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Monday, 7 March 2005
Page: 93


Senator HILL (Minister for Defence) (5:27 PM) —I table a revised explanatory memorandum relating to the bill and move:

That this bill be now read a second time.

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

Leave granted.

The speech read as follows—

National Health Amendment (Prostheses) Bill 2005

This bill amends the National Health Act 1953 (the Act) to require registered health benefit organisations (health funds), to provide cover, under their applicable benefits arrangements (hospital cover) for no gap and gap permitted prostheses provided as part of an episode of hospital treatment involving a professional service for which a Medicare benefit is payable.

Specifically, the bill does the following.

The bill amends the Act to allow the Minister to determine in writing:

  • no gap prostheses—prostheses that are to be covered by health funds with no gap payable, at the benefit amount listed for each no gap prosthesis; and
  • gap permitted prostheses—prostheses that are to be covered by health funds, but a gap may be payable by the health fund contributor, and the minimum and maximum benefit amount listed for each gap permitted prosthesis.

When making a no gap or gap permitted prosthesis determination, the Minister may take into account advice from experts in the field of prostheses and in the health insurance industry.

The bill requires health funds to provide contributors no gap cover for prostheses in relation to every in-hospital procedure for which a Medicare benefit is payable. The benefit that the health fund must pay is the no gap benefit amount listed in the no gap prostheses determination. The contributor should have no out of pocket costs for the no gap prosthesis.

The bill also requires health funds to provide contributors cover for gap permitted prostheses. The same requirements as for no gap prostheses will apply to health funds, except that health funds must not pay benefit for a gap permitted prosthesis at less than the minimum benefit amount. In addition, health funds must not pay benefit above the maximum benefit amount for a gap permitted prosthesis. A gap permitted prosthesis is likely to leave a contributor with a ‘gap’ or out of pocket expense, but the gap should not be more than the difference between the minimum and maximum benefit amount for the gap permitted prosthesis.

The aim of the bill is to enhance the value of private health insurance and increase choice for consumers. Health funds currently meet 100 per cent of the cost of all surgically implanted prostheses and other medical devices listed on the Prostheses Schedule issued under 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. Feedback from industry is that the current arrangements are also administratively cumbersome. The new arrangements are intended to allow consumers access to prostheses with no out of pocket costs or to choose from a range of more expensive prostheses if they are willing to pay an out of pocket cost.

Health funds will still have the ability to choose to provide, under their applicable benefits arrangements, cover for prostheses which are not listed on a 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).

Contributors to health funds will still have the ability to choose to pay lower premiums for lesser benefits. Health funds will not be required to pay the benefit amount for a no gap prosthesis, or the minimum benefit amount for a gap permitted prosthesis, where a member has made an election not to be covered for the procedure. For example, a health fund may still offer, for a lower premium, and a contributor may still choose, a hospital cover policy which does not cover cardiac surgery. In such a case, the health fund will not be obliged to pay benefit for cardiac surgery, including any prostheses provided as part of the cardiac surgery.

Finally, the bill inserts a new section to ensure that a contributor to a health fund will receive the same cover for a no gap or a gap permitted prosthesis, when the hospital or day hospital facility where they receive treatment has a hospital purchaser-provider agreement with the contributor’s health fund.

I acknowledge the contribution of all stakeholders who have contributed to the development of the new arrangements for the coverage of prostheses for consumers with private health insurance.

Debate (on motion by Senator Hill) adjourned.