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2004
THE PARLIAMENT OF THE
COMMONWEALTH OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
NATIONAL HEALTH AMENDMENT
(PROSTHESES) BILL 2004
EXPLANATORY
MEMORANDUM
(Circulated
by authority of the Minister for Health and Ageing,
the Hon Tony Abbott
MP)
NATIONAL HEALTH AMENDMENT (PROSTHESES) BILL 2004
OUTLINE
On 3 April 2003 the Government announced a new range of
measures to improve the regulatory framework and introduce greater competition
into the private health insurance industry. One of the measures announced was
the change in the manner of funding of prostheses by health funds.
Health funds currently meet, in relation to applicable benefits
arrangements (hospital cover),
100 per cent of the cost of all surgically
implanted prostheses and other medical devices listed on the Prostheses Schedule
[Schedule 5 to the determination under paragraph (bj), Schedule 1 of the
National Health Act 1953 (the Act)]. Under these arrangements, the cost
to funds of prostheses and medical devices has been growing at an unsustainable
rate over the last decade, and is recognised by funds as a significant driver of
premium growth. The current arrangements are also administratively cumbersome
and limit consumer choice in whether they wish to purchase, for a lower premium,
a health insurance product that may include co-payments or gaps for more
expensive prosthetic items.
The Bill amends the Act to require
registered health benefit organizations (health funds), to offer a no gap and
gap permitted range of prostheses in relation to every in hospital procedure on
the Medicare Benefits Schedule (MBS) for which they provide cover.
The
Bill amends the Act to allow the Minister to determine in writing:
• no gap prostheses - and the benefit amount for each no gap
prosthesis;
• gap permitted prostheses - and the minimum and maximum
benefit amounts for each gap permitted prosthesis.
In making
decisions regarding listing and benefit levels of prostheses that health funds
will be required to cover, the Minister will take into account advice from
experts in the field of prostheses and in the health insurance industry.
Determinations made in relation to the listing of no gap and gap
permitted prostheses and the benefit levels of prostheses will be legislative
instruments.
Health funds will still be permitted to choose to provide,
under their applicable benefits arrangements, cover for prostheses which are not
listed on the no gap or gap permitted prostheses determination, for example,
more expensive prostheses relating to MBS procedures, and prostheses not related
to MBS procedures.
This initiative does not affect the ability of health
funds to provide cover for prostheses under their tables of ancillary health
benefits (ancillary cover).
The Bill recognises that in many cases public
hospitals will be able to purchase prostheses from suppliers at prices that are
below the determined benefit amount or minimum benefit amount. Health funds and
public hospitals may therefore agree on payment of benefit below the benefit
amount for a no gap prosthesis, or below the minimum benefit amount for a gap
permitted prosthesis.
Health funds must offer at least one hospital cover
policy covering all episodes of hospital treatment: paragraph (bd), Schedule 1
of the Act. Members of health funds will still have the ability to choose to pay
lower premiums for lesser benefits. Where a member has elected not to be covered
for a particular hospital procedure (for example, cardiac surgery or hip
replacement), the health fund will not be obliged to pay benefit for that
hospital procedure (for example, cardiac surgery or hip replacement), including
benefit for associated prostheses.
Prostheses Payments under hospital
purchaser-provider agreements
The Bill inserts a new section 73BDAAA
relating to arrangements for payment for no gap and gap permitted prostheses
where a no gap or gap permitted prosthesis is provided as part of an episode of
hospital treatment covered by a hospital purchaser-provider agreement (HPPA)
between a health fund and a hospital or day hospital facility.
For a no
gap prosthesis, the amount the health fund will pay to the private hospital or
day hospital facility must be the benefit amount that has been determined by the
Minister. The amount the health fund must pay the public hospital can be lower
than, but must not exceed the benefit amount that has been determined by the
Minister.
For a gap permitted prosthesis, the health fund will pay the
private hospital or day hospital facility at least the minimum benefit amount,
and must not exceed the maximum benefit amount. The amount the health fund must
pay the public hospital can be lower than the minimum benefit amount, but must
not exceed the maximum benefit amount.
In the case of a no gap
prothesis, the HPPA must provide that the hospital or day hospital facility
agrees to accept payment, of the benefit amount, by the health fund under the
agreement as the full amount that the health fund contributor is liable to pay
the hospital or day hospital facility for the prosthesis.
In the case of
a gap permitted prosthesis, the HPPA must provide that the hospital or day
hospital facility agree that payment by the health fund under the agreement will
not leave the contributor liable to pay more than:
• the difference
between the minimum and maximum benefit amount (where the health fund has paid
less than or equal to the minimum benefit under the agreement);
or
• the difference between the maximum benefit and the amount paid by
the health fund under the agreement (where the health fund has paid more than
the minimum benefit amount under the agreement).
The arrangements
outlined in section 73BDAAA will apply to HPPAs that are in place immediately
before the commencement of the amendments and HPPAs that are entered into after
commencement.
Prostheses Payments where a hospital purchaser-provider
agreement does not cover the episode of hospital treatment
The Bill
amends Schedule 1 of the Act to require funds to provide cover for contributors
for prostheses in relation to in-hospital procedures on the MBS where the
episode of treatment is not covered by a HPPA between the health fund and the
hospital or day hospital facility.
The Bill provides that the amount
that the fund is required to pay the organisation to cover the cost of the
prosthesis is calculated differently for a public hospital than for a private
hospital or a day hospital facility.
For a no gap prosthesis that is
provided in a private hospital or day hospital facility, the amount the health
fund will pay will be the benefit amount that has been determined by the
Minister.
For a gap permitted prostheses, the health fund must pay the
private hospital or day hospital facility at least the minimum benefit amount,
and must not pay more than the maximum benefit amount.
For a no gap
prosthesis that is provided to a private patient in a public hospital, the
amount the health fund will pay the public hospital will the lesser of either
the benefit amount determined by the Minister, or the amount that the
contributor is liable to pay the hospital for the prosthesis. The amount of
benefit paid by the fund will be no higher than the benefit amount determined by
the Minister. For a gap permitted prosthesis, the amount the health fund must
pay a public hospital will the lesser of either the minimum benefit amount
determined by the Minister, or the amount that the contributor is liable to pay
the hospital for the prosthesis. The amount paid by the health fund will be no
higher than the maximum benefit amount.
Minor Legislative
Amendments
The Health Legislation Amendment (Private Health Insurance
Reform) Act 2004 (the Reform Act) made a number of changes to the Act. .
Three consequential amendments not included the Reform Act are now made in this
Bill.
Rule Change validation – An amendment to
section 78 of the Act (health fund rule change notifications) made by item 27,
Schedule 1, of the Reform Act altered the section reference for the
Minister’s power to approve the form for notifying rule changes from
subsection 78(1C) to subsection 78(2). This Bill contains a savings provision
which provides that a form approved by the Minister under subsection 78(1C) of
the Act prior to the Reform Act amendment to section 78 continues in force as if
approved by the Minister under subsection 78(2) of the Act
To remove any
doubt about the validity of rule change notifications on and from 1 July 2004,
this amendment commences retrospectively on 1 July 2004, when item 27, Schedule
1, of the Reform Act commenced.
Loyalty Bonus Schemes –
Paragraph (ma), Schedule 1 of the Act, which deals with loyalty bonus schemes,
refers to loyalty bonus scheme guidelines determined by the Minister under
subsection 73BA(2A) of the Act. On and from 1 July 2004, due to re-numbering,
the reference should be to subsection 73AAG(2). This Bill replaces the obsolete
reference to subsection 73BA(2A) with a reference to subsection 73AAG(2).
To remove any doubt about the validity of loyalty bonus schemes on and
from 1 July 2004, this amendment commences retrospectively on 1 July 2004, when
item 16, Schedule 1 of the Reform Act commenced.
The changes to the arrangements will make a significant contribution towards reducing pressure on health insurance premiums and the growth in Government outlays on the 30% Private Health Insurance Rebate. Estimated savings from the measure are $4.3m in 2005-2006 and $20.6m in 2006-07.
REGULATION IMPACT STATEMENT
On 3 April 2002 the Government announced a review of the regulatory
arrangements of the private health insurance industry to consider if the rules
and regulations were delivering affordable, high quality private health care for
health fund members.
The review took into consideration objectives in
relation to:
• private health insurance policy;
• health
policies;
• fiscal policy objectives;
• competition policy
objectives; and
• Industry policy.
The preliminary work of the
review considered ways in which further reductions in private health insurance
industry regulation could be employed to minimise future premium increases while
also providing mechanisms to protect the interest of members. Four areas were
identified where changes to the regulatory framework for private health
insurance could assist in reducing cost pressures on premiums: prostheses;
reinsurance; second tier benefits; and reporting on management expenses.
The Government has already implemented a number of measures arising from
the review, including:
• a reduction in regulation around the
introduction of new products balanced by an improved reporting regime for the
industry;
• increased powers for the Private Health Insurance Ombudsman
to deal with complaints;
• the publication of an annual State of the
Health Funds report to provide consumers with comparative information on the
performance and services of the health funds; and
• changes to
administrative arrangements relating to premium increases.
On 3 April
2003 the Government announced a new range of measures to improve the regulatory
framework and introduce greater competition into the private health insurance
industry. One of the measures announced was a change in the manner in which the
funding of prostheses by health funds occurs.
The cost to funds of prostheses and medical devices has been growing at an
unsustainable rate over the last decade and is recognised by funds as a
significant driver of premium growth. There was an average 29 per cent increase
in prostheses benefits paid in 2003-04 compared to 2000-01. Benefits paid in
2003-04 totalled over $647 million.
Prostheses benefits now account for
12 per cent of total hospital benefits, up from 1.7 per cent in
1989-90. Current rates of growth in prostheses costs are estimated to be to be
resulting in a 2% growth in premiums each year.
Health funds currently
meet 100 per cent of the cost of all surgically implanted prostheses and other
medical devices listed on the Government’s Prostheses Schedule (Schedule 5
to the determination under paragraph (bj), Schedule 1 of the National Health
Act 1953). There are few incentives for ensuring value for money in the
current arrangements. For example, there is little evidence-based assessment of
safety, effectiveness and cost-effectiveness and pricing arrangements are left
to individual funds and suppliers.
The existing prostheses arrangements
are unique in private health insurance regulation in that consumers cannot
choose to purchase a health insurance product that may include co-payments or
gaps for prosthetic items. Consumers cannot decide that they do not wish to
insure for more expensive or unproven items. This is not the case for any other
item or service covered by private health insurance.
The Prostheses
Schedule is also unique in private health insurance regulation in that it
specifies actual medical items. Other provisions relating to hospital treatment
are broad and do not prescribe the type of treatment that must be
funded.
In addition to the increasing cost of the current arrangements as
outlined above, funds, hospitals and suppliers of prostheses (manufacturers and
distributors) complain that the arrangements are cumbersome simply because the
list of prostheses now includes over 9,000 items. Suppliers resent being asked
to cover the cost of listing items. There can also be pricing disputes between
funds and suppliers and disputes with hospitals over alleged incorrect charging
for items.
The overall objective of Government private health insurance policies, is to
make private health insurance more competitive and valuable to consumers with
the aim of giving Australians greater choice in health care, while providing
consumers with certainty that there is a sustainable and balanced health system
for the future by supporting a private health sector that complements the public
health system.
Consistent with this, the objectives of the proposed new
prostheses arrangements are to:
• reduce the pressure on the level of
private health insurance premiums by limiting the growth in benefits for
prostheses;
• reduce the administrative burden on the industry; and
• provide contributors with more choice in the provision of
prostheses.
Three options were identified as part of the regulation review process,
for implementing prostheses arrangements that may meet the above objectives. An
assessment of each option is provided below.
The groups most likely to be
affected by these options are:
• health
funds;
• consumers;
• suppliers of prostheses;
• doctors;
• hospitals; and
• Government.
A legislative framework would be established by the Government to support a
Prostheses Schedule allowing health funds to charge a gap in certain
circumstances. The evidence requirements for listing on the schedule would be
increased and the schedule would be limited to items that met a narrow
definition of replacement body parts.
Option 2 – No
legislative requirements for prostheses funding
Under this option, there
would be no specific legislative requirements to cover prostheses. Funds could
choose to offer products which cover prostheses, with or without gaps, and would
be required to provide clear information on the level of coverage for each
product.
Option 3 – Industry self-regulation within
a new legislative framework
Under this option the Government would
legislate to require health funds to offer a no gap range of prostheses in
relation to every in-hospital procedure on the Medicare Benefits Schedule (MBS)
for which they are providing cover.
Provided that a no gap range of
prostheses is available for every procedure on the MBS, funds could then offer a
range of more expensive prostheses which may involve a gap
The intention is
that health funds would still have the freedom to choose to provide cover for
prostheses that are not related to MBS procedures covered and are not listed on
the no gap or gap permitted prostheses determination.
Members would
still be able to choose to pay lower premiums for lesser benefits. Health funds
would not be required to pay benefit for a no gap or gap permitted prosthesis
where a member has made an election not to be covered for the hospital
procedure.
The Minister will determine in writing:
• no gap
prostheses and the benefit amount for each no gap prosthesis; and
• gap
permitted prostheses and the minimum and maximum benefit amounts for each gap
permitted prosthesis.
Health funds will pay the benefit amount (for no
gap prostheses) and at least the minimum and no more than the maximum benefit
amount (for gap permitted prostheses) where members are treated in private
hospitals or day hospital facilities. Public hospitals are generally able to
purchase prostheses directly from suppliers at prices that are below prices
negotiated between the health funds and suppliers. Therefore, to implement the
intent of the policy to reduce the upward pressure on health fund expenditure
and therefore premiums, health funds will pay benefit that cannot exceed the
benefit amount (for no gap prostheses) or the maximum benefit amount (for gap
permitted prostheses) where members are treated as private patients in public
hospitals and can pay below the minimum where hospitals have negotiated a price
in that range.
On health funds – The increased evidence requirements for
listing would restrict the number prostheses listed, and would result in a
reduction in the level of benefits that health funds would pay for prostheses.
They would also have more choice in the level of cover for items that have a
gap. However, health funds would continue to be subject to detailed and costly
regulation.
On consumers – Consumers could face
considerable uncertainty about coverage and may face significant gaps for many
prosthetic items. Consumer choice of private health insurance product would be
restricted.
On suppliers – Suppliers would need to provide
more information to justify listing and would not be guaranteed a no gap benefit
would be paid by health funds.
On doctors – Doctors would
need to provide their patients with the information they need on clinical and
cost options in order for them to take an informed decision on their prostheses
options.
Hospitals – Hospitals would not be significantly
affected by the option.
On Government – The Government would
be more involved with the day-to-day administration of the arrangements, as
current assessment processes would be increased.
This option may meet the
objective of reducing the pressure on health insurance premiums to some degree.
There would be tighter restrictions on the prosthesis items that would be listed
on the schedule, and for which health funds would provide a benefit. There
would also be a number of items for which a gap could be charged. This would
have the effect of reducing the amounts of benefits health funds would pay.
However, consumer choice of product would be restricted and uncertainty
about the level of cover would increase. The administrative burden on the
industry in providing more evidence for approval of the prosthesis items and for
those items not listed would be increased.
On health funds – Health funds could choose which items to cover
and what level of benefits they pay thereby reducing their costs. However,
total deregulation would require duplication of administrative and assessment
processes between funds. This could lead to inconsistency and thus uncertainty
for consumers. Individual funds would not be protected from pressure to pay for
expensive and unproven items.
On consumers – Consumers are
not guaranteed anything with respect to the cost of prostheses. They could face
considerable uncertainty about coverage and significant gaps for prosthetic
items. They may miss out on clinically necessary or life-saving technology.
On suppliers – Suppliers would still not be guaranteed that
health funds would pay a no gap benefit without having to enter into costly
negotiations.
On doctors – Doctors would need to provide
their patients with the information they need on clinical and cost options in
order for them to take an informed decision on their prostheses
options.
On hospitals – Hospitals would not be directly
affected.
On Government – Government objectives with respect
to private health insurance would not be satisfied because consumers have
inadequate protection with respect to prostheses costs. Depending on the
response of the funds, this could pose a major problem for fund members.
This option would meet the objective of reducing pressure on health fund
premiums. Health funds would have more freedom in deciding the benefit level
and coverage of prosthesis items.
However, there is a significant risk
that consumers would face a reduction in the level of cover for prostheses and a
greatly reduced choice of products available to them. Suppliers would also be
faced with increased costs from negotiations.
On health funds – This option is based on a proposal put forward
by health funds and public and private hospitals. This option would address
current problems with administration and significantly reduce pressure on costs
over time.
On hospitals – This arrangement would provide
hospitals as purchasers of prostheses, with improved arrangements for listing
and pricing. The new arrangements will not alter the current procurement and
purchasing practices between public hospitals and suppliers and between public
hospitals and health funds.
On consumers –This option
contains various consumer protections and provides national consistency in
access to a no gap prostheses product. For people with private health insurance
needing an in-hospital procedure, they will have the choice between different
levels of prostheses cover. They would still have the choice of a no gap
product or could choose a more expensive item with a co-payment. The majority
of prostheses would remain at no gap. The possible gaps, or out-of-pocket
costs, that may arise could be of concern to consumers. However, this option is
expected to significantly reduce growth in prostheses benefits over time and as
a result will alleviate some pressure on premiums.
From a consumer
perspective the new arrangements for a private patient in a public hospital
should be the same as for a private patient in a private hospital. All
privately insured patients will be able to receive clinically necessary
prostheses at no additional cost where an item is on the no gap list. Where a
gap product is preferred by the patient and clinician, the patient will only be
required to pay up to the total gap amount as shown in the prostheses schedule
determined by the Minister.
On doctors – Doctors would need
to provide their patients with the information they need on clinical and cost
options in order for them to take an informed decision on their prostheses
options.
On suppliers – The no gap benefit to be paid by
health funds would be determined by the Minister for Health and Ageing. The
Minister would also determine the maximum amount that the fund would be required
to cover for a gap permitted prostheses. While the level of benefit for no gap
prostheses may have some impact on the price that suppliers can negotiate for
their products, they will still have some flexibility in pricing their products
through the gap permitted prostheses items. This option will also provide them
with greater certainty that their items will be covered by health funds.
On Government – This option would significantly reduce
growth in prostheses benefits over time, alleviating some pressure on premiums
and the 30% private health insurance rebate. The Government would work with
industry to ensure the application of informed financial consent arrangements
for consumers.
On 17 April 2002, the Department of Health and Ageing wrote to a
broad range of private health industry stakeholders seeking their views on the
current regulatory arrangements. Submissions from interested stakeholders were
received by 10 May 2002 and were considered as part of the review processes.
Submissions were received from private health industry peak bodies and peak body
representatives, including private hospitals, health funds, consumer groups,
health professionals the Private Health Insurance Ombudsman and the Private
Health Insurance Administration Council (PHIAC) board. Health funds and private
and public hospitals worked together over two months to produce a joint
submission in relation to prostheses cover. In all, 25 submissions were
received.
With the information provided by these submissions the above
options were developed by an inter-Departmental Committee.
Option 3, is
based on the joint proposal put forward by health funds and the private and
public hospitals.
Since the announcement of the new arrangements early in
2003 the industry has worked together towards implementation. The industry has
made progress in relation to the clinical assessment of currently listed
prostheses. It has collectively worked on resolving outstanding issues and
identified an agreed way forward.
Option 3 is the most likely to reduce the growth in prostheses benefits
over time. Health funds will have some control over their level of coverage of
benefits for prostheses items. This option will also reduce the administrative
burden for the industry.
Option 3 also has the support of the
main industry groups.
IMPLEMENTATION AND
REVIEW
Implementation
Amendment to the National
Health Act 1953, will be required to implement the recommended option.
Implementation is planned to commence in early 2005.
The Prostheses and
Devices Committee, a non-statutory advisory committee, has been established to
advise the Minister on the listing and pricing of prostheses (including medical
devices). Its composition includes experts from the health funds, private
hospitals, clinicians, the Department of Veterans’ Affairs, consumers and
suppliers. The Chair of the committee is an independent clinician.
To
support the Committee there will be:
• Clinical Advisory Groups,
comprised mainly of expert clinicians to provide advice on the clinical
effectiveness and relative effectiveness of prostheses; and
• A
Benefits Negotiating Group to advise on appropriate level of benefits for the
products.
A Policy Advisory Group, comprising a senior representative
of each of the key stakeholders, will address major policy
issues.
Currently, in addition to surgically implanted prostheses and
other medical devices, human tissues are listed on a no gap basis in Schedule 5
to the determination under paragraph (bj), Schedule 1 of the Act. Human tissues
are listed on a cost recovery, non-profit basis only. Human tissues will
continue to be listed on a cost recovery, non-profit basis only, but will move
to become determined ‘no gap prostheses’ when the proposed
amendments commence. A simpler recommendatory process will apply in respect of
human tissues.
Review
A review of the new arrangements will commence two years after full implementation.
This clause provides that the Act may be cited as the National Health Amendment (Prostheses) Act 2004.
This clause sets out the commencement arrangements for provisions of this
Act. Each provision of this Act specified in column 1 of the table commences,
or is taken to have commenced, in accordance with column 2 of the table. Any
other statement in column 2 has effect according to its terms.
Sections 1
to 3 and anything in this Act not elsewhere covered by the table commence on the
day this Act receives the Royal Assent.
Schedule 1 to the Act commences
on a single day to be fixed by Proclamation. If any of the provisions do not
commence within the period of 9 months beginning on the day on which this Act
receives the Royal Assent, they commence on the first day after the end of that
period.
The period of 9 months, rather than 6 months, before the Act will
commence in the absence of proclamation is considered appropriate to ensure that
sufficient time is allowed for industry to make arrangements to adjust to the
prostheses amendments. For example, current hospital purchaser-provider
agreements will need to be varied, before new section 73BDAAA commences, to
comply with section 73BDAAA.
Schedule 2, item 1 commences at the same
time item 27, Schedule 1 to the Health
Legislation Amendment (Private Health Insurance Reform) Act 2004
commenced, that is, 1 July 2004.
Schedule 2, items 2 and 3 commences at
the same time item 16, Schedule 1 to the Health
Legislation Amendment (Private Health Insurance Reform) Act 2004
commenced, that is, 1 July 2004.
This clause provides that each Act that is specified in a Schedule to this
Act is amended or repealed as set out in the applicable items in the Schedule
concerned, and any other item in a Schedule to this Act has effect according to
its terms.
SCHEDULE 1 – AMENDMENTS
Item 1: Subsection 4(1)
Item 1 inserts a new definition of gap permitted prosthesis into subsection 4(1) of the National Health Act 1953 (the Act). It provides that gap permitted prosthesis means a prosthesis determined by the Minister under subsection 73AAG(7) to be a gap permitted prosthesis.
Item 2: Subsection 4(1)
Item 2 inserts a new definition of no gap prosthesis into subsection 4(1) of the Act. It provides that a no gap prosthesis means a prosthesis determined by the Minister under subsection 73AAG(6) to be a no gap prosthesis.
Item 3: Section 5F
Item 3 inserts a new section 5F into the Act, which provides that in the Act and the Health Insurance Act 1973, a reference to hospital treatment, or an episode of hospital treatment, includes a reference to a prosthesis provided as part of an episode of hospital treatment.
New section 5F is designed to remove any doubt that registered health benefits organizations (health funds) may pay benefit, under applicable benefits arrangements, for prostheses provided as part of an episode of hospital treatment, including no gap prostheses and gap permitted prostheses.
Item 4: Subsection 67(4) (at the end of the definition of hospital treatment)
Item 4 inserts a new part (c) in subsection 67(4), at the end of the definition of hospital treatment, which includes in hospital treatment, a prosthesis provided as part of an episode of hospital treatment.
Subsection 67(1) of the Act provides that a person, other than a health fund, shall not carry on health insurance business. Subsection 67(2) makes it an offence to contravene subsection 67(1). Subsection 67, unlike other private health insurance provisions in the Act, is directed at non health funds. The amendment to the definition of hospital treatment in subsection 67(4) is made to remove any doubt that the definition of ‘hospital treatment’ in subsection 67(4) of the Act includes prostheses provided as part of an episode of hospital treatment.
Item 5: At the end of section 73AAG
Item 5 inserts new subsections (6), (7), (8) and (9) at the end of section 73AAG of the Act.
Subsection (6) provides that the Minister may determine in writing the prostheses that are no gap prostheses for the purposes of the Act, and the benefit amount for each of those no gap prostheses.
A prosthesis may include medical devices. A prosthesis may also include human tissues, including an organ, or part, of a human body or a substance extracted from, or from a part of, the human body.
A human tissue should only be determined to be a no gap prosthesis where such listing would not be inconsistent with state or territory legislation (such as legislation regarding human tissues or transplantation) or other Commonwealth legislation (such as the Therapeutic Goods Act 1989).
Subsection (7) provides that the Minister may determine in writing the prostheses that are gap permitted prostheses for the purposes of the Act, and the minimum and maximum benefit amounts for each of those gap permitted prostheses.
Subsection (8) provides that a determination made under subsection 73AAG(6) or (7) before the day on which section 3 of the Legislative Instruments Act 2003 commences is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901.
Subsection (9) provides that a determination made under subsection 73AAG(6) or (7) on or after the day on which section 3 of the Legislative Instruments Act 2003 commences is a legislative instrument for the purposes of that Act.
Item 6: Subparagraph 73BD(2)(b)(i)
Item 6
inserts, after the word “related”, the words,
“goods and” into subparagraph 73BD(2)(b)(i). Following amendment,
paragraph 73BD(2)(b)(i) will provide that a hospital purchaser-provider
agreement (HPPA) must require the hospital or day hospital facility to render,
in respect of an episode of hospital treatment, a single account covering all
hospital services and related goods and services. The purpose of this amendment
is to remove any possible doubt whether the single account must include any
prostheses provided as part of the episode of hospital
treatment.
Item 7: After subsection 73BD
Item 7
inserts a new section 73BDAAA relating to no gap and gap permitted
prostheses payments under hospital purchaser-provider agreements (HPPAs).
Subsection (1) provides that section 73BDAAA will apply if:
• a
hospital purchaser-provider agreement between a health fund and a hospital or a
day hospital facility deals with the payment to be made by the health fund to
the hospital or day hospital facility in relation to a particular episode of
hospital treatment; and
• a no gap or gap permitted prosthesis is
provided as part of that episode of hospital treatment; and
• the
person to whom the prosthesis is provided is a contributor to the health
benefits fund conducted by the health fund; and
• under the terms on
which the person is a contributor, the person is covered (wholly or partly) in
respect of that episode of hospital treatment, or the professional service
associated with the provision of the prosthesis; and
• a Medicare
benefit is payable in respect of the professional service associated with the
provision of the prosthesis.
Subsection (2) provides that in working out the amount the health fund must
pay the hospital or day hospital facility for the episode of hospital treatment,
the amount taken into account to cover the cost of the prosthesis is determined
using the table in subsection 73BDAAA(2). That is:
• If the
prosthesis is a no gap prosthesis and the payment is to a recognised hospital
the amount taken into account to cover the cost of the prosthesis must not
exceed the benefit amount for the no gap prosthesis.
• If the
prosthesis is a no gap prosthesis and the payment is to a private hospital or a
day hospital facility the amount taken into account to cover the cost of the
prosthesis must be the benefit amount for the no gap prosthesis.
• If
the prosthesis is a gap permitted prosthesis and the payment is to a recognised
hospital, the amount taken into account to cover the cost of the prosthesis must
not exceed the maximum benefit amount for the gap permitted
prosthesis.
• If the prosthesis is a gap permitted prosthesis and the
payment is to a private hospital or day hospital facility, the amount taken into
account to cover the cost of the prosthesis must be at least the minimum benefit
amount and not more than the maximum benefit amount for the gap permitted
prosthesis.
Subsection (3) provides that paragraphs (d) and (e) of
Schedule 1 do not apply to benefits covered by this section. This exclusion is
needed because, where it applies, section 73BDAAA sets, or caps, the benefit
payable for no gap and gap permitted prostheses.
Subsection (4) provides that if the prosthesis is a no gap prosthesis, the
HPPA must provide that the hospital or day hospital facility agrees to accept
payment by the health fund under the agreement, of the benefit amount, in
relation to the episode of hospital treatment in satisfaction of any amount that
the contributor would, apart from the HPPA, owe the hospital or day hospital
facility for the prosthesis.
The purpose of this amendment is to ensure
that the contributor does not have any out of pocket expense for any no gap
prosthesis provided as part of the episode of hospital
treatment.
Subsection (4) only applies if subsection 73BDAAA(1)
applies.
Subsection (5) provides that if the prosthesis is a gap permitted prosthesis,
the HPPA must provide that the payment by the health fund under the agreement
for an episode of hospital treatment will not leave the contributor liable to
the hospital or day hospital facility in relation to the prosthesis for an
amount that exceeds the difference between:
• the maximum and
minimum benefit amount, if the amount of benefit paid by the health fund for the
prosthesis was less than or equal to the minimum benefit amount for the
prosthesis; or
• the maximum benefit amount and the amount paid by the
health fund, if the amount of benefit paid by the health fund for the prosthesis
was more than the minimum benefit amount for the prosthesis.
The purpose
of this amendment is to ensure that the contributor does not have an out of
pocket expense for a gap permitted prosthesis which exceeds the
‘gap’. In addition, should the health fund pay more than the minimum
benefit amount for a gap permitted prosthesis, the purpose of this amendment is
to ensure that the contributor does not have an out of pocket expense for the
gap permitted prosthesis that exceed the resulting smaller gap (the difference
between the higher amount paid by the health fund and the maximum benefit
amount).
Subsection (5) only applies if subsection 73BDAAA(1)
applies.
If the health fund pays benefit to a recognised hospital, the
table in subsection 73BDAAA(2) provides that the health fund must not exceed the
benefit amount (gap permitted prosthesis) or maximum benefit amount (gap
permitted prosthesis). However, in order for 73BDAAA(4) and (5) to apply, the
health fund must pay benefit for the no gap or gap permitted prosthesis
‘under the agreement’. The amount the health fund will pay the
recognised hospital must be referenced in the HPPA and agreed between the health
fund and recognised hospital.
Example
1: A health fund and recognised hospital may agree that the health fund will
pay the benefit amount for no gap prostheses, or, if less, the amount the
supplier charged the recognised hospital for the no gap
prosthesis.
Example 2: A health
fund and recognised hospital may agree that the health fund will pay an amount
which is not less than the minimum benefit amount, and not more than the maximum
benefit amount, for gap permitted prostheses, or, if less, the amount the
supplier charged the recognised hospital for the gap permitted prosthesis.
Example 3: A health
fund and a recognised hospital may agree, as part of the negotiated HPPA, that
in certain circumstances the health fund will pay less than the benefit amount
for no gap prostheses, and less than the minimum benefit amount for gap
permitted prostheses.
Obligation on
organizations regarding
agreements
Subsection (6) provides
that a health fund must not enter into a hospital purchaser-provider agreement
that does not contain the terms required by subsections (4) and
(5).
Unlike the rest of section
73BDAAA, since the obligation applies at the point of entry into a HPPA,
subsection (6) applies only to HPPAs made after the commencement of section
73BDAAA: item 8(2).
Item 8: Application of item
7
Item 8 contains two
application provisions.
Item 8(1)
provides that section 73BDAAA of the Act applies to hospital purchaser-provider
agreements made after the commencement of the
Schedule.
Item 8(2) provides that
section 73BDAAA (other than subsection 73BDAAA(6)) also applies to hospital
purchaser-provider agreements made before the commencement of the Schedule, but
only if the agreement is in force immediately before that
commencement.
The purpose of item 8(2)
is to expressly provide that section 73BDAAA (other than subsection 73BDAAA(6))
also applies to HPPAs which are current when the Schedule commences. It is
expected that HPPAs will need to be varied, before 73BDAAA commences, to ensure
compliance with new section 73BDAAA.
Item 9: Paragraph
(bi) of Schedule 1
Item 9 amends paragraph (bi) of
Schedule 1 to omit “condition set out in paragraph” and substitute
“conditions set out in paragraphs (bl), (bm) and ”.
Paragraph (bi) sets the minimum benefit payable by health funds for
episodes of hospital treatment not covered by a HPPA, in situations of
emergency. The amendment requires health funds to apply, in relation to payment
of benefit for no gap and gap permitted prostheses, the new conditions of
registration relating to no gap and gap permitted prostheses set out in
paragraphs (bl) and (bm).
Item 10: Paragraph (bj) of Schedule
1
Item 10 amends paragraph (bj) of Schedule 1 to omit
“condition set out in paragraph” and substitute “conditions
set out in paragraphs (bl), (bm) and ”.
Paragraph (bj) provides
for the Minister to set the minimum benefit payable by health funds for episodes
of hospital treatment not covered by a HPPA, otherwise than in situations of
emergency. The amendment requires health funds to apply, in relation to payment
of benefit for no gap and gap permitted prostheses, the new conditions of
registration set out in paragraphs (bl) and (bm).
Item 11: After
paragraph (bk) of Schedule 1
Item 11 inserts two new
conditions of registration after paragraph (bk) of Schedule 1 – contained
in paragraphs (bl) and (bm).
Paragraph (bl) provides that paragraph
(bl) applies to a prosthesis if:
• the
prosthesis is a no gap prosthesis or a gap permitted
prosthesis;
• the prosthesis is provided as part of an episode
of hospital treatment; and
• a Medicare benefit is payable in respect
of the professional service associated with the provision of the prosthesis;
and
• the person to whom the prosthesis is provided is a contributor to
the health benefits fund conducted by the health fund; and
• under the
terms on which the person is a contributor, the person is covered (wholly or
partly) in respect of the episode of hospital treatment or the professional
service; and
• the episode of hospital treatment is provided in a
hospital or day hospital facility with which the health fund does not have a
HPPA covering episodes of hospital treatment of that kind.
Paragraph (bm)
provides that if paragraph (bl) applies to a prosthesis:
• each
applicable benefits arrangement of the health fund must provide for benefits to
be payable in respect of the prosthesis; and
• the amount of benefit
payable by the health fund in respect of the prosthesis is determined by using
the table in paragraph (bm).
That is:
• If the prosthesis is
a no gap prosthesis and the episode of hospital treatment is provided in a
recognised hospital the amount of benefit payable for the prosthesis must not
exceed the benefit amount for the no gap prosthesis and must be the lesser of
the following amounts:
i. the benefit amount for the prosthesis determined by
the Minister; or
ii. the amount of the contributor’s liability to the
recognised hospital for the prosthesis.
• If the prosthesis is a
no gap prosthesis and the episode of hospital treatment is provided in a private
hospital or a day hospital facility the amount of benefit payable for the
prosthesis must be the benefit amount for the no gap
prosthesis.
• If the prosthesis is a gap permitted prosthesis and
the episode of hospital treatment is provided in a recognised hospital, the
amount of benefit payable for the prosthesis must not exceed the maximum benefit
amount for the gap permitted prosthesis, and must be at least the lesser of the
following amounts:
iii. the benefit amount for the prosthesis determined by
the Minister; or
iv. the amount of the contributor’s liability to the
recognised hospital for the prosthesis
• If the prosthesis is a gap
permitted prosthesis and the episode of hospital treatment is provided in a
private hospital or day hospital facility, the amount of benefit payable for the
prosthesis must be at least the minimum benefit amount and not more than the
maximum benefit amount for the gap permitted prosthesis.
Paragraphs (d)
and (e) do not apply to benefits covered by paragraph (bm). This exclusion is
needed because, where it applies, paragraph (bm) sets, or caps, the benefit
payable for no gap and gap permitted prostheses.
Where a health fund pays benefit with
respect to a private patient in a recognised hospital, it is expected that a
health fund will pay benefit which will not leave the member with an out of
pocket expense (no gap prosthesis) or an out of pocket expense greater than the
gap (gap permitted prosthesis). This may be achieved by paying the benefit
amount (no gap prosthesis) or minimum benefit amount (gap permitted prosthesis),
or, if less, the amount the supplier charged the recognised
hospital.
Schedule 2 –
Technical Amendments
Health
Legislation Amendment (Private Health Insurance Reform) Act
2004
Item 1: After Item
28 of Schedule 1
This item
inserts a saving provision to continue in force a form approved by the Minister
under subsection 78(1C) of the National Health Act 1953 as if the
Minister has approved the form under and for the purposes of subsection 78(2) of
the National Health Act 1953 as amended by item 27 of Schedule 1 to the
Health Legislation Amendment (Private Health Insurance Reform) Act 2004 (the
Reform Act).
To remove any doubt about the validity of rule change
notifications on and from 1 July 2004, this amendment commences retrospectively
on 1 July 2004, when item 27, Schedule 1, of the Reform Act
commenced.
National Health Act
1953
Item 2: After item
32 of Schedule 1
This item
removes the current reference in the note to Schedule 1 of the National
Health Act 1953 to section 73BA and replaces it with the correct reference
which is section 73AAF.
This
amendment operates retrospectively on and from 1 July 2004, when item 16 of the
Reform Act commenced. The note is a cross-reference to assist the reader, with
no legal effect or impact.
Item
3: Paragraph (ma) of Schedule
1
This item removes the
current incorrect reference to subsection 73BA(2A) in paragraph (ma) of Schedule
1 to the National Health Act 1953 and replaces it with the correct
reference subsection 73AAG(2).
To remove any doubt about the
validity of loyalty bonus schemes on and from 1 July 2004, this amendment
commences retrospectively on 1 July 2004, when item 16, Schedule 1 of the Reform
Act commenced.