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Opening statement by Dr Greg Herring, Executive Director, Australian Private Hospitals Association, to the Senate Community Affairs Legislation Committee Inquiry into Health Legislation (Private Health Insurance Reform) Amendment Bill 1994



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Australian Private Hospitals Association

Limited ACN 008 623 809 Media Release

OPENING STATEMENT BY DR GREG HERRING,

EXECUTIVE DIRECTOR,

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AUSTRALIAN PRIVATE HOSPITALS ASSOCIATION

TO THE SENATE COMMUNITY AFFAIRS Cxrrwrrx LEGISLATION COMMITTEE

INQUIRY INTO THE

HEALTH LEGISLATION (PRIVATE HEALTH INSURANCE REFORM) AMENDMENT BILL 1994

FRIDAY MARCH 3,1995

For further information or to organise an interview with Dr Herring, contact Michael Roff, APHA Public Affairs Manager, on 018 628 192

Suite 1, 25 Napier Close, Deakin ACT 2600, P0 Box 346 Curtin ACT 2605, Tel: 06 285 2716 Fax: 06 285 2243 Healthnet (Data): 06 285 1283 Executive Director: Dr Greg Herring mb bs, mhp, fracma, facom, fchse, dav Med

Opening Statement to Senate Community Affairs Legislation Committee 3 March 1995

APHA has proposed twenty five amendments to this Bill to make it fairer to all parties, unambiguous and less confusing.

Although this may seem a lot, APHA believes that they are all important and urges the Committee to consider all not just the few 'high profile' amendments.

In this Statement I will refer only to two major amendments.

Our first major set of amendments seek to protect the small and weak against domination by the large and powerful. And can I stress this applies to small health insurance companies as well as small hospitals.

The amendments take cognisance of the inability of the Trade Practices Act (TPA) to offer assistance during hospital-insurer negotiations. There are two major issues. Firstly, the Trade Practices Act will not allow groups of hospitals or insurers to get together to negotiate contracts. We believe this is essential to allow some balancing up of the relative power of the negotiators. We also believe that this will save millions of dollars in legal fees and provide simpler information for consumers. It is possible to apply for 'authorisation' i.e. exemption from the TPA but that too is costly and time consuming with no guarantee of success. Our advice is that the legislation should allow such negotiations to take place obviating the need to override the TPA.

Secondly, our advice is that the TPA will not protect a hospital (or insurer) from

'unfair treatment' or ' misuse of market power". APHA's amendments will overcome this inadequacy. We seek to ensconce in legislation a default payment for those hospitals which do not have contracts with insurers. The default payment should be

set by each individual payer, should be published and should relate to the average payment made to contracted hospitals. It should not be set by Government.

However, even with a default payment the Bill gives aggrieved parties no avenue of

appeal. Thus APHA is seeking to give the Complaints Commissioner the power to investigate complaints of unfair treatment or misuse of market power etc, to direct that financial arrangements between the parties remain intact while investigations take place and to recommend to the Minister that a specified Hospital Purchaser-Provider

Agreement be entered into.

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We are also urging the Senate to agree to put back the compulsoryness of the contracting arrangements until 1 July 1996. Nothing is lost by doing this. The Act

itself will come into force immediately. The collection, analysis and reporting of Casemix data, negotiations leading to contracts and Casemix payments can start immediately. All we are seeking is that negotiations be allowed sufficient time to reach sensible decisions based on the best information available.

Our second major concern is over the provision of patient data by private hospitals.

The Bill currently gives hospitals no authorisation to provide data; says nothing about data on patients who are not privately insured and provides only vague information about what the data will be used for - modelling, evaluation and research. APHA supports the provision of relevant casemix data by private hospitals. However, we

have a prime responsibility to our patients and hospitals and patients need protection to cover privacy and confidentiality issues and against misuse of such information. Hospitals also need to be spared from meeting the myriads of requests for information that now seem to be appearing.

We are most concerned about the uses to which private patient data will be put. We believe we have good reason to be. What powers do modelling, evaluation and research give the Commonwealth Department of Human Services and Health? We have recently seen private hospital data provided to the Commonwealth Department

in good faith for one specific purpose being used for completely different purposes. APHA has little confidence that data provided directly to the Department in the future will not be used for similar purposes.

Thus, APHA is seeking amendments to the Bill to do two things; firstly to give private hospitals clear authorisation to provide Casemix data to private health insurers and secondly for private hospitals to provide Casemix data on all patients privately

insured and thus to an Independent Data Bureau which will become the Australian recipient of all private patient hospital data. This Bureau will have specified responsibilities to publish regular reports and will also service external clients which may include the Commonwealth Department, State Health Departments, Australian

Bureau of Statistics, Australian Institute of Health and Welfare as well as professional

organisations like APHA.

Thank you for the opportunity to make this opening statement.