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Commonwealth Government reviews medical indemnity schemes – cornerstones of stability

Sep 19, 2017

The Commonwealth Government is conducting a First Principles Review of the medical indemnity schemes. The Government released a consultation paper calling for submissions by 13 October 2017.

Avant has made a submission strongly supporting the continuation of these schemes. The schemes were introduced in the early 2000s following the medical indemnity crisis and have helped to bring stability to the indemnity system and premiums. Any reduction in medical indemnity schemes would have the potential to impact how medical indemnity works and, in particular, what premiums doctors pay.

In the early 2000s the Government introduced a suite of reforms that brought stability to the medical indemnity sector which was in crisis following the collapse of HIH and UMP. These included tort law reforms and a series of schemes designed to maintain and provide premium affordability for doctors.

Many of the schemes represent a societal support to doctors and their patients. The schemes help ensure that patients are compensated in the event of medical negligence and help manage financial volatility.

While some doctors lived and breathed the crisis and were instrumental in bringing about a stable system, many others may not have the same visibility of the schemes; a brief summary is below.

Government insurance schemes

Exceptional Claims Scheme (ECS)

The ECS is the Government's scheme to cover doctors for 100% of the cost of private practice claims that are above the limit of their medical indemnity contracts of insurance, so that doctors are not personally liable for very high claims. The scheme is fully funded by the Government. Doctors are not required to make a contribution.

Premium Support Scheme (PSS)

The PSS assists eligible doctors to meet the costs of their medical indemnity insurance where a doctor's gross medical indemnity costs exceed a percentage of their gross private medical income.

High Cost Claims Scheme (HCCS)

The HCCS reimburses medical indemnity insurers 50% of the insurance payout over $300,000 up to the limit of the practitioner's cover, for claims notified on or after 1 January 2004. From 1 July 2018 the threshold increases from $300,000 to $500,000.

Run-off Cover Scheme (ROCS)

The ROCS provides secure insurance for doctors who have left private practice. It ensures that eligible doctors have medical indemnity cover for incidents that might have occurred during their careers but had not been notified to insurers. The ongoing cost of ROCS will be met over time by a ROCS support payment paid by insurers.

Significant impact if schemes were reduced

Indemnity schemes reduce the cost of medical indemnity premiums, which in turn reduce costs for healthcare payers. Removing or reducing the support provided by these schemes would lead to increased healthcare costs, which would in turn have to be met by patients.

Medical indemnity has historically been volatile in Australia and overseas, and this remains an ongoing risk. Introducing uncertainty into this sector is counterproductive and if the schemes were removed, it is not clear how the system would respond in the event of another period of crisis.

Medical indemnity schemes serving patients well  

Avant’s position is that the medical indemnity schemes have served the Australian community well. Doctors have been able to access medical indemnity cover and there has been stability in premiums, which have both helped to maintain patient access.

Submissions are now closed, thank you to all our members who provided feedback.

Share your view

We welcome your feedback on this article – email the Editor at: editor@avant.org.au