ACC Pricing Review 1 July 2024
Updated 02/05/2024
The New Zealand Government has provided guidance to public sector organisations to consider adopting a culture of spending control and fiscal responsibility, while continuing to provide for all New Zealanders. We have heard the concerns raised by a range of rehabilitation providers and acknowledge we’re all operating in a difficult period of balancing cost pressures with the need for spending restraint.
As part of our contract management process, every year we consider whether a review of pricing across our contracts is needed. We completed a review in November 2023, and we have decided to increase many of our contracted rates effective from 1 July 2024.
Our pricing review considers factors such as:
- general inflation
- changes in service component costs (e.g. overheads and indirect costs)
- substantial changes in the market, for example MECA settlements.
We adjust prices where our review finds that the factors we’ve considered have had an impact on the price we pay.
When an uplift is applied to one component (e.g. overheads) it doesn’t necessarily result in the service item price increasing by the same percentage. This is because the service item price is made up of several components (e.g. direct costs, indirect costs, overheads, and margin). Following our review, we are confident that our service prices are fair and reflect market conditions.
We will begin issuing contract variation letters in mid-April which will confirm the contracted rate increases. All variation letters will be issued by early June. We’re doing our best to get these contract variations out as soon as possible. Regardless of the date people receive their variation letter the new rates will apply from 1 July 2024.
For some services suppliers may also bill ACC under Cost of Treatment Regulations. The changes outlined in the pricing uplift variation letter will only apply to their contracted rates.
Pricing Uplift FAQ's
What are the changes?
As part of our pricing review, there will be increases to many contracted rates. These vary between contracts and will be shared in the variation letter our suppliers receive.
These reviews consider factors such as general inflation and changes in service component costs, to set our pricing for the next financial year.
Where can I find the new prices?
You can find your pricing uplift in your contract variation letter.
From mid-April onwards, we’ll issue contract variation letters to confirm the rate increases that will be effective from 1 July 2024. All variation letters will be issued by early June.
We’re doing our best to get these contract variations to you as soon as possible.
When do I start using the new rates on my invoices?
Services delivered on and after 1 July 2024 in your contract should be invoiced at the new rates. Please note that invoices during this week will need to include both new and old rates if you have consultations on either side of the uplift start date.
You'll need to update your invoicing systems, so you are paid at the new rates and to avoid any delays or errors in processing payments.
Providers billing manually or through ACC online services.
If you don’t use a practice management system you can continue to invoice us for services as you do now, using the updated prices from 1 July 2024.
Why are the changes being made?
We regularly review the contracted rates we pay for services delivered to our clients.
The review assesses if changes in the costs of rehabilitation require adjustments to the prices we pay toward treatment. We also use a retrospective approach to assess how market activity has affected the cost of treatment and rehabilitation.
What about increases for providers operating under the Cost of Treatment regulations?
We review the rates we pay Cost of Treatment Regulations providers on a bi-annual basis. This process is run by MBIE before being approved by Cabinet.
Will ACC be applying the new rates from the 2023 – 2025 Te Whatu Ora and Public Services Association Allied, Public Health, Scientific and Technical Collective Agreement (‘The Te Whatu Ora and PSA Agreement’) to the uplift?
We completed our pricing review in November 2023. The Te Whatu Ora and PSA Agreement was not released publicly until February 2024 so it could not be considered during the recent ACC pricing review.
However, in anticipation of a settlement after our review, we gave a price increase in July 2023 and are giving another price increase this year. The anticipated increases have resulted in ACC paying just below current MECA rates for recognition step 10, which we will consider how we will address moving forward.
Has ACC considered the latest rates from the Te Whatu Ora and New Zealand Nurses Organisation Nursing and Midwifery Collective Agreement (‘The Nursing and Midwifery Agreement’) in the 1 July 2024 uplift?
Yes. The pricing review has considered the Nursing and Midwifery Collective Agreement.
Does the pricing review due to take effect on 1 July 2024, take pay equity into account?
Pay equity and MECA settlements prior to November were considered as part of the review. Any settlements released after that time were not able to be considered in this review.
Will this uplift be backdated?
No, this uplift will not be backdated and will start 1 July 2024. ACC is not a binding party to the pay equity agreement, and we review our rates in accordance with our price review contract clause.
Are the price uplifts negotiable?
No, we are confident the review is fair and that the service price is adequate to enable suppliers to attract suitably qualified providers.
Are there any contracted services which are not included in this price review?
Yes. HTI and IHCS (currently transitioning to HCS) and Equipment and Consumables are not included in this review.
Can you share the percentage uplifts to expect? If not, why not?
We do not publish the percentage increases, as they do not necessarily apply to every service code within each and every contract. This is due to contracts having different pricing structures. As a result, providing the percentage only would not be helpful to understanding actual pricing changes.
Please refer to your contract variation which will have the updated pricing.
Why do uplifts vary across contracts?
Uplifts are calculated based on the components that make up the price for the service, such as labour, overheads, profit and their weightings.
As a result, uplifts will vary across contracts as services within the contracts may vary due to having different components.
Why is ACC’s inflation increase different to published inflation?
Uplifts are calculated based on the components that make up the service and their weightings such as labour, overheads and profit and their weightings.
The Consumer Price Index (CPI) is a common measure of inflation and covers a broad range of goods and services and as a result is not always an appropriate reflection of the price movement for health services.
Instead, we use publicly available information that has a direct link to the component (such as labour or overheads) as a proxy to determine price movement, providing a truer reflection of cost movement for delivering those services.
How are variations calculated?
Uplifts are calculated based on the components that make up the service and their weightings such as labour, overheads and profit.
We use publicly available information that has a direct link to the component (such as labour or overheads) as a proxy to determine price movement for delivering those services.
Why is the travel km rate not the same as the IRD rate?
ACC pays travel based on the AA rate, which publishes an average cost per km travelled, based on the size of vehicle. We base our calculations on the average of small and compact cars, which are assumed to be most likely used in health service fleets. The IRD rate is based on all vehicle types.
We review our rates every year. If the rate decreases when calculated from the AA report, we hold our rates instead.
Why do we need to ‘accept’ our variation letter?
Your delegated authority needs to confirm formal and express acceptance of the variation by replying to the email sent by ACC. This is because a variation to any contract requires the mutual consent of the contracting parties. By accepting the variation via email, you agree and accept all the terms of the variation.
How do I know what is changing in this variation?
For this variation you will receive two emails from us.
The first will be your variation letter, which will contain any material changes to your contract, including the amended pricing which applies from 1 July 2024.
The second will contain a copy of the service schedule with tracked changes which will clearly show the minor amendments being made to:
- update references to legislation, regulation and other relevant standards
- clarify the wording
- correct drafting, formatting or cross reference issues and inconsistencies.
We recommend taking some time to understand all the changes. When you accept the variation by email, you will accept all the changes proposed in the variation.
How are you working with Patient Management System (PMS) vendors to make sure they are ready?
ACC will advise PMS Vendors of the pricing changes so these are available to you before 1 July 2024.