Inflating Inefficiency

Experts in the field have grappled long and hard with workers’ compensation inflation. Let’s understand what we mean by this: your assessments are a percentage of earnings – the salaries and other benefits that you pay your employees. Because salaries and wages increase with inflation, or faster than inflation as we have seen in the recent spate of well publicised wage negotiations, the income to the Compensation Fund increases.
But, we have seen that assessment percentages have been creeping up. This is strange because the benefits that injured employees receive are all based on their wages or salaries. The other costs that the Compensation Fund pays are medical expenses and so-called administration.
So, let us consider issues that inevitably must have a negative effect on medical costs. It is common cause that there is an enormous backlog in the payment of accounts to service providers. The reason for this is twofold namely a lack of experienced staff to perform the duties and a delay in the electronic scanning of documents. That is in any case what the newspapers are regularly reporting. So what is the result of these problems?

  • The result of the long delays to pay the service providers is that a number of them are refusing to treat Injury on Duty (IOD) patients. Other service providers are, however, are more persistent and continue to serve the injured but are now making use of a new creature namely the financial hubs for service providers. Explore the internet for websites to see what the service is all about and to confirm what might seem to be a pipedream.  Promises such as “….we will act as your sole agent and guarantee cash payments for backlogged and new claims within 14 days from claims..” are being accepted by them. I am not joking, 14 days within handing your accounts over to your agents the service provider will be paid the outstanding account.
  • The accounts ceded to he agents will obviously be subject to a fee payable in the form of a percentage of the account obtained from the service provider. The percentage is not relevant and varies from organisation to organisation.  In some cases the undertaking from the agent is that the outstanding claim will be paid within 72 hours following the acceptance of the claim by the agent from the service provider.
  • There are also attorneys taking a percentage of the outstanding amount paid by the Commissioner after a court order. Again, the provider of the service is prepared to forfeit a percentage of the outstanding account in exchange for the payment thereof.

Is it not obvious to you that there are hidden costs in this crazy situation? You are intelligent enough to work it out for yourself.
The funny part, if anything can be remotely regarded as funny, is that the companies involved motivate their actions by statements on their brochures and website by declaring that the reason for undertaking this financial assistance to service suppliers is because of the “long payment delays”!!!  The “pre-funding” to the medical service providers is to ensure “the prompt payment without the burden…”.  I am dumbfounded by this statement.  I was always under the impression that the civil servants are being paid to fulfil this noble task. It seems I was obviously mistaken; maybe very naïve. The idea is perhaps to create chaos for other parties to financially thrive on.
In a recent newspaper report I read the Mr A Louw, a DA Member of Parliament, said that Netcare and Medi-Clinic the two largest hospital groups in the RSA are no longer prepared to supply medication to IOD patients because of the non-payments of the accounts by the Commissioner. (Only free board and lodging?). The allegation by Mr Louw was denied by both hospital groups but they admitted that they have to write off large amounts per month because of the partial payments of hospital accounts by the Commissioner. This does not make sense but I cannot cover the issue now and beside that, between what a newspaper reports and a politician says, research is necessary before one can be safe.
The bottom-line is what is at stake. I warned last month about medical cost inflation for workers’ compensation. Now, do you really believe that the hospitals and other medical service providers are prepared to sacrifice a percentage of their accounts to avoid a negative impact of the late payments? I might be cynical but I must still be convinced that all these parties are suffering losses because of the Commissioner’s ineffective administration. If you disagree feel free to convince me otherwise. Prove to me that pre-funding is not inflating medical costs for workers’ compensation.

Till next month.