Explanatory Statement
Issued by the authority of the Minister for Health and Ageing
Medical Indemnity Act 2002
Premium Support Amendment Scheme 2005 (No. 1)
Background
The Premium Support Amendment Scheme 2005 (No. 1) amends the Premium Support Scheme 2004 (Premium Support Scheme) formulated by the Minister for Health and Ageing under subsection 43(1) of the Medical Indemnity Act 2002.
The objective of the Premium Support Scheme is to help ensure the continued availability of medical services in Australia by providing Australian Government assistance to medical practitioners, via their insurers, with the cost of obtaining appropriate medical indemnity cover.
The Premium Support Scheme provides for the making of subsidy payments to contracted medical indemnity insurers by the Government on behalf of medical practitioners, where these organisations agree to administer the Premium Support Scheme on behalf of the Australian Government. Currently, there are five medical indemnity insurers that are contracted to the Government to operate the Scheme.
Objective of the amendments
Some doctors are liable under the medical indemnity legislative framework to pay a UMP support payment (UMPSP). The Medical Indemnity Act specifies the date on which the UMPSP must be made.
The Medical Indemnity Act 2002 also provides the option for the doctor to pay the UMPSP directly to the HIC or through the doctor's medical indemnity insurer. However, if a doctor chooses to pay the UMPSP directly to the HIC, the value of the UMPSP cannot be included in the calculation of the doctor’s gross indemnity costs for the purposes of the Premium Support Scheme. For a doctor to be able to include the value of the UMPSP in the calculation of gross indemnity costs the UMPSP must be paid via the insurer and it must not be paid later than 1 May 2005.
Under the existing Premium Support Scheme, doctors who have a liability to pay a UMPSP are not eligible for a subsidy unless they make the payment within two months after the specified date or, if the payment is deferred under the Medical Indemnity Act, by that later date.
The amendments will:
allow an extension of time to be given where a doctor has not paid the UMPSP by the due date under the Premium Support Scheme because of circumstances beyond the doctor's control;
remove the 1 May 2005 deadline for an election.
The level of compliance by doctors in paying the UMPSP via their medical indemnity insurer to date is well above 90 percent. For doctors who have not nominated that they intend to pay the UMPSP via their insurer (ie. they intend to pay it directly to the HIC or they have not advised of their preference for payment), the compliance rate is also around 90 percent. The issue clearly, is those who have not indicated their payment preference. While these compliance levels are high, the fact that some doctors have not indicated their preference may reflect the fact that HIC have been unable to contact them. These doctors should not be disadvantaged by circumstances outside their control.
Consultation
Medical indemnity insurers and representatives of the Australian Medical Association have been consulted in the drafting of the Premium Support Amendment Scheme 2005 (No. 1). In addition, the HIC has been consulted on administrative matters.
Notes on sections and amendments
Section 1
Section 1 specifies the name of the Scheme.
Section 2
Subsection 2(1) provides that the Scheme commences on the date that it is registered, subject to subsection 2(2).
Subsection 2(2) provides that if the Scheme is registered after 30 April 2005, item 5 takes effect on 30 April 2005.
Item 5's taking effect before the date on which the Scheme is registered will not result in:
the rights of any person (other than the Commonwealth or the HIC) being affected so as to disadvantage that person; or
liabilities being imposed on a person (other than the Commonwealth or the HIC) in respect of anything done or omitted to be done before the date of registration.
This is because the amendment of section 24(2) (by item 5) removes the requirement that, for doctors to be able to include the amount of their UMPSP in their subsidy after 1 May 2005, they must inform the HIC by 1 May 2005 that they elect for their insurer to collect their UMPSP. This removes a possible disadvantage to doctors who have not made the election by 1 May 2005 and in particular those doctors who may not be aware that they have a UMPSP liability (see the amendments by items 3 and 4).
Section 3
Section 3 provides that the Schedule amends the Premium Support Scheme 2004.
The Schedule - Amendments
Item 1
This item amends subsection 11(4) to change the reference to paragraph '13(c)' to '13(1)(c)' to take account of the amendment to section 13 by item 2.
Item 2
This item inserts '(1)' at the beginning of section 13 to take account that new subsections 13(2) and 13(3) are to be added to the section.
Item 3
This item deletes the requirement for the UMPSP to be paid two months after the payment day specified in the Medical Indemnity Act 2002 and refers to the date specified in the new subsection 13(2).
Item 4
This item inserts new subsections 13(2) and 13(3).
New subsection 13(2) makes the date specified for payment of the UMPSP two months after the payment date (which is the existing requirement) or a later date approved by the HIC, but the HIC can approve a later date only if satisfied that the late payment was due to circumstances beyond the doctor's control. The later date must not be later than 12 months after the relevant premium period.
New subsection 13(3) provides that the HIC may require the doctor to provide a statutory declaration setting out the reasons why the payment was not made by the date specified in paragraph 13(2)(a). The HIC may be unable to be satisfied that the late payment was genuinely beyond the doctor's control if the doctor does not provide the statutory declaration.
The requirement for doctors to pay their UMPSP by a certain date and the interaction of these dates with the PSS have the potential to unfairly disadvantage a small number of doctors in particular circumstances. Under the PSS, a medical practitioner's UMPSP must be paid on or by a specified date (see paragraph 13(c)) unless payment is deferred under the Medical Indemnity Act 2002 (see paragraph 13(d)).
Under the existing Premium Support Scheme, if the payment is not made on or by the specified date, the medical practitioner will not be able to access any of the subsidy otherwise provided for under the PSS for the relevant premium period or any period thereafter until the UMPSP is paid (subsection 11(4)).
The HIC has been unable to contact some doctors at their last-known address to provide them with an invoice detailing their liability for the UMPSP. To remove any disadvantage to these doctors where the reason for the late payment is genuinely beyond the doctor's control, amendment to the PSS is required to allow extension of the time for payment in limited circumstances if the HIC is satisfied the delay was beyond the doctor's control.
An example would be where doctors never received an invoice for their UMPSP from either the HIC or their medical indemnity insurer due to the HIC's not having the doctor’s correct mailing address. In such a circumstance, the HIC usually would have a record of the invoice being returned and could therefore verify non-receipt of the UMPSP invoice.
The extended date under the Premium Support Scheme for the payment of the UMPSP is for the administration of that Scheme only. The Medical Indemnity Act 2002 provides for penalties where a doctor has not paid his or her UMPSP liability by the specified date under that Act. The requirement under the Premium Support Scheme for subsidy not to be paid unless the UMPSP is paid by the date specified by or under the Scheme does not have any effect on the requirement under the Medical Indemnity Act 2002 to make the payment by the date specified under that Act.
Item 5
Item 5 deletes subsection 24(2).
At present, the determination of the amount of subsidy under the general PSS Calculation can take account of the amount of UMPSP paid by the doctor (if any) (see section 14 and paragraph 24(1)(c)). However, this will not be the case after 1 May 2005 unless the doctor has elected before 1 May 2005 to have his or her medical indemnity insurer collect the UMPSP payment.
Where the doctor has not made the election by 1 May 2005, the doctor will never be able to include the amount of the UMPSP in the determination of the amount of his or her subsidy for the PSS Calculation.
Under current arrangements, the large majority of doctors now pay their UMPSP directly to their insurer (which then remits the amount to the HIC).
However, there are some doctors who are not aware that they have a UMPSP liability (see item 4 above).
The deletion of the requirement in subsection 24(2) removes any disadvantage to these doctors. If they become aware of their UMPSP liability and obtain an extension of time under the new subsection 13(2)(b) in which to pay their UMPSP, they will be able to claim the UMPSP in the determination of their subsidy for the relevant premium period.
The amendment also takes account of administrative arrangements where the HIC needs to invoice the doctor directly for the UMPSP, including, for example, where a doctor changes insurer.
Items 6, 7 and 8
Items 6, 7 and 8 amend section 47 to give doctors a right of internal review of a decision of the HIC not to approve a later date under the new section 13(2)(b) and, if still aggrieved, a right of review by the Administrative Appeals Tribunal of the internal review decision.