Since 2003, the Federal Government has progressively released a series of reforms for medical indemnity the key aims of which have been to ensure that medical indemnity in Australia:
- Is financial sustainable, transparent and comprehensible to all parties
- Provides affordable, comprehensive and secure cover for all doctors
- Enables Australia's medical workforce to provide care and continue to practise to its full potential; and
- Safeguards the interests of consumers and the community.
MIGA was extensively involved in consultation with the Federal Government on implementation of the new arrangements.
We believe the Government's initiatives have had a significant stabilizing effect on the industry and have positively impacted the affordability of medical indemnity insurance for doctors.
An outline of each of the key components of the Federal Government's package of benefits is provided below.
Premium Support Scheme (PSS)
The PSS was introduced from 1 January 2004 to assist doctors with affordability of medical indemnity premiums. Essentially, doctors are eligible for the PSS if their medical indemnity costs exceed 7.5% of their gross income from medical practice. If so, PSS will provide funding for 60% of the amount above this threshold.
In addition to this:
- Doctors who were previously entitled to the Medical Indemnity Subsidy Scheme (MISS) maintain this entitlement (to ensure that no doctor previously receiving a subsidy under MISS guidelines will receive less support under the PSS)
- Doctors who are procedural GPs in a designated rural area will receive funding for 75% of the difference between their premium and that of a Non-Procedural GP in similar circumstances
The PSS is managed by medical indemnity insurers and is offset against a doctor's total indemnity cost, excluding government charges such as stamp duty and GST.
For more detail about the operation of the PSS please refer to our Combined Financial Services Guide and Product Disclosure Statement.
Run-Off Cover Indemnity Scheme (ROCS)
The aim of ROCS is to provide doctors with access to free and unlimited run-off cover for claims against:
- Doctors who are aged 65 or more who permanently retire from private medical practice
- Doctors who die or are forced to retire permanently due to permanent disablement
- Doctors on maternity leave
- Other doctors who have permanently left private medical practise for a continuous period of three or more years, and
- Doctors in another qualifying group determined by regulation to be eligible.
ROCS is funded by a charge on medical indemnity insurers which is incorporated into each doctor's annual insurance premium.
Once cover is triggered, it is provided for as long as the doctor has ceased private medical practise and will be managed by the doctor's last insurer.
High Cost Claim Indemnity Scheme (HCCS)
The HCCS was introduced from 1 January 2003 as a means to stabilize medical indemnity premiums by reducing the cost of large claims to insurers.
The HCCS funds 50% of all claims in excess of $300k up to the limit of a doctor's insurance cover (note when first introduced it provided funding for claims above $2m, but the attachment point was reduced to $300k from 1 January 2004).
Key features of the HCCS are:
- The HCCS does not directly affect doctors as it involves a reimbursement of claims costs to insurers
- It will only provide a subsidy to the level of a doctor's policy limit with their medical indemnity insurer (which is currently $20m with MIGA)
- It does not reimburse the cost of claims for incidents which occur outside Australia nor for the treatment of Public Patients in Public Hospitals (note Medical Insurance Australia can still provide this cover).
Exceptional Claims Indemnity Scheme (ECS)
The ECS came into effect on 1 January 2003. It is intended that the Federal Government will cover the cost of claims that exceed an agreed threshold which is currently set at $20m.
The intention is that doctors have protection for claims that may ultimately resolve for an amount above the level of their policy cover with their insurer.
The cover is the same as the cover provided by the medical indemnity insurer at the time the claim is notified.