Table of contents

Related Links

You are in:

NOTE 20: Liabilities Administered on Behalf of Government

Payables
Note 20A: Suppliers

	2011 $’000	2010 $’000
Trade creditors and accruals	11,430	16,852
*Total suppliers*	11,430	16,852
Current supplier payables are represented by:
External parties	11,430	16,852
*Total suppliers*	11,430	16,852

Settlement is usually made within 30 days.

Note 20B: Subsidies

	2011 $’000	2010 $’000
Payable to external entities	52,649	41,328
*Total subsidies*	52,649	41,328
Total subsidies are expected to be settled in:
Less than 12 months	52,649	41,328
*Total subsidies*	52,649	41,328

Note 20C: Personal Benefits

	2011 $’000	2010 $’000
Indirect	1,130,046	1,135,755
Total personal benefits	1,130,046	1,135,755
Total personal benefits are expected to be settled in:
Less than 12 months	1,130,046	1,135,755
*Total personal benefits*	1,130,046	1,135,755

Note 20D: Grants

	2011 $’000	2010 $’000
Public sector:
Australian Government entities (related entities)	14,701	7,264
State and Territory Governments	27,106	14,347
Local Governments	2,006	2,149
Private sector:
Non-profit organisations	446,816	419,241
*Total grants*	490,629	443,001
Total grants are expected to be settled in:
Less than 12 months	490,629	443,001
*Total grants*	490,629	443,001

Settlement is usually made according to the terms and conditions of each grant. This is usually within
30 days of performance or eligibility.

Note 20E: Other Payables

	2011 $’000	2010 $’000
Department of Veterans Affairs	0	2,946
*Total other payables*	0	2,946
Total other payables are expected to be settled in:
Less than 12 months	0	2,946
*Total other payables*	0	2,946

Provisions
Note 20F: Subsidies

	2011 $’000	2010 $’000
Medical Indemnity provision (Note 20H)	385,000	379,000
*Total subsidies*	385,000	379,000
Total subsidies are expected to be settled in:
Less than 12 months	44,340	43,649
More than 12 months	340,660	335,351
*Total subsidies*	385,000	379,000

Note 20G: Personal Benefits

	2011 $’000	2010 $’000
Indirect	781,237	770,585
*Total personal benefits*	781,237	770,585
Total personal benefits are expected to be settled in:
Less than 12 months	781,237	770,585
*Total personal benefits*	781,237	770,585

Note 20H: Subsidies – Medical Indemnity Provision

The Department has responsibility for policy and legislative control of medical indemnity, while Medicare Australia has responsibility for administering the following elements of the Government’s medical indemnity package:

Incurred But Not Reported Scheme (IBNRS);
High Cost Claims Scheme (HCCS);
Exceptional Claims Scheme (ECS); and
Run-Off Cover Scheme (ROCS).

A summary of each of the schemes is provided below.

The Australian Government Actuary (AGA) has provided advice on each of the schemes, and financial estimates of the liabilities of the IBNRS, HCCS, ECS and ROCS. The AGA notes that estimates of this type are by their nature subject to inherent and unavoidable uncertainty.

Incurred But Not Reported Scheme (IBNRS)

The IBNRS provides for Medicare Australia to make payments to United Medical Protection Limited (UMP) and Australasian Medical Insurance Limited (AMIL) for claims made in relation to their IBNR liability at 30 June 2002. An actuarial assessment is performed to arrive at a reasonable estimate of the liability based on assumptions that are valid at the time of the assessment. Some claims that will be payable under the IBNRS may also be eligible for payment under the HCCS.

Based on advice from the AGA a revised IBNRS liability of $68,000,000 (2010: $77,000,000) was included in the Schedule of Administered Items as at 30 June 2011.

High Cost Claims Scheme (HCCS)

Under HCCS, the Government pays 50% of the cost of claims made to all Medical Indemnity Insurers (MIIs) that exceed a specified threshold, up to the limit of the practitioner’s insurance. The threshold to be applied depends on the date of notification of the claim, as follows:

· from 22 October 2003 to 31 December 2003 – $500,000; and

· on or after 1 January 2004 – $300,000.

As noted above, some claims payable under the IBNRS will also be eligible for payment under the High Cost Claims Scheme. An administered liability of $258,000,000 (2010: $244,000,000) for the HCCS has been recorded in the Schedule of Administered Items based on advice from the AGA and from MIIs regarding notified claims that are eligible under the HCCS.

Exceptional Claims Scheme (ECS)

The ECS provides coverage for practitioners for the cost of medical indemnity claims that exceed the limit of their contract of insurance. To be covered by the ECS, the practitioner must have medical indemnity insurance cover to at least $15,000,000 for the period 1 January to 30 June 2003 and $20,000,000 from 1 July 2003. There have been no payments under the ECS during 2011 (2010: $0). Current actuarial data indicates no present obligation and therefore no liability under this scheme in respect of claims not notified at the reporting date. Given the nature of the scheme, a contingent liability is included in the Administered Contingencies.

Run-Off Cover Scheme (ROCS)

ROCS provides free run-off cover for specific groups of medical practitioners including those retired and over 65, on maternity leave, retired for more than three years, retired due to permanent disability or the estates of those that have died. This scheme is funded through the collection of support payments imposed as a tax on MIIs.

ROCS commenced on 1 July 2004. A liability of $59,000,000 (2010: $58,000,000) has been included in the Schedule of Administered Items at 30 June 2011. This amount is based on advice from the AGA, and represents the present value of any future claims that may be made by practitioners who were eligible for ROCS at the commencement of the scheme.

Prior to ROCS, a portion of the ROCS liability was included as part of the IBNRS liability. The AGA advises that the estimate of the liability is subject to inherent uncertainty, and the true value of this amount will not be known for some time.

The table below provides a summary of the movement of medical indemnity liabilities in the Department’s Schedule of Administered Items for the financial year ended 30 June 2011. This value is included in the subsidies payable liability in the Schedule of Administered Items.

Balance as at 30 June 2010
$’000
Claims
paid
$’000
Schedule of Administered Items impact
$’000
Balance
as at 30
June 2011
$’000

Medical Indemnity Liabilities

Incurred But Not Reported Scheme
77,000
(13,410)
4,410
68,000

High Cost Claims Scheme
244,000
(24,537)
38,537
258,000

Run-Off Cover Scheme
58,000
(5,702)
6,702
59,000

Total
379,000
(43,649)
49,649
385,000

	Balance as at 30 June 2010 $’000	Claims paid $’000	Schedule of Administered Items impact $’000	Balance as at 30 June 2011 $’000
Medical Indemnity Liabilities
Incurred But Not Reported Scheme	77,000	(13,410)	4,410	68,000
High Cost Claims Scheme	244,000	(24,537)	38,537	258,000
Run-Off Cover Scheme	58,000	(5,702)	6,702	59,000
*Total*	379,000	(43,649)	49,649	385,000

prev page | TOC | next page