MEDICAL INDEMNITY LEGISLATION AMENDMENT (COMPETITIVE NEUTRALITY) BILL 2005

2004-2005

The Parliament of the

Commonwealth of Australia

HOUSE OF REPRESENTATIVES

Presented and read a first time

Medical Indemnity Legislation

Amendment (Competitive Neutrality)

Bill 2005

No. , 2005

(Health and Ageing)

A Bill for an Act to amend the Medical Indemnity

Act 2002 and the Medical Indemnity (UMP Support

Payment) Act 2002, and for related purposes

i Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 No. ,

2005

Contents

Short title.......................................................................................1

Commencement .............................................................................1

Schedule(s)....................................................................................2

Schedule 1--Competitive advantage payment

Health Insurance Act 1973

Health Insurance Commission Act 1973

Medical Indemnity Act 2002

National Health Act 1953

Schedule 2--UMP support payment

Medical Indemnity Act 2002

Medical Indemnity (UMP Support Payment) Act 2002

Schedule 3--Technical correction

Medical Indemnity Act 2002

Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 No. , 2005

A Bill for an Act to amend the Medical Indemnity

Act 2002 and the Medical Indemnity (UMP Support

Payment) Act 2002, and for related purposes

The Parliament of Australia enacts:

1 Short title

This Act may be cited as the Medical Indemnity Legislation

Amendment (Competitive Neutrality) Act 2005.

2 Commencement

(1) Each provision of this Act specified in column 1 of the table

commences, or is taken to have commenced, in accordance with

column 2 of the table. Any other statement in column 2 has effect

according to its terms.

2 Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 No.

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Commencement information

Column 1

Column 2

Column 3

Provision(s)

Commencement

Date/Details

1. Sections 1 to 3

and anything in

this Act not

elsewhere covered

by this table

The day on which this Act receives the

Royal Assent.

2. Schedules 1

and 2

1 July 2005.

1 July 2005

3. Schedule 3

Immediately after the commencement of

Schedule 2 to the Medical Indemnity

Legislation Amendment (Run-off Cover

Indemnity and Other Measures) Act 2004.

1 July 2004

Note:

This table relates only to the provisions of this Act as originally

passed by the Parliament and assented to. It will not be expanded to

deal with provisions inserted in this Act after assent.

(2) Column 3 of the table contains additional information that is not

part of this Act. Information in this column may be added to or

edited in any published version of this Act.

3 Schedule(s)

Each Act that is specified in a Schedule to this Act is amended or

repealed as set out in the applicable items in the Schedule

concerned, and any other item in a Schedule to this Act has effect

according to its terms.

Competitive advantage payment Schedule 1

Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 No. , 2005

Schedule 1--Competitive advantage payment

Health Insurance Act 1973

1 Subsection 130(25) (after paragraph (a) of the definition of

medical indemnity legislation)

Insert:

(aa) the Medical Indemnity (Competitive Advantage Payment) Act

2005; and

Health Insurance Commission Act 1973

2 After paragraph 42(2)(a)

Insert:

(aa) the Medical Indemnity (Competitive Advantage Payment) Act

2005;

Medical Indemnity Act 2002

3 At the end of subsection 3(4)

Add:

; and (c) to require a payment from medical indemnity insurers to

ensure that the assistance referred to in paragraph (2)(c) does

not give a competitive advantage to the organisations that

receive that assistance.

4 Subsection 4(1) (at the end of the definition of contribution

year)

Add:

; and (c) for a competitive advantage payment--has the same meaning

as in the Medical Indemnity (Competitive Advantage

Payment) Act 2005.

5 Subsection 4(1) (at the end of the definition of medical

indemnity payment)

Add:

Schedule 1 Competitive advantage payment

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; or (c) a competitive advantage payment payable under Division 2A

of Part 3.

6 Subsection 4(1) (at the end of the definition of medical

indemnity payment legislation)

Add:

; or (c) the Medical Indemnity (Competitive Advantage Payment) Act

2005.

7 Subsection 4(1)

Insert:

net IBNR exposure has the meaning given by section 8A.

8 After section 8

Insert:

8A Net IBNR exposure of an MDO

An MDO's net IBNR exposure at a particular time is the MDO's

IBNR exposure at that time, reduced by any amounts of high cost

claim indemnities and run-off cover indemnities that are likely to

be payable in respect of the incidents that satisfy subsection 8(2)

and that relate to the MDO's IBNR exposure at that time.

9 Paragraph 40(1)(d)

After "IBNR exposure", insert ", or its net IBNR exposure,".

10 After Division 2 of Part 3

Insert:

Division 2A--Competitive advantage payment

Subdivision A--Introduction

59A Guide to the competitive advantage payment provisions

(1) The Medical Indemnity (Competitive Advantage Payment) Act

2005 (the Payment Act):

Competitive advantage payment Schedule 1

Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 No. , 2005

(a) imposes payments on medical indemnity insurers for

contribution years; and

(b) specifies the amount of those payments (by reference to the

net IBNR exposure of the insurer's participating MDO for

the contribution year).

This Division contains further provisions relating to the payment.

(2) The following table tells you where to find the provisions dealing

with various issues:

Where to find the provisions on various issues

Item

Issue

Provisions

which years are contribution years?

section 5 of the

Payment Act

who must pay the competitive

advantage payment?

section 59B of this Act

who is exempt from the competitive

advantage payment?

section 59C of this Act

what is the amount of the competitive

advantage payment?

section 6 of the

Payment Act

what is the time for paying the

competitive advantage payment?

section 61 of this Act

when is late payment penalty

payable?

section 65 of this Act

what method should be used to pay

the competitive advantage payment?

section 66 of this Act

what happens if an amount of

competitive advantage payment is

overpaid?

section 67 of this Act

how are competitive advantage

payments and late payment penalties

recovered?

sections 68 to 70 of this

Act

what information has to be provided

to the HIC about competitive

advantage payment matters?

sections 71 and 72 of

this Act

Schedule 1 Competitive advantage payment

6 Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 No.

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Subdivision B--Who pays competitive advantage payment

59B Who is liable to pay the competitive advantage payment

A person is liable to pay a competitive advantage payment for a

financial year if:

(a) the person is a medical indemnity insurer; and

(b) the financial year is a contribution year; and

section 59C.

59C Exemptions

(1) The regulations may provide that a person is exempt from

competitive advantage payment in the circumstances specified in

the regulations.

(2) Regulations made for the purposes of subsection (1) may provide

that a person is exempt from competitive advantage payment either

generally or for a particular contribution year.

Subdivision C--Annual reassessment of participating MDO's

net IBNR exposure

59D Object of this Subdivision

The object of this Subdivision is to allow annual reassessment and

publication of a participating MDO's net IBNR exposure so that

the competitive advantage payment reflects the competitive

advantage that the participating MDO and any associated insurer

enjoy.

59E Process for annually reassessing net IBNR exposure

Report by the Actuary

(1) For each contribution year for a participating MDO, the Actuary

must give the Minister a written report that:

(a) states the Actuary's assessment of the MDO's net IBNR

exposure as at the end of the financial year that ends

immediately before the start of that contribution year; and

Competitive advantage payment Schedule 1

Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 No. , 2005

(b) sets out the reasons for the assessment.

(2) In preparing the report, the Actuary must take into account any

information that the HIC gives the Actuary in relation to the MDO

under subsection (6).

HIC's information gathering powers

(3) If the HIC believes on reasonable grounds that a participating

MDO is capable of giving information that is relevant to assessing

the MDO's net IBNR exposure as at the end of a financial year that

ends immediately before the start of a contribution year for the

MDO, the HIC may request the MDO to give the HIC the

information.

Note:

Failure to comply with the request is an offence (see section 73).

(4) Without limiting subsection (3), the kind of information that may

be requested includes information in the form of:

(a) financial statements; and

(b) a report prepared by a suitably qualified actuary assessing the

MDO's net IBNR exposure as at the end of a financial year

that ends immediately before the start of a contribution year

for the MDO.

(5) The request:

(a) must be made in writing; and

(b) must state what information the MDO is to give to the HIC;

and

declaration; and

(d) must specify the day on or before which the information must

be given; and

(e) must contain a statement to the effect that a failure to comply

with the request is an offence.

The day specified under paragraph (d) must be at least 28 days

after the day on which the request is made.

(6) The HIC must give any information that the MDO gives the HIC to

the Actuary for the purposes of preparing the report for the

Minister under subsection (1).

Schedule 1 Competitive advantage payment

8 Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 No.

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Publishing net IBNR exposure

(7) The Minister must cause to be published in the Gazette a notice of

the amount of any net IBNR exposure of an MDO stated in a report

to the Minister under subsection (1).

(8) A notice made under subsection (7) is not a legislative instrument.

11 Subsection 60(1)

Omit "and run-off cover support payments", substitute ", run-off cover

support payments and competitive advantage payments".

12 Section 61 (at the end of the table)

Add:

competitive advantage

payment

(a) 30 April in the contribution year; or

(b) such other day as is specified in the

regulations as the payment day for the

contribution year either generally for all

people, for the class of people that

includes the person or for the person, as

the case may be.

13 After paragraph 73(1)(a)

Insert:

(aa) subsection 59E(3); or

National Health Act 1953

14 Subsection 135A(24) (after paragraph (a) of the definition

of medical indemnity legislation)

Insert:

(aa) the Medical Indemnity (Competitive Advantage Payment) Act

2005; and

UMP support payment Schedule 2

Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 No. , 2005

Schedule 2--UMP support payment

Medical Indemnity Act 2002

1 Paragraph 52(2)(ca)

Omit "income period was less than $5,000; or", substitute:

income period was:

(i) if the contribution year started on 1 July 2003 or 1 July

2004--less than $5,000; or

(ii) otherwise--less than or equal to $50,000; or

2 Paragraph 52(2)(cb)

Omit "income period was less than $5,000; or", substitute:

income period was:

(i) if the contribution year started on 1 July 2003 or 1 July

2004--less than $5,000; or

(ii) otherwise--less than or equal to $50,000; or

3 After paragraph 52(2)(cb)

Insert:

(cc) the contribution year started on or after 1 July 2005 and the

applicable percentage of the annual subscription for the base

year of a participating member of a participating MDO is less

than or equal to $1,000; or

4 Paragraph 52(2)(db)

Omit "6", substitute "4".

5 After subsection 52(3A)

Insert:

(3AA) For the purposes of paragraph (2)(cc):

(a) annual subscription and base year have the same meanings

as in section 54 of this Act; and

(b) applicable percentage has the same meaning as in section 6

of the Medical Indemnity (UMP Support Payment) Act 2002.

Schedule 2 UMP support payment

10 Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 No.

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Medical Indemnity (UMP Support Payment) Act 2002

6 Paragraph 6(1)(a)

Omit "$5,000", substitute "$4,000".

7 Paragraph 6(1)(b)

Repeal the paragraph, substitute:

(b) the amount by which the applicable percentage of the

member's annual subscription for the base year exceeds

$1,000; and

8 Paragraph 6(1)(c)

Omit "the member's gross Medicare billable income for the income

period for that contribution year", substitute "the amount by which the

member's gross Medicare billable income for the income period for that

contribution year exceeds $50,000".

9 Paragraph 6(1)(d)

Omit "the member's gross medical income for the income period for

that contribution year", substitute "the amount by which the member's

gross medical income for the income period for that contribution year

exceeds $50,000".

Commonwealth of Australia Bills

MEDICAL INDEMNITY LEGISLATION AMENDMENT (COMPETITIVE NEUTRALITY) BILL 2005