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Thursday, 29 March 2007
Page: 3

Mr ABBOTT (Minister for Health and Ageing) (9:09 AM) —I move:

That this bill be now read a second time.

I am very pleased to introduce the Health Insurance Amendment (Inappropriate and Prohibited Practices and Other Measures) Bill 2007, which amends provisions of the Health Insurance Act 1973 relating to pathology and diagnostic imaging services provided under Medicare. These reforms, which were foreshadowed in May 2006, will enable the government to deliver on its commitment to strengthen Medicare.

The government is firmly committed to ensuring that all Australians have access to affordable world-class health care. Since coming to office in 1996, the Howard government has worked consistently to ensure that vital services are accessible and affordable, with as little out-of-pocket expense as possible for the Australian taxpayer. The government is also committed to ensuring that these services remain financially sustainable.

This bill will ensure that patients’ access to pathology and diagnostic imaging services is not clouded by considerations other than clinical need. Not only does this bill strengthen Medicare but it also allows the government to deliver on its commitment to act on the recommendations of the Phillips Fox review of the pathology enforcement and offence provisions of the act.

Pathology and diagnostic imaging services play a critical role in health care. They also account for a significant amount of taxpayer funded outlays from the national health care budget. In 2005-06, 83 million Medicare funded pathology services were performed, with approximately 10 million Australians accessing these services. During the same period, approximately 15 million Medicare funded diagnostic imaging services such as X-rays, ultrasound, CT and MRI were performed, benefiting more than 6½ million Australians. This equates to expenditure in excess of $3.2 billion, representing approximately 30 per cent of total Medicare outlays in 2005-06.

The government has committed approximately $15 billion over five years for pathology and diagnostic imaging services through collaborative agreements with the pathology and diagnostic imaging professions and industries. The government works closely with a wide range of stakeholders to ensure that this significant investment is applied wisely.

Claims have been made that a minority of providers, particularly within the pathology industry, make payments or other considerations so that practitioners will refer patients to them. This can lead to ordering excess services that may not be clinically necessary. Also, some medical practitioners are alleged to have demanded payments or other benefits in return for directing their patients to a particular provider.

I have no reason to think that these unethical practices are widespread. Certainly, if and when they occur, they are not consistent with a doctor’s responsibility to make all clinical decisions in the best interests of patients. They also undermine the integrity of the agreements between the government and the pathology and diagnostic industry sectors and are of concern to the government, to the professions and to industry.

The act currently establishes a range of provisions addressing overservicing and prohibited practices. These provisions aim to prevent payments for pathology and diagnostic imaging services that do not provide a benefit to patients. However, they have been problematic to interpret and apply because they are expressed very broadly and their scope is unclear.

The government acknowledges the health sector’s concerns about the lack of clarity in the act and the potential for many providers to suffer commercial loss because they comply with the spirit of the legislation while their competitors do not.

This bill amends the act to express more clearly the government’s intention to prevent inducements between providers and requesters of services, and to extend the application of provisions to create an enforcement framework that can be more effectively applied.

The majority of the amendments are designed to clarify and strengthen the existing provisions. The amendments have three main aims.

Firstly, to prohibit certain practices relating to the rendering of pathology and diagnostic imaging services, including to prohibit inducements between requesters and providers of those services;

Secondly, to prevent payments for pathology and diagnostic imaging services that do not benefit patients; and

Thirdly, to encourage fair competition between providers of those services on the basis of quality of services provided and cost to patients.

The amendments also create an expanded range of penalties that are relevant to the scale of the offence.

These reforms are proposed to take effect from 1 March 2008.

Currently, section 129AA of the Health Insurance Act sets out offences for offering or accepting inducements to encourage referrals for pathology services. Section 129AA is supplemented by section 129AAA, which describes prohibited practices relating to the provision of pathology services

Similar provisions are included in section 23DZG in relation to prohibited diagnostic imaging practices.

The bill repeals these sections and replaces them with a new part which sets out new prohibitions relating to both pathology and diagnostic imaging services.

The revised provisions define those commercial relationships that are permitted between those who can request Medicare funded pathology and diagnostic imaging services and those who provide the services. For example, it would be permitted for a provider to lease premises from a requester, provided that the amount of rent paid aligns with the market value of those premises. It would not be permitted for commercial transactions between requesters and providers to be linked in any way to the number type of value of the services requested. The provisions prohibit both requesters and providers from being involved in non-permitted transactions, including those that are channelled through third parties.

The provisions include civil penalties where pathology or diagnostic imaging providers offer or provide non-permitted benefits or make threats to requesters. The bill also prohibits requesters from asking for or accepting non-permitted benefits from providers.

Providers and requesters will also be held liable when non-permitted benefits are asked for, offered or exchanged, or threats are made by someone connected to them. Relationships that would be covered will include relatives, partnerships and other close financial relationships.

The prohibitions are supported by penalties of up to $66,000 against individual requesters or providers, or $660,000 for corporations.

Similar exchanges of benefits or threats, where it can be shown that the person intended to induce the requester to request services from a particular provider, or where a requester intended to be induced, will represent a criminal offence subject to a fine of up to $33,000, $165,000 for corporations, and/or a maximum penalty of five years imprisonment. These penalties indicate the seriousness with which the government regards such behaviour.

The bill also makes minor technical amendments to the act to address changes which have occurred within the pathology industry since the existing provisions were drafted. In general, the intent of these changes is to clarify the policy intent of the legislation and to enable more efficient and effective implementation of that intent.

As I noted earlier, subject to the agreement of parliament, these reforms will take effect from 1 March 2008. This will allow all stakeholders to familiarise themselves with the changes and aid a smooth transition.

Before then, the government will develop regulations to support the legislation. The regulations will provide comprehensive details about specific elements of the reforms. It is important that we get these right. We will work closely with our stakeholders during the development of the regulations to ensure that they are tailored to suit the different needs of the diagnostic imaging and pathology sectors respectively and do not produce any unintended consequences. We will also consult widely to ensure that the changes are well understood by those who may be affected.

The government is confident that these changes will ensure that the small number of requestors and providers of diagnostic services who currently engage in inappropriate practices will do so or be subject to significant penalties. If there is any evidence that the provisions are not effectively addressing such activities, the government will certainly look at this in consultation with stakeholders. Further criminal offences or civil penalty provisions could of course only be added by the passage of additional legislation.

The government is also conscious that there may be other factors contributing to overservicing or inappropriate referral of pathology and diagnostic imaging services that cannot be addressed in this legislation but will be considered separately.

Goodwill and cooperation between the government, the professions and industry is one of the best means to ensure that Australians get value for money and quality of care. Legislation is the framework that supports this shared vision by setting the proper boundaries. The time the government has taken to develop the reforms and to consult extensively with all concerned parties has paid dividends. The bill before us has been carefully drafted to ensure that it encourages competition on the basis of quality and cost and has no negative effect on consumers or those who are assisting them to obtain the services they need and are entitled to.

I would like to thank our stakeholders for their part in developing legislation to resolve these difficult issues. I would also like to thank them for their commitment to ensuring patients receive value for money and that the collaborative agreements between the government and the professions are not undermined by the few who engage in inappropriate practices. The government looks forward to continuing this partnership to work through the regulations that support the legislation. I commend this very important bill to the House.

Debate (on motion by Mr Edwards) adjourned.