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Health Insurance (Pathology Services) Amendment Bill 1991

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House: House of Representatives

Portfolio: Community Services and Health


To retrospectively correct certain defects in the Schedules of the Health Insurance Act 1973 relating to a pathology testing method.


The Health Insurance Act 1973 (the Principal Act) and the National Health Act 1953 provide the legislative basis for Commonwealth health insurance. The Principal Act provides the legal framework for Medicare and covers such areas as: billing methods; eligibility for benefits; regulation of pathology services; and inquiries into over servicing. Medicare, which came into operation on 1 February 1984, provides access to medical and hospital services for all Australians.

Medicare benefits are based on fees determined for certain specified medical and pathology services. Medical/pathology services which attract a benefit are contained in lists, or Tables, in the Schedules to the Principal Act.

The main amendments to the Principal Act proposed by this Bill are intended to correct certain defects in the Schedules to the Principal Act. The defects relate to a pathology testing method known as the enzyme-linked immunosorbent assay (ELISA), which provides a cheaper and quicker way of conducting certain pathology tests.

Some of the difficulties this Bill addresses arise from an invalid determination made in March 1984 which attempted to change the pathology services table with respect to ELISA services. As a result of the method and procedures used to change the table, this determination, and similar changes that were made in later years to the same items, were subsequently found to be defective. The result of this was that the changes, which had largely been used by the pathology industry, were ineffective. The changes included increases in returns for the providers of pathology services. An attempt was made in 1987 to rectify the mistakes by a determination, but the procedures involved were challenged in the Federal Court and were again found to be defective, so this did not rectify the problem. This meant that the changes to this area of the Table made in 1986 and previously were invalid as well. The situation may have been thought to have been resolved when amendments passed in 1989 meant that a new Table had force due to the Minister's regulation making power. The new table had effect from 1 August 1989, but did not validate the changes made from 1984.

A further complicating element appeared when it was realised that as well as being subject to a specific item in the Table, the ELISA services could also be charged under another, more general item in the Table. The benefits available under the general item were higher than those available under the more specific item. A 1990 Federal Court case ( Peverill v. Health Insurance Commission 95 ALR 401) has upheld the right for pathology service providers to use either where, due to the definitions of the items, a service could fall within either Item. As the report of the case shows, the definition of pathology items can be very complex. This case raises the likelihood that litigation would be used by pathology service providers to have all ELISA services performed while there were two items covering the service available recompensed at the higher rate, even though most were originally charged under the lower rate. The explanatory memorandum estimates that this could cost $100 million. In the second reading speech, the Minister states that this likelihood has been raised by further litigation.

Main Provisions

Two new interpretation rules will be inserted into the Tables by clause 4. They will provide that where a service is covered by two items, the specific, rather than general, item is to be used. If the service is covered by two general items, the lower cost one is to be used. The amendments will apply from 1 January 1980.

The principal effect of the amendment contained in clauses 4, which will have effect from 1 March 1984, 15 June 1984, 1 July 1985, 14 March 1986 and 1 August 1986, will be to correct various invalid determinations and tables in respect to ELISA inserted into the Principal Act which were subsequently found by the Federal Court to be invalid.

Clause 5 will amend Schedule 1A of the Principal Act (the relevant Table which applies from 1986) to perform the same amendments as contained in clause 4. The amendments will apply from this time until 1 August 1989 when the new, valid, Table came into force.

Clause 6 contains transitional provisions and, basically, will ensure that persons will not have, because of the amendments proposed by this Bill, to make any refunds of payments already received and will retain their right to receive payments where they have already lodged a claim.

Bills Digest Service 16 April 1991

Parliamentary Research Service

For further information, if required, contact the Education and Welfare 06 2772410.

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1991

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Published by the Department of the Parliamentary Library, 1991.