Premium Support Scheme Amendment 2012

Administered by Department of Health, Disability and Ageing

Legislation au F2012L01366 Not in force Legislative Instrument

Legislation content

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.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Overview

The Premium Support Scheme Amendment 2012 amends the Premium Support Scheme 2004, formulated under the Medical Indemnity Act 2002, to implement a phased reduction in the subsidy rate for eligible medical practitioners over a two-year period. The scheme, introduced to address the financial burden faced by medical practitioners in high-risk specialties due to their relatively high medical indemnity premiums, aims to alleviate the need for these practitioners to transfer the cost of their premiums to their patients. The objective of the amendments is to adjust the subsidy rates progressively to ensure the sustainability of the scheme. Consultation for the drafting of these amendments was undertaken with relevant parties, including medical indemnity insurers, the Department of Human Services, and representatives of the Australian Medical Association. The amendments reflect the integration of Medicare Australia into the Department of Human Services, replacing references to the former with the latter to align with the legislative changes. The instrument will commence on 1 July 2012, and it is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Scope and Application

The Premium Support Scheme Amendment 2012 applies to eligible medical practitioners who participate in the Premium Support Scheme under the Medical Indemnity Act 2002. This Act specifically targets medical practitioners whose medical indemnity premiums are relatively high in proportion to their income due to high levels of clinical and actuarial risk. The amendment regulates the subsidies provided to these practitioners to ensure that the costs of their higher premiums do not have to be passed on to their patients. The amendment applies nationally across Australia, administered by the Commonwealth government through the Department of Health. The amendment modifies the subsidy rates in a phased manner over two years, providing different subsidy rates based on the commencement date of the practitioner’s contract of insurance. It also includes technical amendments to reflect the integration of Medicare Australia into the Department of Human Services, such as changing references to the Medicare Australia CEO to the Chief Executive Medicare. The changes do not exclude any categories of practitioners or alter the eligibility criteria for the scheme, maintaining the focus on those with high-risk profiles.

Key Provisions

The Premium Support Scheme Amendment 2012 introduces changes to the Premium Support Scheme 2004 by amending various subsections to adjust the subsidy rates for eligible medical practitioners and to reflect the integration of Medicare Australia into the Department of Human Services (section 3). The key amendments include adjustments to the subsidy rates based on the commencement date of the insurance contract. Specifically, for contracts starting before 1 July 2012, the subsidy rate remains at 80%; for contracts starting between 1 July 2012 and 30 June 2013, the rate is reduced to 70%; and for contracts starting on or after 1 July 2013, the rate is further reduced to 60% (Schedule, Item 1 and Item 2). These changes are designed to phase out the subsidy rates over a two-year period, starting from 1 July 2012. The Amendment imposes obligations on medical indemnity insurers and eligible medical practitioners to ensure compliance with the new subsidy rates based on the commencement date of their insurance contracts. Medical indemnity insurers must apply the correct subsidy rate as per the new provisions when calculating premiums for their clients. Eligible medical practitioners, in turn, need to ensure that their contracts of insurance are appropriately aligned with the new subsidy rates. Additionally, the Amendment requires the substitution of references to "Medicare Australia CEO" and "employee of Medicare Australia" with "Chief Executive Medicare" and "Departmental employee" respectively, to reflect the structural changes within the Department of Human Services (Schedule, Item 3, Item 4 and Item 5). Failure to comply with the new provisions of the Amendment may lead to incorrect subsidy rates being applied, which could result in financial discrepancies or disputes between medical indemnity insurers and practitioners. While the Amendment does not explicitly state penalties for non-compliance, breaches of such provisions could potentially lead to civil consequences, including financial penalties or legal actions for any resultant financial losses. It is crucial for all parties involved to adhere to the new requirements to avoid any adverse outcomes.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.