Bills Digest no. 111 2005–06
Health and Other Services (Compensation) Amendment
Bill 2006
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Health and
Other Services (Compensation) Amendment Bill
2006
Date introduced: 2 March 2006
House: House of Representatives
Portfolio: Health and Ageing
Commencement: Royal
Assent
The purpose of the Health and Other Services
(Compensation) Amendment Bill 2006 is to make a series of technical
amendments to the Health and Other Services (Compensation) Act
1995 clarifying the application of certain provisions within
the Act, and to remove a sunset clause on the Advanced Payment
Option currently available for finalising settlements under the
Act.
The Health and Other Services
(Compensation) Act 1995 ( the Act ) provides for the
Compensation Recovery Program, under which Commonwealth Medicare,
nursing home or residential care benefits are recovered from people
who are in receipt of compensation payments for the injury or
illness for which they have claimed Medicare, nursing home or
residential care benefits. The program is administered by
Medicare Australia, formerly the Health Insurance Commission
(HIC).
The Compensation Recovery Program is designed to prevent double
dipping by successful claimants of compensation. Double-dipping
occurs when a person receives a compensation payment to cover
medical and other care costs relating to their injury, as well as
Medicare and/or other benefits provided under other Commonwealth
programs such as residential care. In these situations, the person
has been compensated twice for medical (and other) costs associated
with the injury.(1)
Eligible people who are claiming compensation for an injury or
illness can claim Medicare and other benefits from the time that
their injury was sustained or their illness commenced. However,
once their case reaches judgment or settlement, the Act requires
insurers and other compensation payers to advise Medicare Australia
of any claims where the compensation provided amounts to more than
$5000 (inclusive of all costs). Medicare Australia then determines
the amount of Medicare benefits, nursing home benefits and/or
residential care subsidies that have been paid out in the course of
treating the compensable injury/illness, and collects the repayment
of this amount. In 2004 05 the HIC recovered $24 million under the
Compensation Recovery Program.(2)
Since the Act was passed in 1995 a series of amendments have
been made to refine the operation of the Compensation Recovery
Program, and in particular to overcome administrative complexities
and implementation problems which proved cumbersome for insurers,
claimants and for the HIC in administering the Program. For
example, in 1998 99 the HIC recovered $31.9 million under the
Program, but spent $14.7 million almost half the total recovered
amount in administrative costs in doing so.(3)
The purpose of the current Bill is to make technical amendments
to the Act to clarify the application of various provisions within
the Act (see Main Provisions for details).
The Bill also proposes to remove the sunset clause on the
Advanced Payment Option from the Act. The Advanced Payment Option
can be used in cases where the judgment/settlement has been reached
but the amount to be repaid to the Commonwealth is not known. In
these cases, the compensation payer forwards 10 per cent of the
total compensation amount to Medicare Australia, and the claimant
receives the remaining 90 per cent. When the amount to be recovered
(if any) is determined, it is deducted from the 10 per cent and the
balance is forwarded to the claimant. If the recovered amount is
greater than 10 per cent, the claimant is required to pay the extra
amount.(4) According to the Explanatory Memorandum to
the Bill, over 80 per cent of the 50 000 settlements processed
each year are finalised using the Advanced Payment
Option.(5)
Accordingly, the Bill does not propose major changes to the
operation of the Compensation Recovery Program and as such is
likely to be uncontroversial.
Item
1 repeals the paragraph that refers to fatal injury
(4(2)(d)) from the definition of payments that cannot be
included as compensation for the purposes of the Act. This is to
make clear that, even in cases of fatal injury, there is still an
obligation to repay the Commonwealth if Medicare, nursing home or
residential care expenses have been incurred (from the claimant s
estate).
Item 2 aligns the current wording in paragraph
17(6)(a) ( claim for compensation was made more than 5
years before the request ) (emphasis added) with that in 23(3)(b)
that is, date on which the claimant suffered the injury is
more than 5 years before the request was made (emphasis added).
Item 3 specifies that the provisions outlined
in the new paragraph 17(6)(a) will apply to requests made after the
commencement of item 2.
Items 4 and 5 provide for a
process, under Section 18, through which claimants may have their
notice of claim reviewed by Medicare Australia. The current process
operated by Medicare Australia is informal only, which means that a
person can seek review through the Administrative Appeals Tribunal
(AAT) before the outcome of the internal Medicare Australia review
process is finalised. The new formal process specified in this item
means that a claimant will have to await the outcome of the review
process prior to seeking review through the AAT.
Item 6 repeals the sunset clause (section
33AA), meaning that after 1 July 2006, claimants will continue to
be able to utilise the Advanced Payment Option (see Background
section for details).
Items 7 and 8 make clear that the term small
amount (paragraph 33B(1)(d)) refers to amounts equal or less than
$5000.
As noted above, the changes to the Health and Other Services
(Compensation) Act 1995 proposed by the Bill are mostly minor
and technical in nature and do not constitute any significant
change to the operation of the Compensation Recovery Program.
Accordingly, the Bill is likely to be uncontroversial.
-
P. Mackey, Health and Other Services (Compensation) Legislation
Amendment Bill 2001 , Bills Digest, No. 56,
Parliamentary Library, Canberra, 2001 02. See http://www.aph.gov.au/library/pubs/bd/2001-02/02bd056.htm.
-
Health Insurance Commission (HIC), 2004 05 Annual
Report, HIC, Canberra, 2005, p. 103.
-
Mackey, op. cit. See this Digest for further details on the 2001
amendments to the Act following an extensive review of the Act
conducted by former Insurance and Superannuation Commissioner
George Pooley (G. Pooley, Review of the Health and Other
Services (Compensation) Act 1995 and of its operation,
Canberra, 201).
-
Medicare Australia, Information Sheet: Compensation Recovery
Program Information for claimants, 2005. See
http://www.medicareaustralia.gov.au/resources/compensation_recovery/ma_1236_compensation_recovery_program_information_for_claimants.pdf.
-
Explanatory Memorandum, p. 2.
Angela Pratt and Luke Buckmaster
29 March 2006
Bills Digest Service
Parliamentary Library
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ISSN 1328-8091
© Commonwealth of Australia 2006
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Published by the Parliamentary Library, 2006.
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