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          • Determinations

Determinations

Home » Circulars » 2000 » 111 » Determinations

General PHIAC Circulars

Commonwealth Coat of Arms

Circular No 111

Health Benefits Reinsurance (Trust Fund Principles) Determination 1998

as amended

made under Section 73BC (5B) of the National Health Act 1953

This compilation was prepared on 1 September 2000 taking into account amendments up to Health Benefits Reinsurance (Trust Fund Principles) Amendment Determination 2000 (No. 1)

Prepared by the Office of Legislative Drafting, Attorney-General's Department, Canberra

Contents

Part 1

Preliminary

1.1

Name of Determination [see Note 1]

3

1.2

Commencement [see Note 1]

3

1.3

Definitions

3

1.4

Notification by Council

4

Part 2

Payments into the Fund

2.1

Purpose of Part

5

2.2

Matters to be taken into account

5

2.3

Persons under 65  reinsurable amount of episode benefits

6

2.4

Reinsurable patient days

6

2.5

Effect of unpaid contributions

7

2.6

Method of calculation

7

2.7

Amount and due date of payment

8

Part 3A

Adjusting calculations

3A.1

Calculation of appropriate payment may be adjusted

9

3A.2

Determination of adjustment payments 

10

3A.3

Application of adjustment payments

10

Part 3

Payments out of the Fund

3.1

Purpose of Part

11

3.2

Matters to be taken into account

11

3.3

Method of calculation

11

3.4

Amount of payment

11

3.5

Manner and time of payment

11

Part 4

Revocation of previous Determination

4.1

Revocation

12

Notes

 

13

 

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Part 1 Preliminary

1.1 Name of Determination [see Note 1]

This Determination is the Health Benefits Reinsurance (Trust Fund Principles) Determination 1998.

1.2 Commencement [see Note 1]

This Determination commences on gazettal.

1.3 Definitions

(1) In this Determination:

Act means the National Health Act 1953.

Fund means the Health Benefits Reinsurance Trust Fund.

hospital has the same meaning as in subsection 67 (4) of the Act.

hospital treatment has the same meaning as in subsection 67 (4) of the Act.

patient day means a day on which a contributor to a table of the health benefits fund conducted by a registered health benefits organisation, or a dependant of a contributor, is accommodated as a patient in a hospital for hospital treatment.

quarter means the period of 3 months ending on 31 March, 30 June, 30 September or 31 December in a year.

Reinsurance Records Determination means the Health Benefits Reinsurance (Records of Organisations) Determination 1998 made under subsection 73BB (1) of the Act.

single equivalent unit means any of the following members of a registered health benefits organisation:

  1. for a single membership - the contributor;

  2. for a couples membership - both members of the couple;

  3. for a single parent membership - the single parent and one other member only;

  4. for a family membership - 2 members only.

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Note Some expressions used in this Determination are defined in the Act (see s 4) or in the Health Insurance Act 1973 (see s 3), including:

  • applicable benefits arrangement

  • contributor

  • Council

  • dependant

  • professional service

  • registered health benefits organisation

  • registered organisation.

(2) In this Determination:

  1. the Northern Territory is taken to be a State; and

  2. the Australian Capital Territory is taken to be part of New South Wales.

1.4 Notification by Council

As soon as possible after receiving from all registered health benefits organisations carrying on health insurance business in a State the information required under the Reinsurance Records Determination, the Council must give each organisation written notice of the amount payable by, or to, the organisation, under section 73BC of the Act, for the quarter for the State to which the information relates.

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Part 2 Payments into the Fund

2.1 Purpose of Part

The purpose of this Part is to set out principles for determining the method of, and the matters to be taken into account in, calculating the amounts to be paid into the Fund by registered health benefits organisations, and related matters.

2.2 Matters to be taken into account

(1) The following matters are to be taken into account in calculating the amounts to be paid into the Fund, for a particular quarter, by a registered organisation:

  1. the reinsurable patient days that have been claimed against the organisation in the quarter for hospital treatment, including patient days for hospital treatment outside Australia, if the rules of the registered organisation accommodate such claims;

  2. for each of those claims, the amount of the benefit payable by the organisation;

  3. in relation to each of those claims, the amount of the benefit payable by the organisation for professional services, to the extent of:

    1. the difference between the medicare benefit for the service and the fee charged for the service, up to the amount of the Medicare Benefit Schedule fee for a service of that kind; and

    2. if the professional service is subject to a Division 4 agreement, and the amount payable under the agreement exceeds the amount of the Medicare Benefit Schedule fee for a service of that kind - the amount of that excess, up to 16% more than the amount of the Medicare Benefit Schedule fee;

  4. the median number, for the quarter, of single equivalent units with whom the health benefits fund conducted by the organisation has entered into an applicable benefits arrangement (that is, the number determined by adding the number of such units at the beginning of the quarter and the number at the end, and halving the result).

(2) The matters mentioned in subsection (1) are to be taken into account on a State by State basis consistently with the organisation of information presented for the quarter by the registered organisation under the Reinsurance Records Determination.

(3) For this section, the Council may make a correction to information received from a registered organisation if it considers the information to be inaccurate in a way that would produce an incorrect calculation.

(4) For this section, Division 4 agreement means a medical purchaser provider agreement under section 73BDA of the Act or a practitioner agreement under section 73BDAA of the Act.

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2.3 Persons under 65 - reinsurable amount of episode benefits

(1) For paragraph 2.2 (1) (b), the amount payable for a person aged less than 65 for a reinsurable patient day that occurs in a reported episode is the amount worked out by:

  1. dividing the amount of the payment for the episode by the duration, in days, of the episode; and

  2. multiplying the result by the number of days in the episode that are reinsurable patient days.

(2) However, if the person turns 65 during the episode, before the occurrence of the first reinsurable patient day mentioned in subsection (1), the amount payable is worked out by:

  1. dividing the amount of the payment for the episode by the duration, in days, of the episode; and

  2. multiplying the result by the number of days in the episode that are reinsurable patient days because the person has turned 65.

(3) In this section:

episode has the same meaning as in the Reinsurance Records Determination.

reported episode means an episode mentioned by the registered organisation in the information presented for the quarter concerned under the Reinsurance Records Determination.

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2.4 Reinsurable patient days

(1) For sections 2.2 and 2.3, each instance of hospital treatment given on a particular day to a contributor to a table of the health benefits fund conducted by a registered health benefit organisation, or to a dependant of the contributor, counts as a reinsurable patient day for the contributor.

(2) For subsection (1), reinsurable patient day means:

  1. for a person aged 65 years or more - every patient day; and

  2. for any other person - each patient day that is preceded by 35 or more patient days for that person, or a related member, in the 12 month period immediately preceding that patient day; and

  3. if, in a quarter preceding the quarter concerned, a patient day that would have been a reinsurable patient day was not so recognised because the contributor had not made a timely claim - that patient day.

(3) For paragraph (2) (b), related member means:

  1. if the person is the contributor - a dependant; or

  2. if the person is a dependant of the contributor - the contributor or another dependant.

2.5 Effect of unpaid contributions

A single equivalent unit is not to be taken into account in determining, under paragraph 2.2 (1) (d), the median number for a registered organisation, if:

(a) contributions for the person represented by the single equivalent unit have not been paid for a period longer than:

  1. 2 months after the end of the period for which contributions were last paid; or

  2. if the rules of the organisation allow a longer period - that longer period; and

(b) the person has been given written notice by the organisation that he or she is no longer a member of the health benefits fund concerned.

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2.6 Method of calculation

The following method is to be applied in calculating the amount (if any) to be paid into the Fund by a registered organisation (Organisation Z), for a particular quarter, in respect of a State for which the organisation has given the Council a return under the Reinsurance Records Determination:

(a) calculate, for each registered organisation, the amount that is the total of:

  1. 79% of the total amount of the benefits payable for the quarter in that State, as mentioned in paragraph 2.2 (1) (b); and

  2. 79% of the total amount of the benefits payable for the quarter in that State, as mentioned in paragraph 2.2 (1) (c);

(b) add the amounts calculated under paragraph (a) for each registered organisation;

(c) ascertain the number that is the total of the average number of single equivalent units in that State for the quarter for all registered organisations by:

  1. determining, under paragraph 2.2 (1) (d), the median number of single equivalent units for each registered organisation in the State; and

  2. adding the numbers determined under subparagraph (i);

(d) calculate the average amount payable for each single equivalent unit by dividing the total amount determined under paragraph (b) by the total number ascertained under paragraph (c);

(e) calculate the total amount that would have been payable by Organisation Z if the single equivalent units determined under paragraph 2.2 (1) (d) to be the median number of single equivalent units in that State for the organisation had each been entitled to the amount calculated under paragraph (d) of this section;

(f) calculate the difference between the amount calculated under paragraph (e) and the amount calculated under paragraph (a) for Organisation Z.

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2.7 Amount and due date of payment

If the amount calculated under paragraph 2.6 (a) for a registered organisation is less than the amount calculated under paragraph 2.6 (e), the Council will determine, under subsection 73BC (6) of the Act, that, for the quarter concerned, an amount equal to the difference is the appropriate payment to be made by the organisation.

Note 1   See s 73BC (8) of the Act, which provides for the Council to notify a registered organisation of the amount to be paid into the Fund, and the date by which payment must be made. At the time of making this Determination, the Council generally allows 14 days after written notification.

Note 2   The Council may impose a penalty for failure to make timely payment of the calculated amount: see s 73BC (9) of the Act. At the time of making this Determination, the prescribed rate is 15%: see r 49 of the National Health Regulations.

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Part 3A Adjusting calculations

3A.1 Calculation of appropriate payment may be adjusted

(1) If, after a calculation (the primary calculation) is made under section 2.6 or 3.3, the Council receives information (new information) on a matter mentioned in subsection 2.2 (1) that, if received earlier, would have affected the result of that calculation, the Council may make a further calculation taking account of the new information.

(2) Unless subsection (3) applies, a further calculation may be made only if the new information is received by the Council:

  1. during the financial year in which the particular quarter concerned occurs; or

  2. within the period provided under subsection 82L (2) of the Act for the giving of the report, described in that subsection, that relates to the particular quarter concerned.

(3) A further calculation may be made as a result of new information received later than is allowed under subsection (2) if the Council is satisfied that:

  1. the new information demonstrates that, in preparing its report in respect of information that the Council is required to acquire under subsection 82G (1) of the Act, the registered organisation made a significant error; and

  2. it is in the best interests of registered organisations generally, and good administration of the Fund, that a further calculation be made.

Example 1

Under subsection (2), new information could be considered for a calculation made for the September quarter of 1998 if the new information was received by the Council at any time until, and including, 30 September 1999.

This is because the registered organisation concerned had until the end of September 1999 to give the Council information to enable the Council to prepare its report to the Minister about the 1998-1999 financial year (see subsection 82L (2) and section 82PA of the Act).

Example 2

Under subsection (2), new information could not be considered for a calculation made for the June quarter of 1999 if the information was received by the Council after 30 September 1999.

This is because 30 September 1999 was the last day for the Council to receive information about registered organisation operations in the 1998-1999 financial year to enable it to prepare its report to the Minister (see subsection 82L (2) of the Act).

3A.2 Determination of adjustment payments

If a further calculation made under section 3A.1 shows that a payment made under subsection 73BC (6) or (12) was not appropriate, the Council may determine:

  1. under subsection 73BC (6) - that an adjusting amount is an appropriate payment in relation to the registered organisation concerned; or

  2. under subsection 73BC (12) - that an adjusting amount is to be paid to the registered organisation concerned.

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3A.3 Application of adjustment payments

(1) In general, a determination under section 3A.2 takes effect in the first reinsurance settlement period for the registered organisation concerned that follows the making of the determination:

  1. if subsection 73BC (6) applies - as an appropriate payment in relation to that organisation; or

  2. if subsection 73BC (12) applies - as an amount to be paid to that organisation.

(2) However, if the Council is satisfied that the financial stability of the registered organisation, or the Fund, would be unreasonably affected by the application of subsection (1), the determination takes effect as payments (proportional, or as otherwise decided by the Council) in:

  1. the reinsurance settlement period mentioned in that subsection; and

  2. as many subsequent reinsurance settlement periods as the Council determines to be reasonable.

(3) In this section:

reinsurance settlement period means the period following the end of each quarter, during which the Council determines whether payment should be made to, or received from, each registered organisation in respect of that quarter.

unreasonably affected means:

  1. in the case of an organisation having to pay an adjusting amount under subsection 73BC (6) of the Act - that the amount of the payment is so large that, in the opinion of the Council, the financial stability of the organisation would be at risk; or

  2. in the case of a payment having to be made under subsection 73BC (12) of the Act - that the amount of the payment would be greater than 1% of the amount, at the time the determination is made, of the State or Territory pool of the Fund from which the payment is to be drawn.

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Part 3 Payments out of the Fund

3.1 Purpose of Part

The purpose of this Part is to set out principles for determining the method of, and the matters to be taken into account in, calculating the amounts to be paid out of the Fund to registered health benefits organisations, and related matters.

3.2 Matters to be taken into account

(1) The same matters are to be taken into account in calculating the amounts to be paid out of the Fund to a registered organisation, for a particular quarter and in respect of a particular State, as are to be taken into account under section 2.2.

(2) For this section, the Council may make a correction to information received from a registered organisation if it considers the information to be inaccurate in a way that would produce an incorrect calculation.

(3) Sections 2.3, 2.4 and 2.5 have the same application to this section as they have to section 2.2.

3.3 Method of calculation

The same method is to be applied in calculating the amount (if any) to be paid out of the Fund in respect of a particular State to a registered organisation as is to be applied under section 2.6 in calculating the amount (if any) to be paid into the Fund.

3.4 Amount of payment

If the amount calculated under paragraph 2.6 (a) for a registered organisation is more than the amount calculated under paragraph 2.6 (e), the Council will determine, under subsection 73BC (12) of the Act, that an amount equal to the difference is the appropriate payment for the organisation for the quarter concerned.

3.5 Manner and time of payment

(1) For subsection 73BC (12) of the Act, the Council may decide that an amount is to be paid out of the Fund to a registered organisation by instalments, as money becomes available in the Fund.

(2) When an instalment payment is made, the Council must simultaneously make a payment to all registered organisations to which payment is due, proportionally in accordance with the total amount due to each.

(3) Whether or not payment is made by instalments, the Council must make payments out of the Fund without unnecessary delay, and, in any event, must, for a particular quarter, make all due payments out no later than 14 days after the last due payment in is made.

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Part 4 Revocation of previous Determination

4.1 Revocation

The Determination made under subsection 73BC (5B) of the Act on 21 September 1995 is revoked.

Notes to the Health Benefits Reinsurance (Trust Fund Principles) Determination 1998

Note 1

The Health Benefits Reinsurance (Trust Fund Principles) Determination 1998 (in force under Section 73BC (5B) of the National Health Act 1953) as shown in this compilation is amended as indicated in the Tables below.

Table of Principles
Title
Date of notification in Gazette
Date of commencement
Application, saving or transitional provisions

Health Benefits Reinsurance (Trust Fund Principles) Determination 1998

16 July 1998
(see Gazette 1998, No. S367)

16 July 1998

 

Health Benefits Reinsurance (Trust Fund Principles) Amendment Determination 1999 (No. 1)

13 Oct 1999
(see Gazette 1999, No. GN41)

1 Oct 1999

 

Health Benefits Reinsurance (Trust Fund Principles) Amendment Determination 2000 (No. 1)

3 May 2000
(see Gazette 2000, No. GN17)

3 May 2000

 

Table of Amendments

ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted

Provision affected
How affected

Ss. 1.3A-1.3C

ad. 1999 No. 1

 

rep. 2000 No. 1

S. 2.2

am. 1999 No. 1; 2000 No. 1

Part 3A
(ss. 3A.1-3A.3)

ad. 2000 No. 1

Ss. 3A.1-3A.3

ad. 2000 No. 1

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