Part 1: Introduction

Ministry of Social Development: Changes to the case management of sickness and invalids’ beneficiaries.

In this Part, we discuss:

Why we carried out our audit

We carried out a performance audit to provide Parliament and the public with assurance that the Ministry of Social Development (the Ministry) – through its service delivery arm, Work and Income – was effectively managing sickness and invalids' beneficiaries.

In 2007/08, the financial year immediately before our audit fieldwork, the Ministry had spent about $1.8 billion on sickness benefits and invalids' benefits. In December 2008, there were 83,501 people receiving an invalid's benefit and 50,896 people receiving a sickness benefit. In line with patterns in other developed countries, those on sickness and invalids' benefits comprised the largest – and growing – group of beneficiaries.

In 2008/09, the Ministry spent about $1.9 billion on these benefits. In June 2009, there were about 54,000 people receiving a sickness benefit because they were temporarily unable to work, and about 84,000 people receiving an invalid's benefit because they were permanently and severely restricted in their ability to work.

What we looked at

Specifically, we looked at how case management changed when the Working New Zealand: Work-Focused Support Programme (the Programme) was extended to include sickness and invalids' beneficiaries from September 2007.1Extending the Programme introduced changes that were designed to better assess eligibility for these types of benefit and to more actively help and encourage beneficiaries into work (where appropriate). The Ministry anticipated that it would take five years for the changes to deliver results. Those expected results included a reduction in the number of sickness and invalids' beneficiaries, and reduced spending on these types of benefit.

Effectively applying eligibility criteria, and timely referrals to accessible and appropriate services, are critical to achieving the Government's goal of moving beneficiaries into work as their circumstances allow. For these reasons, our audit focused on how Work and Income assessed a person's eligibility for a sickness or invalid's benefit, and on the comprehensive case management that the Programme was intended to produce.

Structure of this report

Part 2 of this report explains the Programme in greater detail. Part 3 discusses how Work and Income was gathering and using the information needed to determine whether a person met the eligibility criteria for a sickness benefit or invalid's benefit. Part 4 discusses how well comprehensive case management was helping sickness and invalids' beneficiaries into work, as appropriate, or providing them with ongoing support and services. Part 5 discusses the Ministry's efforts in monitoring and reporting on movements in beneficiary numbers, and in evaluating the progress and effectiveness of the changes that extended the Programme to sickness beneficiaries and invalids' beneficiaries.

Our audit expectations

We expected the Ministry to gather and use the information needed to determine whether a person was eligible for a sickness benefit or invalid's benefit. Making an informed decision requires case managers to consider and interpret various pieces of information about the applicant. The primary source of information is the health practitioner's assessment of the applicant's medical condition and the effect of that condition on the person's ability to work, as recorded in a medical certificate. Other relevant information can also be held in paper-based and electronic records that Work and Income might already hold about the person.

Deciding whether a person is eligible for a sickness benefit or invalid's benefit often requires careful judgement. We looked at how Work and Income's regional health advisors and regional disability advisors were used to support case managers in making these decisions.

We also expected Work and Income to actively identify the needs of individual beneficiaries and either help them into work or support them in the community. This requires a prompt and effective response to indications that the person is ready to plan for their return to work. It also requires periodic and direct contact with the person to identify their needs and plan with them, as their circumstances allow, for their personal development or eventual return to work.

We expected the Ministry to monitor and report on progress in implementing the changes made as part of the Programme, measure the effect on beneficiary numbers, expenditure, and other relevant outcomes, and monitor progress in achieving the savings expected from the Programme. The Ministry estimated annual savings of $49 million by 2010/11, after all the Programme's changes for sickness and invalids' benefits were in place.

How we carried out the audit

We carried out our audit fieldwork from September to December 2008. We spoke to staff in the Ministry's head office and in Work and Income's national office about the case management of sickness and invalids' beneficiaries. These staff represented the service development, policy analysis, planning and performance, finance, and research and evaluation functions of the Ministry and Work and Income.

We visited five of Work and Income's 11 regional offices – in Dunedin, Waikato, Auckland, Nelson, and Northland – and two service centres in each of those regions. In the offices and service centres, we spoke with a range of staff, examined plans, strategies, reports, and other documents, and selected a sample of case files for 320 beneficiaries to examine. We used the sample to assess how Work and Income staff were deciding whether people were eligible for a sickness benefit or invalid's benefit, and to assess case management processes.

Our sample comprised files from two beneficiary groups: people with psychological or psychiatric conditions; and people with musculoskeletal disorders. These are the two major categories of incapacity among sickness and invalids' beneficiaries. The overall increase in beneficiary numbers is largely because of the increasing numbers of beneficiaries with these types of incapacity.

We have referred to numbers of cases in the report to show the extent of what we found in the sample we examined. The numbers sometimes relate to a subgroup of our sample. Where cases relate to a subgroup, we have given the size of that subgroup. We did not intend that the figures be extrapolated to all sickness and invalids' beneficiaries.

We also sent a questionnaire to general practitioners (GPs), the health practitioners who fill out most of the medical certificates that applicants for a sickness benefit or invalid's benefit must provide to Work and Income. The questionnaire asked GPs about this role, the design of the medical certificate, and their communication with Work and Income.

Appendix 1 has more detailed information about our audit methodology – our visits to the offices and service centres, our sampling, and the questions that we asked GPs in our questionnaire.

What we did not audit

We did not audit:

  • whether staff were complying with the Ministry's administrative rules and other requirements for considering applications for a sickness benefit or invalid's benefit;
  • whether beneficiaries were satisfied with the service they received;
  • whether beneficiaries were paid their full and correct entitlements; or
  • the effectiveness of the Programme for individual beneficiaries, in terms of, for example, living conditions or participation in the community.
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