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2010-2011-2012
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Health Insurance Amendment (Extended Medicare Safety Net) Bill 2012
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health, the Hon Tanya
Plibersek MP)
Health Insurance Amendment (Extended Medicare Safety Net) Bill 2012
OUTLINE
The Bill amends provisions of the Health Insurance Act 1973 (the Act)
dealing with the Extended Medicare Safety Net (the EMSN) to enable a cap on
the maximum increase in Medicare benefit payable under the EMSN to apply to
'deemed' medical services to which no particular Medicare item applies. It
also removes the requirement that confirmation of the composition of a
registered family for the purposes of the Original Medicare Safety Net and
EMSN must be done in writing.
The EMSN provides individuals and families with an additional rebate for
out-of-hospital Medicare services once an annual threshold of out-of-pocket
costs is reached. Sections 10ACA and 10ADA of the Act provide that once an
individual or a member of a registered family reaches the applicable out-of-
pocket EMSN threshold, the person is entitled to an increase in the
Medicare benefit equal to 80 per cent of their out-of-pocket costs. The
increased amount of Medicare benefit payable under the EMSN is commonly
referred to as the 'EMSN benefit'.
Under section 10B of the Act the Minister can, by legislative instrument,
determine the maximum increase of Medicare benefit available under the EMSN
(an EMSN cap) in respect of a particular Medicare item.
The Act currently provides for two situations in which multiple Medicare
services provided to the same patient on the same occasion are deemed to
constitute one professional service. These are where a patient receives
two or more operations on the one occasion (subsection 15(1) of the Act)
and where a patient receives anaesthesia for two or more operations
performed while the patient is under anaesthetic (subsection 16(4) of the
Act). In each case the multiple Medicare services that would ordinarily
apply in relation to the operations or administration of anaesthesia, as
appropriate, are deemed to constitute one professional service to which no
particular Medicare item applies. As an EMSN cap can only be determined
for particular Medicare items, no cap can apply to the deemed services
created by the operation of subsections 15(1) and 16(4) of the Act.
This means that where medical practitioners perform more than one Medicare-
eligible operation on the same patient on the same occasion and at least
one of those operations has an EMSN cap, no EMSN cap will apply to the
resulting deemed service. Similarly, no EMSN cap will apply to a deemed
anaesthesia service resulting from the administration of anaesthesia in
respect of multiple operations.
This Bill will ensure that in situations where multiple Medicare services
('original service') are deemed by the Act to constitute one professional
service, and all of the Medicare items related to the original services are
subject to an EMSN cap, the maximum increase in Medicare benefit payable
under the EMSN will not exceed the sum of the EMSN caps that would apply to
the items treated as constituting the deemed service.
Section 10AE of the Act currently requires that families approaching their
EMSN or Medicare Safety Net threshold confirm in writing the composition of
their family. The Department of Human Services has received feedback from
the public that having to complete a form confirming who is in their
current safety net family is inconvenient. Removing this requirement and
allowing the Chief Executive Medicare to determine the manner in which a
family must confirm their family composition will allow a more streamlined
process and ensure faster payment of safety net benefits to patients.
Financial Impact Statement
This Bill will support the achievement of savings announced in the 2012-13
Federal Budget of which $79.6 million was related to capping EMSN benefits
of items that are subject to section 15 of the Act.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011
Health Insurance Amendment (Extended Medicare Safety Net) Bill 2012
This Bill is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the Human
Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Bill
The Extended Medicare Safety Net (the EMSN) provides individuals and
families with an additional rebate for out-of-hospital Medicare services
once an annual threshold of out-of-pocket costs is reached. Sections 10ACA
and 10ADA of the Health Insurance Act 1973 (the Act) provide that once an
individual or a member of a registered family reaches the applicable out-of-
pocket EMSN threshold, the person is entitled to an increase in the
Medicare benefit equal to 80 per cent of their out-of-pocket costs. The
increased amount of Medicare benefit payable under the EMSN is commonly
referred to as the 'EMSN benefit'.
Under section 10B of the Act the Minister may, by legislative instrument,
determine the maximum increase of Medicare benefit available under the EMSN
(an EMSN cap) in respect of particular Medicare items.
The Act currently provides for two situations in which two or more Medicare
services are deemed to constitute one professional service to which no
particular Medicare item relates. Specifically, subsections 15(1) and
16(4) of the Act respectively provide that where a patient receives two or
more operations on the one occasion, or where a patient receives
anaesthesia for two or more operations performed while the patient is under
anaesthetic, the multiple Medicare services that would ordinarily apply in
relation to the operations or administration of anaesthesia, as
appropriate, are deemed to constitute one professional service to which no
particular Medicare item applies.
As the deemed service is not specified in a particular Medicare item, an
EMSN cap cannot be determined for the service under section 10B of the Act
and, even where one or more of the original operation or anaesthesia
services were subject to an EMSN cap, no cap will apply to the deemed
service.
Items 1 and 2 of Schedule 1 of the Bill amend sections 10ACA and 10ADA of
the Act respectively by inserting new subsections 10ACA(7AA) and
10ADA(8AA). The new subsections will enable an EMSN cap to apply to any
'deemed' Medicare items created by provisions of the Act. The cap will
only apply where all of the original services are themselves subject to an
EMSN cap, and the cap will be the sum of the caps that would apply to the
items treated as constituting the deemed service. The amendments will also
allow the regulations to prescribe any provisions of the Act creating
deemed services to which subsections 10ACA(7AA) and 10ADA(8AA) should not
apply.
Item 3 of the Schedule to the Bill amends subsection 10AE(1) of the Act to
remove the requirement that confirmation of family composition by a family
approaching its EMSN or Medicare Safety Net threshold must be made to the
Chief Executive Medicare in writing, and allows the Chief Executive
Medicare to approve the manner in which confirmation should be given.
Human rights implications
The right to health
The right to health - the right to the enjoyment of the highest attainable
standard of physical and mental health - is contained in article 12(1) of
the International Covenant on Economic, Social and Cultural Rights
(ICESCR). The UN Committee on Economic, Social and Cultural Rights (the
Committee) has stated that health is a 'fundamental human right
indispensable for the exercise of other human rights', and that the right
to health is not to be understood as a right to be healthy, but rather
entails a right to a system of health protection which provides equality of
opportunity for people to enjoy the highest attainable level of health.
Right to Social Security
The right to social security is contained in article 9 of the ICESCR. The
right requires that a country must, within its maximum available resources,
ensure access to a social security scheme that provides a minimum essential
level of benefits to all individuals and families that will enable them to
acquire at least essential health care. Countries are obliged to
demonstrate that every effort has been made to use all resources that are
at their disposal in an effort to satisfy, as a matter of priority, this
minimum obligation.
Discussion of the Bill
Items 1 and 2 of Schedule 1 of this Bill close a loophole that allows
doctors who perform more than one service on the same patient on the same
occasion to avoid the EMSN caps that currently apply to the individual
operation services. This will potentially reduce the amount of EMSN
benefits payable where a person receives more that one Medicare-eligible
operation on the one occasion and each of the individual Medicare items
relating to the operations or associated anaesthesia is subject to an EMSN
cap.
The Committee has stated that the notion of 'the highest attainable
standard of health' takes into account both the conditions of the
individual and the country's available resources. The right may be
understood as a right of access to a variety of public health and health
care facilities, goods, services, programs and conditions necessary for the
realisation of the highest attainable standard of health.
The Committee has also stated that with respect to the right to social
security that the qualifying conditions for benefits must be reasonable,
proportionate and transparent.
While this Bill may increase the out-of-pocket costs for some patients in
certain circumstances, all patients will still be eligible for the existing
Medicare rebate and any associated benefits from the Original Medicare
safety net for families and individuals. Patients will also still be
eligible for EMSN benefits, however, if the fee charged for the service by
the doctor is high enough that the EMSN benefits calculated are higher that
the EMSN benefit cap, the patient will receive the lower amount equal to
the EMSN benefit cap amount.
EMSN benefit caps were introduced in 2010 because some doctors were
charging excessive fees, knowing that the government would pay 80 per cent
of the out-of-pocket costs faced by patients once they reached the relevant
threshold. This had implications for those people that had not qualified
for the EMSN threshold and was not an effective use of Government
expenditure. It is also of relevance that an independent report in 2009 by
the Centre for Health Economics Research and Evaluation found that prior to
EMSN benefit caps being introduced, 55 per cent of EMSN benefits were
distributed to the top fifth of Australia's most socioeconomically
advantaged areas, whereas the least advantaged fifth received less than 3.5
per cent.
The introduction of EMSN benefit caps was a reasonable, proportionate
response to ensure that the EMSN continued to be financially sustainable.
Items 1 and 2 of the Schedule to this Bill close a loophole which currently
exists and limits the amount of Government funding for selected Medicare
items to an appropriate level. The resulting saving in Government
expenditure can then be directed into programs to increase the health of
all Australians. Those patients who may not be able to afford any increase
in out-of-pocket costs could have their operation performed in-hospital
where private health insurance benefits are payable or as a public patient
in a public hospital with no out of pocket costs.
The amendment to the Act made by Item 3 of the Schedule to the Bill does
not engage any of the relevant human rights.
There is no incompatibility with the right to health or social security
because the legislation is for a legitimate objective and reasonable,
necessary and proportionate in the circumstances.
Conclusion
The Bill is compatible with human rights because the extent that it may
limit the human right to health, this limitation is reasonable, necessary
and proportionate.
The Hon Tanya Plibersek MP, the Minister for Health
Health Insurance Amendment (Extended Medicare Safety Net) Bill 2012
NOTES ON CLAUSES
Clause 1 - Short Title
This clause provides that the Bill, once enacted, may be cited as the
Health Insurance Amendment (Extended Medicare Safety Net) Act 2012.
Clause 2 - Commencement
This clause provides that the provisions of the Bill, once enacted, will
commence as follows:
. sections 1 to 3 (which cover the Short Title, Commencement and
Schedule) will commence on the day the Act receives the Royal Assent;
. items 1 and 2 of Schedule 1 will commence on a single day to be fixed
by Proclamation. However, if these provisions do not commence within
the period of 6 months beginning on the day on which this Act receives
the Royal Assent, they will commence on the fist day after the end of
that 6 month period;
. item 3 of Schedule 1 will commence on the day after the Royal Assent;
. item 4 of Schedule 1 will commence at the same time as items 1 and 2
of Schedule 1.
Clause 3 - Schedule(s)
This clause provides that each Act that is specified in a Schedule to the
Bill is amended or repealed as set out in the applicable items in the
Schedule concerned, and that any other item has effect according to its
terms. There is one Schedule to the Bill, which amends the Health
Insurance Act 1973 (the Act).
SCHEDULE 1 - AMENDMENT OF THE HEALTH INSRUANCE ACT 1973
Item 1 - After subsection 10ACA(7A)
This item inserts a new subsection 10ACA(7AA) into section 10ACA of the
Act, which provides for the Extended Medicare Safety Net (EMSN) for
families. New subsection 10ACA(7AA) enables the application of an EMSN cap
where a provision of the Act creates a 'deemed service' to which no
particular Medicare item relates.
Subsection 10ACA(7A) of the Act currently applies an EMSN cap where a claim
for Medicare benefit is for "a service specified in an item" which has been
determined by the Minister under section 10B of the Act to be an item to
which subsection 10ACA(7A) applies. The amount of the EMSN cap is
determined by the Minister in respect of that Medicare item.
Accordingly, where a service is not specified in a particular Medicare item
the Minister is not able to determine that an EMSN cap should apply to the
service and there is no limit on the increase in benefit available for the
service under the EMSN.
While subsection 10ACA(7B) currently sets out a method for applying an EMSN
cap where two or more pathology services are treated as a single deemed
pathology service under the regulations, subsection 10ACA(7B) does not
apply to non-pathology services or to deemed services created by provisions
of the Act.
Under subsection 15(1) of the Act, where a patient receives two or more
operations on the one occasion, each of which is a professional service
covered by a Medicare item, then for the purposes of calculating any
Medicare benefit for those operations:
. the Schedule fees for all items other than the item with the highest
fee are deemed to be reduced; and
. the multiple operations are deemed to constitute one new professional
service.
Under subsection 16(4) of the Act, where a patient receives anaesthetic for
two or more operations performed while the patient is under the
anaesthetic, then for the purposes of calculating any Medicare benefit for
the administration of the anaesthetic:
. the Schedule fees for all items relating to the administration of
anaesthetic for the purposes of the operations other than the item
with the highest fee are deemed to be reduced; and
. the administration of anaesthetic is deemed to constitute one
professional service.
In both cases no particular Medicare item relates to the resultant deemed
service and no EMSN cap can be determined for that service, even if one or
more of the original operation or anaesthesia services is subject to an
EMSN cap.
New subsection 10ACA(7AA) will provide that if:
. two or more services, each specified in a Medicare item, are deemed to
constitute, or are treated as, a single service (a 'deemed service')
under a provision of the Act other than a provision prescribed by the
regulations; and
. all of the Medicare items in which the services are specified are items
that are subject to an EMSN cap under section 10B of the Act; and
. EMSN claim is being made in respect of the deemed service;
then the maximum increase in Medicare benefit payable in respect of the
claim cannot be greater than the sum of the EMSN caps that would apply to
the items treated as constituting the deemed service.
The ability to prescribe in regulations provisions of the Act to which
subsection 10ACA(7AA) will not apply provides flexibility if the Act is
amended in the future to create more deemed services, and the Government
does not want these deemed services subject to an EMSN cap.
Item 2 - After subsection 10ADA(8A)
This item inserts a new subsection 10ADA(8AA) into section 10ADA of the
Act, which provides for the EMSN for individuals.
New subsection 10ADA(8AA) will operate in the same way as new
subsection 10ACA(7AA) (refer to item 1), and enable the application of an
EMSN cap to deemed services under the EMSN for individuals.
Item 3 - Subsection 10AE(1)
Under section 10AE, the Chief Executive Medicare is required to notify
families registered for the Medicare safety net or EMSN when the family
becomes entitled to, or is close to becoming entitled to, increased
Medicare benefits under sections 10AC or 10ACA of the Act. The person who
registered the family is then required to state in writing whether the
composition of the family has altered.
This item amends subsection 10AE(1) of the Act by deleting reference to
"state, in writing," and replacing with "state, in a manner approved by the
Chief Executive Medicare,". The amendments to subsection 10AE(1) will
enable Chief Executive Medicare to determine the manner in which a family
must confirm their family composition.
Item 4 - Application provision
This item is an application provision, which establishes that new
subsections 10ACA(7AA) and 10ADA(8AA) will apply in relation to services
rendered after the commencement of this item.