COMPENSATION FOR COMPENSATION FOR OCCUPATIONAL INJURIES AND OCCUPATIONAL INJURIES AND

DISEASES ACT, 130 OF 1993 AS DISEASES ACT, 130 OF 1993 AS AMENDED (COIDA)AMENDED (COIDA)

DEPARTMENT OF LABOUR: DEPARTMENT OF LABOUR: COMPENSATION FUNDCOMPENSATION FUND

PRESENTATION TO THE SELECT PRESENTATION TO THE SELECT COMMITTEE FOR LABOUR ON 26 COMMITTEE FOR LABOUR ON 26

AUGUST 2009AUGUST 2009

THE COMPENSATION FUNDTHE COMPENSATION FUND

Social insurance within the social security system in South Social insurance within the social security system in South Africa.Africa.

Administered under the Compensation for Occupational Administered under the Compensation for Occupational Injuries and Diseases Act, 130 of 1993 as amended in 1997. Injuries and Diseases Act, 130 of 1993 as amended in 1997.

Public Entity in the Department of Labour.Public Entity in the Department of Labour. The Director-General is the accounting officerThe Director-General is the accounting officer The Compensation Commissioner (DDG) reports to the The Compensation Commissioner (DDG) reports to the

DG.DG. Generates revenue from employers’ annual contributions-Generates revenue from employers’ annual contributions-

employers register with the Fund and report accidentsemployers register with the Fund and report accidents..

Compensation BoardCompensation Board

CF Board is a statutory body- comprises organised CF Board is a statutory body- comprises organised business, organised labour, government and medical business, organised labour, government and medical experts.experts.

Advises Minister of Labour on policy matters, Advises Minister of Labour on policy matters, amendments to the Act, annual increases in benefits, amendments to the Act, annual increases in benefits, appointment of assessors.appointment of assessors.

Director-General can request the board to investigate any Director-General can request the board to investigate any issues.issues.

Legislative framework and policiesLegislative framework and policies

Constitution Act, 108 of 1996Constitution Act, 108 of 1996 Compensation for Occupational Injuries and Diseases Act Compensation for Occupational Injuries and Diseases Act

130 of 1993 as amended.130 of 1993 as amended. COIDA regulations.COIDA regulations. Recognition of Customary Marriages ActRecognition of Customary Marriages Act Public Service Act.Public Service Act. Public Finance Management ActPublic Finance Management Act DPSA guidelines on COIDADPSA guidelines on COIDA COIDA policies on occupational diseases and injuriesCOIDA policies on occupational diseases and injuries

Business operations of the fundBusiness operations of the fund

Employers are classified according to nature of operations.Employers are classified according to nature of operations. Assessments are based on the risk profile of employer.Assessments are based on the risk profile of employer. Generates revenue from employers’ annual contributions-Generates revenue from employers’ annual contributions-

Employees do not contribute.Employees do not contribute.

• COID Act operates on a no fault principleCOID Act operates on a no fault principle Recourse for employees- section 56 increased Recourse for employees- section 56 increased

compensation for negligence by employer.compensation for negligence by employer. Section 91 objections-heard by a tribunal.Section 91 objections-heard by a tribunal.

section 22 covers employees on ‘willful misconduct’section 22 covers employees on ‘willful misconduct’

Operations continued…Operations continued…

Employers may request transfer to mutual associationsEmployers may request transfer to mutual associations Two Mutual associations operate under license from the Minister Two Mutual associations operate under license from the Minister

of Labour to process COIDA claims.of Labour to process COIDA claims. Minister sets conditions for Mutual Associations e.g security Minister sets conditions for Mutual Associations e.g security

guarantees.guarantees. The DG determines provisional settlements to monitor mutual The DG determines provisional settlements to monitor mutual

associations.associations. Rand Mutual operates in the mining industryRand Mutual operates in the mining industry FEMA operates in the construction industry.FEMA operates in the construction industry. Government departments are exempted from annual Government departments are exempted from annual

contributions-their claims are adjudicated by the Fund.contributions-their claims are adjudicated by the Fund.

COIDA Benefits structureCOIDA Benefits structure

Permanent disablements (PD) are scheduled in Permanent disablements (PD) are scheduled in Schedule 2 and 3 of the COID Act-Schedule 2 and 3 of the COID Act-

Unscheduled PD are those not in the Act (Brain Unscheduled PD are those not in the Act (Brain injuries, multiple injuries, internal injuries)- PD is injuries, multiple injuries, internal injuries)- PD is determined by in house medical officers.determined by in house medical officers.

Benefits are based on the employee’s medical Benefits are based on the employee’s medical condition to determine permanent disablement condition to determine permanent disablement (PD) -employee’s earnings and medical reports are (PD) -employee’s earnings and medical reports are imperativeimperative

Lump sum payment-below 31% PDLump sum payment-below 31% PD Monthly pension -From 31% and aboveMonthly pension -From 31% and above

Benefits-continued…Benefits-continued…

Medical expenses including- assistive devices (prosthesis).Medical expenses including- assistive devices (prosthesis). Widows pension-40%Widows pension-40% Widows lump sumWidows lump sum Children’s pension up to 18 years-60%Children’s pension up to 18 years-60% Pension commutation.Pension commutation. Temporary Total Disablement-loss of earnings(75% of Temporary Total Disablement-loss of earnings(75% of

earnings).earnings). Burial expenses.Burial expenses. Constant attendance allowanceConstant attendance allowance

RehabilitationRehabilitation

Currently, the CF does not have policy on rehabilitation and early return to Currently, the CF does not have policy on rehabilitation and early return to work work

Rehabilitation CentresRehabilitation Centres Two Centres established by the Compensation Fund in Durban Two Centres established by the Compensation Fund in Durban

and Benoni – under section 4(2)(b)and Benoni – under section 4(2)(b) Centres are private organizations but are not profit driven.Centres are private organizations but are not profit driven. Run by managers who report to the Board of Directors-CF and is Run by managers who report to the Board of Directors-CF and is

also represented in the board.also represented in the board. Funding- CF used to provide 90% funding but has since been Funding- CF used to provide 90% funding but has since been

phased out. phased out.

Business processes- high levelBusiness processes- high level

Supporting IT systemsSupporting IT systems

Axes One-Revenue and FinanceAxes One-Revenue and Finance E-Claims for processing CLAIMSE-Claims for processing CLAIMS FYI-electronic file for claimsFYI-electronic file for claims Centura systems –generates form letters for claims.Centura systems –generates form letters for claims.

FINANCIAL INFORMATIONFINANCIAL INFORMATION

Revenue generationRevenue generation

The Fund has 387 000 registered employers.The Fund has 387 000 registered employers. Raised over R3.9 billion ($500m) employer’s Raised over R3.9 billion ($500m) employer’s

annual contributions in the past financial year.annual contributions in the past financial year. Net assets amount to R 21 billion($2.7billion)- Net assets amount to R 21 billion($2.7billion)-

reserves plus pension account.reserves plus pension account.

FINANCIAL INFO. CONTFINANCIAL INFO. CONT….….

Expenditure on claimsExpenditure on claims Over 203 711 claims have been reported from 01 April 2008 to Over 203 711 claims have been reported from 01 April 2008 to

31 March 2009.31 March 2009. From a total of 815 045 medical accounts, R1,544,970,689 From a total of 815 045 medical accounts, R1,544,970,689

billion was paid by 31/03/2009.billion was paid by 31/03/2009. From a total of 327 647 compensation payments, R630 m was From a total of 327 647 compensation payments, R630 m was

paid by 31/03/2009.paid by 31/03/2009.

Distribution of medical claims Distribution of medical claims submitted for 2008/2009 financial yearsubmitted for 2008/2009 financial year

General Practitioners 27%General Practitioners 27% Private Hospitals 21%Private Hospitals 21% Diagnostic Radiology 18%Diagnostic Radiology 18% Physiotherapist 7%Physiotherapist 7% Orthopaedics 6%Orthopaedics 6% Pathology 5%Pathology 5%

Graphical distribution of Graphical distribution of medical claims submittedmedical claims submitted

Claims' Ratio/ Service Provider 2008/09

003 Accredited Bloodand Blood ProductCouriers004 Chiropractors

008 Homeopaths

009 Ambulance Services-Advanced

010 Anaesthetists

011 Ambulance Services-Intermediate

012 Dermatology

013 Ambulance Services-Basic

014 General MedicalPractice(7 digit pr no)

016 General MedicalPractice(7 digit pr no)

017 Obstetrics andGynaecology

018 Pulmonology

019 Specialist Physician

020 Gastroenterology

021 Neurology

022 Cardiology

023 Psychiatry

024 Medical Oncology

025 Neurosurgery

026 Nuclear Medicine

028 Opthalmology

030 Clinical Haemotology

031 Orthopaedics

036 Otorhinolaryngology

038 Rheumatology

039 Paediatrics

040 Paediatrics -cardiology

042 Physical Medicine

044 Plastic andReconstructive Surgery

046 Diagnostic Radiology

049 Radiography

050Radiotherapy/NuclearMedicine/Oncologist051 Surgery/Paediatricsurgery

052 Cardio ThoracicSurgery

054 Urology

055 Drug & AlcoholRehab

056 Sub-Acute Facilities

057 Group Practices

058 GroupPractices/Hospitals

059 Pathology

060 General DentalPractice

062 Mental HealthInstitutions

064 Provincial Hospitals

066 Private Hospitals('A'- Status)

068 Private Hospitals('B'- Status)

070 Private RehabHospitals(Acute)

072 Pharmacies

075 Pharmacotherapist

076 Maxillo-Facial andOral Surgery

077 Orthodontics

078 OccupationalTherapy

080 Art Therapist

082 Podiatry

083 Medical Scientist

084 optometrists

086 Optical dispensers

087 Physiotherapist

088 Masseurs

089 Orthoptists

090 Clinical Technology

090 Unattachedoperating theatres/ Dayclinics090 Approved U O T U /Day clinics

091 Blood transfusionservices

092 Hospices

093 NursingAgencies/Home CareServices094 Speech therapy andaudiology

095 Hearing AidAucostician

Total medical payments for Total medical payments for the past three yearsthe past three years

Year Payment category Number of payments Rand Value 2006/07 Medical 886 511 R 1,430,143,788 2007/08 Medical 777 320 R 1,294,380,035 2008/09 Medical 815,045 R 1,544,970,689

Graphical presentation of Graphical presentation of payments over the past three payments over the past three

yearsyears

NUMBER OF MEDICAL ACCOUNTS PAID

720,000740,000

760,000780,000800,000

820,000840,000860,000

880,000900,000

2006/07 2007/08 2008/09

Acc. Paid

Number of compensation Number of compensation benefits for the past three yearsbenefits for the past three years

YEARYEAR NO OF PAMENTSNO OF PAMENTS RAND VALUERAND VALUE

20062006 331672331672 R655000000R655000000

20072007 335345335345 R652000000R652000000

20082008 327647327647 R630708449R630708449

Graphical presentation of Graphical presentation of compensation benefitscompensation benefits

COMPENSATION BENEFITS

331672

335345

327647

322000

324000

326000

328000

330000

332000

334000

336000

2007

NU

MB

ER

PA

ID Series2

Series1

Series3

2006 2008

Current challenges facing the Current challenges facing the

FundFund Lack of capacity for revenue generation, debt collection and Lack of capacity for revenue generation, debt collection and

Supply Chain Management.Supply Chain Management. Slow Slow settlement of claims thus eliminating backlogs.settlement of claims thus eliminating backlogs. Non and/or delays in reporting of accidents and submission of Non and/or delays in reporting of accidents and submission of

documentsdocuments Lack of adequate IT resources and InfrastructureLack of adequate IT resources and Infrastructure Disparate IT systemsDisparate IT systems Outdated business processesOutdated business processes Decentralization of functionsDecentralization of functions Audit qualifications.Audit qualifications.

Current interventionsCurrent interventions

New business processes have been developed and are pending New business processes have been developed and are pending the development of the new IT system-the development of the new IT system-

The new system is being developed in collaboration with Rand The new system is being developed in collaboration with Rand Mutual Assurance (RMA).Mutual Assurance (RMA).

- Electronic submission of claims will be possible- Electronic submission of claims will be possible - Will facilitate the final decentralization of the remaining - Will facilitate the final decentralization of the remaining

functionsfunctions - Will facilitate automation and organizational structure re-- Will facilitate automation and organizational structure re-

designdesign Organizational structure re-design- A service provider has Organizational structure re-design- A service provider has

already been procured by tender.already been procured by tender.

Current interventions cont….Current interventions cont….

The COIDA Enforcement policy was developed and is being The COIDA Enforcement policy was developed and is being implemented by provinces.implemented by provinces.

A new case management IT system is currently under A new case management IT system is currently under development by Inspection and Enforcement Servicesdevelopment by Inspection and Enforcement Services

The decentralization of claims pilot will be rolled out to 4 The decentralization of claims pilot will be rolled out to 4 provinces by 30 March 2010-Currently the pilot is running at provinces by 30 March 2010-Currently the pilot is running at Limpopo Provincial Office.Limpopo Provincial Office.

Action plans on all audit queries have been put in place and the Action plans on all audit queries have been put in place and the project will be complete by 30 March 2010.project will be complete by 30 March 2010.

Intensify communication with stakeholders in line with the current Intensify communication with stakeholders in line with the current communication strategy namely-Public Service employees communication strategy namely-Public Service employees educational campaign, reporting of accidents campaigneducational campaign, reporting of accidents campaign

Future plans/initiatives of the fundFuture plans/initiatives of the fund

New Policy OptionsNew Policy Options- Development of policy on rehabilitation and re-integration Development of policy on rehabilitation and re-integration

of an employee following an occupational injury.of an employee following an occupational injury.- Review the pension policy regarding the death of a Review the pension policy regarding the death of a

pensioner through natural causes.pensioner through natural causes.- Joint strategy with RAF on assessment of permanent Joint strategy with RAF on assessment of permanent

disablement and payment of medical aid.disablement and payment of medical aid.- Integration of COIDA with the current comprehensive Integration of COIDA with the current comprehensive

social security reforms proposals within government.social security reforms proposals within government.

THANK YOUTHANK YOU

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