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Health and Other Services (Compensation) Legislation Amendment Bill 2001

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1998-1999-2000-2001

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

HEALTH AND OTHER SERVICES (COMPENSATION) LEGISLATION AMENDMENT BILL 2001

 

 

 

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

 

 

OUTLINE

 

 

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

 



Regulation Impact Statement (RIS) for Amendments to the Health and Other Services (Compensation) Act 1995 (HOSCA)

 

 

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.

 

OPTIONS

 

The following section provides an overview of each option with the costs and benefits of each.

 

Option 1 - Status Quo

 

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.

 

Option 3 - Lump Sum Payments by Insurers to the HIC

 

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.

 

IMPACTS

 

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

 

Option 2 - Costs & Benefits (Streamlining)

 

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.

 

CONCLUSION

 

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.

 



IMPLEMENTATION AND REVIEW

 

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.

 



 

HEALTH AND OTHER SERVICES (COMPENSATION) LEGISLATION AMENDMENT BILL 2001

 

 

NOTES ON CLAUSES

 

 

Clause 1 - Short title

 

This is a formal provision that specifies the short title of the Act as the Health and Other Services (Compensation) Legislation Amendment Act 2001 .

 

Clause 2 - Commencement

 

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.

 
 
Schedule 1 - Amendment of the HeaLTH AND OTHER SERVICES (COMPENSATION) aCT 1995
 
Item 1
 
This item defines the term “Secretary” as meaning the Secretary of the Department, under subsection 3(1), reliant on subsection 19A(3) of the Acts Interpretation Act 1901.

 

Item 2
 
This item provides for an additional paragraph in subsection 4(2) which allows for a Regulation to be prescribed to define certain kinds of payments, or circumstances where a payment would not be “compensation” under the Act This will enable the future exclusion from HOSCA of those sections of State/territory legislation not included at present, which might still be caught by the HOSCA, but clearly involve no medical or residential care (nursing home) payments.

 

Item 3
 
This item repeals paragraph 8(9)(a).  This is a consequential amendment to take account of the repeal of current sections 11 and 12.

 

Item 4
 
This item amends paragraph 10(1)(c) to correct an error in the drafting of the original Act. Section “8” was inadvertently used instead of the correct reference to section “9”.
 
Item 5
 
This item repeals paragraph 10(9)(a).  This is a consequential amendment to take account of the repeal of current sections 11 and 12.
 

Item 6

 

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.

 

Item 7

 

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.

 

Item 8

 

This item repeals sections 15 and 16 as the sections relate to the notification of claims, which is no longer required.

 

Item 9

 

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.

 

Item 10

 

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.

 

Item 11

 

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.

 

Item 12

 

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.

 



Item 13

 

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.

 

Item 14

 

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.

 

Item 15

 

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.

 

Item 16

 

This item repeals the note to subsection 22(1), which had been inadvertently retained after a previous amendment, which negated its validity.

 

Item 17

 

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.

 

23B Notice of Statement that is Not Substantially Correct

 

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.

 

23C Notice of Acceptance of Amended Statement

 

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. 

 

23D Review of Decision under Section 23B by the Administrative Appeals tribunal

 

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.

 

Item 18

 

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.

 

Item 19

 

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

 

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.

 

Item 26

 

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.

 

Item 27

 

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.

 

Item 28

 

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.

 

Item 33

 

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).

 

Item 34

 

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.

 

Item 35

 

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).

 

Item 36

 

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.

 

Item 37

 

This item omits the words “other than sections 11 and 12” in subsection 35(3) as sections 11, current form, and 12 are repealed. 

 

Item 38

 

This item repeals subsection 35(4).  This is a consequential amendment to take account of the repeal of the current sections 11 and 12. 

 

Item 39

 

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.

 

Item 40

 

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.

 

Item 41

 

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.

 

Item 42 - Application

 

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.

 

Item 43 - Transitional

 

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

 

 

Item 1

 

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.

 

Item 2

 

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.

 

 

Schedule 3 - CHANGED ADMINISTRATIVE LAW ARRANGEMENTS

 

Administrative Review Tribunal (Consequential and Transitional Provisions) Act 2001

 

Item 1

 

This item repeals Item 259 of Schedule 1.

 

Item 2

 

This item repeals Items 264 and 265 of Schedule 3.

 

Health and Other Services (Compensation) Act 1995

 

Item 3

 

This item omits reference to the Administrative Appeals Tribunal and substitutes the reference with Administrative Review Tribunal.

 

Item 4

 

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.

 

Item 5

 

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”.

 

Item 6

 

This item changes the title in subsection 23D(1) (note) from Administrative Appeals Tribunal to Administrative Review Tribunal.

 

Item 7

 

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 .