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1998-1999-2000-2001
THE PARLIAMENT OF
THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
EXPLANATORY
MEMORANDUM
(Circulated
by authority of the Minister for Health and Aged Care,
the Hon. Dr Michael
Wooldridge, MP)
HEALTH AND OTHER SERVICES (COMPENSATION) LEGISLATION
AMENDMENT BILL 2001
This bill contains amendments relating to two areas in the Health
portfolio, and changed administrative law arrangements.
Schedule 1
contains amendments to the Health and Other Services (Compensation) Act
1995 (the HOSC Act) to streamline the current administrative arrangements
underpinning the Act.
Schedule 2 contains amendments to the Health
and Other Services (Compensation) Care Charges Act 1995 (the Charges
Act). The amendments are consequential amendments from the changes to
the Health and Other Services (Compensation) Act 1995.
Schedule 3
contains amendments to reflect the proposed change from the
“Administrative Appeals Tribunal” to the newly structured
“Administrative Review Tribunal”.
Under the HOSC Act and
the Charges Act the Commonwealth is able to recover an amount equivalent to the
medicare and nursing home/residential care benefits that have been provided in
relation to a compensable injury or disease prior to the judgment or settlement
of a claim.
The administrative program underlying these Acts is the
Compensation Recoveries Program (the Program) managed by the Health Insurance
Commission (the HIC).
The purpose of the bill is to reduce the current
administrative burdens of the Program on both the HIC and other affected
parties, including insurers and claimants. The proposed amendments will
continue to ensure that the Commonwealth can identify and recover the individual
debt owed to it by successful claimants.
The principle amendments are to
the HOSC Act. The bill also makes consequential amendments to the Charges Act
as well as amendments consequential upon the passage of the Administrative
Review Tribunal Act 2001.
The amendments are largely technical and
procedural in nature. They streamline both the process for notifying
compensation claims and the processes for determining the amount payable to the
Commonwealth to allow a clearer and more manageable path from claim to
resolution of incurred Commonwealth debt. The main amendments
will:
• Exclude from the scope of the Act judgments and settlements
that are less than $5,000. This will reduce the number of settlements and
judgments that are required to be notified to the
Commonwealth;
• Enable regulations to be made to exclude from the
scope of the Act certain types of compensation which do not involve the payment
of Commonwealth subsidies;
• Remove the requirement to notify
claims to the HIC prior to judgment or settlement;
• Provide
simplified processes for judgments and settlements that exceed $5,000 but where
no medical, nursing home or residential care services are
involved;
• Simplify the processes for calculating the debt owed to
the Commonwealth. The processes will differ, depending upon whether the debt is
to be calculated before or after judgment or settlement;
• Allow
claimants, in certain circumstances, to seek a review of decisions by the HIC to
‘deem’ liability;
• Enable the Minister, by
disallowable instrument, to vary the percentage amount of the judgment or
settlement which may be paid to the HIC under the advanced payment arrangements
contained in Division 2A;
• Sunset the advanced payment
arrangements contained in Division 2A.
FINANCIAL IMPACT STATEMENT
The Bill will have no significant financial impact. There will be a
reduction in the administrative costs for relevant businesses, such as insurers
and legal firms. The projected savings to the Commonwealth are:
|
2001-2002
$m |
2002-2003
$m |
2003-2004
$m |
2004-2005
$m |
|
-5.3
|
-6.5
|
-6.7
|
-6.8
|
INTRODUCTION
The Health and Others Services
(Compensation) Act (HOSCA) 1995 (the Act), was introduced to address the problem
of double dipping and cost shifting. Double dipping occurs when a person
receives a compensation payment to cover medical, nursing home or residential
care costs and does not reimburse the Commonwealth for related health and other
care benefits provided through Commonwealth programs. In effect the person
receives double compensation for medical care − the first from the
compensation provider − the second from services provided under
Commonwealth programs. Cost shifting occurs when a compensation payer pays no,
or only a limited amount to the injured persons or the Commonwealth for past
costs paid by Medicare, nursing home, or the residential care subsidy
programs.
Under HOSCA, insurers and compensation payers must notify the
Health Insurance Commission (HIC) of all personal injury claims lodged against
them, unless they accept liability within six months. In this case they would
enter into a reimbursement arrangement where they pay all medical and other
costs as they are incurred. Medicare payments for services are recovered for
compensation claims made under common law, public liability, worker’s
compensation or third party (motor vehicle accident) compensation.
To
process recoveries, in compliance with the Act, the HIC administers the
Compensation Recoveries Program. The program is complex and labour intensive
and broadly follows a multi-stage process. The insurer notifies the HIC of a
claim. The HIC sends the claimant a Notice of Benefits, which requires that
they declare the medical services that relate to the claim. Included in this is
the advice that the Commonwealth intends to recover any benefits paid in
relation to those services. When the claimant returns the notice declaring
those services relating to the injury, the HIC provides further notification of
the amount of benefit paid by the Commonwealth. Following this a compensation
payer must notify the HIC when the settlement is made. The HIC then confirms
the amount receivable by the Commonwealth which must be paid within twenty eight
days.
Both the Government and Opposition agreed to a review of HOSCA
after twelve months operation. In 1999, the Department of Health and Aged Care
commissioned a review of the legislation. The Review included five principal
terms of reference:
• consult with
representatives of organisations affected by the operation of HOSCA and the
Compensation Recoveries Program;
• report on the
extent to which the program was meeting its policy objectives of removing
cost-shifting and double dipping;
• review the
operation of HOSCA and its administration in terms of effectiveness, efficiency
and regulatory impacts;
• review the level of
recoveries under HOSCA and ways for improving recoveries;
and
• develop options for change which could
allow HOSCA and the Compensation Recoveries Program to achieve their objectives
more effectively and efficiently.
The Review found that while the Act and
the Compensation Recoveries Program achieved overall objectives in that they
recovered money that was previously lost to double dipping and cost shifting,
the processes were a burden and costly to all
stakeholders.
PROBLEMS
Prior to the introduction of HOSCA,
there was some legislation to prevent double dipping and cost shifting from
Commonwealth programs. The Health Insurance Act (HIA), the Nursing Homes Act
and the National Health Act (NHA) precluded people with compensable injuries
from Medicare benefits and nursing home benefits.
However, a 1995 review
of these provisions concluded that they were not effective in dealing with these
problems. Among the problems were the lack of provisions requiring disclosure
of information about settlement details and the reliance on self-identification
of the current and compensation recipients. Furthermore, recovery of benefits
could only occur if a settlement stipulated an amount to provide for services
that would otherwise have been subsidised by the Commonwealth under a specified
Act. Generally, at their most specific, settlements would identify a component
for future care needs, rather than a component for benefits or services under
the HIA and/or the NHA.
HOSCA was introduced in February 1996 to improve
the Commonwealth’s ability to deal with these issues. The Act has
problems in several areas: the costs and burdens associated with administration
for both the HIC and stakeholders; cost shifting; double dipping and the
interaction with legislation of the states and territories. While the Act is an
improvement on previous legislation in terms of retrieving funds, the
administrative cost of the process is high, and cost shifting and double dipping
continues.
Since its inception, the HIC’s Compensation Recoveries
Program has been costly to run. It is only recently that the annual costs of
the program have been less than 50 per cent of annual recoveries. Despite HIC
improvements to their internal collection processes, the program remains labour
intensive because of the administrative requirements built into the Act. In
1998-99, the HIC recovered $31.9 million under the program. However, it cost
the HIC $14.7 million to recover this money. This was an improvement on
1997-98, where recoveries were $26.0 million and costs were $15.8 million. Over
a two-year period the HIC had dealt with over 172,000 claims. Just under one
third of these cases resulted in no reimbursement to the HIC. In effect HOSCA
in its current form compels the HIC and other organisations to engage in an
exchange of information which is unproductive and unnecessary in many
cases.
Aside from the HIC, other organisations such as insurers and legal
firms are also subjected to HOSCA requirements which are burdensome,
time-consuming, complex and costly. For example, in workers’ compensation
cases the HIC must be notified of every letter of demand or determination.
Estimates highlight the average cost of complying with HOSCA for each claim is
$120 for insurers and a higher cost of $500 for claimants. This represents a
total amount of $44.95 million for the 1998/99 financial year.
Prior to
HOSCA both cost shifting and double dipping were significant. Under the
legislative changes the Commonwealth now retrieves about $32 million per year.
This indicates the degree to which HOSCA has captured those monies previously
lost to cost shifting and double dipping. While cost shifting and double
dipping continue the total monetary cost and the scale of both is difficult to
quantify − although they may be exacerbated by the administrative
complexity of the Act.
Under HOSCA there are a number of areas where cost
shifting and double dipping can occur. The first is non-notification of claims
either deliberately or because of a lack of understanding of the legislation.
The second occurs because of mistaken declarations of past benefits. The third
problem relates to conflicts between State and Commonwealth legislation. For
example, some states argue that workers’ compensation schemes often pay
out money for the full cost of the injury even though there may have been a
pre-existing condition which would eventually be borne by Medicare. In these
cases States argue that they are bearing the burden of 100 per cent of the costs
when the reality is that it is less. From their position this represent a form
of cost shifting.
From the Commonwealth’s point of view cost
shifting can occur in several ways. One example is Victorian Transport Accident
Commission which prevents claimants from accessing the first $444 in medical
expenses thereby forcing claimants to access Medicare if necessary. Another
example is capping of claims which in effect may necessitate a claimant
accessing any additional medical services above the pay out
amount.
OBJECTIVES
The objectives of government
intervention in this area are to:
• reduce
the administrative burdens to both the HIC and
stakeholders;
• reduce the financial costs of
administration for the HIC and other stakeholders;
and
• reduce the likelihood of double dipping and
cost shifting.
The following section provides an overview of each option with the costs
and benefits of each.
This option continues the current system without any changes and
continues to impact on all stakeholders through the problems identified earlier
in the paper. The details of the current system are included
below:
1) notification (of all claims) by insurers to the
HIC;
2) the insurer/accident victim requesting a statement of
benefits;
3) the HIC providing the accident victim with a statement of
benefits received from the date of the accident;
4) the accident victim
identifying which benefits are related to the accident;
5) the accident
victim providing the information (supported by a statutory declaration) to the
HIC;
6) the HIC calculates this information to determine the amount payable
and sends a Notification of Past Benefits (NOPB) to the claimant and
insurer;
7) the insurer provides the HIC with a Notice of settlement or
judgement plus either a cheque for the amount due if the NOPB is valid (less
than 3 months), holding all compensation monies until the HIC issues a NOC or
electing to make an advance payment (10 percent of the verdict) if a valid NOPB
did not exist;
8) if 10 per cent is paid repeat steps 2-6 to enable a
calculation of the charge;
9) HIC repayment to the claimant of any balance of
the 10 per cent, or recovery of monies where the payment was insufficient to
cover the Medicare debt.
Option 2 − Streamlining HOSCA
−Legislative Amendment to the Act
The amendments to the Act
will assist the HIC to administer the program and reduce the burden on
stakeholders. The changes would allow for the simplification of the
Compensation Recoveries Program and include:
1) no notification of claim
to the HIC prior to judgement or settlement. This eliminate stages one and two
of the current process;
2) no notification of claim to the HIC in cases where
settlements or judgements are less than $5,000;
3) no notification to the HIC
in cases where claims involve no medical, nursing home or residential care
services have been claimed (supported by statutory declaration);
4) change
the return by date period of the Notice of Past Benefits (NOPB) statements to 60
days without extension;
5) extend the validity period of the NOPB to six
months if the claimant provides a statutory declaration stating that since the
NOPB was issued, no further Commonwealth medical, nursing or residential
services related to the injury were provided;
6) revise the Advance Payment
Option (APO) balances from a flat rate 10 per cent to a sliding
scale:
− $5001-$10,000 = an APO of 8 per
cent;
− $10,001-$50,000 = an APO of 6 per cent;
and
− $50,000 or more = an APO of 4 per
cent;
7) HIC ability to undertake random audits of claimants based on
Medicare data and judgement documents;
8) create new provision for the HIC to
sample reimbursements, judgements and settlements each year to determine the
extent of ongoing and new cost shifting and double dipping. This will require
the HIC to examine samples of claims from all compensation schemes.
The proposal is a major change from the current recoveries’ process
and is not based on individual assessment of debt owing to the Commonwealth, but
a levy system. Option three includes the following features:
1) a
benchmark percentage levied on individual settlements and judgements would be
developed from existing HIC data;
2) the percentage would reflect the average
recovery of benefits across a class of settlements and judgements within a
particular state or territory;
3) almost all settlements and judgements would
attract the levy;
4) a small proportion of judgements and settlements would
be obtained from random samples which would then use the existing HOSCA
arrangements. This would generate the data necessary for regular re-appraisals
and re-calibrations of the levy system;
5) the insurers would pay the levy to
the HIC.
The following groups are affected by the three options (See Table 1.0 for
cost comparison):
• The Commonwealth
Government through the Health Insurance Commission and the Department of Health
and Aged Care. State and Territory Governments though workers’
compensation and motor accident
authorities;
• Businesses, including,
insurers, legal firms;
• Injured persons,
claimants, recipients of settlements or judgements.
Option 1 −
Costs and Benefits (Status Quo)
Government
Cost
• Maintenance of burdensome and
costly administrative procedures.
- Almost half of the HIC’s total
recoveries are absorbed by administrative costs. In 1998-99 the HIC recovered
$31.9 million at a cost of $14.7 million.
- The current Act requires that all
claims be notified to the HIC. About one-third of these do not result in a
reimbursement to the
Commonwealth.
• Unintentional double dipping and
cost shifting due to complex legislation and procedures.
Government
Benefits
• Maintenance of existing
level of recoveries.
Business
Costs
• Notification of all claims
prior to judgement or settlement;
- Includes amounts over $175;
- Includes
claims that have not incurred any Commonwealth medical or nursing home
programs;
- Cost of processing claims is $120.
Business
Benefits
• Working knowledge current
procedures.
Individual
Cost
• Notification of all claims
prior to judgement or settlement;
- Includes amount over $175;
- Includes
claims that have not incurred any Commonwealth medical or nursing home
programs;
- Cost of claims for individuals is $500.
Individual
Benefits
• None
Government
(Cost)
• Establishing additional
fraud controls and audit procedures to take account of greater reliance on
statutory declarations. Some fraud control measures are already in place. In
budget terms fraud and audit controls are not separately accounted but form part
of the wider corporate budget of $907,000 (1998/99). Assumptions are that any
additional fraud and audit costs will have to be met from within the existing
budget.
• Reduced total recoveries to the
Commonwealth − Option recovers 29.1 million.
Government
(Benefits)
• Reduced number of reported
settlements and judgements.
• Reduced issuing of
Notice of Past Benefits Statements.
• Reduced
complaints from claimants because of sliding scale Advanced Payment
Option.
• Reduction in administrative costs of
$25.3 million over four years;
- - $5.3 million (2000/2002);
- - $6.5
million (2002/2003);
- - $6.7 million (2003/2004);
- - $6.8 million
(2004/2005).
• Unanimous stakeholder
support.
Businesses
(Costs)
• Maintenance of some procedures
and associated compliance costs. Under existing HOSCA compliance procedures
business costs are about $8.7 million per year. This is based on estimates that
each claim costs business about $120 to process (725,000 claims per
year).
Businesses
(Benefits)
• Reduced reporting of claims
(each potentially costing $120).
• Reduced
administration of reported claims (not
quantifiable).
• Ability to continue to use the
Advanced Payment Option.
• Reduced costs −
Option 2 should reduce these costs to about $5.8 million per
year.
Individuals
(Costs)
• Maintenance of some procedures
and associated compliance costs. Compliance costs for individuals are estimated
at $500 per claim.
Individuals (Benefits)
Benefits are
twofold. The first relates to those individuals with claims under $5,000 who
would no longer comply. The second is for those who must continue to comply
($5,000 and over) in relation to administrative procedures. For
example:
• Many claimants would be outside
the scope of HOSCA (This would save these people about $500 per
claim);
• Individuals whose claims are $5,000 or
more will benefit from more streamlined procedures:
- Ability to use
statutory declarations where no Commonwealth benefits were
received;
- Reduced need to complete Notice of Past Benefit statements
because of validity extension from three to six months;
Option 3
− Costs and Benefits (Levy)
Government
(Costs)
• Stakeholder objections to the
option making it difficult to implement and manage. These objections included
the following concerns:
- The levy as an additional cost. There is no
guarantee that in some cases the levy would not collect more than the actual
medical costs. The aim is that over time an accurate levy would average out.
However, in some cases more would be paid than was provided in Commonwealth
benefits.
- Some claimants will be disadvantaged. Some claimants will
pay more than they received in Commonwealth benefits while others will pay less
than they received in Commonwealth benefits.
- Reduced ability to monitor
medical accounts. This is a concern of insurers. A levy may limit their
current access to medical accounts and reduce their ability to risk
manage.
- Potential increase in double dipping. Because treatment
charges can be assessed under the current system, insurance companies are
concerned that a levy (where treatments are not assessed) may increase the
chances of double dipping).
• Periodic
reviews through sampling.
• Costs of
sampling.
- Anecdotal comments by stakeholders indicated that the proposed
sampling process would involve significant costs.
Government
(Benefits)
• Maintenance of gross
receipts;
• Greatly reduced costs of
collection;
• 90 per cent reduction in telephone
enquiries from accident victims and
solicitors;
• Use of existing computer equipment
to conduct random sampling.
Business (Costs)
• Sampling of data to set rates for levy in each
state and territory.
- Anecdotal comments by stakeholders indicated that the
proposed sampling process would involve significant costs.
Business
(Benefits)
• Reduced direct costs of
compliance with the Act because of the elimination of the need to notify claims,
request statements, lodge judgement notices, make individual payments to the
HIC;
• Simplified payment system (one cheque per
month);
• System of periodic sampling provides
protection against arbitrary increases in percentage rates and changes in state
and territory legislation.
- It is important that the levy be open and
accountable so that it accurately collects only those funds to which the
Commonwealth is entitled.
- Arbitrary increases refers to stakeholder
perception that the Commonwealth may raise the levy to recover more money
without consultation (sampling is in place to protect against this).
- The
setting of the levy has some link to state legislation. For example, if workers
compensation schemes change the Commonwealth may bear a greater burden of costs
and therefore the levy may be increased.
Individuals/Claimants
(Costs)
• Elimination of the need to
identify the reason for every medical attendance, except in 5-7 per cent of all
cases.
- To assist with an accurate setting of the levy 5-7 per cent of
claimants will need to be sampled. In these cases the individuals will still be
undertaking procedures based on the old system so that data is collected to
assist with the setting of the levy.
Table 1.0
Comparison of HOSCA
Options
$million
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
||
|
|
HIC Total
|
HIC Net
|
HIC
|
Estimated
|
Gain to HIC
|
||||
|
|
Recoveries
|
Recoveries
|
Costs
|
Industry Costs
|
Claimant Costs
|
Total Costs
|
Cf HOSCA
|
||
|
(Option1)
Existing HOSCA |
31.9
|
17.2
|
14.7
|
A 8.7
|
A 36.2
|
A 59.7
|
Nil
|
||
|
(Option 2)
Streamline (a) |
29
|
19.9
|
9.1
|
A 5.8
|
A 24.9
|
A 39.7
|
2.7
|
||
|
(Option 3)
Levy (with 5,000 sample) |
31.9
|
28.4
|
3.5
|
0.6
|
2.5
|
6.6
|
11
|
||
(a) Excludes judgements/settlements of less than
$5,000.
CONSULTATION
The first term of reference for the review was to “consult with
relevant representatives from the Commonwealth, State/Territories, community,
legal profession and companies and agencies providing
compensation.”
Mr George Pooley was appointed as Chairman of the
Review in March/April 1999. To assist him a small advisory committee was
established drawn from organisations and sectors affected by HOSCA. These
organisations included the: HIC; Department of Health and Aged Care; Law Council
of Australia; Insurance Council of Australia; Heads of Workers’
Compensation Authorities and Self-Insurers. As the Review progressed, the
advisory committee was augmented by comprehensive third party
insurers.
Consultation was largely iterative. Members of the advisory
group commented on material prepared by the consultants, the secretariat or
committee members. Feedback was incorporated into material prepared during the
Review and re-submitted to the committee for further discussion between members
and then between members and the sector representatives.
In addition to
the advisory committee work, the Review also sought public submissions on HOSCA.
Over a dozen were received from Commonwealth and State agencies and
representatives of insurance companies and legal firms. Submissions focused on
HOSCA’s operation and the administrative procedures needed to comply with
the Act. All organisations commented on the procedures as time-consuming,
complex and costly.
Of the three options, Option Two had no objections
and was seen as an improvement on the current processes which was workable and
acceptable to all representatives. While there were no objections to Option
Two, Option Three was strongly supported by the Law Council of Australia and
self-insurers and was based on their submission to the Review. However, other
stakeholders raised strong objections to the proposal. These focused on
additional costs, fairness and the transparency of new procedures. As mentioned
earlier on page six, the potential costs of this approach include: in some cases
insurers will bear a greater cost; some claimants may be disadvantaged; insurers
reduced ability to monitor accounts; potential for increases in double
dipping.
Option One maintains the status quo with administrative costs to the HIC
and other stakeholders. Under existing arrangements this translates into
recoveries to the HIC of $31.9 million per year and a cost of recovery of $14.7
million. Industry costs represent $8.7 million under this option and claimants
face costs of $36.2 million per year. This option does not reduce the
administrative costs to the HIC and other stakeholders. Double dipping and cost
shifting are curtailed to some degree in line with the intent of the original
legislation. However, complexity of procedures may encourage unintended double
dipping on the part of claimants.
Option Two streamlines collection
process for both the HIC and other stakeholders. In terms of costs the
HIC’s total recoveries would be slightly less than option one @ $29
million, however, the costs of collection would be $9.1 million with a net
recovery of $19.9 million. This represents a net increase in recoveries of $2.7
million. In terms of stakeholders, the costs are $5.8 million for industry and
$ 24.9 million for claimants this represents a savings of $2.9 million and $11.3
million respectively. In terms of double dipping and cost shifting, the
streamlined procedures should reduce unintended activities in these areas.
However, because data in these areas is poor it is difficult to quantify the
precise figure.
Option Three removes significant administrative burdens
for the HIC and has subsequently greater savings than under Option Two.
Administrative costs to the HIC fall to $3.5 million a saving of $5.6 million
compared to the administrative costs under Option Two. This translates into HIC
net recoveries of $28.4 million − an increase of $8.5 million in
comparison to Option Two. Industry also faces less cost @ $0.6 million rather
than the $5.8 million under Option Two. Claimants will also accrue significant
cost reductions with only $2.5 million instead of the $24.9 million under Option
Two. While cost savings were significant, the need to impose a levy, and doubts
over its long-term viability were raised by stakeholders and unacceptable to
many of them. Concerns were also raised in terms of double dipping and cost
shifting and the possibility that this option may increase the potential for
this. However, because of lack of data it is difficult to quantify these
claims.
The process for implementing Option 2 involves amendments to the
Health and Other Services (Compensation) Act 1995 in the sittings of
Parliament this financial year, to take effect under appropriate transitional
provisions.
Education and information campaigns will be directed towards
insurers, legal firms and individuals from the date of commencement of the
legislation. These will be implemented and managed by the HIC. The financial
impact of the proposed amendments will be monitored by the Department of Health
and Aged Care as part of program monitoring and the Department of Finance and
Administration (DOFA) as a savings measure.
The HIC as manager of the
Compensation Recoveries Program will also be reviewing and monitoring the
amended HOSCA. The HIC has in place administrative processes and direct contact
with stakeholders (insurers, legal and individuals). This places them in the
position to monitor the practical outcome of the revised Act and its impact on
stakeholders including the compliance costs on insurers and legal firms.
NOTES ON CLAUSES
This is a formal provision that specifies the short title of the Act as
the Health and Other Services (Compensation) Legislation Amendment Act
2001.
Subclause 2(1) provides that subject to subsections (2), (3), (4)
and (5), the Act commences on a day to be fixed by
Proclamation.
Subclause 2(2) provides that subject to subsections
(3), (4) and (5), if this Act does not commence under sub-clause (1) within the
period of 6 months beginning on the day on which it receivers Royal Assent, it
commences on the first day after the end of that period.
Subclause
2(3) provides that if the Health and Aged Care Legislation Amendment
(Application of Criminal Code) Act 2001 commences before Schedule 1 of this
Act, then item 21 (which amends subsection 26(2) of Schedule 1 to this Act does
not commence.
Subsection 2(4) provides that subject to subsection
(5), Schedule 3 is to commence either when Parts 4 to 10 of the
Administrative Review Tribunal Act 2001 commence, or immediately after
the commencement of Schedule 1 to this Act, whichever occurs
later.
Subclause 2(5) provides that if item 259 of Schedule 1 and
items 264 and 265 of Schedule 3 to the Administrative Review Tribunal
(Consequential and Transitional Provisions) Act 2001 commence before the day
on which Schedule 1 to this Act commences, then items 1 and 2 of Schedule 3 to
this Act do not commence.
Clause 3 – Schedule(s)
The
clause provides that each Act that is specified in the Schedule is to be amended
or repealed as set out in the applicable items in the Schedule, subject to the
commencement provisions in section 2.
This item repeals section 11 in its present format and section 12 as each
of these sections relate to the notification of a claim, and such a requirement
will no longer be required. The notification of a claim prior to judgement or
settlement is no longer a requirement as the streamlining process relies only on
notification once a judgement or settlement has been reached.
A new
section 11 has been inserted relating to the operation of the Division. It
clarifies that if a person makes a claim against another person for compensation
in respect of an injury, by claiming compensation from the other person, then
the Division will operate.
This item repeals the current section 13, as its wording relates to the
notification of claims, a requirement no longer essential, and therefore will no
longer be required. A new section 13 is substituted with the same requirement
of notification for a reimbursement arrangement if it is entered into 6 months
or more after a claim for compensation was made. A period of 28 days is
provided within which a person, who is liable to reimburse a claimant, must
notify the Commission of the arrangement.
This item repeals sections 15 and 16 as the sections relate to the
notification of claims, which is no longer required.
This item provides a note of explanation after subsection 17(1) to
clarify that a notice requiring a person to clarify their use of professional
services or nursing home care or residential care may be sent to a claimant
before or after a judgement or settlement.
This item inserts a new subsection 17(5A) providing for the Managing
Director to approve the form of the information which is provided in a request
relating to a history statement of the claimant’s medical or residential
care history.
This item extends the time frame in the current paragraph 18(4)(b) from 3
to 6 months in which it is possible for the Managing Director to grant an
extension of time to the existing history statement.
The item provides for additional subsections for section 18. These
provisions will allow claimants, in certain circumstances, to seek a review by
the Managing Director of the Commission of a “deemed” liability
under subsection 18(5).
Subsection 18(6) provides that where the Managing
Director gives a notice under subsection 18(7), subsection 18(5) does not
operate, and is taken for the purposes of this Act and the Charges Act, never to
have operated, in relation to professional services specified in a notice under
subsection 17(2).
Subsection 18(7) provides that the Managing Director
must give the claimant a notice for the purposes of subsection 18(6) in certain
circumstances. These are all services specified in a notice under subsection
17(2) would be taken to have been rendered in the course of treatment, or as a
result of, the injury that the claimant claims to have suffered and a judgement
or settlement has been made in respect of an amount of compensation and the
claimant within a two year period from judgement or settlement satisfies the
Managing director that not all of those services were related to the claim and
the reason for not indication that earlier was reasonable in the
circumstances..
Subsection 18(8) puts beyond doubt that, in the specified
circumstances, any excess amount is payable by the Commonwealth to the person.
Subsection 18(9) provides for the Consolidated Revenue Fund to be
appropriated for the purposes of payments by the Commonwealth under subsection
18(8).
Under subsection 18(10) a decision of the Managing Director to
refuse to issue a notice under subsection 18(7) will be reviewable by the
Administrative Appeals Tribunal.
This item extends the period described in subsection 21(5) in which a
notice of past benefits would be accepted as a notice of charge from 3 to 6
months.
This item extends the period from 3 to 6 months described in paragraph
21(13)(a) which provides for when subsection (11) does not apply. The effect of
the proposed amendment is that subsection (11) does not apply if the Managing
Director had given the notifiable person a notice within 6 months, rather than
the current 3 months in which the Managing Director may be requested by a
claimant or the notifiable person to provide a notice of past benefits, if the
Managing Director had provided such a notice during the previous 6 month
period.
This item extends the period from 3 to 6 months described in paragraph
22(1)(b) in which the notifiable person is restricted from entering a judgement
or settlement due to the existence of a notice of past benefits which had been
provided by the Managing Director within the previous 6 months. This allows a
greater time frame in which the Commonwealth benefits are not subject to
refund.
This item repeals the note to subsection 22(1), which had been
inadvertently retained after a previous amendment, which negated its
validity.
This item inserts new section 23A which allows for the provision of a
statutory declaration to extend the life of a notice of charge if a judgement or
settlement has been made, the claimant has received a notice under section 23(1)
and the Managing Director had not given a notice under section 21 during the
past 6 months period ending when the judgement or settlement was made. Further
under subsection 23A(1)(d)(i), if the Managing Director had not given the
claimant a notice of past benefits or under subsection 23A(d)(ii) the Managing
Director had given the notifiable person one or more such notices before the
start of the 6 month period and as at the date of judgement or settlement the
Commonwealth had paid no eligible benefits.
Subsection 23A(2) provides that
the claimant may give a statement to the Commission specifying under (a) if
subparagraph (1)(d)(i) applies, if the Commonwealth has paid no eligible
benefits in respect of services and care rendered or provided in the course of
treatment of the injury. If subparagraph (1)(d)(ii) applies if the Commonwealth
has paid no eligible benefits in respect of services and care rendered or
provided in the course of treatment of the injury, other than those set out in
the most recent of the notices.
Subsection 23A(3) provides for a
determination by the Managing Director to specify the information that must be
contained in any statement/statutory declaration indicating that no relevant
benefits had been used.
Subsection 23A(4) provides for the statement to
be verified by a statutory declaration.
The item allows the Commission to
take account of the information in the statement in specifying in a notice under
section 24 the amount payable to the commonwealth.
This part of the item inserts a new section 23B. New subsection 23B(1)
gives the Managing Director the power under section 18 or 23A to provide the
claimant with a written notice stating that the Commission believes that the
statement of past benefits provided by the claimant to be substantially
incorrect. The notice must contain a statement under paragraph (a) that the
statement is not substantially correct, and under paragraph (b) require the
claimant to provide an amended statement that is substantially correct and under
paragraph (c) state the period in which the claimant has to
respond.
Subsection (2) provides for a period of 28 days, under paragraph
(a) after the statement under sections 18, 23A or 23B has been given to the
Commission or under paragraph (b) before the last day an advance payment can be
lodged.
Subsection (3) provides for a period of 28 days in which the
claimant has to respond to the Managing Director after being given the notice of
past benefits].
Subsection (4) provides for the conditions, which the
Managing Director may consider when deciding if a statement is substantially
correct. The Managing Director may take into account, under paragraph (a) the
date of the injury is required, paragraph (b) the nature of the injury to be
described, paragraph (c) the treatment provided for the injury and paragraph (d)
statistical information about claims relating to substantially the same kind of
injuries, paragraph (e) an expert medical opinion about the treatment for
injuries of that kind and paragraph (f) any other matter that the Managing
director considers relevant to the claim. Subsection (5) provides for the
inclusion of a reference to nursing home or residential care to be included as
part of the treatment for the injury. Subsection (6) applies to the amended
statement as if it were a statement under section 18 or 23A.
This part of the item provides for the Managing Director under subsection
23B(1) to provide a notice of acceptance as soon as practicable or if he fails
to do so within 28 days, the statement is taken to be accepted by the Managing
Director as being substantially correct.
This part of the item provides for a claimant, under subsection 23B(1) to
appeal to the Administrative Appeals Tribunal if the Managing Director has
decided that a statement under section 18 or 23A, or an amended statement under
section 23B is not substantially correct.
This item extends the period from 3 months, (first occurring), to 6
months described in paragraph 24(4)(a) in which a notice of past benefits will
remain valid for the purposes of allowing the Managing Director to issue a
notice of charge.
This item extends the period from 3 to 6 months described in paragraph
24(6)(b). The effect of this is to extend the period where a notice of past
benefits automatically becomes a notice of charge, dependant on the judgement or
settlement being made within 6 months after the notice was given.
Items 20 to 25 make consequential amendments to section 26. They remove
references to sections 11, 12 and 15 following the repeal of those sections as
currently drafted relating to the notification of claims.
This item omits the words “11, 12 or” from subsection 29(3)
as the current sections 11 and 12 relating to the notification of claims are to
be repealed.
This item extends the period from 3 to 6 months described in paragraph
32(1)(b). The effect of this is provide for a period of 6 months from the date
of the judgement or settlement where it is an offence for the compensation payer
or insurer to pay the compensable person after a judgement or settlement if the
liability set out in the notice under paragraph 21(2)(b) has not been
discharged.
This item inserts new section 33AA before existing section 33A. The new
section provides for a sunset provision to cease the use of advanced payment
options. Subsection 33AA(1) provides for the sunset provision to commence on 1
July 2004 or at a later date to be determined by the Minister under subsection
33AA(2), which must be before 1 July 2006 and must be determined in writing.
That determination, under subsection 33AA(3), must be made no later than 1 July
2004. Under subsection 33AA(4), such a determination would be a disallowable
instrument for the purposes of section 46A of the Acts Interpretation Act
1901.
Item 29
This item extends the period from 3 to
6 months described in paragraph 33B(1)(a). The effect of this is an extension
of the time period where a compensation payer may make an advance payment if a
notice of past benefits had not been previously issued.
Item
30
This item amends the value of a “small amount” in
paragraph 33B(1)(d) from $3,000 to $5,000 under which an advance payment can be
made. The effect of this is to set the value of a small amount to $5,000, which
is a reflection of monetary value where the recovery of Commonwealth expenditure
becomes economically viable.
Item 31
This item inserts a
new subsection 33B(2A), which provides the Minister with the ability to
determine different amounts, or ranges of amounts of compensation payable under
the advanced payment option, under subsection 33B(2A)(a), and to set different
percentages for any one or more of those amounts or ranges of amounts under
subsection 33B(2A)(b). This will provide greater flexibility to alter the
percentage values of the compensation held by the Commission in the debt
recovery process and in turn allow for a more accurate estimation of the values
required to discharging liability to the Commonwealth .
Item
32
This item amends the reference in paragraph 33C(2)(b) to new
section 23B. The previous reference to paragraph 33E is no longer relevant as
it has been relocated to section 23B.
This item amends the reference in paragraph 33D(2) to new section 23B(1).
The previous reference of paragraph 33D(2) is no longer relevant as it has been
relocated to subsection 23B(1).
This item amends the reference in paragraph 33D(2)(b) to new section 23B.
The previous reference to section 33E is no longer relevant as it has been
relocated to section 23B.
This item amends the reference in paragraph 33D(3)(a) to new subsection
23B(1). The previous reference to subsection 33E(2) is no longer relevant as it
has been relocated to section 23B(1).
This item repeals sections 33E, 33F and 33G as they have been relocated
to sections 23B, 23C and 23D respectively. The relocation provides for the
application of notices that are substantially incorrect, consequential review by
the claimants and acceptance by the Managing Director of such notices, plus the
ability to have such decisions reviewed by the Administrative Appeals Tribunal
to apply to claims that are deemed or covered by the advanced payment option.
The relocation of these sections is also for clarity in presentation.
This item omits the words “other than sections 11 and 12” in
subsection 35(3) as sections 11, current form, and 12 are repealed.
This item repeals subsection 35(4). This is a consequential amendment to
take account of the repeal of the current sections 11 and 12.
This item omits the words “before a notice under section 11 or 12
would, but for this section, have been required to be given to the
Commission” in paragraph 38(1)(a). This is a consequential amendment to
take account of the repeal of the current sections 11 and 12.
This item provides for the definition of a small amount in subsection
38(2) as being less than or equal to $5,000 or another higher amount, as
prescribed for the purposes by regulations as referred to in this subsection.
Currently the small amount is $166.60. Amounts under that value are exempt from
the HOSCA provisions. It is proposed that the Act expressly provide that an
amount of compensation is a small amount if it is equal to or less than $5,000.
It is currently not economically viable to attempt to recover amounts under
HOSCA where judgments/settlements are $5,000 or less, as the administrative
expenses outweigh the recovery value.
This item replaces the reference in paragraph 42(1)(f) from subsection
44-16(5) of the Aged Care Act 1997 to subsection 44-20(5) and (6). The
replacement is required as the previous reference was incorrect. This corrects
a drafting error.
This item provides for the amendments made to this Schedule to apply to a
claim for compensation made after the commencement of this item or before that
commencement where a judgement or settlement has not been made prior to the
commencement.
This item provides for, under subsection (1), the application of the
Schedule to apply to a notice, statement, or application made under the old
provisions. Under subsection (2), the term “new provisions” means
sections 23B, 23C and 23D of the Health and Other Services (Compensation) Act
1995. The term “old provisions” means sections 33E, 33F and 33G
of the Health and Other Services (Compensation) Act 1995.
This
item provides for the transitional provisions to operate in relation to a
notice, statement or application made under the old provisions before the
commencement of this Schedule. New provisions means sections 23B, 23C and 23D
of the Act, and old provisions means 33E, 33F and 33G of the previous version of
the Act.
SCHEDULE 2 – AMENDMENT OF THE HEALTH AND OTHER
SERVICES (COMPENSATION) CARE CHARGES ACT 1995
This item repeals paragraph 6(9)(a) as the paragraph refers to and is
dependant on sub-clauses 11 and 12 in the Health and Other Services
(Compensation) Act 1995 that have been repealed.
This item repeals paragraph 8(9)(a) as the paragraph refers to and is
dependant on sub-clauses 11 and 12 in the Health and Other Services
(Compensation) Act 1995 that have been repealed.
This item repeals Item 259 of Schedule 1.
This item repeals Items 264 and 265 of Schedule 3.
Health and Other Services (Compensation) Act 1995
This item omits reference to the Administrative Appeals Tribunal and
substitutes the reference with Administrative Review Tribunal.
This item repeals the note and substitutes a note referring to Section 56
of the Administrative Review Tribunal Act 2001 which requires the
decision maker to notify persons whose interests are affected by the decision
making process of their rights to have the decision reviewed.
This item changes the title in subsection 23D(1) from Administrative
Appeals Tribunal to Administrative Review Tribunal, which allows for any future
changes under proposed legislation currently before the parliament. It also
alters the heading by omitting “Appeals” and substituting
:”Review”.
This item changes the title in subsection 23D(1) (note) from
Administrative Appeals Tribunal to Administrative Review Tribunal.
This item changes the reference in subsection 23D(2) from subsection
43(6) of the Administrative Appeals Tribunal Act 1975 to sections 134 and
135 of the Administrative Review Tribunal Act 2001.