Claim Denied.
Scrubone pointed me to this interesting post on claim rejection rates of American health insurance companies. I will reproduce the table below:
As the NewsBusters site points out, Medicare denies claims at 1.7 times the average rate of insurers (4.05%), with only Aetna being in the same rejection league. In fairness to Medicare, I don’t think this is because they are callous and unfeeling, as NewsBusters tries to make out, I think part of this is likely to be because Medicare have a large number of elderly clients with pre-existing conditions and a large number of indigent client who are more likely to try and claim for cosmetic surgery and the like, simply because they can’t afford it otherwise. Having said that, Medicare does offer a far more basic policy than most Health Insurers and that policy contains far more exclusions than the average. There is a reason why it is “cheap”.
Out of curiosity, I wondered what the rejection rate for ACC claims was. I was stunned to find that it is a mere 1.1%! That is less than a third of the US insurers’ rate and less than a sixth of Medicare.
This puts the sudden increase in refusals for elective surgery in perspective. Even though ACC declines an extra 2500 claims for elective surgery, this was out of a total of 1.5 million claims (one in three New Zealanders, no less), increasing their rejection rate by only 0.1% overall.
Those who are fans of ACC will no doubt think this shows how having a state controlled insurer allows it to engage its clients in a more socially enlightened way. Those of us who are taxpayers will be wondering if this lenient claims process is what is driving the enormous blow-outs in the ACC budget.
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Oct 8 09 9:48 pm
I found some research you may be interested in on the subject of ACC performance you may or may not have seen, MacDoctor.
PWC’s ACC NZ scheme review 2008, found along with other historical ACC docs at:
http://www.accfocus.org/knowledgebase/downloads%10reports_on_acc.html
More PWC research – “Fault vs no-fault, reviewing the international evidence”:
http://www.actuaries.asn.au/IAA/upload/public/GIS08_3d_Paper_Tess,Armstrong_Fault%20versus%20No%20Fault%20-%20reviewing%20the%20international%20evidence.pdf
Your opinion appreciated.
Oct 9 09 1:58 am
a wee bird tells me ACC isn’t going to allow claims for any treatment physios do offsite – while there are several aspects to this, worst hit will be all those sports clubs in the country areas whose players can’t get into town, but who are treated after hours at rugby clubs during practices. physios just won’t offer this service anymore.
Which is fair enough, because there is no evidence that this does anything more than make rugby players feel loved…
Oct 9 09 5:01 pm
I’ve long thought that the only effective solution to the ACC problem – in a declining economy, with an increasing proportion of bludgers in the solution – was simply to abolish the entire scheme — crucially, except the single section that prevents lawsuits for anything covered by ACC.
Result: people could by private insurance – or not – up to them. But they’d be no way to sue employers for health and safety, or other people for “accidents” or “medical misadventure” or anything else. Much more more efficient, and a great saving on the productive who pay for all this.
Oct 9 09 10:15 pm
Sinner:
I would get rid of the no fault scheme as well. With the proviso that lawyers are prevented from charging contingency fees and the possible exclusion of suing for exemplary damages. People could then claim for loss of earnings and proper medical care instead of just receiving the limited resources provided by ACC
Oct 9 09 11:35 pm
Macdoctor, could you elaborate a bit more on how people are only receiving limited medical care under ACC which would not be the case under a fault or hybrid system? I am interested. There’s enough pro-ACC literature in the links above to sink a battleship. Maybe the other side of the argument deserves a turn (grudgingly)…
Oct 9 09 11:42 pm
From the PWC report, page vi:
“Universal coverage on a no-fault basis is the most important feature of the ACC scheme which impacts its value on New Zealand, with the corresponding removal of tort law as a mechanism for compensating accidental injury. A scan of international literature shows that no-fault systems are associated with the following improved outcomes for injured people:
• More injured people (70-95%) receive compensation.
• A higher portion of total costs (up to 90% in some schemes) goes directly to claimants’ benefits compared to perhaps only 50% in liability systems.
• Benefits commence payment more quickly than in tort systems. The average settlement completion in the US tort system is 15 to 20 months, whereas benefits flow in 3 weeks on average in an uncontested workers’ compensation claim, and 4 months in contested claims.
• Claimant outcomes appear better under periodic no-fault systems. A study by PwC for WorkCover NSW (a blended system) followed the outcomes for over 1,000 claimants receiving compensation under alternative compensation pathways. After standardisation for known variables, Common Law and Commutations claimants were found to have poorer health outcomes and worse return to work rates than those receiving no-fault weekly benefits.”
It does look like ditching no-fault would be a difficult argument to win. Isn’t it all about cost savings, and most importantly, shorter time back to work after injury?
Oct 10 09 12:03 am
Johnnieboy:
No-fault coverage is good for minor claims – fast, easy and almost painless. The problems start with three classes of claims – claims from people with undefined earnings (seasonal workers and some self-employed), claims from people earning over the ACC ceiling (currently $110,000pa, I think) and claims from people with long-term disabilities.
The first two categories are simple. Compensation for them will always be inadequate because they are not compensated on the basis of their true wages. The third category is more difficult. ACC often provide a very adequate initial package (apart from wage compensation if they are also in the first two categories). Their assistance typically diminishes over time and the level of compensation for chronically disabled people is usually ludicrous.
None of these people have recourse to tort law. They cannot sue the cause of the accident, nor can they sue ACC. Their only recourse is an appeals tribunal which is heavily slanted in ACC’s favour.
Note that most of the comparison between ACC and tort law compensation is unfair. ACC is an insurance scheme. People on private insurance schemes receive similar or better service than ACC. Tort law is a purely compensatory mechanism to pay for damages, rather than an insurance.
Of course, some people will not have accident insurance and will therefore be seriously disadvantaged by going through a legal channel, rather than a compulsory insurance. There are ways around that (compulsory government insurance is still a viable idea – sort of like the earthquake commission).
Oct 10 09 12:21 am
I can see that there are some concerns with ACC, but I think the real question is whether the losses caused by inadequate compensation from ACC for those parties are outweighed by shorter rehabilitation times overall for the majority of claims.
If there are those who return to work quickly, but with medical debts hanging over their shoulders due to inadequate compensation, does this outweigh the benefit for that person of being able to go back to work and get off the benefit? I think the implications of that are enormous- it hugely benefits the country when people go back to work and start being productive again.
Again I say that I think that quicker rehab times and better health outcomes are paramount, so stick with ACC.
What about page viii,
“Compared with the current ACC scheme we would expect, based on the available evidence that the alternative scenario would:
• have poorer rehabilitation and financial outcomes for the bulk of injury victims whose access is limited to the social welfare and health systems
• have poorer return-to-work outcomes and more variable financial outcomes for the small proportion of people in the fault-based insurance system.
Further, the fault-based aspect of the scenario would distribute total resources to a much smaller proportion of injured people, with most people bearing their own financial losses from injury. In addition, we would expect much higher levels of overall administrative (non- claimant) costs in this area.
We would also expect the costs and outcomes for workers’ compensation claimants to be slightly worse than the current ACC scheme, as additional pressure would be put onto this system due to the work/non-work coverage boundary.”