House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Health and Aged Care, the Hon Dr Michael Wooldridge, MP)

Schedule 3 - Amendment of the Private Health Insurance Incentives Act 1998

Schedule 3 amends the PHIIAto allow payment for low or late claims to occur through the HIC. It clarifies how the premium reduction should be calculated and rectifies a number of minor inconsistencies within the PHIIA. Schedule 4 deletes an unnecessary item in Health Legislation Amendment Act (No.3) 1999 .

Part 1 - Low or late claims

Item 1

This item inserts four new sections after section 15-20 to enable the HIC to make additional payments for low or late claims. Under the PHIIA , health funds have seven days after the end of each month to lodge a claim with the HIC for reimbursement for the premium reduction scheme. At present a health fund missing or failing to claim the correct amount by this deadline has no other recourse except to recover payment via an Act of Grace mechanism.

New section 15-21 - Additional payment if fund claims less than entitlement

New section 15-21 enables a fund to apply to the Managing Director of HIC for an additional payment if their original claim for reimbursement was for less than their actual entitlement.

New section 15-22 - Additional payment if fund makes a late claim

New section 15-21 enables a fund to apply to the Managing Director of HIC for an additional payment if their claim for reimbursement was late i.e. after the timeframe specified in PHIAA .

New section 15-23 - Contents and timing of application

This section specifies the content of the application including an auditors certificate to verify the amount being claimed and the reasons for the low or late claim. It also limits the time frame for claims to three years from when the low or late claim occurred.

New section 15-24 - Decision on application

This section details the criteria by which the application is approved and how the funds are to be notified of the Managing Directors decision.

Item 2

This item makes a minor amendment to section 15-20 so that the HIC must notify a health fund of the reasons for a refusal of an application for additional payments.

Item 3

This item makes minor amendments to paragraphs 18-5(1)(c), (d) and (e) to extend the recovery of payments provisions to cover additional payments in section 15-24

Item 4

This amendment extends the Administrative Appeals Tribunal review provisions to cover additional payments.

Item 5

This item allows a health fund to submit an application for an additional payment for a low or late claim that occurred before and after the commencement of these amendments. A fund can utilise the additional payment mechanism for a low or late claim that occurred prior to commencement.

Part 2 - Premium reductions

Item 6

Item 6 amends subsection 11-25(1) by omitting it must, within 28 days after the day on which the refusal occurs and substitutes it must

This amendment will correct an anomaly in the PHIIA, subsection 11-25(1) where a new time frame was inserted unnecessarily during the last set of amendments to the PHIIA.

In sub-section 11-25(2) there is already a 14 day time frame built into the legislation, after which time, if a person had not received notification that their application for registration in the premium reduction scheme was refused, they would be deemed to be registered. The

14 day period is the more advantageous of the two time frames for applicants.

Item 7

This item inserts two new subsections (1A) and (1B) after subsection 12-5(1).

This amends the PHIIA such that the directions of how to calculate reduction in premiums as described in Chapter 3 section 12-5 are consistent with those for incentive payments as described in Chapter 2 section 4-10, in so far as they relate to persons registered or eligible to apply for registration under the previous scheme as contained in the Private Health Insurance Incentive Act 1997.

Items 8 to 10

These amendments will make the calculation of premium reductions consistent with the incentive payments scheme.

Item 11

This item inserts a transitional provision to ensure funds are not disadvantaged due to the retrospective nature of this part.

Part 3 - Technical amendment

Item 12

Item 12 amends subsection 15-15(2) by omitting The HIC must pay to the health fund and substituting if a health fund makes a claim that the HIC decides is correct, the HIC must pay to the fund.

This is a technical amendment which was previously misdescribed . It is taken to have commenced on 1 January 1999 (ie when Schedule 3 of No. 159 of 1999 was taken to have commenced).