Proposal 3: Performance Monitoring
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What is the proposed change?
We propose to introduce a Performance Monitoring Model (PM) as part of ACC’s monitoring programme of AEs.
PM will provide AE’s and ACC with regular, tailored performance reporting. This reporting will use a mix of quantitative and qualitative sources to provide a holistic view of an AE’s performance. ACC will use the Model to tailor an individualised response which will include active and ongoing monitoring.
AEs will be required to provide ACC with relevant data to make meaningful decisions on their performance. Most of the data ACC will require is currently being collected, but this may change to fulfil the goals of Performance Monitoring.
We also propose that PM will include incentives to AEs for performing well and disincentives for those performing poorly. High performance AEs will enjoy a range of pricing options (such as access to a longer claims management period) while poorly performing AEs will be required to complete action plans and be subject to follow-up assessments and monitoring. Failure to improve performance may raise questions of whether they can continue in AEP.
Why is the change proposed?
Currently ACC undertakes performance monitoring and engagement only when poor performance is flagged during ACC’s annual audit of AEs or the periodic claim file monitoring process.
The proposed PM will address this by introducing more proactive performance monitoring. It will mean AEs will have access to clear and up-to-date information on their performance. It will also enable ACC to better track an AE’s performance during the contract period.
What options were considered?
The options that were considered in developing this proposal included continuing with the status quo, just requiring AEs to provide more data, and adopting the proposed new PM. How these options were weighed up is outlined below.
Option 1: Status quo
Current monitoring doesn’t collect enough information to benchmark an AE’s performance against other AEs. This makes it difficult for ACC to identify and manage poorly performing AEs.
Option 2: requiring AEs to provide more data
While this option would address the data issues, it would, by itself, not address the problems of the current process not being pro-active or assisting AEs to improve.
Option 3: The proposed PM
This option is favoured because it would address all the issues identified in co-design. It would facilitate collection of sufficient data to undertake the analysis required, and would allow ACC to use PM to provide tailored feedback to AEs that would enable them to lift their performance. PM would provide a path to enable ACC to appropriately manage poorly performing AEs and, if necessary, enable them to be exited from AEP entirely.
How will the Performance Monitoring model work?
Performance Monitoring has 2 main components:
- Performance measures and reporting – this is an ongoing measurement of an AE’s performance against a range of measures, and then assessment against a performance scale. These measures will broadly align with ACC’s Service Agreement with the Minister for ACC.
- Performance response – this is a targeted response from ACC that includes support for an AE which is under performing.
These 2 components are explained in detail below:
Performance measures and reporting
It is proposed to track a range of performance measures under 3 performance categories:
1. Claims and Injury Management (C&IM)
This category will measure an AE’s operational processes and the effectiveness of their claim and injury management.
2. Worker Experience of C&IM
This category will measure a worker’s experience of their employer’s management of claims, including injury treatment and rehabilitation.
3. Injury Prevention
ACC will seek evidence that AEs are continuing to prioritise and improve injury prevention practices within their workplace. This will include gathering and acting on worker experience and insights on whether there is sufficient leadership and organisational commitment to injury prevention.
Performance response
Regular engagement between ACC and an AE about their overall performance is proposed. The frequency of engagement will be dependent on the AE’s position on the Performance Scale (see details below).
ACC will also be monitoring the claims file management process for any trends. Any irregularities noted may trigger a prompt response (see Proposal 2 for more details).
Proposal 2: Strengthen the assessment of Claims and Injury Management
What is the Performance Scale?
The Performance Scale is a subset of measures used to indicate an AE’s performance level within AEP. We propose that performance be measured at the end of each contract period, with an AE’s performance determining the level of engagement between ACC and the AE for the next contract period.
The proposed levels within the Performance Scale are shown below.
Performance Scale Levels
Leading
For AEs assessed as ‘Leading’, the relationship will be collaborative with engagement by mutual agreement. The focus will be on continual improvement and acknowledgement of good practice. Leading For AEs assessed as ‘Leading’, the relationship will be collaborative with engagement by mutual agreement. The focus will be on continual improvement and acknowledgement of good practice. The monitoring of individual claims by ACC will continue with opportunities for improvement being reported back to an AE on a regular basis.
Good
For AEs assessed at the ‘Good’ level, the relationship will be more needs based. As the Programme requires participants to practice continuous improvement, the contact with ACC will be on an ‘as required’ basis, allowing an organisation that is improving capability to initiate more frequent engagement to support good Claims and Injury Management practice.
Adequate
For AEs assessed at the ‘Adequate’ level, the actions will be more directive, with a moderate to high frequency, involving AE improvement actions.
Low
For AEs assessed at the ‘Low’ level, remedial actions for performance improvement will be more prescriptive, compliance focused, frequent and formal, with communication via senior management, the chief executive and/or the board.
Performance Measures
The Performance Monitoring model is a multi-layered reporting schema. Individual Performance Measures focus on specific areas, while Key Result Areas (KRAs) and Performance Categories provide a wider indication of AE performance.
The set of measures proposed to be included in the Performance Scale are below. This is only an initial set of measures and ACC will review all KRAs and determine what measures within each KRA will be included in updates of the Performance Scale.
Where appropriate, these measures and targets will align with ACC’s Service Agreement that it holds with the Minister for ACC.
Performance category: Claims and injury management
Key Result Area
Timeliness, quality of claims decisions and rehabilitation outcomes.
Initial Performance Measure(s)
- AE efficiency in making claim decisions (non-complicated claims)
- AE efficiency in making claim decisions (complicated claims)
- Return to work – full fitness & pre-injury role
- Return to work during incapacity – alternative duties
- Quality and accuracy – claims decisions
- Weekly compensation – days paid
Performance category: Workers’ experience of claims and injury management
Key Result Area
Workers’ knowledge of AEP
Initial Performance Measure(s)
- Workers’ knowledge of AEP and their rights within it
Key Result Area
Injured worker experience of claims management
Initial Performance Measure(s)
- Workers’ level of satisfaction with claim management
- Net promoter score indicating satisfaction levels
Performance category: Injury prevention
Key Result Area
Rates and types of claims
Initial Performance Measure(s)
- Number of claims per $1,000 of liable earnings
Key Result Area
Rates of fatalities and serious claims
Initial Performance Measure(s)
- Number of serious claims
- Number of fatalities
Detail on each performance measure will include an explanation of what level of performance an AE needs to receive a rating of either Low, Adequate, Good, or Leading. See below how a measure can be applied across the 4 performance scale categories.
Measure 1: Quality of paying entitlements
Low performance
Example only:
Major calculation issues with x% or more claim files checked.
Major calculation error includes the following issues:
Adequate Performance
Example only:
Minor calculation issues with X% or more of claim files checked
OR
a single major calculation issue with less that x% of claim files checked
Minor calculation Issues include...
The major calculation issue is…
Good performance
Example only:
Minor calculation issues with less than X% of claims files checked
Minor calculation issues include …
Leading Performance
Example only:
No issues with calculation on any claim files
Measure 2: Timeliness of cover decision (non-complicated)
Low performance
Example only:
Average time to make cover decision (of claims over period) is XXX days or more
Adequate Performance
Example only:
Average time to make cover decision (of claims over period) is XX days or greater, and less than XXX days
Good performance
Example only:
Average time to make cover decision (of claims over period) is X days or greater, and less than XX days
Leading Performance
Example only:
Average time to make cover decision (of claims over period) is less than X days
The scale used for each measure will account for an AE’s organisational size and industry risk, so that ACC can fairly assess their performance relative to the risk profile.
How will the Performance Scale work?
Each performance measure will be explained under each level within the Performance Scale and communicated to AEs, well in advance of implementation, and will be built into each AE’s contract.
Each measure will be scored and placed on the 4-level Performance Scale. The scores will be averaged to provide a single overall assessment of the AE. The labels are subject to change.
The table and example below illustrate this:
Overall Performance Scale
| Level | Assessment # | Assessment range |
|---|---|---|
| ‘Leading’ | 4 | 4 |
| ‘Good’ | 3 | 3 – 3.9 |
| ‘Adequate’ | 2 | 2 – 2.9 |
| ‘Low’ | 1 | 1 – 1.9 |
Example: applying the Performance Scale to Company A
| # | Level Assessed at | Assessment # |
|---|---|---|
| Measure 1 | ‘Leading’ | 4 |
| Measure 2 | ‘Adequate’ | 2 |
| Measure 3 | ‘Low’ | 1 |
| Measure 4 | ‘Adequate’ | 2 |
| Measure 5 | ‘Good’ | 3 |
|
Total |
12 | |
|
Assessment overall (average) |
2.4 (Adequate) |
|
Company A scored an average of 2.4 across all measurements. This places it in the ‘Adequate’ range [2.0 – 2.9] and therefore achieves an ‘Adequate’ rating on the performance scale.
Continuous low performance will have consequences
It is proposed that ACC will manage AEs assessed as low on the Performance Scale as follows:
1. Increased monitoring and engagement: ACC will inform the AE of their low performance and engage with them on how to lift their performance.
The AE must develop, implement, and complete a specific performance improvement plan within a set time period. During this time, the AE will continue to manage their own claims with increased contact and visibility from ACC as they provide frequent updates on their progress.
2. Exit: Failure by an AE to meet all their individual improvement actions by the specified time will result in an escalation and the AE’s exit from AEP.
Exit from the AEP
When an exit occurs, ACC will provide clear information about why the AE is leaving AEP, any settlement arrangements, and how the AE can transition to other levy products. Part of exiting may include a final report on the areas of improvement necessary for re-entry.
There may be circumstances where prolonged or sustained poor performance will result in ACC requiring an AE to exit AEP part-way through their contract period.
Data, information sources and reporting
AEs will be required to provide all the information that ACC needs to make an assessment of AE performance.
The sources of data and information include:
- The detailed claims data that AEs or their TPAs submit to ACC (currently through the Monthly Claim Files (MCF)
- Summary results from claim file quality assessments
- Worker experience surveys, worker and worker representative engagement surveys, and focus group interviews
- Reports from C&IM assessment, and
- Health & Safety audit/assessment reports.
Although most of the above data is already being collected, there may be changes to the content and format of the data and information required. Where additional information is required and/or changes, this will be communicated to AEs well in advance.
The reporting will be individualised to each AE and produced regularly. This will give AEs a better, more timely insight into their performance (compared to the current annual Employer Performance Reports) to assist them to focus on any areas needing improvement.
The same set of measures will be used to measure the performance of AEP as a whole. It will enable ACC to identify any systemic issues needing remedial action or to identify areas where changes might be necessary to improve AEP or better support AEs and their workers.
What will this mean for Accredited Employers?
An AE’s scores on the Performance Scale will have a direct impact on how ACC engages with them. The table below summarises the different actions at different performance levels:
Performance level: Leading
Engagement
As mutually agreed, or when required
Actions
- More pricing options (subject to financial assessment)
- Longer contracting period
- Acknowledgement of high performance by ACC
- Opportunity to share successes with other AEs
Performance level: Good
Engagement
As mutually agreed, or when required
Actions
- More pricing options (subject to financial assessment)
- Longer contracting period
- Support from ACC on how to move from ‘good’ to ‘leading’
Performance level: Adequate
Engagement
Regular engagement between ACC and the AE’s primary contact
Actions
- Limited pricing options
- Targeted performance improvement plans on the areas where an AE’s performance is low
Performance level: Low
Engagement
Regular engagement between ACC and the AE’s Chief Executive (or delegated senior management)
Actions
- Limited pricing options
- Targeted performance improvement plans to improve an AE’s overall performance
- Additional claims monitoring
- Out of cycle assessments
- Additional performance conversations
Assessing new AEs against the Performance Scale
Prospective or new AEs will be ‘on-boarded’ into AEP. This will involve an initial 12-month period of ‘needs based’ support, performance monitoring and engagement. This will help participants adopt a continual improvement approach and good C&IM practice.
After the initial 12 month ‘on-boarding’ is complete, the AE will be assessed and placed on the Performance Scale. Their rating will dictate the level of engagement with ACC until the next review.
What will this mean for workers?
The range of changes proposed to AEP will mean that workers will have more opportunities to engage and provide feedback on an organisation’s C&IM performance. The workers’ voice will have a direct impact on the assessed performance of AEs, which should drive better outcomes for injured workers.
What will this mean for TPAs?
The changes to performance monitoring will indirectly affect TPAs. Under the AEP Framework, AEs (but not TPAs) are required to meet the programme’s requirements, and ACC has a contractual relationship with each AE.
However, if an AE is using a TPA to manage their employees’ claims, the performance of the TPA will have a direct impact on an AE’s performance. Where required, it is proposed that ACC work with the TPA servicing an AE when attempting to improve an AE’s claims management performance.
Further, if any systemic issues identified with a TPA are negatively impacting the performance of multiple AEs, ACC may address these with the TPA directly.
Tell us what you think
Please answer the following questions and provide your feedback via e-mail.
General feedback
- Do you agree with the proposed changes to performance monitoring of AEs, or would you prefer one of the other options? Why/why not?
- How would these changes impact on your participation in the Programme?
- If you don’t support these changes, what alternatives do you propose?