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					            OVERVIEW OF HIC




    We were established as a Commonwealth statutory authority in 1974 to
    administer what has become Australia’s universal health insurance scheme,
    Medicare. However, we have grown over the years to administer a wide range
    of other health-related programs on behalf of the Australian Government.
    Our key programs are:

    > Medicare
    > Pharmaceutical Benefits Scheme
      (and Repatriation Pharmaceutical Benefits Scheme)
    > Australian Organ Donor Register
    > Australian Childhood Immunisation Register.

    We also administer a range of programs relating to general practice, including the
    Medical Indemnity Scheme, the General Practice Immunisation Incentives Scheme,
    the Practice Incentives Program, the Rural Retention Program, and the General
    Practice Registrars’ Rural Incentive Payments Scheme.

    We administer community rebate and reimbursement schemes, such as the
    Higher Education Contribution Scheme (HECS) Reimbursement Scheme and the
    30% Private Health Insurance Rebate. We facilitate payments through the Family
    Assistance Office in partnership with Centrelink, the Australian Taxation Office and
    the Department of Family and Community Services (FaCS).

    We also administer the Compensation Recovery Program for Medicare and nursing
    home benefits, as well as the Balimed scheme for victims of the Bali bombings
    in October 2002.

    We arrange claims processing and payments for the Department of Veterans’
    Affairs (DVA) (veterans’ treatment accounts), the Office of Hearing Services,
    the Health Department of Western Australia, and the Vietnam Veterans’
    Children’s Program.

    ‘Appendix A ∙ Statutory reports’, provides additional information about our
    functions, authority, delegations, judicial decisions and reviews, and activities
    relating to secrecy and privacy, and occupational health and safety.

    8 |     HIC ANNUAL REPORT 2003–04
Our strategic plan
Our purpose of ‘improving Australia’s health through payments and information’
was developed in consultation with customers, stakeholders and staff.

We aim to build on our strong base of payments, processing and customer service
to provide information for better health decision making, and we will develop and
customise new services to supply secure and reliable information to our customers.

The seven levels of our plan are:

> To improve Australia’s health through payments and information.

> Being trusted by our customers and the community.
> Helping to connect Australia’s health sector.
> Being a valued strategic partner in delivering the health portfolio’s agenda.

> We are continuing our efforts to be a customer-driven organisation in
  conjunction with strategic partners in the health portfolio.

> We ensure customer access.
> We create value for our customers.
> We grow and develop.
> We organise ourselves through our business approach.

> We build confidence in HIC.
> We stimulate strategic thinking and the creation of knowledge within HIC.
> We produce complete, accurate and timely payments and information.
> We build strategic alliances to connect the health sector.
> We customise our services.
> We provide efficient and effective program delivery through an emphasis
  on regulatory frameworks and risk management.

> We have a commitment to strengthening HIC’s financial position and
  ensuring accountability for the financial aspects of all programs.
> Our customers and stakeholders have confidence in our provision of services
  and our commitment to relationship-building and open communication.
> We have a commitment to internal processes that support the efficient delivery
  of our products and services that reflect responsible business practices.
> We are committed to supporting innovation, learning and continuous
  improvement for individuals and the organisation as a whole, while also
  respecting the objectives of external parties.
> We have a commitment to our staff and to making a positive contribution
  to the community.
> We are committed to contributing to—and improving—the physical environment.

> We are engaging with customers in accordance with our Charter of Care.
> We are realigning our processes to seamlessly provide payments and
  information to our customers.
> We are working with the Department of Health and Ageing (DOHA)
  to improve connectivity within the health sector.

                                                      PART 02 ∙ MEET THE HIC      | 9
> We are investing in human resources so that staff skills are aligned with
  organisational strategies.
> We are aligning our investment strategies to support the needs of our customers.
> We are proactively approaching new business opportunities that are consistent
  with our strategic plan.

Our values
Our values are as follows:
>   our top priority is meeting customer needs
>   people can trust us to protect the privacy of all information we handle
>   we trust and respect each other and work as a team to achieve the best results
>   we improve our business efficiency with new products, ideas and ways of working
>   we deliver results with honesty, integrity, accountability and enthusiasm.

Continuous improvement
As part of our commitment to continuous improvement, we:
> use customer feedback to help identify and resolve any problems
> provide training programs to ensure staff are skilled and customer-focused
> monitor and evaluate services against our Charter of Care standards.

For more information about our strategic direction, refer to our website

Time for a review
While our current strategic plan has successfully guided our direction since 1999,
five years is a long time in today’s environment of constant change. In view of this,
and in light of the challenges ahead, we began a review of our strategic plan in 2004.

The process we are using to review the plan involves:
> internal stakeholder engagement, including meetings with staff and
  management groups in each state, and interviews with commission members
  and senior management
> external stakeholder engagement, involving meetings with key stakeholders
  (the minister, DOHA, DVA and FaCS), consultations with peak bodies (through
  the Stakeholder Advisory Committee and various communication groups)
  and an analysis of key findings from internal data collected about external
  stakeholders’ views
> an analysis of key findings and current strategic issues
> development of the strategic plan.

The Strategic Plan 2004–07 is due to be launched in September 2004.


We have a decentralised organisation and structure, which includes a national
office in Canberra, a headquarters in each state capital, a number of processing
centres and a Medicare office network throughout Australia.

Our organisational structure at 30 June 2004 and the functions of each
division are detailed on the next page.

10 |    HIC ANNUAL REPORT 2003–04
                         HIC Senior Executive top structure                                                        Managing Director
                                                                                                                   Health Insurance
                                                                                                                   Jeff Whalan

                                                                      National Manager Operations                       Deputy Managing Director
                                                                      Geoff Leeper                                      James Kelaher

                                 Manager Audit &
                                 Risk Assurance Services                  Manager Information Services                        Aged Care            Health eSignature Authority
                                 Simon Moore                              Branch A/g Peter Thomson                            David Trabinger      Suzanne Roche

                          Chief Information     General Manager         General Manager      State Manager       Corporate Development     General Manager             Manager New              General Manager     General Manager             Commission Secretary
                          Officer               Program Management      Program Review       Victoria            Dominic Downie            Information Technology      Business and             Business            Finance & Planning          Executive Support
                          Brian Richards        Ellen Dunne             Janet Mould          Greg Johnson        (Ellen Dunne)             Services Lyn O'Connell      Stakeholder Relations    Improvement         (Chief Finance Officer)     Doug Hall
                                                (A/g Peter Altree)                                                                                                     *Anthony Honeyman        Lou Nulley          John D Lee                  (A/g Sharon Rose)
                          Privacy Branch                                Manager Risk         Deputy              Manager People            Manager Planning and
                          Sharon Rose (A/g      Manager Assoc           Intervention and     State Manager       & Performance             Business Management                                                      Manager Financial           General Counsel
                          Gabrielle Davidson)   Government              Management           Linda Bennett       Julia Burns               Vipan Mahajan                                                            Control and                 Legal Services
                                                                                                                                                                           Manager Program       Project Manager
                                                Programs                Gary Walsh                                                                                                                                  Development                 Paul Fenton-Menzies
                                                                                                                                                                           Strategy and          PBS Online
                          Consultancy           Carol Brain                                  State Manager       Manager Support           Manager                                                                  Ahalya Shakespeare
                                                                                                                                                                           Planning              *Trish Porter
                          Karl Karol                                    Manager Risk         New South Wales     Services                  IT Architecture                 Daryl Lapsley                                                        Manager Public Affairs
                                                Manager Program         Analysis and         Ralph Watzlaff      Natalie Howson            Mark Fraser                                                              Manager Budgeting           Fiona McLean
                                                                                                                                                                                                 Project Manager
                          Information           Support &               Assessment                               (A/g Paul McMahon)                                                                                 & Management                Michele Hendrie
                                                                                                                                                                            Project Manager      Directories (A/g
                          Planning Group        Development             Susan Hextell        State Manager                                 Manager Enterprise                                                       Accounting
                                                                                                                                                                            Medi                 Andrew Boxshall)
                          *Jenny McDowell       Ai Tran                                      Queensland          Manager Corporate         Services & Projects                                                      Krishna Kumar
                                                                        Medical Director     Sue Harrop          Information Services      (A/g Socorro Cue)
                                                Manager Medicare        Jo-Anne Benson                           *Poppy Thamsongsana                                                                                Manager Project &
                                                                                                                                                                            Legislation and
                                                John Trabinger                               State Manager                                 Manager                                                                  Integration Office
                                                                                                                                                                            Policy Advisor
                                                                        Manager PBS          South Australia                               Applications Delivery            Leonie Whiting                          Tony Dunn
                                                Manager PBS             Initiatives Group    Peter Altree (A/g                             Graham Gathercole
                                                David Hancock           Lynne O'Brien        Natalie Howson)
                                                                                                                                                                            Other BI Projects
                                                                                                                                           Manager Infrastructure           > HIC Online
                                                Manager BI              Project Officer      State Manager                                 Delivery & Business
                                                Implementation          Kerrie Foster        Western Australia                             Continuity David Num
                                                Graham Mynott                                Sandy Mamo
                                                                                                                                           Manager Quality
                                                Manager Medicare                             State Manager                                 Assurance
                                                Reform Taskforce                             Tasmania                                      Mark Fraser
                                                Lou Andreatta                                Peter Sexton                                  (A/g Wendy Austen)

                                                Manager National
                                                                                                                                           > IBIS Unit
                                                Telephony Channel                                                                          > Information Security
                                                Trevor Deeming                                                                               Standards and PKI

                                                > Implementation

| 11
                                                  of HIC Online API                                                                                                                                                        * Note: not all officers are senior executives
Office of the Chief Information Officer (OCIO)
The OCIO develops and implements information management strategies that
leverage our technical, intellectual and strategic assets to improve health
outcomes. The Chief Information Officer is responsible for promoting our
reputation as a responsible information manager, and providing advice to
the Managing Director, commissioners and senior executives on developing
our role within the health sector.

Program Management Division (PMD)
PMD manages Medicare, the Pharmaceutical Benefits Scheme and other health
and allied programs that we administer. We monitor performance of each program,
develop administrative policy, and undertake business development for existing
programs and proposed Australian Government initiatives.

Program Review Division (PRD)
PRD works to protect the public purse from fraudulent or inappropriate claims.
We make the health care dollar go further by working with medical professionals
and the health industry to help them correctly interpret the Medicare and
Pharmaceutical Benefits schedules, and claim for their services appropriately.

Corporate Development Division (CDD)
CDD helps our business areas achieve their goals by delivering human resource
strategies, channel improvement, corporate information, physical security and
property management. We focus on achieving and maintaining a high performing
culture and developing a workforce planning framework to ensure our people
have the right skills in the right locations at the right time.

Information Technology Services Division (ITSD)
ITSD provides and manages information technology services including system
applications, and works closely with all areas to get the best out of our internal
and contracted IT services.

Business Improvement Program Division (BIPD)
BIPD was established to enable delivery of our services and products via the
internet. The implementation of major components of our information technology
and business architectures assists in this progression. These architectures
provide a guide to how we will deliver services in the future as well as identifying
the infrastructure and technical capabilities required to deliver these business

Finance and Planning Division (FPD)
FPD supports the achievement of our strategic direction by providing high
quality planning, project management and financial management services to
the whole organisation.

Executive Support Division (ESD)
ESD supports our Executive team and provides the whole organisation with
support in the form of legal services, parliamentary liaison, and public affairs
and marketing services. We provide the major secretariat services to our Board
of Commissioners via the Commission Secretary, who is also the Manager
of Executive Support.

12 |    HIC ANNUAL REPORT 2003–04
State offices
These cater for Australia’s highly dispersed population. State managers administer
the operations of Medicare offices, processing centres, telephone enquiry lines
and customer service area.


Our staff are employed under the Health Insurance Commission Act 1973.
At 30 June 2004, we employed 5,010 staff—a 6.45% increase since 30 June 2003.
The majority of these (78%) were female.

Of the total staff, 926 were employed part-time and 253 as temporary staff.
The significant proportion of part-time staff (18.5%) ensures we can maintain
high standards of customer service during peak hours.

Staff are located across Australia, with National Office in Canberra and a
state headquarters in each state, as well as several processing centres and
226 Medicare offices.

For detailed staffing statistics, see appendix C.

Managing change
We have pursued a major change management program since 2000, particularly in
enhancing online ways of claiming and obtaining information and authorisations.
This program has had a big impact on staff, particularly as some reduction in
numbers will result from the changes.

We are committed to advising our staff of forthcoming changes in as timely a
manner as possible and, to achieve this—and to help ensure staff understood the
changes and how they would be affected—we released a number of people plans.
These detailed documents, three of which were released in 2003–04, explain to
staff the key changes expected to take place in coming months, the impact on
various work groups, and what support would be provided to affected staff.

Commitment to equity and diversity
For the 2003–04 reporting period, our equity and diversity annual report noted
significant achievements, including:
> continued implementation and monitoring of the Indigenous recruitment and
  retention strategy
> launch of the new Equity and Diversity Plan 2004–07. This plan reaffirms our
  commitment to equity and diversity and provides for stronger linkages with our
  business planning processes in order to better enable our employees to meet
  customer needs while working in an inclusive and flexible environment.

                                                      PART 02 ∙ MEET THE HIC     | 13
Certified agreement with staff
Our staff agreement was certified on 3 December 2003 and is a joint agreement
between staff and the Community & Public Sector Union (CPSU). The certified
agreement remains in force until 2 December 2005 and focuses on:
> enhancing and maintaining our strong performance-based culture
> providing support to the organisation as we face the challenges and
  changes from business improvement processes
> simplifying and streamlining conditions of employment through
  continued development and adoption of contemporary human resource
  management practices
> promoting an environment that upholds and supports policies and principles
  relating to equity and diversity, anti-discrimination, workplace participation,
  and health and safety.

Supporting a work/life balance
During 2003–04, we participated in the fifth annual Work/Life Benchmarking Study
conducted by Families at Work in conjunction with CCH. We were named in the top
25 best practice organisations, and received a Certificate of Achievement.

Our certified agreement supports and encourages a healthy work/life balance
and has the following initiatives in place:
> healthy lifestyle subsidy—a subsidy for eligible employees of up to
  $120 per calendar year to help staff meet the costs of health programs,
  equipment or memberships
> vacation childcare subsidy—a subsidy for employees who have applied
  for leave and are required to work due to operational requirements
> employee assistance program—access to confidential professional counselling
> carer assistance—information about child and dependant care services
> part-time work.

As part of the core skill program, we identified and ran a number of training
programs associated with work/life balance initiatives.

Staff initiative teams
Teams dedicated to improving the work environment of staff have been established
in National Office and state offices for a number of years. Staff are encouraged
to join these teams to play a part in developing and organising activities and
addressing staff concerns where possible, to help us maintain a happy and
healthy work environment.

Over the last 12 months, these teams have organised the following events
and activities:
> monthly Excellence in Service awards, for which staff are encouraged to nominate
  co-workers who have modelled our corporate values and have gone above and
  beyond the call of duty. The winners and nominees are presented with certificates
  of appreciation at monthly award ceremonies attended by most staff
> an art and craft display enabling National Office staff to showcase their
  artistic talent near the entrance to the National Office main building
> Healthy Lifestyle Week, which includes events and speakers on health issues
> recycling of Christmas and greeting cards
> generating support and organising fundraising for various charities (see below)
  and for HIC families in crisis.

14 |   HIC ANNUAL REPORT 2003–04

All of our activities are conducted within the Australian Government policy
framework set by DOHA, DVA, FaCS and relevant legislation. We try to be an
active contributor to policy development by providing regular information
and feedback from our day-to-day operations.

Our relationship with DOHA is underpinned by a service level agreement—
the Strategic Partnership Agreement—and a funding agreement—the Output
Pricing Agreement.

We process medical, hospital and allied health services claims for Veterans’
Treatment Accounts on behalf of DVA, in accordance with a service agreement
covering services, service standards and financial arrangements between
our two agencies.

Our role in delivering Family Assistance Office services is covered by
a business service agreement with FaCS.


Department of Health and Ageing
Our current funding arrangement for providing services under the Strategic
Partnership Agreement with DOHA is based on the 2000–02 Output Pricing
Agreement, adjusted for volume variations and indexation. Estimated revenue
under this agreement was $396.3 million.

In 2003–04 the government provided additional funding of $34.3 million to ensure
we were appropriately resourced to continue to deliver a range of family health and
family services programs. This was the first phase of a Department of Finance
and Administration (DOFA) review to update our resourcing arrangements.

As a result of this review, from 1 July 2004 we will be directly appropriated to
provide services on behalf of DOHA.

These new arrangements mean that the role of the Finance and Planning Division
will become more important. As a result, the position of General Manager Finance
and Planning Division has been upgraded to that of Chief Finance Officer (CFO), a
role that will be part of the Executive. The new CFO is due to start in August 2004.

Department of Veterans’ Affairs
Following the expiry of a memorandum of understanding that lasted from
December 1996 to 30 November 2001, we have entered into a new five-year
services agreement with DVA and the Repatriation Commission to continue
to provide processing services for veterans’ treatment accounts. The services
agreement is based on a two-tiered payment arrangement comprising a fixed
charge and a variable charge per transaction processed.

We also administer government initiatives that affect treatment accounts
processing on behalf of DVA. One of these programs is a supplementary
payment for general practitioners contracted with DVA to allow better access to
medical services for veterans and widows in both metropolitan and rural areas.
This initiative became effective on 1 July 2003.

                                                       PART 02 ∙ MEET THE HIC      | 15
Department of Family and Community Services
We receive a single annual payment from FaCS to cover the costs of providing
services under the Family Assistance Office program. Under this agreement,
the estimated revenue to HIC in 2003–04 was $8.4 million.

Health Department of Western Australia
Through an agreement with the Health Department of Western Australia, we have
had a visiting medical practitioner fee-for-service payment and information system
in place since April 2000.

This system provides public non-teaching hospitals in Western Australia with an
intranet processing system (in real time) to assess and pay invoices submitted
by visiting medical practitioners for services to public patients.

We expect this agreement to be renewed in 2004–05.

Office of Hearing Services
We process and pay claims to accredited hearing service contractors on behalf of
the Office of Hearing Services in DOHA, according to the Output Pricing Agreement
between our two agencies. Payments are made up of a fixed component and
variable payments, depending on the number of claims paid. Under the agreement,
the estimated revenue to HIC in 2003–04 is $0.5 million.

16 |   HIC ANNUAL REPORT 2003–04

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