What regulation changes are being proposed?
On behalf of the Minister for ACC, the Department of Labour and ACC are consulting on two separate regulatory proposals to change the way that ACC provides services for clients with cover for hearing loss under the Accident Compensation Act 2001.
- The first proposal is to introduce regulations to ensure ACC funding does not exceed its legislative mandate for hearing loss. Two ways of doing this are proposed. In both options, ACC would make a contribution to hearing devices (mainly hearing aids) and fitting fee costs based on the level of a client’s injury-related hearing as a proportion of his or her total hearing loss. Regulations would apply to both new and existing claims.
- The second proposal is to update the current regulations that prescribe procedures for occupational hearing loss assessments.
What are the two options for new regulations?
The first option proposes that ACC’s contribution to costs of hearing devices and fitting fees is exactly matched to each client’s individual level of hearing loss.
The second option proposes that ACC’s contribution to costs of hearing devices and fitting fees is based on four standardised bands of proportionate injury-related hearing loss (0 24.9%, 25-49.9%, 50-74.9%, 75-100%).
Other audiological services would also be prescribed in regulations at a set rate.
Why are regulatory changes being proposed?
To ensure that ACC’s funding of hearing loss does not exceed its legislative mandate. At present, ACC levy payers (particularly employers) are funding the full cost of hearing loss claims even though evidence suggests that, on average, only about half of ACC clients’ hearing loss is injury-related (the rest being due to other causes, such as age). The changes will help ensure the financial sustainability of the Scheme.
As this work is going through, there is an opportunity to ensure regulations relating to assessment of work-related noise-induced hearing loss are up-to-date.
What kind of hearing loss does ACC cover?
ACC accepts cover for hearing loss as a personal injury if it is caused by an accident, treatment injury, or gradual process noise exposure at work (often called occupational noise-induced hearing loss, or ONIHL). Under the Accident Compensation Amendment Act 2010, claims lodged on or after 1 July 2010 must have at least 6% binaural injury-related hearing loss to gain cover.
What is ONIHL and who has it?
Occupational noise-induced hearing loss is a permanent injury that does not improve over time. It is the most common form of hearing loss that ACC covers – approximately 90% of all ACC hearing loss claims are for ONIHL. People do not usually notice the effects of ONIHL until age-related changes make the hearing loss worse, meaning that claims are often lodged up to 30 years after the exposure occurred. ACC ONIHL claims are typically from men in their mid-sixties who used to work in manufacturing, construction, agriculture, or forestry/wood processing.
What does ACC currently spend on hearing loss?
Currently, ACC funds the total cost of entitlements for clients with covered hearing loss claims. This includes assessment costs, initial and replacement hearing aids, audiological fitting fees, repairs and batteries. Evidence suggests that, on average, only about half of clients’ hearing loss is injury related, and the rest due to other causes (eg age).
Annual ACC expenditure on hearing loss has risen from $37 million in 2003/04 to $60 million in 2008/09.
How are ACC hearing loss claims funded?
Approximately 90% of hearing loss claims are funded by employer levies.
How would ACC’s contribution be calculated?
Under current practice, ACC receives information from an ear, nose and throat (ENT) specialist on a client’s total percentage hearing loss, as well as the percentage hearing loss attributed to causes covered by ACC.
Under the proposed new regulations, ACC will use this information to determine the level of a client’s injury-related hearing loss, as a proportion of his or her total hearing loss. ACC will then make a contribution to hearing device costs and audiological fitting fee costs based on the proportion of injury-related loss. It is proposed that costs for repairs and future assessments would also be prescribed in these new regulations.
What are the key benefits of the new regulations?
Limiting ACC funding to injury-related hearing loss costs will provide value for money for levy payers (employers) and reduce ACC’s outstanding claims liability.
What are the key risks of the new regulations?
ACC recognises that both options for new regulations place more importance on the existing process of ear, nose and throat (ENT) specialists diagnosing the percentage of injury-related hearing loss. ACC intends to work with ENTs, seeking to jointly develop more standardised processes and build on current methods.
How will new regulations affect key stakeholders?
For employers, new regulations to limit ACC’s liability to injury-related hearing loss costs would ensure that the levies collected from employers fund only the costs of covered personal injuries.
Under either option, clients with some other cause of hearing loss (eg age related) are likely to be required to pay a portion of the costs of their hearing devices and audiological fitting fees.
For providers, ACC would cease to hold a contract for audiology services. Under the first option, ACC would seek to maintain a contract with hearing aid manufacturers. ACC would continue to pay for reports from ear, nose and throat (ENT) specialists outside contract. The current ENT assessment procedure would remain the same.
How will new regulations affect other government agencies?
Other government agencies providing hearing services and/or funding (Ministry of Health, Ministry of Social Development, Veterans’ Affairs) may experience increased demand as a result of new ACC regulations. ACC has typically provided a higher level of funding for hearing services than other government agencies. New regulations will ensure that ACC funds are only available to those people who fall within the scope of the Scheme. ACC will work with the Ministry of Health to consider whether health funding could complement ACC’s contribution under regulations, and if so, to what level.
What alternatives to regulations were considered?
Alternative ways of managing the rising volume and cost of ACC hearing loss claims were considered. These were a subsidy and a continuation of the current contractual purchasing approach. However, these alternatives did not meet the dual policy objectives of limiting ACC’s liability for hearing loss expenditure to injury-related costs, and reducing ACC’s outstanding claims liability.