HICAPS settlements in Xero

A HICAPS claim is settled at the desk in two halves. The patient's fund card is read on the terminal, the fund adjudicates in seconds, and the approved benefit is recorded against the invoice straight away. The patient then pays the gap, usually by card on the same terminal. One invoice in the practice system now carries two payments, and two different payers owe the practice money.

Those two payers do not settle together. The fund benefit is paid by the fund, on the fund's own clock. The gap joins the card merchant batch and is paid by the acquiring bank. So a single visit turns into two bank lines, commonly on different days, and neither line matches the invoice total.

The terminal settles automatically at 21:30 VIC or NSW time each day, a time the practice can move, and the HICAPS switch settles the terminal where it has not settled itself. That closes the day's claiming. What it does not do is set the payment date: under the agreement each fund works out its own daily amount and has 10 business days from that day to pay it, or another period agreed with the provider. The card side runs on the merchant agreement's schedule instead.

Claims raised digitally rather than on a terminal are marketed on a shorter clock: HICAPS says eligible digital claims are paid as soon as the next business day, and that daily settlement summaries are produced for reconciliation.

This is the part that makes HICAPS easier than most rails. A health fund or Easyclaim claim carries no fee, card fees are billed to a nominated account, and the deposit reconciles to the approved benefit.

The canonical allied health template encodes that timing: the HICAPS rail is marked as billed separately monthly, and its one posting component sends the gross fund benefit to account 104. The monthly fee debit is an expense in its own right, matched against the HICAPS statement rather than against a day's claims.

A fund paying a benefit on the patient's behalf does not change who the supply is made to. The ATO puts that case plainly: where the third party pays the practitioner on behalf of the patient, the supply is GST free if it falls under the definition of a medical or other health service. For allied health that is three conditions at once, from the ATO's own list: a listed health service, performed by a recognised health professional in that service, generally accepted in that profession as necessary for the recipient's appropriate treatment. In the allied health canonical template that is account 403, clinical services private health fund benefit, at the GST free tax rate.

A fund can also be the recipient in its own right. Where a practice contracts with the fund to supply services to its members, the ATO treats that supply as GST free too: it is made to an insurer settling a claim, and the same service would be GST free supplied to the patient direct. The parties can agree not to treat it that way, which is a contract question rather than a mapping one.

The exceptions travel with the service too, which is why the map keeps a row per service category rather than one row per funder. A product the patient takes home, a cosmetic procedure with no Medicare benefit, or a report written for a third party can be taxable even when a fund settles part of the invoice.

An Australian bookkeeping practice writing about HICAPS through Halaxy pulled apart three words that practices use as if they meant one thing. It is the most useful sentence written about this rail.

Paid, synced and reconciled are not synonyms. Paid describes the invoice or claim status. Synced describes information moving between systems. Reconciled confirms that the Xero accounting record agrees with bank activity.⁷

A HICAPS claim can be marked paid at the desk, exported to Xero that night, and still be sitting in a clearing account a week later because the fund settled into a different account. The three states are worth checking separately, and the clearing balance is what tells you which one is out.