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Thursday, 7 November 1991
Page: 2781

Senator McMULLAN (Parliamentary Secretary to the Treasurer) (2.44 a.m.) —I table the revised explanatory memorandum relating to the Bills and move:

  That these Bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

  Leave granted.

  The speeches read as follows


BILL 1991

This Bill would enact a number of changes which would be the basis for reforms to ensure that Medicare remains a sustainable, equitable, and efficient universal health insurance system.

This Bill would adjust the Medicare benefits arrangements to encourage more appropriate use of medical services and more efficient use of health resources and to provide improved protection for families from high out of pocket gap costs for private medical services. The Bill would also ensure ongoing support for those general practitioners who choose to bulk bill.

The major problem facing Australia's health care system is the growth in use of medical services per person. This growth means that every 20 years the number of medical services per person doubles.

That growth is not caused by Medicare—the National Health Strategy has shown that that growth has been occurring fairly constantly since at least 1976. The cause is an open ended fee for service system underwritten by insurance—whether public or private.

The result has been that as doctor numbers have grown so too has the use of medical services.

The National Health Strategy has indicated that an integrated approach—that addresses the demand and supply sides together—could have a major impact on growth in use of medical services.

That is what the Government proposes. Details are set out in Budget Related Paper No. 9. This Bill would implement the first parts of the package of measures the Government envisages. Further measures will be discussed with the medical profession over coming months—with the Government intending to implement further changes from 1 July 1992. As a result of the Caucus working party review of the reforms to Medicare, the Government has now agreed to commit up to $12 million to demonstration general practice grants in 1991-92, keeping in mind the general aims of the formal program due to commence on 1 July 1992.

The measures contained in this Bill have been subjected to a comprehensive review process and have been refined as a result of this process. I am therefore confident that the revised package of reforms will provide a sound basis for containing health expenditure and encouraging the more efficient use of health resources. It will address the problem of inappropriate service patterns and encourage a more selective use of medical services through the introduction of a judicious price signal while providing improved protection for families, the chronically ill and heavy users of medical services. Finally the reforms provide a clear signal that the Government supports the ongoing role of bulk billing.

The Bill would amend the Health Insurance Act 1973 in order to:

  reduce benefits for out of hospital general practitioner attendance items provided to non cardholders and permit doctors who bulk bill non cardholders to raise charges (copayments) for the same services;

  provide additional protection for concessional beneficiaries in circumstances where they cannot produce their card to a doctor as evidence of their status;

  introduce provisions for an additional payment to be made to doctors each time they bulk bill a non cardholder for these services;

  expand the Medicare safety-net, and to permit "gap" costs for families to count towards the existing safety-net threshold of $246;

  include transitional provisions to protect individuals when the existing safety net arrangements which apply on a financial year basis are replaced retrospectively by a calendar year accounting period; and

  provide for the indexation of certain amounts in the Act.

Medicare benefit for prescribed out-of-hospital general practitioner consultation items for non-concessionary benefits would be reduced by $3.50 from 1 December 1991. This reduction would increase to $5 from 1 November 1992 and be indexed annually from then on. For bulk-billed services where the benefit is reduced, general practitioners would be able to charge non-concessionary patients a co-payment of up to $2.50. When the additional $1.00 fee for bulk billed services is added to the $2.50 maximum copayment, the net income for a doctor who bulk bills remains unaffected by these changes.

The Government recognises the administrative efficiencies and lower costs which result from processing bulk billed claims compared with patient billed claims for general practice services. It also acknowledges that there are broader benefits which result from bulk billing in terms of cost control and in access to affordable medical services. The introduction through this Bill of an indexed $1.00 additional payment (known as the transaction fee) for each bulk billed service affected by the reduced benefit will recognise these advantages and send a clear signal to doctors that the Government supports bulk billing.

The attendance items affected by these reforms are defined in the Bill and would be prescribed in detail in regulations and would include the following:

  all vocationally registered general practitioner items for consultations in the surgery, home visits, and consultations in institutions and nursing homes;

  all parallel consultation items for attendances by other than vocationally registered general practitioners;

  emergency after hours attendances; and

  GP attendances involving acupuncture.

The benefits for other items in the Medicare Benefits Schedule are unchanged by this Bill.

There would be exemptions from these changes for a range of concessional beneficiaries and, in most cases, their dependants and for those persons and families who become eligible for increased benefits in any year under the safety-net arrangements. Concessional beneficiaries are similar to those under the Pharmaceutical Benefits arrangements but will also extend to those persons entitled to medical care under sections 85 and 86 of the Veterans' Entitlements Act 1986.

The following concessional beneficiaries and their dependants would be exempt;

  Social Security and Veterans' Affairs pensioners, including those persons who have retained some entitlements under the deeming provisions for savings introduced in the 1990 budget;

  most Social Security beneficiaries;

  persons receiving family allowance supplement in respect of a child;

  disadvantaged persons under the Health Insurance Act; and,

  pensioners within the meaning of the National Health Act.

Persons with treatment entitlements under the Veterans' Entitlements Act would also be exempt but this exemption will not extend to their dependants.

The Parliament has enacted the Social Security (Disability & Sickness Support) Amendment Act 1991 which will replace the sheltered employment allowance, the rehabilitation allowance and the invalid pension with the disability support pension and to replace sickness benefit with sickness allowance from 12 November 1991.

Social Security legislation which provides for necessary consequential amendments to the Health Insurance Act has been introduced into the Senate and certain provisions of that Bill are dependent on the passing of this Bill.

The Bill deals with new safety-net arrangements which are designed to protect families and individuals from excessive medical costs.

Currently individuals who incur out of pocket costs for gaps between the Medicare benefit and the Schedule Fee for out of hospital services totalling more than $246 (indexed) in a financial year are entitled to benefits to cover their gap costs up to 100% of the Schedule Fee for out of hospital services for the remainder of the financial year.

The threshold would from 1 January 1992 apply to gap expenses incurred by a family as a whole rather than by each individual member of the family. The definition of a family would be that currently used for the safety-net applying in the Pharmaceutical Benefits Scheme. Enrolling as a family would be voluntary.

The current safety-net threshold of $246 for individuals would not change for persons who are not members of families and anyone who chooses not to be counted as part of a family.

The safety-net year would change from the existing financial year to a calendar year basis. This would ensure the extra protection applies as soon as practicable. It would also bring the arrangements into line with those which apply to the Pharmaceutical Benefits Scheme.

The safety-net threshold would remain at its current level of $246 for 1992 and would be indexed thereafter annually. The level would be the same for both individuals and families.

This represents a substantial improvement in protection for families. Under the current arrangements some families continue to pay gap costs for out of hospital services for some family members even when one or more members have exceeded the threshold figure. The new arrangements should bring relief to those families where one or more members has a chronic condition or who face unexpected high costs because of sudden serious illness in the family.

The change would reduce the maximum costs for out of hospital private medical services of a couple with two children from $984 to $246 a year where their doctors charge Schedule fees or less.

The transitional provisions within the Bill provide for the protection of individuals for the period where existing safety net provisions, which apply on a financial year basis, would be overlapped by new provisions, applying retrospectively for the calendar year commencing 1 January 1991. The transitional provisions would take into account the reduction in benefit and the copayment which will apply from 1 December 1991 to 31 December 1991. These provisions also ensure that the potential for "double-dipping" is avoided as a result of the transitional overlap in safety net periods.

The Health Insurance Commission would recalculate the totals of individuals' patient contributions back to 1 January 1991 and then apply the current threshold of $246. Retrospective adjustments would be made, where necessary, to claims already processed for individuals who achieve the safety-net threshold under this transitional arrangement. People who received increased benefits after reaching the threshold in the period 1 July 1990 to 30 June 1991 would not be required to repay those benefits.

The Bill would also provide for indexation of the following: the maximum gap between the Schedule Fee and the Medicare Benefit; the safety-net threshold; the reduction to benefit for the prescribed GP services; the maximum copayment; and the additional fee for bulk billed services. Both the maximum gap and safety-net threshold are indexed under current legislation.

The package of reforms provided for in this Bill represent future changes foreshadowed in the Budget papers; the most significant changes to Australia's health system since the introduction of Medicare. In order to ensure that the community understands the reasons for these changes and what effect they will have on the quality and efficiencies of general practice, $4 million has been allocated over the next two years for patient information and education purposes.

Clearly there are serious concerns about the cost to the community and the quality of care provided in general practice. The Government has commenced discussions with the medical profession to see how funding arrangements might be further amended to assist the profession in its appropriate role of improving standards of practice.

The aim of the discussions is to enable both the profession and the Government to pursue their legitimate roles while ensuring that there is a greater synthesis between the two. It is the responsibility of the profession to set and supervise standards. It is the responsibility of the Government to ensure the financing mechanisms permit access to necessary medical services while constraining costs to ensure the long term sustainability of Medicare and assisting the profession to provide high quality care.

Discussions with the profession will centre around the following:

First, the use of practice grants to complement fee for service reimbursement. A practice grant would provide some remuneration to those general practices which choose to reduce their reliance on fee for service.

This would better target health benefits, since it would offer appropriate financial incentives for practices to engage in best practice care, provide financing arrangements to encourage better integration with the health system and to involve GPs in a wider range of activities. These could be funded through a trade off between providing funds for practice grants and providing funds for Schedule fee increases for GPs' services.

Up to $12 million will be provided in 1991-92 to enable demonstration practice grants to be introduced as soon as possible.

Second, trialing of the use of practice budgets. Under this arrangement a budget is allocated to general practices to cover the costs of diagnostic services and pharmaceuticals. This could build on the Government's other reforms in pharmaceuticals, pathology and radiology. It could also facilitate the trade offs which GPs make between different approaches to the care of their patients and support the role of the GP as the co-ordinator of a network of care. It would be a different approach from that at the moment which relies on counselling by the Health Insurance Commission for doctors who by comparison with their peers appear to use excessive amounts of these services.

Third, accreditation of general practices. The Government sees this as a natural development of the vocational registration arrangements. Those arrangements are a form of accreditation, but of individual practitioners. Accreditation would be a matter for the profession, but it could provide a framework within which many steps could be taken to address quality of care issues in general practice. These might include improved quality of training provided to GP trainees through links between accredited practice and academic Departments of general practice in medical schools. Similarly improved continuing education and quality assurance programs could result from these links.

Fourth, supply and distribution of medical practitioners. There are four major aspects for discussion. These are: medical immigration; output of medical schools; the distribution of medical practitioners; and developing alternatives for GPs to help reduce the oversupply problem in urban areas.

Many other countries have acted to deal with excessive medical immigration. The situation in Australia is now such that it can no longer afford to permit relatively unrestricted entry of overseas medical practitioners.

Fifth, information technology. Information technology could substantially enhance the diagnostic and patient education roles of General Practitioners as well as improving the business management of practices. However, as with other diagnostic equipment the current structures of general practice mean that few practices have sufficient capital base to provide these facilities.

Over $400,000 has been provided in the 1991-92 Budget to support the work of the Review of Professional Indemnity Arrangements for Health Care Professionals. The Review, established by me in April 1991, will examine and report on current arrangements relating to professional indemnity insurance for health care professionals. It will also examine current experience with compensation for medical misadventure and any difficulties with these current arrangements including problems with service quality, coverage and benefits.

The Review will prepare a discussion paper, undertake widespread consultations and prepare a final report, with recommendations for reform, for consideration by the Government in the context of the 1992-93 Budget.

The resources provided in the 1991-92 Budget will enable the Review to prepare its discussion paper, develop options, undertake national consultations, conduct a number of research projects and develop sound costings for possible reform options.

Reform of arrangements for compensation for medical misadventure could assist doctors to significantly improve the quality of care to patients while avoiding unnecessary diagnostic costs which arise from the practice of defensive medicine.


I reiterate that this Bill is to enact a number of changes designed to ensure that Medicare remains a sustainable, equitable, and efficient universal health insurance system.

It is the first step in addressing difficulties that exist not so much in our health insurance system as in our health care system.

The reforms contained in this Bill have been subjected to a comprehensive review process, and as a result of that process have been refined to ensure that they represent the most effective means of dealing with these difficulties.

I look forward to the co-operation of the medical profession in addressing these difficult and complex issues.

I commend this Bill to the Senate.

I now present the Explanatory Memorandum to the Bill.


(NO. 2) 1991

As part of the Government's 1991-92 Budgetary measures, I bring before the House a Bill to amend the Health Insurance Act 1973.

The Bill rectifies what has previously been a deficiency in the Legislation, that enabled Medicare benefits to be paid when a medical practitioner rendered a medical service outside the scope of that medical practitioner's limited or restricted State or Territory registration.

The Bill also includes a new provision which ensures that a patient is fully informed concerning the non availability of Medicare entitlements before a medical service is rendered outside a medical practitioner's State or Territory registration. The Bill includes a provision which requires that a medical practitioner, before rendering a medical service outside that medical practitioner's State or Territory registration, will be required to give to the patient a notice advising that a Medicare benefit is not payable in respect of such a service.

The Bill introduces a penalty provision where, if a medical practitioner who is required to so notify a patient fails to do so, then a penalty, set at a maximum of $2000 may apply.

Also included in the Bill is a discretion for the payment of Medicare benefits, to ensure that patients are not disadvantaged by the proposed new arrangements. This will enable the payment of Medicare benefits for a medical service which is rendered by a medical practitioner outside that medical practitioner's State or Territory registration and where the medical practitioner fails to inform the patient that Medicare benefits are not payable. For example, such a provision would enable Medicare benefits to be paid where a medical practitioner acting outside that medical practitioner's State or Territory registration, was required to provide an emergency service.

Honourable Senators will be aware, that for some time, the Government has been reviewing the key elements of the Medicare arrangements and, in particular, concerns related to excessive servicing by some medical practitioners.

The Bill introduces a new penalty provision and new referral powers to a Medicare Participation Review Committee, which are considered necessary as deterrents to medical practitioners who render excessive services. These amendments are part of the Government's broad initiatives to control the costs of Medicare.

Medical practitioners, under the current legislation, may be required to appear before a Medical Services Committee of Inquiry, which is a committee of medical colleagues, to justify the necessity of the medical services rendered. To the extent that a Medical Services Committee of Inquiry finds that the medical practitioner has excessively serviced, that medical practitioner may be required to repay such Medicare benefits to the Commonwealth or the Commonwealth may not be required to pay Medicare benefits for such medical services. The Bill introduces a penalty, in addition to the non-payment or repayment of Medicare benefits, equal to the value of the Medicare payments in respect of those services, which have been found by a Medical Services Committee of Inquiry to have been rendered excessively.

The current legislation provides for the establishment of Medicare Participation Review Committees. Such Committees are empowered to review the continued participation of a medical practitioner in the Medicare arrangements, in certain circumstances, and may disqualify a medical practitioner from the Medicare arrangements for up to five years. The Bill introduces new provisions requiring that where a medical practitioner has been found to have rendered excessive services by a Medical Services Committee of Inquiry, and has incurred a penalty, on two or more occasions, then such a medical practitioner will be referred to a Medicare Participation Review Committee.

On 1 December 1991 new Health Insurance (General Medical Services Table) Regulations will be implemented. From these Regulations, it has been common practice to produce the Medicare Benefits Schedule, which is used by medical practitioners in relation to billing patients under Medicare. The Australian National Audit Office, Efficiency Audit Report No. 26, on the Administration of the Medicare Benefits Schedule made four recommendations regarding presentational changes to the Medicare Benefits Schedule. The recommendations regarding the Medicare Benefits Schedule were, in substance, that it be restructured with more logical and appropriate headings to enable easier identification of the Medical Services Items, and thus be more `user friendly'.

To implement the changes, the Bill introduces two technical amendments. These amendments will exclude the restrictive references in the current Legislation to the words "Parts" and "Divisions" to enable more appropriate terms to be used in dividing up the various medical services in the Health Insurance (General Medical Services Table)

Regulations. These changes do not effect in any way the substance of the medical services that are itemised in the current Health Insurance (General Medical Services Table) Regulations.

I commend the Bill to the Senate.

I now present the Explanatory Memorandum to the Bill.

  Debate (on motion by Senator Reid) adjourned.

  Motion (by Senator McMullan) agreed to:

  That these Bills be listed on the Notice Paper as separate orders of the day.

Reference to Standing Committee

The PRESIDENT —Pursuant to the order of the Senate agreed to on 15 October 1991, the Health Insurance Amendment Bill 1991 stands referred to the Standing Committee on Community Affairs for consideration and report by 11 November 1991.

Senate adjourned at 2.45 a.m. (Friday)