Summary of the Medical and Midwife Indemnity Legislation Amendment Bill 2019
From July 1, 2020 new medical indemnity reform legislation will come into effect in Australia which will provide greater certainty and protection for patients and health professionals.
The current Government subsidised medical indemnity scheme is administered via contracts with four insurance providers. The new law aims to create a level playing field for medical indemnity insurers. It essentially extends the scheme to more insurers who must provide universal cover to medical practitioners.
What is medical indemnity insurance?
Medical indemnity is like professional indemnity insurance for health practitioners. In Australia, all registered health professionals must be covered by indemnity insurance. Privately practising health practitioners must purchase their own indemnity insurance (but may be covered by an employers’ insurance policy). Medical services provided under the public health system are covered by State and Territory professional indemnity arrangements as part of their employment arrangements.
Medical indemnity insurers provide insurance to pay the cost of claims against medical practitioners for medical malpractice proceedings.
A summary of the new Australian Midwifery and Indemnity Law
The Medical and Midwife Indemnity Legislation Amendment Bill 2019 is designed to streamline the various medical indemnity support schemes for medical practitioners.
It requires all medical indemnity insurers to provide universal cover to medical practitioners. The Premium Support Scheme (PSS) will cease.
There will be a separate allied health practitioner (including pharmacists) high cost claims scheme and simpler eligibility and claim requirements for the Midwife Professional Indemnity Scheme (MPIS).
The new law amends three acts:
- Medical Indemnity Act 2002
- Medical Indemnity (Prudential Supervision and Product Standards) Act 2003 (MI(PS&PS) Act)
- Midwife Professional Indemnity (Commonwealth Contribution) Scheme Act 2010.
It repeals (removes) two, now redundant, acts:
- The Medical Indemnity (Competitive Advantage Payment) Act 2005
- The Medical Indemnity (UMP Support Payment) Act 2002.
The history of indemnity cover for health professionals in Australia
As little as 25 years ago, unlike other professionals including lawyers and accountants, doctors and health professionals were not required to have professional indemnity insurance.
In 2002, Australia’s largest medical indemnity provider United Medical Protection went into liquidation leading to a spike in premiums. The Federal Government introduced a medical indemnity reform package to essentially subsidise medical indemnity. The package established support schemes to subsidise the medical indemnity market to stabilise the medical industry by providing government funding support for claims, costs and premium subsidies underpinning medical indemnity insurance.
The schemes were designed to support affordable health care and to ensure that patients who make legitimate claims against medical practitioners and midwives are able to be compensated for any loss they have suffered.
A First Principles Review of the Medical Indemnity Fund – undertaken in 2018 for the Department of Health – found that
- at a high level, reforms implemented since 2002 (including the Commonwealth interventions) have improved the stability and profitability of the medical indemnity insurance industry and, in turn, improved the availability and affordability of insurance premiums
- improved monitoring of the schemes will enable better assessment of the impact of any changes into the future
- there is merit in continuing the schemes, which is strongly supported by stakeholders
- the schemes largely remain fit for purpose but all bar one could be improved.
What does the Medical and Midwife Indemnity Legislation Amendment Bill 2019 mean for patients and the community?
It is important for patients and the broader community that all doctors and other health professionals have proper, comprehensive, indemnity insurance cover. This ensures that there are funds to be distributed as fair compensation to people who have proven that they have suffered as a result of malpractice (negligence) by the health professional.
Other key professional groups in Australia are required to have similar cover.
This legislation ensures there is universal cover – so all medical practitioners, midwives and allied professionals have access to cover.
It also clarifies loopholes in relation to the provision of cover for doctors who have retired.
The legislation also aims to ensure profitability and continuity of the medical insurance industry which is vital to prevent a similar collapse to the one that occurred in 2002.
What does the Medical and Midwife Indemnity Legislation Amendment Bill 2019 mean for doctors and other health professionals?
- All medical indemnity insurers must to provide universal cover to medical practitioners. This guarantees that every medical practitioner in private practice can access indemnity insurance.
- Currently medical practitioners can only access the Premium Subsidy Scheme (PSS) if their medical indemnity insurer has entered into a contract with the Commonwealth. The law will remove the existing contract requirements for the PSS so all eligible medical practitioners can access the PSS.
- Exceptional cost claims can be made under a separate scheme for medical practitioners.
- It maintains support for high cost claims and exceptional claims made against allied health professionals.
- Medical indemnity schemes currently exclude privately employed practising midwives. The law gives them access to professional indemnity insurance.
- Insurers can increase the current maximum risk surcharge to 200% of the premium, up from 100%. This risk surcharge is paid by doctors deemed to have deviated from good medical practice. It clarifies eligibility for the Run-off Cover Schemes (ROCS) and permits access for medical practitioners and eligible midwives retiring before the age of 65.
The Issue of Run-off Cover
Claims against health professionals are often made some time after the malpractice has occurred, in some cases after a practitioner has retired or stopped practising. The objective of the Run Off Cover Schemes (ROCS) is to ensure that once medical practitioners cease private practice (permanently or, in some limited cases, temporarily), there continues to be insurance to cover any claims relating to when they were practising privately (without the need for the medical practitioner to continue to hold medical indemnity insurance after they cease private practice). Under the ROCS the Australian Government is essentially acting as reinsurer for claims arising after medical practitioners cease private practice.
Currently, after three years of not engaging in private medical practice, the practitioner becomes eligible for ROCS and is no longer charged for run-off cover. The new law amends the ROCS eligibility requirements to provide that practitioners who have retired permanently from private medical practice (regardless of their age) are eligible for ROCS, without requiring them to wait three years.
Our expert health law team can help you if you are a patient, or a patient’s family member, who is unhappy with the care you have received by a health professional and wish to make a claim against them.
Simply call us on 1800 874 949 or contact us online for a confidential discussion.