Why ACC is Broke
The tale of the $1000 ankle sprain
Mr. X hobbles into an A&M clinic at 7pm on a Sunday night. He twisted his ankle playing soccer the previous day and it is still quite swollen and painful. His job involves standing all day and his main motivation for attending is to get a few days off work.
He fills in an ACC form – I am reliably informed that for the form to be processed, assessed, the claim accepted and a case manager assigned costs ACC about $300 – I presume this is an average figure (i.e. this particular form may cost less)
He sees a triage nurse then a doctor – ACC is charged $38 for this.
The doctor orders an Xray of the ankle and foot – ACC is charged $112
There is no fracture but the doctor decides the sprain should be immobilized for a few weeks – he wants to use a simple air-splint for this but ACC won’t pay the $60 fee unless it is prescribed by a specialist. Accordingly, he sends a referral to the specialist and, in the meantime uses a back slab of plaster of paris to immobilize the ankle – ACC is charged $143 for the temporary back slab and loan of crutches.
The doctor refers Mr. X for physiotherapy – ACC is billed $390 ($39 per session x 10)
Mr. X. sees a specialist – ACC is billed $78 and $60 for the air-splint
Mr X. returns to the A&M to have his back slab taken off – ACC is billed $38
Total ACC cost for Mr. X and his moderately sprained ankle = $1,159
A sprained ankle is the second commonest injury to present to an A&M or ED (cut finger is the most common). I have used a worst case scenario here so the average sprained ankle will be less than this (I estimate about $650 on average). My point here is that the vast majority of ankle sprains do not require any of this intervention. If you can walk around on the ankle and the pain is improving slowly (it can be really painful for the first couple of days), the chances are that you need nothing but a couple of paracetamol and some ice. Unfortunately there is no incentive not to have all this unnecessary treatment.
- The patient pays little (or nothing in an ED) of the bill
- The doctor will get endless paperwork to do if he misses even the smallest fracture – so he will Xray almost everything.
- In an A&M, the doctors are encouraged to Xray, as the radiologist makes more money and is therefore unlikely to shut down (which would shut down the A&M)
- Most injuries ACC pays for are fairly trivial and are simply not worth checking up on.
- ACC provides more than half of the income of A&Ms – there is every incentive for private clinics and GPs to over-treat their patients.
And this is only one of the many reasons why ACC is $2.5 billion short. At least $2.5 billion…
Related posts:
- Why ACC is Broke – Part 2 Some interesting little tidbits on ACC can be found in the HoS...
- Why ACC is Broke (Part 3) Colin Espiner blogs on the mess that is ACC today....
- Is ACC Broke? Tim Hazledine (professor of economics at the University of Auckland)...
- ACC and Accelerated Decrepitude “You are old,” said the youth, “As I mentioned before,...
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- ACC & my part in the blow out « Homepaddock — [...] and I decided I didn’t need an x-ray but ACC would have been billed for my Saturday visit and ...
Dec 6 08 11:09 pm
And you want to use this as an excuse for destroying no-fault accident insurance and throwing decent New Zealanders to the wolves, or should I say, private insurers, who as I said before, would rather make a profit instead of helping a human being.
Please admit you want to destory ACC, and replace it with a free market wild-west nightmare, in which people will not be covered.
Yes! I confess, Millsy! I want to destroy civilisation as we know it – because I can.
Dec 7 08 9:11 am
So that is why they pedantically x-ray everything. I always wondered.
MacDoctor any chance you could speed up your ‘destruction of ACC’ and bring in your ‘wild west freemarket nightmare’ anytime sooner? I am so sick of not being fully covered, ACC do not pay for all of my ongoing GP visits or my Osteo who relieves my pain while I wait for surgery. I am unable to sue the moron who injured me, whose life has gone on as normal while mine has been in hell for the best part of a year. I live in constant pain, on drugs that are harming me so badly I have been admitted to hospital because of their side effects, waiting for surgery for months longer than necessary because of bureacratic paperwork taking forever to be processed even though everyone knew that my diagnosis meant surgery was the only option.
My career is hannging by a thread as the company I work for patiently wait for me to be back on my feet and put up with a string of expensive temps who don’t know the role like I do. My family have to put up with a mum who can’t do anything who is grumpy from pain and weird from the drugs. My studies have been jeapardised, my place at Uni is under question, my marks sucked this year due to having to have lectures taped and sit exams that exceeded my sitting tolerance and even if I can overcome all this the completion of my degree has been delayed.
I long for an efficient, 100% cover, private scheme where they actually get that getting me better quickly not only saves them money but makes my life better too and where people who carelessly and recklessly injure other people are held to account for it.
Dec 7 08 9:16 am
Cool, lets tie the courts up with lawsuits that can only be afforded by the wealthy.
Dec 7 08 9:20 am
Of course this is only one reason.
I see numbers of cases that are well known side effects of treatment, or even a natural process such as childbirth, being rewarded with ACC payouts. Also many assessments done by ACC are unbelievably incorrect and then the patient is rewarded on this misassessment.
And these have become much more frequent, obvious and frivolous.
Dec 7 08 9:31 am
Access to justice is the one of the few things I think the state should fund.
The courts could then throw out those cases without merit and the playing field would be a lot more even.
Dec 7 08 11:13 am
We only need look at the American health system to see why leaving accident cover to the insurance industry would be a bad idea. Do you think it is OK for companies to weasal out of paying out?
Dec 7 08 11:17 am
And do we really want lawyers chasing ambulances, etc…
Dec 7 08 1:10 pm
Millsy – harden up. I sprained my ankle last Sunday. On Monday I could hardly stand on it. I knew what I had done. Twisted it standing up. So I hobbled around for a few days. A week later it is right as rain. Cost to NZ taxpayers – $Nil.
Dec 7 08 1:39 pm
“I sprained my ankle last Sunday. On Monday I could hardly stand on it. I knew what I had done. Twisted it standing up. So I hobbled around for a few days.”.
Thats probably what I would do. But I dont want to destroy ACC and hand it to the private insurance barons.
Dec 7 08 4:49 pm
Millsy, Actually I do not think MD was suggesting destroying ACC.
I fail to understand your objection to the idea that ACC should have to function efficiently.
Interestingly, one of the reasons US costs are so high is because of the plethora of tests ordered in case of litigation. Given that recourse to the Courts here is the rare exception, then why do ACC routinely order so many tests?
I support the original concept of ACC, but in recent years it has become bloated and due to political meddling forced to cover costs for ailments that perhaps should not be part of ACC, but covered by the general public health system. However, I suspect ACC coverage has been extended to find a way to get people to fund more of their health costs, rather than push up Vote Health.
Efficiency Millsy does not mean the advent of robber barons, it can mean the advent of better delivery and more focus.
But then I suspect you belong to those who think there is a bottomless money pit and any grossly inefficient and expensive service is always better when it is state run.
Dec 8 08 5:58 pm
Interesting. I’ve never been x-rayed for a sprain, and most other possible broken bones. The doctors that treated me have had a good look, done their magic with their fingers, moved the limb/foot and determined that nothing is wrong and sent me home.
I’ve also had ACC funded treatment for a running accident, and nothing like what you describe here (6 weeks physio, (~$240), preventing what could have been a much more serious injury and long term problem).
So we get anecdotes like this, and suddenly the ACC is seen by a significant quarter as a “bottomless money pit and grossly inefficient and expensive service”. Room for improvement, certainly, but there are plenty who would throw the child out with the bathwater.
Dec 8 08 6:10 pm
I should also say that while ACC is a bureaucracy, it is a fairly streamlined and efficient one. (I’ve seen it from several sides). I fail to see how the forms and case management associated with an injury of this type could amount to $300. Is a case manager assigned to individual minor ED injuries? Or are they managed collectively and supervised? I really would need a lot of convincing that the figure even approaches this.
I also don’t see the slab, the splint, and ten sessions of physio coming merely from a sprained ankle. Last time I went into Wellington Hospital I was just told to rest it as much as possible in the next few days. I suspect that a large proportion of sprained ankles and other minor injuries see the same kind of response.
Dec 8 08 9:58 pm
I note that everyone (over the blogosphere in general, not just you, George) seems to have become excited about the $300 fee for processing a form. I did point out that this was most likely an average figure (I also can’t see a sprained ankle form costing this much to process – but it is still likely to be far more expensive than we think).
I should also point out that I was talking from the perspective of a private clinic where the more one does on a patient, the more one gets paid. There is no disincentive to avoid Xray, physio, back slabs and air-splints so treatment is made more expensive by the current ACC system. The economic terms for it are moral hazard and perverse incentives.
Dec 12 08 3:14 pm
“hand it to the private insurance barons.”
What private insurance barons you twat ? The largest (by a country mile) private insurer in this country is a not for profit friendly society.