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Private Health Insurance (National Joint Replacement Register Levy) Amendment Bill 2015

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2013 - 2014 - 2015

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

PRIVATE HEALTH INSURANCE (NATIONAL JOINT REPLACEMENT REGISTER LEVY) AMENDMENT BILL 2015

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Health, the Hon Sussan Ley MP)





PRIVATE HEALTH INSURANCE (NATIONAL JOINT REPLACEMENT REGISTER LEVY) AMENDMENT BILL 2015

 

OUTLINE

 

The Bill amends the Private Health Insurance (National Joint Replacement Register Levy) Act 2009 (the NJRR Levy Act) to change the way the rate of National Joint Replacement Register (NJRR) levy payable by sponsors of joint replacement prostheses is set. 

 

The National Joint Replacement Registry was established by the Australian Orthopaedic Association (the AOA) in 1998.  The Registry collects data on the implantation of prosthetic joint replacement devices and reports on the performance of those prostheses, including revision rates, complications and other outcomes for devices. 

 

The aim of the NJRR is to improve the quality of care of patients undergoing joint replacement surgery.  The information collected provides an accurate measure of the success of a procedure and also allows for post-market monitoring of the performance of joint replacement prostheses .   Any devices showing high failure rates can be identified and removed from the market if necessary.

 

The information collected on the NJRR is used by orthopaedic surgeons and other health care professionals, governments, and patients.  The NJRR supports consumer confidence in the safety and efficacy of joint replacement prostheses on the market in Australia.  Manufacturers of joint replacement prostheses can also use information from the NJRR in the development of new products. 

 

Funding for the AOA for administering the NJRR has been cost-recovered via a levy on industry since 2009.  NJRR levy is payable by sponsors of those joint replacement prostheses that are listed in the Private Health Insurance (Prostheses) Rules (the Prostheses Rules).  This ensures ongoing funding for the Registry and is particularly important given the recent increased activity of the NJRR. 

 

A sponsor of a joint replacement prosthesis is the person who applied under the Private Health Insurance Act 2007 (the PHI Act) for the prosthesis to be listed in the Prostheses Rules.  For joint replacement prostheses transitioned to the Prostheses Rules when the PHI Act commenced in 2007, the sponsor is the person who was the sponsor of the prosthesis under the National Health Act 1953 .  The sponsor of a joint replacement prosthesis is typically the manufacturer or distributer of the prosthesis. 

 

It is not mandatory for the sponsor of a prosthesis to apply to have that prosthesis listed in the Prostheses Rules.  A joint replacement prosthesis which is not listed in the Prostheses Rules may still be sold and distributed in Australia and tracked by the NJRR.  Listing in the Prostheses Rules requires private health insurers to pay a minimum benefit for the provision of the prosthesis in certain circumstances, in accordance with the PHI Act. 

 

The NJRR Levy Act currently requires the rate of NJRR levy imposed through the Private Health Insurance (National Joint Replacement Prostheses Register Levy) Rules to be based on the number of joint replacement prostheses a sponsor has listed on the Prostheses Rules on a particular day.  A joint replacement prosthesis that is included in the Prostheses Rules but has never been provided to a patient or notified to the NJRR will attract the same amount of levy as a prosthesis that is frequently provided to patients and reported to the NJRR, resulting in a higher volume of work for the NJRR and reflecting a greater revenue stream for the sponsor.

 

This Bill will amend the NJRR Levy Act to remove this restriction on how the rate of NJRR levy must be set.  Changing to a calculation taking into account the number of times the provision of a sponsor’s prostheses to a patient is recorded on the NJRR will result in a more equitable distribution of cost recovery across the industry. 

 

Over time, consultations with industry have indicated a strong preference for determining individual sponsor’s levy contributions by a method that better reflects utilisation of its joint replacement prostheses.  This Bill will allow for the implementation of these changes by providing that NJRR levy is imposed on the recording on the NJRR of the provision of a joint replacement prosthesis and the rate of levy may take into account the number of times the provision of a kind of joint replacement prosthesis is recorded on the NJRR in a particular period.  The proposed change to the method of calculating NJRR levy will see the majority of sponsors (over 85 per cent) paying smaller individual contributions. 

 

The Bill makes a number of other minor amendments to the NJRR Levy Act as a consequence of the change to the way the levy is to be calculated and to reflect modern drafting conventions. 

 

The NJRR Levy Act currently provides that the Private Health Insurance (National Joint Replacement Prostheses Register Levy) Rules (NJRR Levy Rules) may set a maximum levy of $5,000 for sponsorship of any one joint replacement prosthesis in any one financial year.  The amendments made by this Bill similarly restrict the amount of levy that a sponsor may pay in respect of a financial year in respect of one joint replacement prosthesis to $5,000.  

 

The number of joint replacement surgeries taking place in Australia is increasing every year, along with an increasing number of joint replacement prostheses available for use by surgeons.  While orthopaedic surgeons and hospitals are not required to report the provision of a joint replacement prosthesis to the Registry, the reporting rate is exceptionally high. 

 

The Bill will commence on the day after Royal Assent. 

 

 

Financial Impact Statement

 

The Commonwealth’s funding of the NJRR is a cost recovered activity and there is no financial impact to government as a result of the amendments made by this Bill.

 

 



Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

PRIVATE HEALTH INSURANCE (NATIONAL JOINT REPLACEMENT REGISTER LEVY) AMENDMENT BILL 2015

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Bill

This Bill amends the Private Health Insurance (National Joint Replacement Register Levy) Act 2009 (the NJRR Levy Act) to allow for a change in the method used to set the rate of National Joint Replacement Register (NJRR) levy payable by sponsors of joint replacement prostheses.

 

The National Joint Replacement Registry, operated by the Australian Orthopaedic Association (the AOA), collects data on the implantation of prosthetic joint replacement devices and reports on revision rates, complications and other outcomes for those devices.  Its aim is to improve the quality of care of patients undergoing joint replacement surgery.  

 

The information collected provides an accurate measure of the success or otherwise of a procedure and also allows for post-market surveillance of the performance of joint replacement prostheses .  D evices showing high failure rates can be quickly identified and removed from the market if necessary.  

 

The information collected on the NJRR may be used to inform orthopaedic surgeons and other health care professionals, governments, sponsors of joint replacement products and patients. 

 

The NJRR has been funded through cost-recovery since 2009.  NJRR levy is currently imposed on sponsors of those joint replacement prostheses that are listed in Private Health Insurance (Prostheses) Rules, made under the Private Health Insurance Act 2007 (the PHI Act), to recover the costs of the AOA in administering the NJRR.  This ensures ongoing funding for the Registry. 

 

A sponsor of a joint replacement prosthesis is the person who applied under the PHI Act for the prosthesis to be listed in the Private Health Insurance (Prostheses) Rules (the Prostheses Rules) for the listing of the prosthesis.  A person may also be a sponsor of a joint replacement prosthesis if that prosthesis was transitioned to the Prostheses Rules when the PHI Act commenced in 2007 and the person had been the sponsor of the prosthesis under the National Health Act 1953

 

It is not mandatory for the manufacturer or distributer of a joint replacement prosthesis to apply to have that prosthesis listed on the Prostheses Rules.  A joint replacement prosthesis which is not included in the Rules may still be sold and distributed in Australia and tracked by the NJRR.  Inclusion in the Prostheses Rules requires private health insurers to pay a minimum benefit for the provision of the prosthesis in certain circumstances, in accordance with the PHI Act.

 

The NJRR Levy Act allows for NJRR levy to be imposed, at a rate specified in Private Health Insurance (National Joint Replacement Register Levy) Rules, on a maximum of four days per financial year.  It also allows for supplementary NJRR levy to be imposed, at a rate determined by the Minister for Health via legislative instrument, on a maximum of two days per financial year.  Although minor technical amendments will be made to sections of the NJRR Levy Act dealing with the Minister’s power to determine supplementary levy days by legislative instrument, these are to modernise drafting of the NJRR Act and do not alter its substantive operation. 

 

However, the NJRR Levy Act currently restricts the way in which the rate of NJRR levy may be set, requiring it to be based on the number of joint replacement prostheses a sponsor has listed on the Prostheses Rules on a particular day.  Where the provision of a sponsor’s joint replacement prostheses is more frequently reported to the NJRR, resulting in a higher volume of work for the NJRR, that sponsor does not pay a proportionately higher NJRR levy.  

 

This Bill will provide for NJRR levy to be imposed on the recording on the NJRR of the provision of a joint replacement prosthesis, rather than simply for being a sponsor of a joint replacement prosthesis.  It also allows for the rate of levy to take into account the number of times a record of the provision of a type of prosthesis was made on the NJRR for a particular period.  NJRR Levy will remain payable by the sponsor of a joint replacement prosthesis.  A cap of $5,000 on the amount of NJRR levy payable for a financial year by a sponsor in relation to a particular joint replacement prosthesis is retained in the NJRR Levy Act.  

 

The amendments to be made by the Bill will only apply in relation to NJRR levy imposed on a day after the NJRR Levy Act is amended, although the calculation of the rate of levy may be by reference to matters occurring before those amendments.

 

Human rights implications

The right to privacy

Article 17 of the International Covenant on Civil and Political Rights provides that no one is to be subject to unlawful or arbitrary interferences with that person’s privacy, family, home and correspondence, or to unlawful attacks on the person’s honor or reputation.

 

The amendments made by this Bill do not limit the right to privacy of surgeons undertaking, or patients undergoing, joint replacement procedures. Information on the implantation of joint replacement prostheses is provided to the Registry by orthopaedic surgeons, or hospitals acting on their behalf, using forms completed in theatre at the time of surgery.  Information collected includes a patient’s name and age, the surgeon’s name, and details of the operation performed and the prosthesis used. 

 

However, surgeons are not required to report on the provision of joint replacement prostheses to the Registry and patients are free to refuse to consent to their details being included on the NJRR.  It is a testament to the quality of the work undertaken at the NJRR that almost 100 percent of surgeons and their patients choose to report on joint replacement surgeries. 

 

Where information is included on the NJRR, the record is given a de-identified Registry number and no personal information is included in data or reports produced by the NJRR.  The Registry is subject to the Privacy Act 1988 in its collection, storage, use and disclosure of personal information. 

 

As mentioned, a surgeon may choose not to report on the provision of a joint replacement prosthesis to the Registry, or a patient may elect not to have the details of his or her operation reported to the Registry.  The fact that a joint replacement procedure is not reported to the NJRR has no impact on the obligation of a private health insurer’s to pay a minimum benefit for the provision of the prosthesis, where required by the PHI Act. 

 

The amendments made by this Bill make no changes to these arrangements.  The amendments simply alter the way that NJRR levy is imposed and the method by which the NJRR Levy Rules may set the rate of levy. 

 

Finally, it should be noted that the NJRR Levy Act does not authorise or require the collection, storage, security, use, disclosure or publication of personal information or regulate the operation of the NJRR itself. 

 

The right to health

The right to health - the right to the enjoyment of the highest attainable standard of physical and mental health - is contained in article 12(1) of the International Covenant on Economic, Social and Cultural Rights.

 

The continued funding of the AOA to operate the NJRR supports the right to health of all Australians.  The information and data collected by the NJRR is a valuable tool in determining the safety and efficacy of joint replacement prostheses available in Australia.  It enables the post-market surveillance of joint replacement prostheses and can help device manufacturers develop safer prostheses.  The work of the Registry benefits all joint replacement prosthesis recipients, whether a private or a public patient.

 

As mentioned above, whether or not a particular joint replacement procedure is reported to the Registry does not affect any entitlement of a private hospital patient to a minimum benefit for the procedure. 

 

The amendment made by this Bill aim to introduce a method of imposing NJRR levy that more accurately reflects the number of times the use of a listed prosthesis is recorded in the NJRR.  This is expected to result in lower overall levy amounts for the majority of sponsors, approximately 85%. 

 

Conclusion

This Bill is compatible with human rights as it does not raise any human rights issues.

 

The Hon Sussan Ley MP, the Minister for Health



PRIVATE HEALTH INSURANCE (NATIONAL JOINT REPLACEMENT REGISTER LEVY) AMENDMENT BILL 2015

 

NOTES ON CLAUSES

 

Clause 1 - Short Title

This clause provides that the Bill, once enacted, may be cited as the Private Health Insurance (National Joint Replacement Register Levy) Amendment Act 2015 .

 

Clause 2 - Commencement

This clause provides that the Bill will commence on the day after Royal Assent.  

 

Clause 3 - Schedule(s)

This clause provides that each Act specified in a Schedule to this Bill is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item has effect according to its terms.  Items 1 to 13 of Schedule 1 amend the Private Health Insurance (National Joint Replacement Register Levy) Act 2009 (the NJRR Levy Act).  Item 14 of Schedule 1 is an application provision.

 

SCHEDULE 1 AMENDMENT OF THE PRIVATE HEALTH INSURANCE (NATIONAL JOINT REPLACEMENT REGISTER LEVY) ACT 2009

 

Item 1 - title

Item 1 amends the long title of the NJRR Levy Act to omit reference to the NJRR Levy Act being an Act to impose levy on sponsors of joint replacement prostheses and replacing with reference to the Act being to impose the NJRR levy

 

Item 2 - subsection 5(1)

This item inserts a definition of register into subsection 5(1) of the NJRR Levy Act, being the register known as the Australian Orthopaedic Association National Joint Replacement Registry (the NJRR).

 

Item 3 - subsection 5(2)

Item 4 - paragraphs 5(2)(a) and (b)

These items amend subsection 5(2) to change the definition of a sponsor of joint replacement prostheses to a definition of a sponsor of a joint replacement prosthesis.  This better reflects that a person may be a sponsor of a single joint replacement prosthesis. 

 

The sponsor of a joint replacement prosthesis is the person who applied under the PHI Act for the prosthesis to be listed or, for those prostheses transitioned onto the Prostheses Rules when the PHI Act commenced in 2007, the person who was the sponsor of that prosthesis under the National Health Act 1953 (see subsection 5(2) of the NJRR Levy Act). 

 

The clarification of the definition will not affect the status of anyone as a sponsor (or not a sponsor). 



Item 5 - subsection 5(3)

Item makes a minor consequential change to subsection 5(3) of the NJRR Levy Act to omit the reference to “kinds” of prostheses and replace with reference to “classes” of prostheses, to reflect wording used in new subsections 7(2) and 7(3) of the NJRR Levy Act (see item 11).

 

Item 6 - subsection 6(1)

Subsection 6(1) of the NJRR Levy Act provides for the imposition of NJRR levy.  Item 6 amends subsection 6(1) to provide that NJRR levy is imposed on the recording of the provision of a joint replacement prosthesis. 

 

For the purposes of the NJRR Levy Act a joint replacement prosthesis is a prosthesis listed in the Private Health Insurance (Prostheses) Rules (the Prostheses Rules) and used in joint replacement.  The Prostheses Rules are made under the Private Health Insurance Act 2007 (the PHI Act).

 

The amendment to subsection 6(1) reflects that NJRR levy will now be imposed based on the recording in the NJRR of the provision of a joint replacement prosthesis to a patient rather than simply on sponsorship of joint replacement prostheses.  NJRR levy remains payable by the sponsor of a joint replacement prosthesis (see item 12).  

 

Item 7 - paragraph 6(1)(b)

Paragraphs 6(1)(a) and 6(1)(b) of the NJRR Levy Act set out when NJRR levy is imposed. 

 

Paragraph 6(1)(b) previously empowered the Minister for Health to determine ‘supplementary NJRR levy days’ in addition to NJRR levy days specified in the Private Health Insurance (National Joint Replacement Register Levy) Prostheses Rules (the NJRR Levy Rules). 

 

Item 7 makes a minor technical amendment to paragraph 6(1)(b) as a consequence of the inclusion of new section 8A in the NJRR Levy Act (see item 13).  New section 8A will empower the Minister for Health to determine, by legislative instrument, supplementary NJRR levy days and the rate of levy to be imposed on those days.  It has been included as a separate provision to reflect modern drafting practices. 

 

Item 7 therefore removes a reference in paragraph 6(1)(b) to days “determined by the Minister, by legislative instrument” as supplementary levy NJRR days and replaces it with a reference to “days specified in a determination under section 8A”.

 

Arrangements in paragraph 6(1)(a) that NJRR levy is imposed on each day specified in the NJRR Levy Rules as an NJRR levy day for a financial year remain unchanged. 

 

NJRR levy is currently imposed twice a year by the NJRR Levy Rules, in April and October.  No supplementary NJRR levy days are currently determined and it is not planned for the Minister for Health to determine any new supplementary NJRR levy days as a result of these amendments. 

 

Subsection 6(2) of the NJRR Levy Act has not been amended and will continue to limit NJRR levy days to a maximum of four per financial year. 

Item 8- subsection 6(3)

Item 8 omits reference in subsection 6(3) of the NJRR Levy Act to a determination of supplementary NJRR levy being made “by the Minister”, as that reference has become redundant following changes to the drafting of new subsection 6(1A).  The restriction in subsection 6(3) on the number of supplementary NJRR levy days to a maximum of two per financial year has not been altered by these amendments. 

 

Item 9 - subsection 7(1) (table item 1, column headed “is the rate that…”, paragraph (a))

Item 1 of the table to subsection 7(1) of the NJRR Levy Act sets out how the rate of levy imposed on a NJRR levy day is to be worked out.  Item 9 of the Bill amends paragraph (a) of item 1 to make clear that the NJRR Levy Rules may, in addition to specifying a rate of levy, specify a method for calculating a rate of levy. 

 

Item 10 - subsection 7(1) (table item 2, column headed “is the rate that…”, paragraph (a))

Item 2 of the table to subsection 7(1) of the NJRR Levy Act sets out how the rate of levy imposed on a supplementary NJRR levy day is to be worked out.  Item 10 of the Bill amends paragraph (a) of item 2 to make clear that a determination of the rate of supplementary NJRR levy by the Minister may, in addition to specifying a rate of levy, specify a method for calculating a rate of supplementary levy. 

 

The item also removes reference in paragraph (a) of item 2 of the table to subsection 7(1) of the NJRR Levy Act to the determination of the rate of supplementary levy being made in a legislative instrument.  This is redundant with the inclusion in the NJRR Levy Act of new section 8A, which provides that such determinations are legislative instruments. 

 

Item 11 - subsection 7(2)

This item repeals subsection 7(2) of the NJRR Levy Act and replaces with new subsections 7(2) and (3). 

 

New subsection 7(2) of the NJRR Levy Act provides that the NJRR Levy Rules, and a determination made under section 8A relating to supplementary NJRR levy, may:

(a)     specify different rates of levy, or methods for calculating the rate of levy, in relation to different classes of joint replacement prostheses; and

(b)    specify a rate of levy of zero in relation to one or more classes of joint replacement prostheses; and

(c)     specify a rate of levy, or method for calculating the rate of levy, that takes into account the number of times recordings were made on the NJRR of the provision of a joint replacement prosthesis during a particular period.

 

It may be appropriate to specify a rate of zero for certain prostheses where, for example, those prostheses have only been added to the Prostheses Rules shortly before the levy is due to be imposed. 

 

Paragraph 7(2)(a) of the NJRR Act previously required the rate of NJRR levy or supplementary NJRR levy to be based on the number of joint replacement prostheses sponsored on a ‘census day’ either specified in the NJRR Levy Rules (for NJRR levy) or determined by the Minister for Health (for supplementary NJRR levy).

 

The administrative burden on the AOA in recording and tracking high use prostheses that are frequently reported to it is significantly higher than for lower use prostheses seldom reported to it.  Allowing the rate of levy to take into account the number of times the provision of a joint replacement prosthesis to a patient is recorded by the NJRR in a period will result in a fairer distribution of levy under which the amount levied on sponsors will more accurately reflect the number of times its listed prostheses are used. 

 

Subsection 7(3) provides that the total rate of NJRR levy for a financial year for the recording on the NJRR of the provision of a particular joint replacement prosthesis must not exceed $5,000.  This maintains the $5,000 cap on NJRR levy for a particular prosthesis for a financial previously found in repealed paragraph 7(2)(d). 

 

Item 12 - after section 7

Item 12 inserts new section 7A, which provides that NJRR levy is payable by the sponsor of the joint replacement prosthesis. 

 

The inclusion of new section 7A does not change practical arrangements for the liability of NJRR levy, as section 6 of the NJRR Levy Act previously imposed NJRR levy on sponsors. 

 

Item 13 - after section 8

Item 13 inserts new section 8A into the NJRR Levy Act.  The new section provides that the Minister for Health may, by legislative instrument, make a determination specifying a supplementary NJRR levy day for a financial year and specifying a rate or method of calculating a rate of supplementary NJRR levy.

 

The Minister previously made these determinations under paragraph 6(1)(b) and item 2 of the table to subsection 7(1), respectively. 

 

Item 14 - application of amendments

This item provides that the amendments made by Schedule 1 will apply in relation to NJRR levy or supplementary NJRR levy imposed on a day falling on or after the commencement of the Schedule, whether or not the calculation of the levy is by reference to matters occurring before or after that commencement. 

 

The first imposition of NJRR levy after the amendments to the NJRR Levy Act made by this Bill will take into account utilisation of listed joint prostheses before those amendments take effect.