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Health Legislation Amendment Bill (No. 1) 2001

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1998-1999-2000

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

HEALTH LEGISLATION AMENDMENT BILL (NO 3) 2000

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Health and Aged Care,

the Hon. Dr Michael Wooldridge, MP)

 



 

 

HEALTH LEGISLATION AMENDMENT BILL (No 3) 2000

 

OUTLINE

 

This Bill amends the National Health Act 1953 (NHA) to:

 

·          enable the private health industry to fund ‘outreach services’, that is, alternative models of health care delivery, as a direct substitute to in-hospital care for admitted patients;

 

·          protect registered health benefits organizations from any action for a breach of duty of confidence (or breach of a similar obligation) in relation to the reasonable disclosure of membership eligibility information to hospitals or day hospital facilities with which the organizations have a Hospital Purchaser Provider Agreement;

 

·          to clarify the definitions ‘adult beneficiary’ and ‘hospital cover’ for the purposes of the Lifetime Health Cover (LHC) rules; and

 

·          provide all refugees with 12 months after they become eligible for Medicare in which to take out hospital cover without incurring a LHC penalty.

The principal amendments contained in the Bill are those dealing with ‘outreach services’.  These amendments extend the definition of ‘hospital treatment’ in the NHA to enable outreach services as a substitute for in-hospital care to better reflect current care practices.  This also requires a consequential technical amendment to the Health Insurance Act 1973 (HIA) as the term ‘hospital treatment’ is also used in that Act.

 

The aim of these amendments is to enable private patients in both public and private hospitals to receive the same equitable care choices available to public (Medicare) patients in public hospitals.  This, in turn, will improve the efficiency and flexibility of the private health insurance industry.  It will also improve the attractiveness to consumers of private health insurance products by providing greater value for money for their hospital coverage.

 

Considerable interest in private health outreach programs has been generated over the past two years.  Six patient trials have been piloted with the involvement and support of the Commonwealth, consumer representatives, participating private hospitals, participating health funds and the medical profession.

 

The Federal Government is committed to promoting efficiency in the private sector, containing the cost of acute care and improving the private health insurance product.  Following this amendment health funds should have the flexibility to offer privately insured patients alternate models of quality care as a substitute to in-hospital care in a public or private hospital. 

 

The remaining amendments are principally of a machinery or technical nature.

 

 

FINANCIAL IMPACT STATEMENT

 

The Health Legislation Amendment Bill (No 3) 2000 will have no significant impact upon the finances of the Commonwealth.



 

REGULATION IMPACT STATEMENT

 

HEALTH LEGISLATION AMENDMENT BILL (No 3) 2000

 

 

Background

 

The primary policy objective of the amendment is to enable the private health industry to fund alternative models of health care delivery as a substitute to in-hospital care for admitted patients.  The aim is to enable private patients in both public and private hospitals to receive the same care choices available to public (Medicare) patients in public hospitals.

 

To achieve this, the Department of Health and Aged Care has been promoting alternative models of care to overnight stays in hospital through the development of a number of pilots to test outreach services in the private health sector. 

 

Six trials involving outreach services that are providing substitute care to in-hospital care for admitted patients are currently in progress under National Health Regulations.  Each trial involves an agreement between the participating funds and hospitals to provide outreach services as a substitution for in-hospital care for an agreed daily health insurance benefit.  Outreach services are services that are provided by or on behalf of the participating hospitals. The outreach care can be provided directly by the hospital or provided on behalf of the participating hospital by sub-contracted local services.  The types of services that are most likely to be subcontracted out by hospitals include clinical nursing services, "meals on wheels" and home care.  Home care services could include housekeeping or personal care services.

 

A number of outreach service trials have been running for some time and the outcomes to date have been positive.  The private health insurance patient trials have been designed to test if the provision of acute care can be cost effectively and safely substituted by outreach services

 

Problem

 

The primary problem with the existing private health insurance legislation is that health funds have been prevented from expanding the range of hospital health services that may be privately covered in line with the expansion of public hospital cover. Public patients in the public hospital system have been able to receive these services for some time.  Private patients have been unable to use their hospital fund membership to receive hospital outreach services, so may stay in hospital longer than necessary.  This also means that private health insurance is not as attractive to consumers as it might be otherwise.

 

Under the National Health Act 1953 , funds can only pay benefits from hospital tables for admitted patients within the four walls of the hospital.  This means that funds have only been able to offer hospital-in-the-home and outreach services to their members from their ancillary tables that are not eligible for inclusion in the reinsurance arrangements.  An additional limitation under ancillary table arrangements is that Medicare benefits are not available to the attending doctor.  Funds are unable to pay benefits towards the cost of medical services covered by the Medicare Benefits Schedule.

 

A health fund may currently pay benefits for outreach services under a table of ancillary benefits.  However, the payment of benefits for these services is generally limited because health funds cannot reinsure ancillary health products in the health benefits reinsurance trust fund.  T he reinsurance trust fund is designed to support community-rating, which is an underlying principle of the current private health insurance system.  Community rating requires health funds to charge the same premiums for each member of an applicable benefits arrangement regardless of age, sex, claims history or health status.

 

Objective:

 

The objective is to encourage, through private health insurance arrangements, the cost-effective provision of safe equitable hospital treatment, including outreach services (substitute care for in-hospital treatment) for privately insured patients.

 

The objective is consistent with the Government’s strategic direction of a quality health care system that provides affordable private health care options. 

 

Options

 

Option 1: Make a legislative change to enable private patients in both public and private hospitals to receive the same outreach care available to public patients in public hospitals.

 

A legislative amendment to the National Health Act 1953 and the Health Insurance Act 1973 is necessary to enable private health insurance funds to pay benefits from hospital tables for outreach patients as a direct substitution for what would otherwise have been provided in an admitted setting. 

 

Option 2:-No change to the existing legislation

 

Impact Analysis

 

The following groups are the major stakeholders affected:

 

·          consumers of private health insurance;

·          health funds;

·          private hospitals;

·          doctors;

·          outreach service providers.

 

The impact of the option one on the Commonwealth is expected to be cost neutral as an approved outreach program is a direct substitute for in-hospital care.  Therefore, Medicare benefits for medical services will be paid at an amount equal to 75 % of the schedule fee with the funds paying 25% as is the case with all other admitted hospital patients. 

 

Impact of the option on consumers of private health insurance:

 

·          increasing the attractiveness of the private health insurance product by allowing funds to offer cover for alternatives to in-hospital care that will provide greater benefits and value for money for their coverage;

·          reduce the risk of infection as there is a link between length of stay in hospital and an increased risk of infection; and

·          patients are treated in familiar surroundings (the place they usually reside).  This is particularly of benefit for older Australians who can experience confusion and disorientation when treated in a hospital environment, this could delay a patient’s recovery and prolong their hospital stay.  There is also a distinct advantage when young children are involved

 

Impact on health funds :

 

·          increases the financial incentive for funds to provide substitute care alternatives as benefits paid for this substitute care will be considered part of the reinsurance arrangements;

·          funds can improve the efficiency of their operations, as their costs for hospital treatment of private patients will be lower as hospital treatment will be provided in a lower cost setting; 

·          increases the attractiveness of their products and therefore increases their market opportunities; and

·          should reduce costs for funds in the provision of hospital treatment (the arrangement between the funds and participating hospitals is a commercial-in-confidence agreement).  The Commonwealth is not involved in the funding agreements between the participating parties.  The funds negotiate directly with hospitals.

 

Impact on private hospitals:

 

·          increases the attractiveness of their services;

·          enables private hospitals to offer choices in the setting of where hospital treatment can be provided to patients and medical practitioners;

·          increases market opportunities;

·          may have an impact on some in-hospital services as some services may be outsourced, an example being home help services;

·          enables private hospitals to offer similar outreach services to those offered by the public system; and 

·          reduces the length of stay within the physical confines of the “hospital”, thus freeing up beds for acutely ill patients and increasing throughput.

 

Impact on doctors

 

·          enables doctors to offer their private health care clients the same cost choices of alternative care arrangements as public patients receive.



 

Impact on Outreach Services

 

·          participating hospitals may provide outreach services themselves or through local service providers.  The outreach care can be provided directly by the hospital or provided on behalf of the participating hospital by sub-contracted local services.

·          the likelihood of increased market opportunities for home care services providers.

 

Option 2:-No change to the existing legislation

 

Impact of the option on consumers of private health insurance

 

·          private patients will not the receive the same choices as public patients receive of where their hospital treatment may be provided; and

·          private patients will not have the option of receiving hospital treatment in familiar surroundings

 

Impact on health funds :

 

·          provides no financial incentive for funds to provide substitute care;

·          decreases the flexibility of funds to improve the efficiency of their operations, as hospital treatment costs will not able to be provided in a lower cost setting; and

·          will not increase the attractiveness of their products to consumers and funds will be prevented from providing greater value for money.

 

Impact on private hospitals:

 

·          will not provide the same attractiveness of their product and services to private patients as public patients and they will look to the public system to provide this service .

 

Impact on doctors

 

·          doctors will be unable to offer the same choices of where hospital treatment can be provided to their private patients as their public patients receive.

 

Impact on Outreach Services

 

·          fewer market opportunities for private local health and home care service providers.

 

Recommended Option

 

Option 1 is the preferred option as this option will enable the private health care industry to have the flexibility to offer privately insured patients alternate models of quality care as a substitute to in-hospital care in a public or private hospital. 

 

This option meets the Government’s objective to implement measures for making private health insurance more attractive to consumers by legislative change to enable private health insurance products to cover out-of-hospital care. 

 

Consultation

 

There are six trials involving outreach services that are providing substitute care to in-hospital care for admitted patients currently in progress.  Each trial has an overseeing steering committee.  The steering committees are comprised of the Commonwealth, a consumer representative, the private hospital, participating health funds and the medical profession.  All stakeholders have been consulted through-out the implementation of the trials through the steering committees.  The outcomes and feedback to date from the individual steering committees on the trials have been positive. 

 

A two stage national evaluation commenced in October 1999. This involved the evaluation of three private sector outreach trials.  It is anticipated that the National Report evaluating these three trials will be available to support the amendment.  As part of the national evaluation, surveys are being conducted of all stakeholders and participants.

 

Stage Two of the National Evaluation is expected to commence in May 2000.  It will involve a similar evaluation of additional private sector outreach trials.  (Three new trials are currently operating and more are expected to be established soon.)  It is expected that a Stage Two National Evaluation Report will be available for consideration when the Bill is debated.

 

A national Evaluation Steering Committee comprised of representatives from each of the steering committees is overseeing the individual trials.  The Commonwealth, consumer’s private hospitals, health funds and appropriate medical specialists are represented on the Committee.

 

Considerable interest in private health industry outreach programs has been generated over the past year.  Health funds and private sector health care providers have expressed interest in the potential for improved patient care and increased cost efficiency.

 

Implementation and Review

 

The preferred option will be implemented through amendments to the National Health Act 1953 and the Health Insurance Act 1973.  The commencement date of the amendments will be 6 months after Royal Assent.  This will facilitate the development of guidelines to enable the establishment of outreach services in consultation with all the relevant stakeholders.

 

Under the proposed amendment, hospitals and insurance funds seeking to provide outreach services to private patients will be required to gain Ministerial approval before providing an outreach service.  Only approved services will be covered by hospital table insurance arrangements.  To gain approval, hospitals would be required to meet minimum guidelines.  Approval would only be given to programs with proven clinical pathways, with demonstrated benefits for patients, and that are able to demonstrate cost efficiencies.  This will lead to better practice and improved client outcomes.

 

 

 

 



HEALTH LEGISLATION AMENDMENT BILL (NO 3) 2000

 

 

NOTES ON CLAUSES

 

Clause 1: Short title

 

This clause provides that the amending Act may be cited as the Health Legislation Amendment Bill (No 3) 2000

 

Clause 2: Commencement

 

Clause 2 specifies when each of the Schedules of amendments in this Bill will commence:

 

·          Schedule 1 - Outreach services will commence on a day to be fixed by proclamation, or if the proclamation does not occur within 6 months of the day that this Bill receives Royal Assent, Schedule 1 will commence on the first day at the end of this 6 month period;

·          Schedule 2 - Disclosure of information will commence on Royal Assent; and

·          Schedule 3 - Lifetime health cover will commence on 1 July 2000 immediately after the commencement of the National Health Amendment (Lifetime Health Cover) Act 1999 , that is, 1 July 2000.

 

Clause 3: Schedule(s)

 

This clause notes that each Act that is specified in the schedules is to be amended as set out in the applicable items in the Schedule concerned.

 

Clause 4: Application of amendment made by Schedule 2

 

This clause provides that the amendment in Schedule 2 relating to disclosure of information only applies in relation to information disclosed by a health fund on or after the commencement of that Schedule (ie. information disclosed after Royal Assent).



 

Schedule 1-Outreach Services

 

Introduction

 

This Schedule amends the National Health Act 1953 (NHA) and the Health Insurance Act 1973 (HIA) to expand the meaning of ‘hospital treatment’ to include approved ‘outreach services’ provided by or on behalf of a hospital or day hospital facility as services that a health fund will be able to cover as part of an ‘applicable benefits arrangement’. 

 

An ‘applicable benefits arrangement’ is a table of hospital health benefits which may cover some or all hospital treatment received by a private patient and any associated medical services provided by or on behalf of a medical practitioner which are eligible for a Medicare payment.  Outreach services will provide a direct substitute for in-hospital care by enabling health funds to pay benefits for approved health services that are provided beyond the four walls of the hospital.

 

As the NHA currently stands a fund may only pay benefits from an applicable benefit arrangement for admitted patients.  To provide benefits for outreach services, funds have been restricted to offering outreach services to members as part of a table of ancillary health benefits.  Ancillary health benefits are not eligible for inclusion in the reinsurance trust arrangements.  The reinsurance trust fund supports the principle of community rating by sharing the high-risk members who contribute to applicable benefits arrangements.  As a result there is no incentive for funds to actually insure those services.  This has been a major inhibitor for funds to support best practice by enabling outreach care as a direct substitute for in-hospital treatment.

 

This Bill provides a mechanism by which funds will be able to pay patient benefits from hospital tables and access the reinsurance pool (where eligible) in providing specified outreach services as a direct substitute to in-hospital care.

 

The items contained in Schedule 1 amend the NHA and the HIA to enable the Minister to specify which hospital and day hospital facility may provide outreach services, and the duration for which those services may be offered.  Outreach services will need to demonstrate that clinical standards and high quality outcomes are being maintained and are ongoing.  This will enable:

 

·          funds to pay benefits from applicable benefits arrangements for specified outreach services that are provided by or on behalf of a hospital or day hospital facilities;
·          funds to access reinsurance arrangements for approved outreach services provided by or on behalf of hospital or day hospital facility; and

·          private patients in public or private hospitals to receive approved outreach services and better value for their hospital care.

 



Health Insurance Act 1973

 

Item 1

 

This item inserts a Note after subsection 3(1A) of the HIA to flag that the definition of ‘hospital treatment’ in section 3 of the HIA will be expanded to include outreach services.  The purpose of the Note is to recognise that, except where excluded by new subsection 5C(2) of the NHA, references to ‘hospital treatment’ in both the HIA and the NHA will include outreach services specified by the Minister.

 

National Health Act 1953

 

Item 2

 

This item inserts a definition of outreach services in subsection 4(1) of the NHA.  An outreach service means any service specified in a determination under new section 5D of the NHA (inserted by Item 4 of this Schedule).

 

Item 3

 

As a result of broadening the concept of ‘hospital treatment’ to include outreach services a private patient will no longer need to attend the hospital or day hospital facility to be admitted, or necessarily be discharged when the patient leaves the hospital or day hospital facility:

·          if a patient receives an approved outreach service in substitute for in-hospital treatment the hospital may admit the person regardless of the fact that the person does not attend the hospital;

·          if a patient moves from hospital to an approved outreach service, eg. hospital in the home, then the person may continue to be a patient of the hospital until the treatment is complete at which time the patient may be discharged.

Item 3 broadens the definition of ‘patient’ in relation to day hospital facilities to provide that a person may continue to be a patient if participating in an approved outreach service.

 

Item 4

 

This item inserts two new sections after section 5B:

 

New section 5C

 

New section 5C is an interpretative provision which enables the extension of references to ‘hospital treatment’ (other than in an excluded provision) in the NHA and the HIA to include outreach services provided by or on behalf of a hospital or day hospital facility.  As a result a reference to ‘hospital treatment’ in either Act will also include outreach services approved by the Minister under new section 5D.  These services can be provided by the approved hospital or provided on behalf of that hospital by services subcontracted by that hospital.

 

New subsection 5C(1) also provides that:

·          references to hospital treatment in or at a hospital/day hospital facility will include an approved outreach service provided by or behalf of a hospital or day hospital facility; and

·          references to patients in both Acts receiving treatment in or at hospital/day hospital facility will include approved outreach services.  

 

The effect of the amendment is that a fund will be able to provide benefits under its applicable benefits arrangements (hospital tables) for private patients in public or private hospitals who are receiving approved outreach services.

 

The only provisions in the HIA and NHA that new section 5C will not apply to are specified in subsection 5C(2).  It is intended that the following provisions in each Act will retain their current meanings: subsection 5B(3) of the HIA; section 67 of the NHA; and Division 5A of Part VI of the NHA.

 

Section 5D

 

New section 5D provides that the Minister may specify in a written determination the services that may be provided as an outreach service.  When the service is determined to be an outreach service, then a fund may pay benefits towards that service under an applicable benefits arrangement.

 

Administrative guidelines will be established to help determine whether an outreach service should be specified under new section 5D.  In order to be specified as an outreach service the service will need to be:

 

·          safe;

·          sound clinical practice;

·          accepted by all levels of the profession;

·          beneficial for the patients; and

·          able to demonstrate cost efficiencies.

 

The determination will continue in force for the period specified in the determination: new subsection 5D(2).

 

A determination under new section 5D is a disallowable instrument: new subsection 5D(3).

 

At the conclusion of a determination, the outreach services will be reviewed to ensure that quality outcomes and standards were met and maintained before the Minister may make another determination to renew the outreach service.

 



Items 5 and 6

 

These items make minor amendments to paragraphs 73BD(2)(d) and 73BDAA(1)(a) to ensure that existing provisions in the NHA do not restrict the operation of outreach services.

 

Item 5 amends paragraph 73BD(2)(d) by omitting “ to the hospital or the day care facility” .  This amendment ensures that the hospital or day hospital facility will still have to provide informed financial consent to a patient in relation to outreach services, regardless of whether the services are provided by:

·          the hospital or day hospital facility; or

·          a contractor of the hospital or day hospital facility.

 

Item 6 amends paragraph 73BDAA(1)(a) by omitting “ at the hospital or day hospital” and substituting “ to patients of the hospital or day care faciliti es”.   The purpose of this amendment is to ensure that hospital purchaser provider agreements can be extended to cover professional services provided under a practitioner agreement to admitted patients receiving outreach services.

 

 



 

Schedule 2 - Disclosure of Information

 

Introduction

 

This Schedule makes a minor amendment to section 73G of the National Health Act 1953 (NHA) to protect registered health benefits organisations from certain legal proceedings in relation to the disclosure of information to a hospital or day hospital facility where the disclosure is reasonably necessary to enable the hospital or day hospital facility to comply with its obligations under paragraph 73BD(2)(d) of the NHA, that is to provide a private patient with informed financial consent. 

 

Informed financial consent is a fundamental element of any hospital purchaser-provider agreement (HPPA).  Subsection 73G(2) protects a hospital, day hospital facility or any person acting on behalf of the hospital or day hospital facility from legal action for disclosure of information where the disclosure is necessary to enable the health funds to verify the payability of amounts under the HPPA.  This amendment will extend the protection from liability to the health fund that supplies information to a hospital or day hospital facility in order to enable informed financial consent.

 

Item 1

 

This item inserts a new subsection 73G(2A) after subsection 73G(2), to provide that no action may be taken against a health fund or a person acting on behalf of the health fund for disclosure of information, if that disclosure is made to a hospital or day hospital facility under an HPPA and the purpose of the disclosure is to facilitate informed financial consent under paragraph 73BD(2)(D).

 

 



Schedule 3

 

Introduction

 

On 1 July 2000, Lifetime Health Cover (LHC) will come into effect when the National Health Amendment (Lifetime Health Cover) Act 1999 amends the National Health Act 1953 (NHA).   Schedule 3 of this Bill makes two minor amendments to the LHC rules contained in Schedule 2 of the NHA to ensure the smooth operation of those rules on 1 July.  Specifically these amendments:

·          clarify the definition of ‘adult beneficiary’ and ‘hospital cover; and

·          provide all refugees with 12 months after they become eligible for Medicare in which to take out hospital cover without penalty under the LHC rules.

Item 1

 

This item clarifies that the definition of ‘adult beneficiary’ in subsection 4(1) of the NHA includes a spouse.  A spouse is already defined in subsection 4(1) of the NHA to include a de facto spouse.

 

Item 2

 

This item clarifies the meaning of ‘hospital cover’ in paragraph 4(1)(b) of Schedule 2 of the NHA to provide that a spouse may have hospital cover.

 

Item 3

 

This item replaces subparagraphs 5(1)(c)(i) and (ii) of Schedule 2 of the NHA to provide any adult beneficiary who:

·          enters Australia on a Refugee or Humanitarian (Migrant)(Class BA) visa after 1 January 2000; or

·          was or is granted a protection visa after entering Australia on or after 1 January 2000;

with 12 months after the day on which he or she becomes eligible for Medicare in which to take out hospital cover without his or her contributions being increased under LHC.