Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Human Services and Health Legislation Amendment Bill (No. 2) 1994

Download PDFDownload PDF

House: House of Representatives

Portfolio: Human Services and Health

Commencement: The amendments commence on a range of dates. The dates are noted below.


The Bill proposes amendments to a number of Acts relating to health services.

The main changes include:

. tightening controls over pathology services;

. allowing fees for general medical service and pathology, which form the basis for calculating medical benefits, to be consolidated in the regulations, (rather than forming a Schedule to the legislation and being updated by regulation);

. restricting the issue of safety net concession cards for pharmaceutical benefits to people who are eligible for Medicare benefits;

. allowing brand substitution of some prescription medications by pharmacists, subject to certain conditions.


Expenditure on health care in Australia in 1992/1993 was estimated by the Australian Insitute of Health and Welfare to total over $34 billion, or an average of $1,944 per person. This amounted to approximately 8.5% of Gross Domestic Product in 1992/93, compared with a 14% figure in the United States. 1

In 1994/95 the Commonwealth Government will spend in excess of $17 billion on health. 2 Recent debate concerning the cost of health services has focussed on the declining proportion of Australians who are covered by private health insurance. This debate is part of a broader health policy debate over the mix of publicly and privately provided health care. 3 The amendments proposed in this Bill do not attempt to change the status quo on the proportion of public as opposed to private health services, instead they represent incremental changes to the current system for health care funding and regulation.

Main Provisions

Clause 2 deals with the commencement of the Bill. Most provisions commence on Royal Assent. Where this is not the case it is noted below in connection with the commentary.

Clause 3 states that the Acts referred to in the Schedule are amended as set out in the Schedule. The amendments to each Act are dealt with below.

Health Insurance Act 1973

The main Act amended by the Bill is the Health Insurance Act 1973 (the Act). The Act provides the legislative basis for the payment and administration of Medicare benefits in relation to medical and hospital services. The Act also establishes a number of specialist committees which advise the Minister on a range of issues such as the inclusion of, and level of fees for, medical services under the Medicare scheme.

Table of fees

The level of Medicare benefit which is payable for a particular service is calculated on the basis of a lengthy table of fees. The table of fees specifies particular medical procedures or services, and the appropriate fee in relation to each service. The fees for general medical service items are currently set out in a table in Schedule 1 to the Act (the table is some 90 pages in length). The fees for pathology services are set out in Schedule 1A to the Act.

The Bill will omit the provisions which require the two tables to appear in the Schedule to the Act. The tables will instead appear in Regulations made under the Act.

The new provisions also provide a sunset period of 12 months for the tables set out in the regulations. This will ensure that the tables are kept up to date with annual reprints of the regulations. [Parliamentary scrutiny is not diminished by the changes, as the tables can be amended by regulation under the existing provisions.]

Supervision of pathology services

Medicare benefits in relation to pathology services are only payable if the service is performed or given on behalf of an approved pathology practitioner. Part IIA of the Act allows for the approval of pathology practitioners and authorities where the person applying for the approval gives certain undertakings to the Minister. Usually undertakings require the personal supervision of pathology services and an agreement not to render 'excessive' pathology services. 4 The undertakings are designed to ensure accountability and avoid cost blow- outs associated with overservicing.

The Bill provides that a service will not attract the Medicare benefit unless the pathologist has arranged 'proper supervision' of the service. The supervision required by the new provisions includes ensuring a properly qualified person, provides the service and has personal responsibility for the proper rendering of the service.

The question of whether proper supervision is being provided is to be decided in accordance with written principles which will be determined by the Minister. These principles will be set out in determinations which can be disallowed by Parliament.

The new provision commences immediately after a section 5 of the Health Legislation Amendment Act 1986 is repealed. That section dealt with supervision but was never proclaimed because of the difficulty in defining a reasonable level of personal control. The repeal of the section is part of the current Bill and is dealt with below.

Licensed collection centres for approved pathology authorities

Division 4A of Part IIA deals with the number of collection centres an approved pathology authority is entitled to operate. The Bill proposes to omit the current provisions which allow the Minister to determine the maximum number of centres in compliance with any written principles the Minister may determine, and substitutes a new section 23DNB.

The new section is designed to allow the Minister to have some influence over the location of pathology collection centres to;

alleviate the hardship caused by the commercial decisions of pathology practices in locating their collection centres. 5

Presumably the Minister will be able to have some influence over the distribution of the collection centres to ensure that more remote, or less economically advantageous locations will have reasonable access to pathology collection services.

The new section includes three mandatory principles which will be applied in allocating the 'units of entitlement' for operating collection centres. The principles must include:

. a formula, or other method, for allocating entitlements;

. the circumstances and method for varying an allocation;

. the number and location of collection centres that can be operated under an entitlement

Temporary collection centres

Temporary collection centres ceased to be operated by approved pathology authorities after 1 January 1994. 6 The Bill omits a number of obsolete references to the temporary collection centres.

Health Legislation Amendment Act 1986

The Bill will repeal section 5 of the Health Legislation Amendment Act 1986. As noted above this section dealt with the supervision of pathology services and will not be necessary in light of the proposed changes to the Health Insurance Act 1973.

Hearing Services Act 1991

The Hearing Services Act 1991 establishes the Hearing Services Authority. One function of the authority is to provide hearing services to 'eligible persons'. The Bill proposes to amend the definition of 'eligible person' omitting the reference to 'Pensioner Health Benefits Card' and substituting a reference to 'Pensioner Concession Card'.

This is a cosmetic change which reflects a change to the name of the card under the Social Security Act 1991. The amendment will be taken to commence on 1 January 1994.

National Health Act 1953

The National Health Act 1953 (the NH Act) regulates a number of health related services including nursing homes, private insurance providers and pharmacists. The NH Act also establishes the Pharmaceutical Benefits Scheme. The scheme ensures that pharmaceuticals are provided to the general public at a maximum of $16 per item. Where an individual or family spend more than a safety net figure of $400 in a year, any further prescriptions are provided at the rate of $2.60. The scheme also provides safety net concession cards to some patients (including pensioners, the unemployed, low income families, veterans, war widows and their dependants). Concession card holders pay $2.60 per prescription until annual expenditure reaches $135.20. After the safety net level has been reached pharmaceuticals are provided at no cost to the card holder. 7 All charges and safety nets are indexed.

The Bill proposes an amendment that will ensure that safety net concession cards will only be available to people who are eligible to receive Medicare benefits. Eligibility to receive Medicare benefits is determined by the Health Insurance Act 1973 and generally extends to Australian residents and certain members of diplomatic missions. 8

The restriction of safety net concession cards to Australian resident implements a 1994- 95 Budget decision. It is estimated the change will result in a saving of $1 million from 1995- 96. 9 The change will come into force from 1 January 1995.

The main amendment to the NH Act will allow pharmacists to supply a substituted drug or medication, that is marketed under a different brand name, to the drug or medication which is specified in a prescription. The substitution will only be allowed if:

. the prescription does not indicate that only the specified drug or medication be supplied;

. a schedule of pharmaceutical benefits issued by the Department states that the two drugs or medications are equivalent;

. a Ministerial determination allowing the substituted drug or medication to be marketed under a particular brand name is in force; and

. the supply of the substituted brand is not prohibited under State or Territory law.

This change has resulted from an agreement between State and Commonwealth health Ministers concerning rules under which pharmacists dispense medication.

The National Secretariat of the Pharmacy Guild of Australia have welcomed the changes stating that:

The change will permit pharmacists to supply lower priced equivalent alternative medications in place of brand name items prescribed by doctors...

...Under the new rules, pharmacists will be able to provide professional advice on the use and effects of medication to patients. We will be able to say there is a lower priced equivalent, explain what it does and how it works, and dispense it for patients if they wish. That's a role we've been professionally trained for and one we can carry out responsibly and effectively. 10

National Health Amendment Act (No. 2) 1993

There is a minor technical change to this amending Act to include the word 'is'. The word was mistakenly omitted when the safety net figure for the Pharmaceutical Benefits Scheme was changed from $300 to $400.

The correction comes into force immediately after the amending Act originally commenced (1 January 1994).


1 Statistics cited in Australia's Health 1994, fourth biennial report of the Australian Institute of Health and Welfare, AGPS, Canberra, 1994, pp 122, 287.

2 Budget Statements 1994- 95, Budget Paper No 1, p 3.62.

3 For a useful summary of the health policy debate in its historical context see G. Gray, "Australian Health Policy at the Crossroads", Current Affairs Bulletin, v.70(9), March 1994.

4 Subsection 23DB(4), Health Insurance Act 1973.

5 Page 1 of the Explanatory Memorandum for the Bill.

6 See definition of 'temporary collection centre' in subsection 23DA(1), Health Insurance Act 1973.

7 Budget Statements 1994- 95, Budget Paper No. 1, p 3.73.

8 See section 3, Health Insurance Act 1973.

9 Budget Statements 1994- 95, Budget Paper No. 1, p 3.75.

10 Media Release, The Pharmacy Guild of Australia, "Guild Welcomes Health Ministers' Decision on Generic Substitution", 24 March 1994.

Margaret Cotton (06) 277 2439

Bills Digest Service

Parliamentary Research Service

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1994

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1994.