Explanatory Statement
Issued by the Authority of the Minister for Health
Medical Indemnity Act 2002
Premium Support Scheme Amendment 2012
Background
The Premium Support Scheme Amendment 2012 amends the Premium Support Scheme 2004 (the Principal Instrument) made by the Minister for Health and Ageing under subsection 43(1) of the Medical Indemnity Act 2002 and which formulates the Premium Support Scheme.
Through the Premium Support Scheme, the Government provides subsidies to assist eligible medical practitioners whose medical indemnity premiums are relatively high in proportion to their income because of high levels of clinical and actuarial risk. The subsidies available through the Premium Support Scheme reduce the need for practitioners in these high risk specialties to pass on the cost of their higher premiums to their patients.
Objective of the amendments
The objective of the Premium Support Scheme Amendment 2012 is to enable a phased reduction of the Premium Support Scheme subsidy rate for eligible medical practitioners over a two year period.
Consultation
Medical indemnity insurers, the Department of Human Services (Medicare) and representatives of the Australian Medical Association have been consulted in the process of drafting the Premium Support Scheme Amendment 2012.
This instrument commences 1 July 2012.
This instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Notes on sections and amendments
Section 1 - Name of instrument
Section 1 specifies the name of the instrument to be the Premium Support Scheme Amendment 2012.
Section 2 - Commencement
Section 2 provides that the instrument will commence on 1 July 2012.
Section 3 - Amendment of the Premium Support Scheme 2004
Section 3 provides that the Schedule amends the Premium Support Scheme 2004.
Schedule – Amendments
Item 1
This item deletes subsection 14(1) of the Principal Instrument and replaces it with a new subsection 14 (1). Subsection 14(1) currently provides for a subsidy rate of 80% in respect of all eligible members referred to in paragraph 12(1)(a) of the Principal Instrument. New paragraphs 14(1)(a) to (c) allow for different subsidy rates to be used in the Premium Support Scheme calculation for eligible members referred to in paragraph 12 (1) (a), depending on when a member’s contract of insurance starts. The new subsidy rates are:
- for contracts commencing before 1 July 2012 – 80%;
- for contracts commencing between 1 July 2012 and 30 June 2013 (inclusive) – 70%; and
- for contracts commencing on or after 1 July 2013 – 60%.
An eligible member for paragraph 12(1)(a) of the Principal Instrument is a member whose gross medical indemnity insurance costs for a premium period are greater than 7.5% of the member’s actual income or, where the calculation of costs is for an advanced subsidy, 7.5% of the member’s estimated income.
Item 2
This item deletes subsection 14(3) of the Principal Instrument and replaces it with a new subsection 14 (3). Subsection 14(3) currently provides for a subsidy rate of 80% in respect of members referred to in paragraph 12(5) of the Principal Instrument. New paragraphs 14(3)(a) to (c) allow for different subsidy rates to be used in the Premium Support Scheme calculation for eligible members referred to in paragraph 12(5), depending on when a member’s contract of insurance starts. The new subsidy rates are the same as those mentioned in item 1.
An eligible member for subsection 12(5) of the Principal Instrument is a member who does not provide any privately billed medical services during a premium period, but whose medical indemnity insurance provides one or both of run-off cover or retroactive cover for incidents that occur in the course of, or in connection with, the member’s private medical practice when the member was deriving income from private practice.
Item 3
This item amends subsection 47(2) and paragraph 47(3)(a) of the Principal Instrument by omitting ‘an employee authorised by the Medicare Australia CEO’ and inserting ‘a Departmental employee (within the meaning of the Human Services (Medicare) Act 1973) authorised by the Chief Executive Medicare’. These are consequential amendments to reflect the integration of Medicare Australia into the Department of Human Services on 1 July 2011.
A ‘Departmental employee’ within the meaning of the Human Services (Medicare) Act 1973 is an APS employee in the Department of Human Services.
Item 4
This item amends subsection 47(4) of the Principal Instrument by omitting ‘An employee of Medicare Australia’ and inserting ‘A Departmental employee (within the meaning of the Human Services (Medicare) Act 1973)’.
Item 5
This item amends remaining provisions in the Principal Instrument that refer to the Medicare Australia CEO, omitting ‘Medicare Australia CEO’ and inserting ‘Chief Executive Medicare’. As part of the integration of Medicare Australia into the Department of Human Services, the position of Medicare Australia CEO was abolished and replaced with the Chief Executive Medicare.