EXPLANATORY STATEMENT

Issued by the authority of the Minister for Health and Ageing

Medical Indemnity Act 2002

Determination under section 27A

MEDICAL INDEMNITY (IBNR CLAIMS) PROTOCOL 2006

The Medical Indemnity (IBNR Claims) Protocol 2006 is made by the Minister for Health and Ageing under section 27A of the Medical Indemnity Act 2002.

The IBNR indemnity scheme was established on 1 January 2003.  Under the scheme, the Medicare Australia CEO reimburses participating MDOs for costs they incur in relation to 'incurred but not reported claims'. 

The purpose of the Medical Indemnity (IBNR Claims) Protocol 2006 (the Protocol) is to allow the Medicare Australia CEO to make payments of claim handling fees to MDOs 

The Protocol establishes eligibility criteria for the payments and sets out the process and timing of payments.  The Protocol also contains a provision dealing with the recovery of overpayments. 

In developing this Protocol, the Department of Health and Ageing has consulted extensively with the United Medical Protection Ltd, the Australian Government Actuary and Medicare Australia.  The Office of Regulatory Review has advised that a Regulatory Impact Statement is not required (RIS 8764).

Section 1 - Name of Protocol

This section provides that the title of the Protocol is the Medical Indemnity (IBNR Claims) Protocol 2006.

Section 2 - Commencement

This section provides that the Protocol would commence on the day after it is registered.

Section 3 - Definitions

This section establishes the definitions of words and expressions that are used within the Protocol.  Where a word or expression is common to the Protocol and the Medical Indemnity Act, it has the same definition as given in that Act.

Section 4 -Claim handling fees

Section 4 notes that where a MDO is managing an IBNR claim it may apply to the Medicare Australia CEO for a claim handling fee in respect of that claim. 

Section 5 - When a claim handling fee is payable.

Section 5 sets out the eligibility criteria under which a claim handling fee is payable to a MDO.  The criteria include a requirement that there must first be an IBNR indemnity that is payable by the Medicare Australia CEO.

There may be more than one claim handling fee in respect of an IBNR claim as the claim may take some time to resolve and the MDO handling the claim may incur costs during that time.  When a MDO incurs costs it may seek an IBNR indemnity in respect of those costs and, under the Protocol, also apply for a claims handling fee.

Section 6 – Amount of claim handling fee payable

The claim handling fee is calculated as a percentage of the costs incurred by a MDO in handling the IBNR claim.

The claim handling fee is calculated at 5% of the amount payable as an IBNR indemnity by the Medicare Australia CEO in response to an application by a MDO.

Where the amount of an IBNR indemnity has been reduced by the amount of high cost claim indemnity as required under subsection 21(3) of the Medical Indemnity Act, that amount is added back in for the purposes of calculating the amount of claims handling fee payable to the MDO.

The IBNR indemnity costs incurred by an MDO include any legal, administrative or other payments directly attributable to the claim by or against the person.

Section 7 – application for payment

It is a condition of eligibility under section 5 that any application for payment of the Protocol must be made in accordance with section 7.  Section 7 requires that an application for payment must be made in writing to the Medicare Australia CEO in the approved form and accompanied by the required supporting documentation.

Section 8 - Payment date

This section requires that the Medicare Australia CEO must make a payment under the Protocol before the end of the month immediately following the month in which the MDO applied for the payment. 

In the case that the application by the MDO for payment has not complied with the requirements of the application form, or the Medicare Australia CEO has requested further information under section 27B of the Medical Indemnity Act in relation to the application, then the payment is required to be made before the end of the month immediately following the month in which the MDO has complied with the requirements of the application form, or has provided the information requested.

Section 9 - Recovery of Overpayments

This section mirrors section 41 of the Medical Indemnity Act which deals with recovery of overpayments of indemnity scheme payments.

Section 9 provides that where an overpayment is made by the Medicare Australia CEO under the Protocol that the amount overpaid is a debt due to the Commonwealth and may be recovered via court action or the deduction, or offset, from future amounts payable to the MDO under the Protocol.