Publications

Topics in this section

PHIAC Charters

PHIAC Corporate Plan

Industry Risk Management

Private Patients' Hospital Charter

Insure? Not Sure? (pdf format)

PHIAC Annual Report

Operations Of The Private Health Insurers Annual Report

Financial and Statistical tables of past Operations Annual Reports

Industry Statistics

Presentations

Discussion Papers

Publications

Operations Of The Private Health Insurers Annual Report 2006-07

Glossary

Acute accommodation/patient

An episode of acute care for an admitted patient where the principal clinical intent is to:

• manage labour (obstetric)

• cure illness or provide definitive treatment of injury

• perform surgery

• relieve symptoms of illness or injury (excluding palliative care)

• reduce severity of illness or injury

• protect against exacerbation or complication of an illness or injury which could threaten life or normal functions

• perform diagnostic or therapeutic procedures.

This does not include nursing home type patients.

Age based pool (ABP)

The age based pool equalises benefits for the Risk Equalisation Levy. Pooling is based on adding a proportion of applicable benefits, above age 55, in a sliding scale.

Table 41. Age based pool

Agreement

Means an agreement entered into between a medical practitioner, within the meaning of that term in subsection 3 (1) of the Health Insurance Act 1973, and an insurer under which the practitioner agrees to accept payment by the insurer in satisfaction of the amount that would, apart from the agreement, be owed to the practitioner in relation to the treatment provided to the insured person.

Average single equivalent units (SEUs) and average policies/insured persons

These are calculated as the weighted average of the year’s four quarterly averages.

Average general treatment only SEU

This is calculated using general treatment only policies.

Average hospital treatment SEU

This is calculated using hospital treatment policies.

Average total general treatment SEU

This is calculated using combined hospital treatment and general treatment policies, and general treatment only policies.

Average total SEU

This combines total hospital treatment policies plus general treatment only policies.

Average policies/insured persons

The weighted average of the year’s four quarterly averages. In reports prepared before 1999–2000, the average was calculated using the membership statistics at 30 June of the current year and 30 June of the previous year. The average of the June figures was acceptable when there was a relatively constant rate of growth or decline in the four quarters. However, over recent years the rate of growth and decline have not been constant, and using only the figures from the first and last quarters would give too much weight to those quarters and too little to the intermediate quarters.

Calculated deficit

Each organisation’s share of the state risk equalisation pool. The figure is calculated by multiplying the organisation’s average SEUs by the average gross deficit (per SEU) for the state.

Classes of health insurance

The three classes of health insurance are hospital treatment only cover, a combination of hospital treatment and general treatment cover, and general treatment only cover.

Chronic disease management program (CDMP)

A CDMP is intended to reduce complications in a person with a diagnosed chronic disease and prevent or delay the onset of chronic disease for a person with identified multiple risk factors for chronic disease.

Community rating

Community rating means that health funds cannot charge members different premiums for the same level of cover because of their age (other than age at entry), claims history, gender, health or place of residence.

Episode

The period of admitted patient care between a formal or statistical admission and a formal or statistical separation (for example, discharge, death) characterised by only one care type.

External management

For the purposes of this report and the Act, an external manager is a person appointed by PHIAC under section 217–10 and 217–15 of the Private Health Insurance Act. The duties and powers of external managers are set out in subdivision 217–C of the Act.

For-profit organisation

An insurer that is registered, or taken to be registered, under part 4–3 of the Act as a for-profit insurer. For-profit insurers are subject to different requirements regarding the assets contained in its health benefits fund/s (see division 137 of the Act) and are subject to income tax (also see not-for-profit organisation).

General treatment

General treatment is treatment (including the provision of goods and services) that is intended to manage or prevent a disease, injury or condition and is not hospital treatment.

General treatment ambulance only

Means policies that cover ambulance services but do not cover any other hospital or general treatment.

Gross deficit

For the reinsurance arrangements means 79% of the total amount of benefit payments reported by organisations. For risk equalisation means total benefits included from the age based pool and high cost claimants pool.

Gross benefit

Means the total eligible benefits paid by the insurer in respect of an insured person in a quarter.

Gross margin

The difference between total contribution income and total cost of benefits, which include state levies, expressed as a percentage.
Health insurance business

The business of undertaking liability, by way of insurance or an employee health benefits scheme, that relates to hospital treatment and general treatment.

Health Benefits Reinsurance Trust Fund (HBRTF)

The pool of monies used for the reinsurance arrangements that underpin community rating in private health insurance. This pool was replaced by the Risk Equalisation Trust Fund on 1 April 2007. Reinsurance in private health insurance is not to be confused with reinsurance in general insurance.

Health related business

Any one or more of the following:

a) a business of providing goods or services (or both) to manage or prevent diseases, injuries or conditions

b) a business of undertaking liability, by way of insurance, to indemnify people who are ineligible for Medicare for costs associated with providing treatment, goods or services that are provided to:

1. those people in Australia

2. manage or prevent diseases, injuries or conditions

c) a business of providing a financial service to assist people insured under complying health insurance products to meet the costs associated with treatment, goods or services that are provided to manage or prevent diseases, injuries or conditions

d) any other business, or business included in a class of businesses, specified in the Private Health Insurance (Health Benefits Fund Policy) Rules for the purposes of this paragraph.

High cost claimants pool (HCCP)

Deals with benefits not equalised by the age based pool. Pooling is based on applicable benefits accumulated by claimant for the current and preceding three quarters. The percentage of the benefits to be pooled will be 82%. A limit is imposed on total pooling under the ABP and HCCP of 82% of gross benefits. When assessing HCCP pooling in each quarter, the cumulative residual after ABP pooling is compared with the threshold at that time.

HCCP claimants

Means the number of insured persons whose total eligible benefits paid by the insurer exceed the threshold after applying age based pooling.

HCCP net benefits

Means applicable benefits after age based pooling that exceed the threshold. A total of 82% of net benefits in excess of the threshold are to be pooled.

HCCP threshold

Means the designated threshold, which is $50,000.

Hospital treatment

Treatment (including the provision of goods and services) that is:

a) intended to manage a disease, injury or condition

b) provided to a person:

1. by a person who is authorised by a hospital to provide the treatment

2. under the management or control of such a person

c) either:

3. provided at a hospital

4. provided or arranged with the direct involvement of a hospital.

Hospital-substitute treatment

Means general treatment that:

a) substitutes for an episode of hospital treatment

b) is any of, or any combination of nursing, medical, surgical, podiatric surgical, diagnostic, therapeutic, prosthetic, pharmacological, pathology or other services or goods intended to manage a disease, injury or condition

c) is not specified in the Private Health Insurance (Complying Product) Rules as a treatment that is excluded from this definition.

Inspector

For the purposes of this report and the Act, an inspector is a person appointed by PHIAC under section 214–1 of the Act to investigate the affairs of an insurer.

Insured person

All persons covered by health insurance policies.

Joint policy

For the purpose of the Council Administration Levy, means a policy under which two or more persons are insured.

Known-gap agreement

An agreement where the medical practitioner agrees to accept a payment by the insurer in part satisfaction of the amount owed and the patient has provided informed financial consent so that the gap or out-of-pocket expenses to be paid by the insured person are known in advance.

Length of stay

The time a patient stays in hospital treatment for an episode of care, measured in patient days. A same-day patient is allocated a length of stay of one patient day. The length of stay of an overnight stay patient is calculated by subtracting the date the patient is admitted from the date of separation.

Lifetime Health Cover

A private health insurer must increase the amount of premiums payable for hospital cover in respect of an adult if the adult did not have hospital cover on his or her Lifetime Health Cover base day (generally the 1 July following the adult’s 31st birthday). The penalty is 2% above the base rate for each year over 30 at the time of joining. For example, a person who joins at 40 will pay 20% more than a person who takes out hospital treatment cover before their 31st birthday. The maximum loading a person can be required to pay is 70%, payable by people who first take out hospital treatment cover at age 65 or older. A private health insurer must stop charging premiums above the base rate for hospital cover in respect of an adult, if the adult has had hospital cover for a continuous period of 10 years (commencing from 1 April 2007).

Management expenses

The operating expenses incurred in the course of normal fund operations (i.e. salaries, commission, rent). The percentage relationship between management expenses and contribution income will be influenced by such factors as the structure of an organisation, the level of contribution rates, assistance from employers in the case of some restricted membership organisations and establishment costs for new organisations.

Medicare Benefits Schedule

A fee set by the Australian Government for services provided by medical professionals for which a rebate is payable.

Medicare Benefits Schedule Fee rebate

The government provides a rebate on nearly all medical fees as listed in the Medicare Benefits Schedule (MBS). This rebate is currently 75% of the MBS fee for part of an episode of hospital treatment or hospital-substitute treatment, and 85% of the MBS fee for medical fees incurred out-of-hospital.

Medicare Levy Surcharge

An Australian Government private health insurance initiative to encourage high-income earners to take out private health insurance. The surcharge imposes an additional 1% on top of the Medicare levy for high-income earners who are not policy holders to private hospital treatment cover offered by an insurer, or to high-income earners with a maximum excess of $500 a year for single policies, or more than $1,000 for all other policies.

Membership statistics

Membership statistics refer to an insurer’s number of policies and the number of insured persons covered under those policies (coverage).

Net margin

Gross margin less management expenses, expressed as a percentage of contribution income.

No-gap agreement

Means an agreement where the medical practitioner agrees to accept a payment by the insurer in full satisfaction of the amount owed so that there is no gap, or no out-of-pocket expenses to be paid by the insured person.

Not-for-profit

An insurer that is registered, or taken to be registered, under part 4–3 of the Act as a not-for-profit insurer. Not for profit insurers are exempt from income tax under section 50–30 of the Income Tax Assessment Act 1997.

Nursing home type patient (NHTP)

Means a patient in the hospital who has been provided with accommodation and nursing care, as an end in itself, for a continuous period exceeding 35 days.

Open funds

Open health benefits funds have no restrictions on who may join.

Outstanding claims

Claims that have been:

• reported and have not yet been settled

• incurred but not yet reported (incurred but not reported)

• incurred but not yet fully settled (incurred but not enough reported)

• administratively finalised but which may be reopened.

Payments to or from HBRTF and RETF

The net amount paid or payable to or from the Benefits Reinsurance Trust Fund and Risk Equalisation Trust Fund in respect of the financial year. A negative figure denotes a payment to the pool.

Percentage point

A unit expressing the difference between two percentages. A fall from 10% to 9% would be a fall of one percentage point.

Policy holder

A holder of a policy that is referable to a health benefits fund.

Private health insurance policy

Means an insurance policy that covers hospital treatment or general treatment or both (whether or not it also covers any other treatment or provides a benefit for anything else).

Private Health Insurance Rebate

The Australian Government rebate in respect of the premium paid for private health insurance. The rebate applies to all hospital treatment and general treatment insurance.

Unearned premium liabilities

The unearned premium liability is the liability determined in respect of premiums paid in advance, being premiums paid for policies prior to the date of valuation which provide cover in respect of some period beyond the valuation date.

Prudential standards

The standards currently in force are:

a) Solvency Standard – schedule 2 of the Private Health Insurance (Health Benefits Fund Administration) Rules 2007

b) Capital Adequacy Standard – schedule 3 of the Private Health Insurance (Health Benefits Fund Administration) Rules 2007.

Reinsurance

A system for sharing the hospital treatment costs of high-risk groups between insurers that ceased on 30 March 2007.

Restricted access group

Restricted access organisations typically draw from an employment group, professional association or union.

Risk equalisation

A system for sharing the hospital treatment costs of high-risk groups and high cost claims between insurers that commenced on 1 April 2007.

Risk Equalisation Trust Fund (RETF)

The pool of monies established on 1 April 2007 that is used for the risk equalisation arrangements that underpin community rating in private health insurance.

Rounding

Most monetary amounts shown in tables and figures have been rounded to the nearest $1,000. Where numbers have been rounded, discrepancies may occur between sums of component items and totals. However, actual figures have been used in respect of the membership statistics reported. Most percentage amounts shown are rounded to one decimal place.

Single equivalent unit (SEU)

SEUs are used as a standard measure, as the number of persons covered under a policy may vary. Single, 2+ persons no adults and single parent policies are counted as one SEU. Couple, family and 3+ adults are counted as two SEUs.

Single policy

For the purpose of the Council Administration Levy, means a policy under which only one person is insured.

Solvency multiple

A measure of a health benefits fund’s compliance with the Solvency Standard, the solvency multiple is equal to total health benefit fund capital divided by the solvency requirement (as calculated by application of schedule 2 of the Private Health Insurance (Health Benefits Fund Administration) Rules 2007).

State levies

Amounts payable to the New South Wales and Australian Capital Territory governments in respect of levies on policy holders of insurers for ambulance cover

Go to next page

Go back to start

Top of Page

| Home | About Us | Circulars | Contact Us | Gap Products | Health Funds | Industry Statistics | News & Updates | Publications | Standards & Legislation | Forms

Private Health Insurance Administration Council

Suite 16, Level 1, 71 Leichhardt Street, KINGSTON ACT 2604
Telephone 02 6215 7900 | Facsimile 02 6215 7977 | Email phiac@phiac.gov.au

Last modified: 22 July, 2005

| Copyright | Privacy Statement | Disclaimer |
© Copyright Private Health Insurance Administration Council, 2001