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Thursday, 28 May 2009
Page: 4697

Ms ROXON (Minister for Health and Ageing) (9:50 AM) —I move:

That this bill be now read a second time.

This bill amends the Health Insurance Act 1973 (the HIA) to enable the Minister for Health and Ageing to determine, by legislative instrument, the maximum benefit payable under the extended Medicare safety net (EMSN) for each Medicare Benefits Schedule (MBS) item.

This bill will result in savings of more than $450 million over four years.

The Medicare safety net provides individuals and families with an additional rebate for their outside-of-hospital Medicare services once an annual threshold of out-of-pocket costs is reached.

Out-of-hospital services include GP and specialist attendances and services provided in private clinics and private emergency departments.

Once the relevant annual threshold has been met, Medicare will pay for 80 per cent of any future out-of-pocket costs for out-of-hospital services for the remainder of the calendar year.

In 2009, the annual threshold for concession cardholders and people who receive family tax benefit part A is $555.70. For all other singles and families the annual threshold is $1,111.60. These threshold amounts are indexed each year by the consumer price index on 1 January each year.

This bill makes an amendment to the safety net program that was introduced through the Health Legislation Amendment (Medicare) Act 2004.

At the time that legislation was introduced to parliament, the stated purpose of the safety net was to ‘protect all Australians from high out-of-pocket costs for medical services provided outside hospital’.

We now have evidence that the safety net is not meeting this purpose in particular cases.

As required under the Health Legislation Amendment (Medicare) Act 2004, I have tabled the Extended Medicare safety net review report 2009, a review of the operation, effectiveness and implication of the safety net conducted by the Centre for Health Economics Research and Evaluation at the University of Technology, Sydney.

The report noted that the safety net has helped patients that have very high costs and has reduced the out-of-pocket costs for some patients with cancer. Nonetheless, the review showed that there are some concerns in areas such as obstetrics, assisted reproductive technology (ART), including IVF, and other Medicare services.

The report noted that around 50 per cent of safety net benefits are paid for obstetrics and ART and that Medicare benefits have more than doubled for both of these groups since the safety net was introduced and a significant proportion of this increase in expenditure is because of increases in the fees charged.

The review noted that between 2003 and 2008 the fees charged by obstetricians for in-hospital services reduced by six per cent, whilst the fees charged out of hospital increased by 267 per cent.

Similarly, the fees charged for ART services fell by nine per cent for in-hospital services, whilst the fees charged for out-of-hospital services increased by 62 per cent.

This indicates that some doctors are taking advantage of the safety net as their fees for out-of-hospital services have increased far in excess of the fees they are charging in-hospital patients.

Before the introduction of the safety net in 2004 there was a limit on the amount of the government contribution for Medicare services—that is, the Medicare schedule fee.

The safety net fundamentally changed these arrangements by essentially removing this limit by covering 80 per cent of out-of-pocket costs for out-of-hospital services, regardless of the fee charged by the doctor.

The unlimited nature of the benefits available through the safety net has led to some doctors taking advantage of the safety net to increase their fees with the knowledge that the majority of the cost will be funded by the government.

This has had the effect of increasing the fees being charged to many people for some services, thus increasing the cost for those people who have not qualified for safety net benefits, as well as the cost to the government.

The safety net benefit is for the patient. It is not intended to subsidise the fee increases of doctors.

The review identified that, for some Medicare services with high out-of-pocket costs, the safety net benefit is not going to its intended purpose. For these services, the review found that, for every safety net dollar that is paid, 78c was spent on meeting doctors’ higher fees, rather than reducing patients’ out-of-pocket costs. Services in this category include one type of varicose vein treatment, one type of cataract surgery, injection of a therapeutic substance into an eye and some ART services.

This bill will enable the Minister for Health and Ageing to determine the maximum benefit that will be paid under the safety net.

The level of the safety net benefit cap for each selected item will be set out in a legislative instrument. It is necessary for the level of the safety net benefit cap to  be set out in a legislative instrument to allow the government to be responsive to changes in circumstances that impact on the safety net. This instrument will be a disallowable instrument and therefore subject to parliamentary scrutiny.

For the benefit of the parliament, at the end of my speech I will table the draft legislative instrument and the draft explanatory statement, which I intend to introduce as soon as the bill is passed.

It is important to note that the safety net benefit caps for artificial reproductive technology are based on the current MBS item structure. These items, however, will be restructured to align the Medicare items with the phases of treatment in an ART cycle and spread the cost for ART across the treatment cycle. Once this restructure is finalised, the new caps will be introduced through a second instrument.

The items that will be ‘capped’ under the measures announced in the 2009-10 budget are obstetrics, ART services, hair transplantation, the injection of a therapeutic substance into an eye, one type of varicose vein treatment and one type of cataract surgery.

This measure also includes funding to increase the MBS rebates of 15 obstetrics services at a cost of $157.6 million over four years, which will assist patients with their out-of-pocket costs.

The government will also be investing $120.5 million over four years though a maternity services reform package to provide greater choice for women whilst maintaining Australia’s strong record of safe, high-quality maternity services. As part of this package, Medicare items will be introduced for midwifery services.

Safety net benefit caps will also apply to midwife services to ensure consistency in the treatment of Medicare funded maternity care.

The safety net benefit cap will apply to the individual MBS items and would be payable in addition to the standard Medicare rebate.

Each person will be eligible to receive up to the safety net benefit cap each time they receive that service. A different level of safety net benefit cap can apply to different MBS items. The safety net benefit cap would be a dollar value. For example, a safety net benefit cap of $100 may apply to one item and a safety net benefit cap of $500 may apply to a different item. The level of the safety net benefit cap will be publicly available. This will ensure that doctors and patients will have certainty in relation to their Medicare entitlements.

Every person is still eligible for a safety net benefit.

All services currently covered by the extended Medicare safety net will remain covered by the extended Medicare safety net.

The total out-of-pocket costs incurred by a person for these services will still count towards the extended Medicare safety net threshold amount.

Once a person has reached that safety net threshold, they will continue to be eligible to receive safety net benefits equal to 80 per cent of their out-of-pocket costs for all other safety net eligible services.

This maintains the government’s commitment to retaining the extended Medicare safety net for all out-of-hospital Medicare services.

In 2008, expenditure on the safety net was $414 million, 30 per cent more than in 2007. Unless we make these changes now, this expenditure will continue to grow rapidly.

This bill creates a mechanism by which the government can responsibly manage expenditure on the safety net. This is important for supporting the sustainability of the safety net so that singles and families can continue to receive this additional assistance with their out-of-pocket costs.

I present draft copies of the Health Insurance Extended Medicare Safety Net Determination 2009 and explanatory statement. As I noted during my speech, these are drafts that are being made available for the benefit of the parliament.

Debate (on motion by Mr Coulton) adjourned.