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Health Insurance Amendment (Extended Medicare Safety Net) Bill 2009

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2008-2009

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

HEALTH INSURANCE AMENDMENT (EXTENDED MEDICARE SAFETY NET) BILL 2009

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Health and Ageing, the Hon Nicola Roxon, MP)





HEALTH INSURANCE AMENDMENT (EXTENDED MEDICARE SAFETY NET) BILL 2009

 

OUTLINE

 

This Bill amends the Health Insurance Act 1973 (the HIA) to enable the Minister for Health and Ageing (the Minister) to determine, by legislative instrument, the maximum increase of benefit payable under the Extended Medicare Safety Net (EMSN) for specified Medicare Benefits Schedule (MBS) items.

 

The EMSN provides individuals and families with an additional rebate for out-of-hospital Medicare services once an annual threshold of out-of-pocket costs is reached. Sections 10ACA and 10ADA of the HIA provide that once an individual or a member of a registered family reaches the applicable out-of-pocket EMSN threshold; the person is entitled to an increase in the Medicare benefit equal to 80% of their out-of-pocket costs for that claim for the rest of the calendar year. The increased amount of medicare benefit payable under the EMSN is commonly referred to as the ‘EMSN benefit’.

 

At present, there is no limit on the amount of benefit payable under the EMSN, only that the person will receive 80% of the out-of-pocket cost for the service.  The unlimited nature of EMSN benefits available through the EMSN has led some doctors to increase their fees with the knowledge that the majority of the cost will be funded by the Government once the person has reached the EMSN threshold. This has implications for those people that have not qualified for the EMSN benefits.

 

The Extended Medicare Safety Net Review Report 2009 conducted by the Centre of Health Economics Research and Evaluation noted that in some areas the EMSN has led to large increases in Government expenditure, with the EMSN benefits going to doctors rather than reducing the cost of the service for people. The amendments proposed by this Bill would create a mechanism by which the Government could responsibly manage expenditure on EMSN.

 

The amendments will enable the Minister to determine a cap on the EMSN benefit payable.  This cap will be set out in a legislative instrument. The purpose of enabling the Minister to determine the cap on the EMSN benefit payable is to ensure that the mechanism is flexible and responsive to changes in circumstances that impact on the EMSN. The legislative instrument will be a disallowable instrument and therefore subject to parliamentary scrutiny.

 

The cap on the EMSN benefit would apply to individual MBS items and, as is currently the case with EMSN benefits, be payable in addition to the standard Medicare rebate.  Each person will be eligible to receive up to the EMSN benefit cap each time that they claim that item. The EMSN benefit cap would be a dollar value, for example, an EMSN benefit cap of $100 may apply to one item, and an EMSN benefit cap of $500 may apply to a different item.

 

The total out-of-pocket costs incurred by the person for services will still count toward the EMSN threshold amount. Once a person has reached the EMSN threshold, they will continue to be eligible to receive EMSN benefits equal to 80% of their out-of-pocket costs for those items that are not specified in the legislative instrument.  

 

The calculations for working out the EMSN benefit under the policy change will remain the same, that is, 80% of the person’s out-of-pocket cost for the claim, however a maximum will apply to the amount that will be paid in EMSN benefit for the items contained in the legislative instrument. If the EMSN benefit calculated is greater than the EMSN benefit cap provided in the legislative instrument, then the person will only be eligible to receive the amount of the EMSN benefit cap. If it is less than the EMSN benefit cap in the legislative instrument, then the EMSN benefit is equal to the calculation.

 

Financial Impact Statement

 

The implementation of this Bill will not have a direct financial impact. The legislative instrument proposed to be made as a result of the amendments will generate savings of $451.6 million over four years. The savings relating to these changes are included in the 2009-10 Budget.

 

2009-10 ($m)

2010-11($m)

2011-12($m)

2012-13($m)

-18.8

-111.1

-142.1

-179.6

 

 



HEALTH INSURANCE AMENDMENT (EXTENDED MEDICARE SAFETY NET) BILL 2009

 

 

NOTES ON CLAUSES

 

Clause 1 - Short Title

This clause provides for the short tile of the Bill, once enacted, to be cited as the Health Insurance Amendment (Extended Medicare Safety Net) Act 2009.

 

Clause 2 - Commencement

 

This clause provides that the amendments will commence on 1 January 2010.  

 

Clause 3 - Schedule(s)

 

Clause 3 specifies that the Act referred to in the Schedule 1 to this Bill is amended by the amendments set out in Schedule 1.

 

Schedule 1 - Health Insurance Act 1973

 

Item 1 - After subsection 10ACA(7)

This item inserts two new subsections after subsection 10ACA(7) of the Health Insurance Act 1973 (the HIA).

 

Section 10ACA of the HIA deals with the application of the extended safety net to families.

 

Subsection 10ACA(2) sets out that if the person has reached the EMSN threshold amount before their current claim, then the increase in the person’s benefit (the EMSN benefit) is equal to 80% of the person’s out-of-pocket costs for the current claim.

 

Subsection 10ACA(7) sets out that if the person has not yet reached the EMSN threshold amount, the EMSN benefit payable is equal to person’s out-of-pocket costs less the amount of out-of-pocket cost needed to reach the threshold amount multiplied by 80%.

 

New subsection 10ACA(7A) provides the conditions that will be applied to items that have a EMSN benefit cap. This subsection outlines that for MBS items specified in the legislative instrument under new section 10B (to which item 3 refers), the EMSN benefit is not to exceed the amount of the EMSN benefit cap.

 

This means that a person’s EMSN benefit will be calculated the in the same manner that is currently outlined in subsections 10ACA(2) and 10ACA(7).  However, when the calculated EMSN benefit (i.e. 80% of out-of pocket-expenses) is greater than the amount of the EMSN benefit cap, then the EMSN benefit will be limited to the EMSN benefit cap. When the EMSN benefit calculated is less than the EMSN benefit cap, the person will receive the EMSN benefit that is equal to the calculation.

 

For example, the legislative instrument specifies that for an item A (MBS Schedule Fee of $100 and a MBS rebate of $85) there is a $50 EMSN cap. Assuming that the patient has already qualified for EMSN benefit, if the doctor charges $200 for this service, under the existing arrangements, a patient can receive an EMSN benefit of up to $92 (80% of their out-of-pocket cost in addition to the $85 rebate.  This is $177 in total).  If the EMSN cap was set at $50, then the person would only receive an EMSN benefit of up to $50 ($135 in total including the MBS rebate).  For a person charged $130, the EMSN benefit would be $36, as this is equal to 80% of their out-of-pocket costs for the claim ($121 in total including the MBS rebate). There is no impact on this patient as the EMSN benefit they are entitled to ($36) is less than the EMSN benefit cap ($50).

 

New subsection 10ACA(7B) sets out the method for determining which EMSN benefit cap applies in circumstances where two or more pathology services are treated as a single pathology service.

 

This is a technical amendment that is required as a result of new subsection 10ACA(7A).  Section 4B of the HIA enables regulations to provide for a rule of interpretation of the pathology services table. Currently the pathology services table contains rule 18 that states that certain pathology services are to be treated as one service. New subsection 10ACA(7B) provides that where two pathology services are treated as one service, if there is EMSN benefit cap for one of those items, the patient will be eligible to receive up to the EMSN benefit cap for that item.  In such circumstances where EMSN caps apply to more than one item in the service, the patient would be eligible to receive up to the EMSN benefit cap which is the highest amount.  

 

Item 2 - After subsection 10ADA(8):

Item 2 inserts two new subsections after subsection 10ADA(8) of the HIA.  Section 10ADA of the HIA deals with the application of the extended safety net to individuals.

 

The new subsections, 10ADA(8A) and 10ADA(8B), will have the same effect as new subsections 10ACA(7A) and 10ACA(7B) as set out in item 1.

 

Item 3- After section 10A

Item 3 inserts a new section 10AB into the HIA.  New section 10B enables the Minister for Health and Ageing,for the purposes of subsections 10ACA(7A) and 10ADA(8A), to determine in a legislative instrument, both or either:

 

(a)                             the MBS items to which a maximum EMSN benefit cap will be applied;

(b)                            the amount of the maximum EMSN benefit cap that will apply to each of the specified items.

 

The powers have been separated as described above to clarify that the Minister may make changes to the legislative instrument to alter the amount of the EMSN benefit caps only, for example, indexing the amount of the EMSN benefit cap by Consumer Price Index each 1 January.



Item 4 - Application

Item 4 sets out that the EMSN benefit cap for the items specified in the legislative instrument will only apply to claims for those items when the service is provided on or after the commencement of the amendment made by this Bill (that is, 1 January 2010).

 

It is important to specify the application of these amendments, as there are often lags between the time that the person receives the Medicare service and the time that they present their claim to Medicare Australia to receive their benefit.  For example, a person may receive a service in December 2009, but may not present the claim to Medicare Australia until February 2010. From 1 January 2010, an EMSN benefit cap may be applied to the item to which that service relates.  Although the person is claiming the benefit in February, when the EMSN benefit cap is in place, the person received the service when the EMSN benefit cap was not in place.  Therefore, the person is entitled to the amount of EMSN benefit that they would have received should they have presented their claim in December 2009.