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Health Legislation Amendment (Private Health Industry Measures) Bill 2002

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THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

SENATE

 

 

 

 

 

 

 

 

 

HEALTH LEGISLATION AMENDMENT

(PRIVATE HEALTH INDUSTRY MEASURES) BILL 2002

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Health and Ageing,

Senator the Hon Kay Patterson)



 

HEALTH LEGISLATION AMENDMENT

(PRIVATE HEALTH INDUSTRY MEASURES) BILL 2002

 

OUTLINE

 

Gap Cover Schemes

 

This Bill amends the National Health Act 1953 (NHA) and the Health Insurance Act 1973 to align legislative provisions relating to gap cover schemes with those applicable to contractual methods of addressing the gap, consolidate and clarify the obligations of health funds to provide information to the public and the Health Insurance Commission (HIC), rationalise the structure of the NHA and transfer responsibility for registration of billing agents from the Private Health Insurance Administration Council to the HIC.

 

On 11 August 2000, the Health Legislation Amendment (Gap Cover Schemes) Act 2000 amended the NHA and the Health Insurance Act 1973 to enable health funds to establish gap cover schemes.  Under these schemes, health funds can provide no gap and/or known gap private health insurance without the need for contracts.

 

Previously, the legislation only allowed health funds to pay gap benefits in circumstances where there was a contractual agreement between a health fund and a doctor or a health fund and a hospital which, in turn, had an agreement with the doctor.

 

This Bill amends the NHA to remove unintended differences between the provisions relating to contractual gap cover arrangements and the new gap cover schemes.

 

The Bill amends the NHA to:

 

·         provide that the automatic assignment of a contributor's Medicare benefit to a health fund under an approved gap cover scheme is not liable to any duty or charge under State or Territory law, or any law of the Commonwealth that applies only to a territory;

 

·         require a health fund, at the request of a contributor, to provide information to a medical practitioner which will enable or assist the medical practitioner to comply with the requirement to provide written information to the patient on the expected costs of treatment covered by a gap cover scheme;

 

·         require a health fund to comply with any request by the HIC for access to documents that relate to payment of Medicare benefits to the fund under a gap cover scheme;

 

·         transfer two of the conditions imposed on health funds by the Minister for Health and Ageing under subsection 73B(1) of the NHA from Schedule A to Schedule 1, in order to rationalise the structure of the NHA;

 

·         extend the parties who are able to access fund lists of contracted hospitals, day hospitals and doctors under paragraph (ha) of Schedule 1 of the Act, by allowing the Department and members of the public to access the lists on request;

 

·         permit the Department to access copies of registered organisations’ Hospital Purchaser Provider Agreements (HPPAs), Medical Purchaser Provider Agreements (MPPAs) and Practitioner Agreements (PAs) attached to its HPPAs; and

 

·         amends the Health Insurance Act 1973 to transfer responsibility for approval of billing agents under subsection 20AB, 20AC and 20AD from the Private Health Administration Council to the Health Insurance Commission.

 

Employee Health Benefits Schemes

 

Since 1 October 1995, employers conducting ‘employee health benefit schemes’ have had three options:

 

·         register as a health benefits organisation (health fund) under the Act;

·         terminate the employee health benefits scheme; or

·         seek a determination from the Minister that their ‘top up’ scheme is not an employee health benefits scheme (and therefore not health insurance business) under subsection 67(4) of the Act.

 

The intention is to ensure that unregistered health schemes do not infringe the regulatory requirements applying to registered health funds, and in particular do not undermine the principle of community rating.

 

Many employers who contribute directly towards the health expenses incurred by their employees have sought a determination under subsection 67(4) of the Act.  However, subsection 67(7) of the Act provides that the Minister must not make a determination under section 67(4) if the ‘top up’ scheme is the subject of an agreement to which Part VIB of the Industrial Relations Act 1988 applies.  Part VIB applies to Certified Agreements and Enterprise Agreements.

 

The proposed amendment will remove this unnecessary restriction on the ability of the Minister to approve ‘top up’ schemes.  This will be beneficial to contributors and to private health insurance generally.

 

Discounting of premiums

 

The proposed amendment will allow health funds to offer discounts where premiums are paid three months or more in advance.  The Act currently allows funds to offer discounts where a contributor pays at least six months in advance.  There appears to be no clear rationale for not allowing discounts on quarterly payments in advance and the health insurance industry has confirmed that there are administrative savings for health funds from such payments.

 

 

FINANCIAL IMPACT STATEMENT

 

The Bill will have no significant impact upon the finances of the Commonwealth.

 



 

 

HEALTH LEGISLATION AMENDMENT

(PRIVATE HEALTH INDUSTRY MEASURES) BILL 2002

 

 

NOTES ON CLAUSES

 

Clause 1:             Short title

 

This clause provides that the amending Act may be cited as the Health Legislation Amendment (Private Health Industry Measures) Act 2002.

 

Clause 2:             Commencement

 

This clause provides that Schedule 1, items 1 to 7 commence on the day on which the Act receives Royal Assent.  Schedule 1, items 8 and 9 commence on the 28 th day after the day on which the Act receives Royal Assent.  Schedule 2 of the Act commences on a day to be fixed by proclamation or otherwise on a day six months from Royal Assent.

 

Clause 3:             Schedule

 

This clause provides that the Acts specified in the Schedule are amended as set out in the applicable items in the Schedule concerned.

 

 

Schedule 1

 

Part 1 - Amendments relating to gap cover schemes

 

Item 1 adds subsection (d) and subsection (2) at the end of section 73BDB of the National Health Act 1953 (NHA).  This amendment provides that benefits paid by registered organisations to medical practitioners and assignments of a contributor’s Medicare benefit by the Health Insurance Commission (HIC) to a registered organisation, approved billing agent, hospital, day hospital or other persons under an approved gap cover scheme are not liable to any duty or charge under State or Territory law, or any law of the Commonwealth that applies only to a Territory. 

 

This amendment also specifies that the term medical practitioner includes accredited dental practitioners, dental practitioners providing services in hospital for which Medicare benefits are payable and a person on whose behalf a medical practitioner or a dental practitioner defined above renders a professional service.  These amendments will ensure that gap cover schemes are treated in the same way as contractual gap agreements in relation to exemption from duties and charges.

 

Item 2 inserts paragraph (hba) after paragraph (hb) of Schedule 1 of the NHA.  This amendment requires health funds, when requested by a contributor, to provide information required by a medical practitioner to enable the practitioner to inform the contributor about the expected cost of treatment. This amendment facilitates the provision of information by medical practitioners in accordance with sub-section 73BDD(7) of the NHA which provides that the Minister must not approve a gap cover scheme unless the scheme provides for insured persons to be informed in writing, where appropriate, of any amounts that the person can reasonably be expected to pay for treatment. This amendment will ensure that health funds are obliged to provide information to assist the informed financial consent process under both contractual gap agreements and gap cover schemes.

 

Item 3 amends paragraph (o) of Schedule 1 to insert a reference to sub-section 20A(2AA) of the HIA.  This amendment requires health funds to provide the Health Insurance Commission (HIC) with access to documents relating to Medicare benefits paid under a gap cover scheme, when requested to do so by the HIC.  This will enable the HIC to access all necessary documents to audit the payment of Medicare benefits and ensure that public money has been properly directed.

 

 

Part 2 - Amendments to clarify obligations of registered organisations to provide information

 

Item 4 amends Subsection 73ABC(1) of the NHA to specifically allow the Department of Health and Ageing ‘the Department’ to access health fund contractual agreements with hospitals, day hospitals and medical practitioners.  This will enable the Department to ensure that these agreements comply with legislative requirements imposed on such contracts, such as the provision of information on charges sufficient to allow patients to give properly informed financial consent to treatment.

 

Item 5 amends subsection 73ABC(3) of the NHA.  This amendment requires that health funds delete identification and pricing details from contractual agreements prior to providing these agreements to the Department or any other person.  This protects the privacy of contracted parties while permitting necessary oversight.

 

Item 6 amends paragraph (ha) of Schedule 1 to the NHA.  This amendment requires health funds to provide up-to-date lists of hospitals, day hospitals and medical practitioners with which they have contractual agreements, to any person who requests this information.  The information is required by the Department to allow comprehension of the situation in relation to contracting by health funds.  This information is also valuable to people considering joining a health fund or transferring from one fund to another as the lists illustrate the success a health fund has had in contracting and its ability to offer benefits on a genuine no-or-known gap basis.

 

Item 7 inserts paragraphs (haa) and (hab) after paragraph (ha) of Schedule 1 to the NHA.  Paragraph (haa) requires health funds to provide all new contributors and existing contributors (on request) with information on their benefit entitlements. 

 

Paragraph (hab) ensures that health funds maintain written and electronic material detailing all health insurance tables offered by the fund.  This material must:

·         be freely available to any person;

·         provide contact details for the Private Health Insurance Ombudsman;

·         indicate the date at which the information is correct;

·         be on display in the health fund’s offices; and

·         be able to be accessed electronically.

 

Item 8 repeals subsection 67(7) of the NHA.  This subsection provides the Minister for Health and Ageing must not make a determination in relation to employee health benefits schemes where the scheme is the subject of an agreement to which Part VIB of the Industrial Relations Act 1988 applies.

 

Item 9 will allow health funds to offer discounts where contributors pay three months or more in advance, rather than the current minimum of six months or more in advance.

 

Schedule 2 - Amendment of the Health Insurance Act 1973 regarding billing agents

Items 1 to 7 amend subsections 20AB(1), (3) & (4), 20AC (1) and (2), Paragraph 20AC(2)(a), Subsections 20AC(3), (4) and (5) and 20AD(1), (2), (3), (4) and (5) of the HIA.   The amendments delete references to the Private Health Insurance Administration Council (PHIAC) and replace them with reference to the HIC.  The amendments provide for responsibility for the approval and monitoring of billing agents to be transferred from the PHIAC to the HIC.  Under current arrangements, the responsibility for approving and monitoring billing agents is split between two agencies and which may be an impediment to fraud detection. This amendment will remove a layer of regulation for billing agents; improve efficiency; and eradicate the risk of error in data transfer between agencies.

 

Item 8 makes transitional provisions to enable PHIAC to finalise consideration of applications for approval as a billing agent; revocation of an approval as a billing agent; and reconsideration of decisions not to approve a person or body as a billing agent, if the applications and/or considerations have been submitted to, or undertaken by, the Council before the amendments in Items 1 to 7 commence.