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2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
HEALTH INSURANCE AMENDMENT (SAFETY NET) BILL 2015
REPLACEMENT EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health, the Hon Sussan Ley MP)
THIS MEMORANDUM REPLACES THE EXPLANATORY MEMORANDUM
PRESENTED TO THE HOUSE OF REPRESENTATIVES ON 21 OCTOBER 2015
HEALTH INSURANCE AMENDMENT (SAFETY NET) BILL 2015
Glossary
The following abbreviations and acronyms are used throughout this explanatory memorandum.
Abbreviation Definition
DHS The Department of Human Services
EMSN Extended Medicare Safety Net
FTB(A) Family Tax Benefit (Part A)
GPG Greatest Permissible Gap
MBS fee Medicare Benefits Schedule fee
OMSN Original Medicare Safety Net
OUTLINE
Summary
This Bill introduces a new medicare safety net to replace the Extended Medicare Safety Net (EMSN),
the Original Medicare Safety Net (OMSN) and the Greatest Permissible Gap (GPG).
The purpose of this Bill is to consolidate the complex medicare safety net arrangements and to
introduce a new medicare safety net that will continue to provide assistance to singles and families
with out-of-pocket costs for out-of-hospital medicare services.
Context
To protect medicare for the long term it is important to consider whether elements of the medicare
programme are having their desired consequences. Expenditure under the medicare safety nets
continues to increase significantly, with expenditure continued to be directed in areas where doctors
charge the highest fees.
The new medicare safety net will continue to cover up to 80 per cent of out-of-pocket costs once an
annual threshold is met. However, it will introduce a limit on the total amount of out-of-pocket costs
for out-of-hospital medicare services to be included in the costs that accumulate to towards the
threshold. There are currently upper limits on the amount of safety net benefits which will be paid for
some items. The new medicare safety net legislation introduces uniform benefit caps across all items.
Medical expenses for in-hospital medicare services will continue not to be relevant for the purposes
of the medicare safety net.
Background
The Extended Medicare Safety Net (EMSN) was introduced in 2004 and provides an additional rebate
for Australian families and singles that have out-of-pocket costs for medicare eligible out-of-hospital
services once an annual threshold of out-of-pocket costs has been met. Out-of-hospital services
include GP and specialist attendances and services provided in private clinics and private emergency
departments.
In 2015, the annual threshold for Commonwealth concession cardholders, including those with a
Pensioner Concession Card, a Health Care Card or a Commonwealth Seniors Card and people who
are eligible for Family Tax Benefit (Part A) is $638.40. For all other singles and families the annual
threshold is $2,000.
1
An independent review of the EMSN in 2009 found the programme supported medical inflation and
that the majority of the benefits were paid to people living in high income areas.
Changes were made in 2010 to cap the amount of safety net benefits for obstetrics services, assisted
reproductive technology services and a number of other selected items.
A second independent review of the EMSN in 2011 found that capping safety net benefits for specific
groups of services, rather than all services, increased complexity.
A further change in 2015 to increase the upper threshold of the EMSN to $2,000 will slow
expenditure growth but did not fix the fundamental structural problems with the programme. For
example, some patients reach the threshold almost immediately each year due to the unlimited
amount of out-of-pocket costs for a service that can accumulate to the threshold.
Current arrangements to be removed
This Bill removes the concepts of Original Medicare Safety Net (OMSN) and Greatest Permissible
Gap (GPG).
The OMSN was introduced in its current form in 1991 and increases the medicare rebate payable for
out-of-hospital medicare services to 100 per cent of the Schedule fee once an annual threshold of gap
costs (the difference between the medicare rebate and the Schedule fee) has been met. In 2015, the
annual threshold is $440.80.
The Greatest Permissible Gap (GPG) was introduced in 1984 and increases the medicare rebate for
high cost out-of-hospital services. From 1 November 2015, the GPG is $79.50. This meant that
where the difference between the MBS fee and the Medicare rebate for an MBS item was greater than
$79.50, the medicare rebate would be increased until the difference was equal to the GPG.
This Bill introduces a new medicare safety net on 1 January 2016. The new medicare safety net,
similar to the EMSN, will provide an additional rebate for Australian families and singles that have
out-of-pocket costs for medicare eligible out-of-hospital services once an annual threshold in
out-of-pocket costs is met. Families will still be able to pool their out-of-pocket costs and there will
be a lower threshold for concession card holders and an intermediate threshold for families eligible
for FTB(A) and singles that are 'confirmed singles' or are 'FTB(A) persons'. A number of rules are
being changed to improve administration of the programme for families.
Programme parameters of the new medicare safety net
In 2016, the new medicare safety net threshold is $400 for singles who hold a concession card or
families where at least one member holds a concession card. The threshold for singles and families
eligible for FTB(A) is $700 and the threshold for all other families (including couples) is $1,000.
Individuals who are confirmed as single have a threshold of $700.
Under the new medicare safety net there is a limit on the out-of-pocket costs that can accumulate per
service to the threshold and a limit on the amount of safety net benefits that are payable per service.
Examples of how the accumulation of out-of-pocket costs and the safety net benefits payable are
calculated under the new medicare safety net are provided in the second table below.
2
Elements of the new medicare safety net compared to the existing EMSN
Key parameters Common to both EMSN and new medicare safety net
The new medicare safety net will continue to be payable only for
Safety-net-eligible out-of-hospital services (i.e. those currently paid at either 85% or 100%
services of the Medicare Benefits Schedule (MBS) Fee and excluding all claims
paid at 75% of the MBS Fee).
Calculation of safety net Subject to any upper limits on safety net benefits payable, safety net
benefits benefits will be calculated at 80% of out-of-pocket costs.
When the sum of a patient's (or a family's) accumulated out-of-pocket
Safety net threshold costs amounts within a safety net year reach the threshold, the person (or
family) becomes eligible for safety net benefits.
The new medicare safety net will be a calendar year program, with
Safety net year accumulation of eligible expenses that count to the threshold to begin on
1 January each year.
A person who is the holder of (or who is listed on) a Commonwealth
Definition of concession card. A person who is a Commonwealth Concession card
concessional person holder at any time in the calendar year retains concessional status for the
rest of the calendar year.
Couples and families need to register in order for DHS to accumulate the
Registration as a safety out-of-pocket costs of all individuals against a single threshold. If
net family families have previously registered for the existing safety nets, the
registration will be automatically rolled over for the new safety net.
If any person in a registered family receives Family Tax Benefit (Part A)
Access to Family Tax
(FTB(A)), then the whole safety net family is given access to the
Benefit (Part A)
FTB(A) threshold. A person who receives FTB(A) benefits but is not
threshold
part of a family is given access to the FTB(A) threshold.
Automatic calculation of DHS (Department of Human Services) will automatically keep a total of
safety net benefit by an individual's (and a registered family's) out of pocket costs. Safety
DHS net benefits are calculated and paid automatically by DHS.
People who are entitled Where multiple thresholds could apply to a person, the lowest threshold
to multiple thresholds does apply.
A person can only have one spouse at any time.
An adult who is not a dependent cannot be in more than one
registered family.
Features of a safety net A dependent can be registered in multiple safety net families at any
family time provided they are substantially dependent on that family.
Where a dependent is part of multiple registered families, then the
out-of-pocket costs accumulate to whichever family incurred the
out-of-pocket cost.
DHS will contact a family when they are approaching the relevant safety
Confirmation of family
net threshold asking them to confirm their family composition. Safety
status
net benefits are not payable until this confirmation is received by DHS.
3
New Elements of the Medicare Safety Net
The table below sets out the key changes to the programme parameters - the calculation of the
amount, which accumulates to the threshold, the threshold amounts and the amount payable once a
person or family has reached the threshold. The thresholds have been designed to better direct
benefits to people with less ability to pay high out-of-pockets.
Key parameters Extended Medicare Safety Net New Medicare Safety Net
(Current Law) (this Bill)
Two thresholds. Three thresholds, which are lower than
In 2015 the: current thresholds for most people.
Lower threshold for concession card In 2016 the:
holders and FTB(A) families is Lower threshold for concession
$638.40; and card holders is $400;
Thresholds Upper threshold for general families The intermediate threshold for
and singles is $2,000. people eligible for FTB(A) and
"confirmed" singles without
concession cards is $700; and
The higher threshold for all other
families and singles is $1,000.
All out-of-pocket costs for out-of- The amount that accumulates to the
hospital medicare services count towards threshold is the out-of-pocket costs up
the threshold. to the maximum accumulation amount
(which is equal to 150 per cent of the
Example: MBS fee minus the medicare rebate )
A patient goes to see a specialist for the
first time, claims an item 104 and is Example:
charged $150. The MBS fee for the item To use the same example as the
is $85.55 and the out-of-hospital EMSN column. The patient's out of
Limits on
medicare rebate is $72.75. pocket costs are $150 - $72.75 =
accumulation to
$77.25.
the safety net
threshold
The patient's out of pocket costs are $150 The maximum accumulation amount
- $72.75 = $77.25. This amount accrues is (150% x $85.55) - $72.75 = $55.58
to the EMSN threshold.
Therefore the amount that accumulates
to the new medicare safety net
threshold is $55.58, the maximum
accumulation amount.
There are currently caps on EMSN There will be caps on the safety net
benefits for some items (all consultation benefits for all MBS items, defined as
Limits on safety items, obstetrics and assisted 150% of the Schedule Fee less the
net benefits reproductive technology services) and the standard MBS rebate. This
method of calculating the cap varies methodology provides greater
between items. certainty and consistency for patients
4
on the total Government benefit
Example: available. The patient will receive a
A patient who has reached the EMSN benefit of 80% of their out-of-pocket
threshold goes to see a specialist for the costs up to maximum safety net
first time, claims an item 104 and is amount.
charged $150. The MBS fee for the item
is $85.55 and the out-of-hospital Example:
medicare rebate is $72.75. A patient who has reached the EMSN
threshold goes to see a specialist for
the first time, claims an item 104 and
The patient's out of pocket costs are $150 is charged $150. The MBS fee for the
- $72.75 = $77.25. 80 per cent of the out- item is $85.55 and the out-of-hospital
of-pocket costs = $61.80 medicare rebate is $72.75.
The limit (EMSN cap) of EMSN benefits The patient's out of pocket costs are
for this item is 300 per cent of the MBS $150 - $72.75 = $77.25. 80 per cent of
fee = $256.65. the out-of-pocket costs = $61.80
The amount of EMSN benefits payable is The maximum safety net amount is
$61.80, the lower amount of the 80 per (150% x $85.55) - $72.75 = $55.60
cent of out-of-pocket costs and the
EMSN cap. Therefore the amount of new medicare
safety net benefits payable is $55.60,
the lower amount of 80 per cent of the
out-of-pocket costs and the maximum
safety net amount.
Alternatively, if the specialist charges
$130 for an item 104 the patient's out-
of-pocket costs are
$130 - $72.75 = $57.25. 80 per cent of
the out-of-pocket costs = $45.80.
The maximum safety net amount is
(150% x $85.55) - $72.75 = $55.60.
Therefore the amount of new medicare
safety net benefits payable is 80 per
cent of the full out-of-pocket cost
($45.80).
5
Families
The definition of a family is important as it specifies whose out-of-pocket costs can accumulate to a
family threshold. Under the new medicare safety net, the definitions relevant to a family are broadened
to recognize different types of family configurations and to better support people who have high
medical costs. For example, it allows young people under the age of 25 who cannot study full-time due
to illness to be part of a person's registered family as a dependent. Similarly, the definition of spouse is
being broadened to include people who are living apart due to illness or infirmity. This means that
where one spouse is living in a nursing home or care facility, while the other spouse remains at home,
the couple can still register as a safety net family.
There are other important changes to the treatment of families for the new medicare safety net:
A simpler and fairer treatment of families where not all members hold a Commonwealth
concession card and therefore have different safety net thresholds;
A simpler and fairer treatment of families whose family composition changes throughout
the year;
A fairer treatment of people who are eligible to receive FTB (A), but who have not
registered as a family for the purposes of the safety net.
Key parameters Extended Medicare Safety Net New Medicare Safety Net
(Current Law) (this Bill)
Categories of Two dependent types: Two dependent types:
dependents child (<16); and child (<16); and
student dependent (aged 16 to 25 and student dependent (aged 16 to 25
studying full-time). and studying full-time or
temporarily unable to study full
time due to illness or infirmity.
The Bill adds a provision allowing
regulations to be made to add
additional classes of people as
dependent.
Couples in a Couples who are permanently living apart Couples who live apart due to illness
registered family are not able to register to be part of the or infirmity (for example, if one of
same family and pool their out-of-pocket them is living in a residential aged
costs. care facility) will be able to register as
a family. This brings the medicare
safety net into line with the PBS
Safety Net.
FTB(A) families FTB(A) recipients who are not registered Both singles and families who are
as a family for safety net purposes do not eligible for FTB(A) payments will be
have access to the FTB(A) family eligible for the FTB(A) threshold.
threshold. This addresses the anomalous situation
where a person may miss out on the
benefit of the FTB(A) threshold if they
fail to register their family with DHS
for safety net purposes.
6
Separation in Family composition is 'locked' for a People can leave a qualified family
families calendar year, once they have qualified and remain safety net eligible.
for the safety net and confirmed their In addition, when parents separate
family composition. That is, they cannot before qualifying for safety net
leave their family or they risk losing benefits and the children are registered
safety net benefits. This can create as part of both new families, the out-
difficulties in some circumstances. of-pocket costs for the children at the
point of separation are copied to both
families so no family misses out.
Split threshold Split threshold families are families Split threshold families accumulate
families where some, but not all members of the towards the same out-of-pockets pool.
family have a Commonwealth The concession card holders and their
Concession Card. family, qualify when their lower
Members on different thresholds in a threshold is reached.
split threshold family accumulate their This will increase the number of
out-of-pocket costs towards different people who qualify and make it easier
out-of-pocket pools. Whether or not an for people to understand.
out-of-pocket cost accumulates towards
the family threshold depends on who
received the service. This is
complicated and confusing.
Single people Currently, the same threshold applies to Single people without concession
all singles and families. cards will have access to a lower
threshold than families without
concession cards. This more equitably
distributes benefits to single people
who may be on a low income but not
qualify for a concession card.
Other minor administrative amendments
The Bill provides for other changes to improve the administration of the programme, for example:
Clarifying the treatment of families who have reached the threshold prior to confirming
their family composition and specifically providing for back-payments as long as the
person has confirmed within 60 days of being requested to do so.
Specifying that in order for a safety net benefit to be paid the medicare claim should be
submitted within seven years of the safety net year.
Allowing a dependent child or student dependent to remain on the family's safety net
registration until the end of the calendar year regardless of whether they finish their
schooling or leave home.
Financial Impact Statement
As announced in the Budget 2014-15, the changes in the Bill will deliver savings to the Budget of
$266.7 million over five years.
7
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
HEALTH INSURANCE AMENDMENT (SAFETY NET) 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 introduces a new medicare safety net to replace the Extended Medicare Safety Net (EMSN),
the Original Medicare Safety Net (OMSN) and the Greatest Permissible Gap.
The purpose of this Bill is to simplify the complex medicare safety net arrangements and to put in place
a sustainable programme, which does not require ongoing regular amendments to manage excessive
growth in expenditure and medical fee inflation. It seeks to address some issues with the current safety
nets, which create unnecessary or unhelpful complications for people who have medical costs.
The EMSN was introduced in 2004 and provides an additional rebate for Australian families and
singles that have out-of-pocket costs for medicare eligible out-of-hospital services once an annual
threshold of out-of-pocket costs has been met. Out-of-hospital services include GP and specialist
attendances and services provided in private clinics and private emergency departments. Once the
relevant annual threshold has been met, medicare will pay for 80% of any further out-of-pocket costs
for medicare eligible out-of-hospital services, up to a maximum, for the remainder of the calendar year,
except for services where an upper limit or 'EMSN benefit cap' applies (includes all consultations and
a number of procedures and diagnostic imaging services).
In 2015, the annual threshold for Commonwealth concession cardholders, including those with a
Pensioner Concession Card, a Health Care Card or a Commonwealth Seniors Card and people who are
eligible for Family Tax Benefit (Part A) is $638.40. For all other singles and families the annual
threshold is $2,000.
The OMSN was introduced in its current form in 1991 and increases the medicare rebate payable for
out-of-hospital medicare services to 100 per cent of the Schedule fee once an annual threshold of gap
costs (the difference between the medicare rebate and the Schedule fee) has been met. In 2015, the
annual threshold is $440.80.
The Greatest Permissible Gap (GPG) was introduced in 1983 and increases the medicare rebate for
high cost out-of-hospital services. In 2015, the out-of-hospital medicare rebate was increased for all
high cost MBS items so that the difference between the MBS fee and the medicare rebate is no more
than $79.50.
The new medicare safety net, similar to the EMSN, will provide an additional rebate for Australian
families and singles that have out-of-pocket costs for medicare eligible out-of-hospital services once an
annual threshold in out-of-pocket costs is met. Families will still be able to pool their out-of-pocket
costs and there will be a lower threshold for concession card holders and an intermediate threshold for
confirmed singles and families eligible for FTB(A).
In 2016, the new medicare safety net threshold for singles who hold a concession card and families,
where a member holds a concession card, is $400. The threshold for singles and families eligible for
8
FTB(A) is $700 and the threshold for all other families (including couples) is $1,000. Individuals who
are confirmed as single have a threshold of $700.
Under the new medicare safety net there will be a limit on the out-of-pocket costs that can accumulate
per service to the threshold for all medicare services and a limit on the amount of safety net benefits
that are payable per service for all medicare services. This will ensure that the Commonwealth
continues to support singles and families with high out-of-pocket costs while restricting the growth in
expenditure to reasonable levels. Two previous independent reviews of the current safety net
arrangements by the Centre for Health Economics, Research and Evaluation (CHERE) from the
University of Technology found that the majority of safety net benefits went to people living in higher
socioeconomic areas and found that there was leakage of government benefits away from the intended
purpose of the programme, which was to assist patients with their out-of-pocket costs, as benefits were
flowing to doctors in the form of fee increases rather than assisting patients with their costs. The
reviews also found that some people were now experiencing higher out-of-pocket costs because the
introduction of the EMSN had led to fee increases for some items. The structural changes enacted by
the new medicare safety net aim to address these issues.
Human rights implications
The proposed amendments engage two human rights: the right to health and the right to social security.
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 Economics, Social and
Cultural Rights (ICESCR). The UN Committee on Economics, Social and Cultural Rights (the
Committee) has stated that health is a 'fundamental human right indispensable for the exercise of other
human rights' and that the right to health is not to be understood as a right to be healthy, but rather
entails a right to a system of health protection, which provides equality of opportunity for people to
enjoy the highest attainable level of health.
The right to social security
The right to social security is contained in article 9 of the ICESCR. The right requires that a country
must, within its maximum available resources, ensure access to a social security scheme that provides a
minimum essential level of benefits to all individuals and families that will enable them to acquire at
least essential health care. Countries are obliged to demonstrate that every effort has been made to use
all resources that are at their disposal in an effort to satisfy, as a matter of priority, this minimum
obligation.
Discussion of the Bill
The Committee states that the notion of 'the highest attainable standard of health' takes into account
both the condition of the individual and the country's available resources. The right may be understood
as a right of access to a variety of public health and health care facilities, goods, services, programmes
and conditions necessary for the realisation of the highest attainable standard of health.
The Committee also states that with respect to the right to social security that the qualifying conditions
for benefits must be reasonable, proportionate and transparent.
The introduction of a new medicare safety net to replace the existing medicare safety net arrangements
is a reasonable and proportionate response to ensure that the safety net arrangements for out-of-pocket
costs for out-of-hospital medicare services are financially sustainable. The Commonwealth will
continue to provide an additional rebate for out-of-hospital medicare services once the threshold has
9
been reached and families will continue to be able to pool their out-of-pocket costs to reach the
threshold more quickly. Singles will also have a lower threshold compared to previous arrangements
under the EMSN. Arrangements are also being put in place to support more equitable treatment of
families undergoing family separation.
While the average benefit paid under the new medicare safety net will reduce, the number of people
that will receive a safety net benefit will increase compared to the number of people who will receive a
benefit under the EMSN in 2015. It is anticipated that benefits under the new medicare safety net will
be more equitably distributed between socio-economically advantaged and disadvantaged areas.
Currently, the EMSN disproportionally directs benefits to people living in more advantaged areas and
encourages fee inflation. This fee inflation disadvantages people who do not qualify for safety net
benefits.
The new medicare safety net threshold for people who qualify for a Commonwealth concession card is
lower than under the EMSN. Therefore this Bill protects the benefits of individuals that are financially
disadvantaged. Commonwealth concession cards are provided to people who meet a range of criteria
including qualifying for a Commonwealth Seniors Health Card, Pensioner Concession Card,
Low-income Health Care Card or Newstart Allowance.
There is no incompatibility with the right to health or social security because the legislation is for a
legitimate objective and reasonable, necessary and proportionate in the circumstances.
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
10
HEALTH INSURANCE AMENDMENT (SAFETY NET) BILL 2015
NOTES ON CLAUSES
Clause 1 - Short Title
This clause provides that the Bill, once enacted, may be cited as the Health Insurance
Amendment (Safety Net) Act 2015.
Clause 2 - Commencement
This clause provides that sections 1 to 3 and anything in the Bill not elsewhere covered in the
table in this clause, will commence on Royal Assent. Schedule 1 to this Bill will commence on
1 January 2016.
Clause 3 - Schedules
This clause provides that each Act that is 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. Schedule 1 amends the Health Insurance Act 1973 to introduce the
new Medicare safety net.
SCHEDULE 1 -- AMENDMENTS RELATING TO MEDICARE SAFETY-NET
Part 1 - Amendments
This part sets out amendments to the Health Insurance Act 1973 (the Act).
Item[1]: Subsection 3(1)
Item [1] inserts definitions of key terms used within the Bill in subsection 3(1) of the Act that are
pertinent to the operation of the new medicare safety net arrangements.
Item [1] inserts certain definitions from section 8 of the Act (which is repealed pursuant to Item
[2] - see below) in subsection 3(1) of the Act, where those current definitions have ongoing
relevance to the new safety net arrangements (i.e. the definitions of concessional person and
FTB(A) family) or are of broader application across the Act (i.e. the definition of Schedule fee).
Item [2]: Sections 8 and 8A
Section 8 of the Act currently lists a range of definitions relevant to Part II of the Act (which
concerns Medicare benefits) (see section 8(1A)) and an interpretative provision relevant to the
meaning of the term 'internal territory' for the purposes of Part II (see section 8(1)).
Section 8A of the Act currently sets out the circumstances in which the Minister may determine
that a registered family is an FTB(A) family.
This item repeals sections 8 and 8A of the Act and inserts:
a new Division heading titled 'Division 1- Preliminary' to appear in Part II of the
Act;
a new section 8AA, which provides a simplified outline of Part II of the Act.
11
a new section 8, which replicates current section 8(1) of the Act - an interpretive
provision, which clarifies that, for the purposes of Part II of the Act, an 'internal
territory' is taken to form part of New South Wales.
a new Division heading titled 'Division 2 - Entitlement to medicare benefit'.
a new section 8A, which provides a simplified outline for the new Division 2.
Item [3]: Section 9
Item [3] omits the reference to "(other than sections 10ACA and 10ADA)" from section 9 of the
Act. Sections 10ACA and 10ADA relate to the operation of the EMSN.
The effect of item [3] is to recognise that for the purposes of the new safety net arrangements,
medicare benefits under Part II shall be calculated by reference to the fees for medical services
set out in the relevant table.
Item [4]: Subsection 10(2)
Item 4 omits "A benefit in respect of a service is" and substitutes "A medicare benefit in respect
of a professional service is". Item [4] clarifies that the reference to a 'benefit in respect of a
service' in subsection 10(2) of the Act is a reference to a 'medicare benefit in respect of a
professional service'.
Item [5]: Subsection 10(2A)
Item [5] inserts "professional" after the word "prescribed". Item [5] clarifies that, in the context
of regulations made for the purposes of paragraph 10(2)(aa) of the Act, the reference in
subsection 10(2A) to the regulations prescribing 'services' is a reference to the prescribing of
'professional services' for the purposes of that paragraph.
Item [6]: Subsection 10(3) and 10(5)
Item [6] repeals subsections 10(3) and 10(5) of the Act. These provisions outline the concept of
the 'greatest permissible gap', which acts to limit the gap between the Schedule fee and the
medicare rebate for out-of-hospital medicare services to a certain amount. As part of the
simplification of the medicare safety net arrangements, it is intended that the 'greatest
permissible gap' will cease for services provided from 1 January 2016.
Item [7]: Sections 10AA to 10C
Item [7] repeals current sections 10AA to 10C of the Act, which contain the core provisions
relating to the operation of the OMSN and the EMSN and:
substitutes a new 'Division 3 - Medicare safety net', which provides for the new
medicare safety net arrangements (set out in new Subdivisions A to Q, which are
described in detail below); and
inserts a new Division heading titled 'Division 4 - Medical benefits not to exceed
medical expenses incurred' before section 14 of the Act.
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Subdivision A - Simplified outline of this Division
Subdivision A lays out a simplified outline for Division 3, which sets out the circumstances
where a safety-net amount is payable.
Subdivision B - General rule
Subdivision B sets out new sections 10B and 10BA.
Section 10B
New section 10B provides that the medicare benefit payable in respect of a 'safety-net service'
will be increased by the 'safety-net amount' for the service where Subdivisions C, D and Q of
Division 3 are satisfied.
In general terms:
- Subdivision C contains a rule requiring a claim for medicare benefit for the safety-net
service to have been made and accepted.
- Subdivision D contains rules relating to meeting the safety-net threshold.
- Subdivision Q contains a rule relating to the amount that must be paid to the practitioner
by whom or on whose behalf the safety-net service was rendered.
Section 10BA
New section 10BA outlines what is meant by the term safety-net service. The purpose of this
section is to clarify which medical services may attract payment of a safety-net amount.
New subsection 10BA(1) provides that a professional service (as defined in subsection 3(1) of the
Act) is a safety net service. unless it is not a safety-net services because of section 10BA.
New subsection 10BA(2) provides that a professional service is not a safety-net service if the
service is rendered as part of an episode of hospital treatment or as part of an episode of hospital-
substitute treatment where the person to whom the treatment is rendered receives a benefit from a
private health insurer.
New subsection 10BA(3) allows for regulations to prescribe circumstances in which more than
one professional service is taken to be one safety-net service.
New subsection 10BA(4) allows regulations made under new subsection 10BA(3) to prescribe,
for the purposes of working out the out-of-pocket costs, the safety-net expenses or the safety-net
amount for the safety-net service:
(a) an amount that is taken to be the Schedule fee for the safety-net service, or the way the
amount is to be worked out; and
(b) the expenses that are taken to be medical expenses incurred for the safety-net service,
or the way in which those expenses are to be worked out.
By way of example, in circumstances where multiple operations or multiple pathology services
are deemed to be one professional service under current legislative provisions, regulations could
be made pursuant to new subsection 10BA(3) and (4) to enable that professional service to be
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taken to be one safety-net service and to facilitate the calculation of the safety-net expenses or the
safety-net amount for that safety-net service by prescribing, amongst other things, the way in
which the amount that is taken to be the Schedule fee for the service is to be worked out.
New subsection 10BA(5) ensures that if regulations prescribe more than one professional service
to be taken as one safety-net service, none of the original services is a safety-net service in those
circumstances.
Subdivision C - Claim for medicare benefit made and accepted
Subdivision C sets out new section 10C.
Section 10C
New section 10C provides that for a safety-net amount (commonly referred to as a safety net
benefit) for a safety-net service to be payable the claim for medicare benefit for that service must
be made within 7 years of the end of the calendar year in which the service was rendered and that
the claim is accepted for payment by the Chief Executive Medicare (CEM).
It is very administratively complex and burdensome to process old claims and it would be an
unreasonable diversion of resources to process safety-net claims older than 7 years.
Subdivision D- The safety-net threshold
Subdivision D sets out new sections 10D to 10DC.
Section 10D
New section 10D provides that for a safety-net amount to be payable for the current service (that
is a service that attracts a safety-net amount), the sum of safety-net expenses for services
rendered in that calendar year for claims already submitted for payment must equal or exceed
the safety-net threshold for that person.
A person's safety-net expenses (and those of their family members) will be automatically tracked
by the Department of Human Services (DHS) throughout a year. DHS will contact people when
the person (or members of their family) approaches their threshold to let them know that they are
nearing their threshold and may qualify for safety-net benefits for future services. DHS will ask
people to confirm their family composition or to confirm that they do not wish to be part of a
registered family at this time. All people can enquire about the balance of their safety-net
expenses at any time by contacting DHS or through their Medicare Online account.
Section 10DA
New section 10DA outlines what is meant by the term relevant service , being a term that is
referred to frequently throughout this Bill, for the purposes of the safety-net. Relevant services
are those services for which safety-net expenses are pooled for reaching the safety-net threshold.
New subsection 10DA(1) provides that a professional service (as defined in subsection 3(1) of
the Act) is a relevant service for a person for a calendar year if:
(a) the service is a safety-net service; and
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(b) the service was rendered during the calendar year; and
(c) a claim for medicare benefit in respect of the service has been made; and
(d) the Chief Executive Medicare (CEM) has accepted the claim for the service for
payment; and
(e) an amount at least equal to the out-of-pocket expenses for the service has been paid
directly to the person by whom or on whose behalf the service was rendered; and
(f) one of the following is satisfied:
(i) if the person is a concessional person who is not confirmed as a member of a
family, an FTB(A) person who is not confirmed as a member of a family, a
confirmed single or an unconfirmed single at the test time for the person for the
calendar year--the service was rendered to the person;
(ii) if the person is confirmed as a member of a family at the 'test time 'for the
person for the calendar year--the service was rendered to either that person or
another person who was confirmed as a member of the family at that time.
By way of example, a confirmed single person, Tom, (see section Subdivision K) has a service in
November 2016. Tom had an out-of-hospital GP medicare service in May 2016, for which he
paid the doctor the full fee charged and subsequently claimed the medicare benefit in May 2016.
The May service satisfies paragraph 10DA(1)(a) as it was rendered during the calendar year. It
satisfies paragraph 10DA(1)(b) as it is a safety-net service under section 10BA (it was a
professional service under section 3 of the Act and was not performed in hospital). Paragraphs
10DA(1)(c) and (d) are satisfied as the May service has been claimed and accepted. The May
service was paid in full, therefore also satisfying paragraph 10DA(1)(e). As the person is a
confirmed single, subparagraph 10DA(1)(f)(i) applies This means that the May 2016 service is
considered to be a relevant service for Tom and any safety-net expenses related to that service
can be counted towards Tom's safety net threshold.
As all tests in subsection 10DA(1) have been satisfied, the service in May 2016 is a 'relevant
service' for the purpose of the remainder of the Act.
New subsection 10DA(2) outlines that for the purposes of 'relevant service', the 'test time' for
the person to who, 'current service' was rendered, for the calendar year in which it is rendered is :
(a) if the claim for medicare benefit in respect of the current service is made during the
calendar year--the day on which the claim is made; and
(b) if the claim for medicare benefit in respect of the current service is made after the end
of the calendar year--the last day of the calendar year.
New subsection 10DA(3) provides that test time as used in provisions other than section 10DA,
has the meaning given by that other provision.
Section 10DB
New section 10DB provides the formula to work out out-of-pocket expenses for the purpose of
the safety-net. Out-of-pocket expenses are the difference between the total medical expenses
incurred for the service less the medicare benefit payable for the service (including any increase
in the medicare benefit by a safety-net amount). For the purposes of medicare, the medical
expense incurred for the service only includes the fee charged by the practitioner for the
professional component of the service. That is, other costs, such as facility fees, cannot be
included in the fee charged and is not counted for the purpose of the safety-net.
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Section 10DC
New section 10DC provides the safety-net threshold for each person. Each person has their own
safety-net threshold and people within a registered family can have different individual
thresholds. For example, if person in a family has a concession card, but their spouse does not
hold one that person would have a threshold of $400 and their spouse would have a threshold of
$1,000 in 2016. The safety-net expenses for services provided to the person and the safety-net
expenses for services provided to members of their confirmed family are 'pooled' to count to the
person's individual safety-net threshold.
New subsection 10DC(1) states that the safety-net threshold for a person for a calendar year
depends on whether they: have concessional status; received FTB(A) or are in a safety-net
family where a member receives a FTB(A) payment; are a confirmed single person ,or are an
unconfirmed single or are a person confirmed as a member of a family.
New subsection 10DC(2) states that the safety-net threshold that applies to a claim depends on
the year in which the service is rendered. For claims for services rendered and claimed in the
same calendar year, the threshold that is applied is the threshold that applies on the day that the
claim is made. For older claims, which are submitted in a later year than when the service was
rendered, the threshold that applied on 31 December is used for processing that claim. When the
safety-net threshold is used for determining whether a person in a family has reached their
threshold before there is a change in their family composition, the threshold that is applied is the
threshold that applies to the person immediately before they change their family registration.
The effect of new subsection 10DC(3) is that if the safety-net threshold is used for the purposes
of another provisions, the safety-net threshold is applied on the day specified in that provision.
Subdivision E- Registering a family
Section10E
New section 10E provides the process for registering a family for the purpose of the safety-net.
Registering as a family allows DHS to track the safety-net expenses for a family unit and once
the composition of the family is confirmed, the safety-net expenses of family members are used
to help each family member reach their respective safety-net threshold. This may mean that some
family members will reach their safety-net threshold more quickly than otherwise would have
been the case for them.
New subsection 10E(1) provides that a member of a family may apply to the CEM at any time for
registration of the family. New subsection 10E(2) provides that the application must be in the
form approved by the CEM and list the names of all persons to be registered as members of the
family.
New subsection 10E(3) provides that the CEM must register the family if the application has
been made in the accordance with the section, is satisfied that the listed members are members of
the family and the CEM is not prevented from registering the family under other sections 10ED
or 10EE.
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Section 10EA
New section 10EA outlines who are the members of a family for purposes of the safety-net. In
general, the person, the person's spouse and their dependent children can be members of a
registered safety-net family.
New subsections 10EA(2) to 10EA(9) provide the definitions for spouse and dependent child.
Two important changes are being made to who can be considered members in a registered family
for the new safety-net. The definition of spouse is being broadened to include people who are not
living together due to a temporary absence from each other, or due to illness or infirmity. This
means that where one spouse is living in a nursing home or care facility, they will be able to be
recognised as a safety-net family with their spouse.
The definition of dependent child is also being broadened to include children aged 16 to 25 who
are temporarily not in full-time study due to illness or infirmity and who are substantially
dependent on their parents. New subsection 10EA(8) allows regulations to specify additional
classes of dependent child, providing flexibility to respond to future changes.
Section 10EB
New section 10EB provides the process for varying a family registration.
New subsections 10EB(1) and 10EB(2) provide for a family registration to be varied by the
addition of a new family member or the removal of a family member respectively. The
application must be made by the person, to be added or removed or a person acting of the
person's behalf.
New subsections 10EB(3) and (4) provide the circumstances in which the application will be
accepted. The application for variation will be accepted if made in a form approved by the CEM
and section 10EE or section 10ED does not apply.
Section 10EC
New section 10EC provides for the registration or variation of a family for the purpose of adding
a newborn child without an application.
New subsections 10EC(1) and 10EC(2) allow the CEM to register or vary a registration of a
family respectively to add a newborn as a member of the family. Under new subsection 10EC(3)
the CEM must take such steps as are reasonable in all circumstances to ascertain the membership
of the family. For example, when a newborn is registered for medicare, the newborn could be
added to the safety-net family of their parents.
Section 10ED
New section 10ED outlines there may be no more than two spouses in a family for the purposes
the medicare safety net.
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Section 10EE
New section 10EE provides that the only person that can be a member of more than one family is
a dependent child. This is in recognition that there are many families with shared care
arrangements for children.
Subdivision F - Confirming the membership of a family
Section 10F
New section 10F provides that a person registered in a family can confirm that family's
composition in a manner approved by the CEM.
Section 10FA
New section 10FA provides that the CEM must request a registered-safety net family with family
members who are likely to be eligible for safety-net benefits to confirm their family composition
and outlines the conditions that apply to the confirmation request and response.
New subsection 10FA(1) provides that section 10CPA applies if the CEM reasonably believes a
person in the family may in the near future be eligible for a safety-net amount if the person were
confirmed as a member of the family.
New subsection 10FA(2) provides that the CEM must request a person who is registered as a
member of the family to confirm the composition of the family.
New subsection 10FA(3) provides that the request for confirmation must be made in the manner
and form approved by the CEM. There will be a range of ways that DHS will contact families to
seek confirmation of family status, including but not limited to, online when a person logs into
their Medicare Online Service Account, via letter to their registered MyGov account where the
person has elected to receive correspondence from DHS in this manner, or via hard copy letter
mailed out to their registered mailing address.
New subsection 10FA(4) provides that each person who is registered as a member of the family
on the day on which notice is given under section 10F, is confirmed as a member of the family
for the period beginning on the day specified under subsection 10FA(5) and ending on the day
specified under subsection 10FA(6).
New subsection 10FA(5) provides that the period begins either:
(a) if composition of the family is confirmed on or after the first day of the calendar year to
which the request relates but before the end of 60 days after the day on which the request is
made--on the first day during the calendar year to which the request relates on which the
person was registered as a member of the family; or
(b) if paragraph (a) is not satisfied--on the first day during the calendar year to which the request
relates on which the inclusion of a person in the composition of the family is confirmed.
This means if a member of the family confirms the composition of the family at any time before
the request is made, or within 60 days of the request being made, then those members are
considered confirmed members from the first day of that calendar year to which the request
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relates. If the person responds after the 60 day period, then the period of confirmation starts on
that date.
New subsection 10FA(6) provides that the confirmation period ends on either the day the family
registration is varied or the end of the calendar, whichever is earliest.
The purpose of this section is to ensure that a family confirms its composition before safety-net
benefits are paid in the circumstances where a person reaches the safety-net threshold using
relevant services provided to their family members. This ensures the accurate payment of
safety-net benefits.
Subdivision G - Consequences of changing the registration of a family after the safety-net
threshold is reached
Section 10G
New section 10G outlines what happens in the circumstances where a family member or
members have reached their safety-net threshold and the family varies their composition.
New subsections 10G(1), 10G(2) and 10G(3) provide that if the registration of a family is varied
(section 10EB) during a calendar year and immediately before the registration was varied, a
person in the family had equalled or exceeded their safety-net threshold, then despite the changes
to the family, the person continues to be considered to have equalled or exceeded their threshold
for the rest of that calendar year. This means that once a person receives safety-net benefits in a
year, then despite changes in their family circumstances, they will continue to receive safety-net
benefits for relevant services for the remainder of the calendar year.
Section 10GA
New section 10GA outlines that where a former spouse has previously equalled or exceeded their
safety-net threshold, there are restrictions on who that person can form a safety-net family with
for the remainder of the calendar year.
New subsection 10GA(1) states that this section applies if a family registration is varied to
remove a person as a member of the family as they are no longer a spouse of another person in
the family and immediately before the registration was varied, a spouse had equalled or exceeded
their threshold.
New subsection 10GA(2) provides that if either former spouse has previously equalled or exceed
their threshold, then for the remainder of the year (defined under section 10GA(3), the only
people that form a new safety-net family is the former spouse or any dependent child.
New subsection 10GA(3) defines the remainder of the safety-net year as beginning on the day on
which the family registration is varied and ending on the end of the calendar year in which the
registration was varied.
The purpose of this section is to prevent a spouse in one family from reaching their safety-net
threshold (an enabling those former family members to reach their safety-net threshold) and then
joining a new family and use their safety-net expenses to also assist a new spouse to reach their
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threshold (with costs incurred by the previous family). These restrictions preserve the financial
integrity of the safety-net.
For example Ewan and Lesley are spouses and are registered members of a family, Family A, at
the start of the calendar year. Midway through the year, Ewan and Lesley cease to be spouses
and the registration of Family A is varied.
Immediately prior to the variation, Ewan had reached the safety-net threshold applicable to
concessional persons under section 10DC. Ewan therefore satisfies paragraph 10GA(1)(d). This
means that section 10GA applies and as a result of subsection 10GA(2), Ewan may only register
dependent children as part his new family for the 'remainder of the safety-net year' - that is, for
the period beginning on the day that the registration of Family A is varied and ending at the end
of the calendar year. Ewan can register a new spouse at the start of the next calendar year.
Section 10GB
New section 10GB outlines that where a dependent child has previously equalled or exceeded
their safety-net threshold and then leaves that family; there are restrictions on who that person
can form a safety-net family with for the remainder of the calendar year.
New subsection 10GB(1) states that this section applies if a family registration is varied to
remove a person as a member of the family, the former member was registered as a member of
the family because they were a dependent child of another member of the family; ; immediately
before variation the former member was confirmed as a member of the family; and immediately
before the registration was varied the child had equalled or exceeded their threshold.
New subsection 10GB(2) provides that for the remainder of the year (defined under section
10GB(3), the child can only be a dependent child of another family or can only form a safety-net
family with any dependent children of their own. The effect of this is that the child may not
register a spouse in their family for the remainder of the calendar year.
New subsection 10GB(3) defines the remainder of the safety-net year as the day on which the
family registration is varied and ending on the end of the calendar year in which the registration
was varied.
The purpose of the section is to prevent a dependent child from leaving a family, then becoming a
spouse of another person and allowing that new spouse to use those safety-net expenses incurred
by the former family to reach their safety-net threshold.
Subdivision H - Where children are registered in more than one family
Subdivision H outlines the operation of the medicare safety net in regards to dependent children
in more than one family during the calendar year.
Section 10H
New section 10H applies the operation of Subdivision H to circumstances where the child is
either in more than one family at the same time or a member of one family during the year and
then leaves that family to become a dependent child of another family.
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Section 10HA
New section 10HA provides for working out whether the safety-net threshold has been reached
for a child. There a two ways that a dependent child in more than one family can reach their
threshold - either only counting safety-net expenses for all relevant services rendered to them
(the child), regardless of who incurred the cost, or only taking into account the relevant services
where the cost was incurred by that family (and the safety-net expenses for relevant services for
members for those family members).
Section 10HB
New section 10HB provides for when a family member can count a service as a relevant service
for the purposes of reaching the safety-net threshold provided to a dependent child. Under section
10HB, if someone other than a family member incurred the cost for a safety-net service provided
to the dependent child, then no member of that family can count that service as a relevant service
for reaching their safety-net threshold.
Section 10HC
New section 10HC provides for the situation where one family with dependent children, becomes
two families during the calendar year. This subsection ensures that the safety-net expenses
incurred whilst those members were still a safety-net family are relevant for both new families
for the remainder of the calendar year.
Under section 10HC if:
(a) a safety-net service (the earlier service) is rendered to the child during the calendar year in
which the current service is rendered; and
(b) a medicare benefit has been claimed and accepted before a claim for the current service is
made;
(c) the child was a registered member of the family (the former family) at the time the claim for
medicare benefit in respect of the earlier service was made;
(d)medical expenses were incurred for the earlier service by a person in the former family at the
time the other service was rendered and
(e) during the calendar year in which the current service is rendered, the former family has ceased
to be registered, or the registration of the former family has been varied, because persons who
were registered as members of the former family at the time the other service was rendered are
no longer spouses; and
(d) either the former family is responsible for the current service or the person who was the
spouse of a member of the former family at the time of the earlier service was rendered is a
member of the family responsible for the current service;
then, for the purpose of safety-net, the earlier services provided to dependent child/ren are
relevant services for each member of the family responsible for the current service for the
calendar year in which the current service is rendered.
The purpose of this section is to allow dependent children who are part of more than one family
to have their safety-net expenses for relevant services to be counted to the threshold of family
who incurred the cost for the service and to allow to child to reach their safety-net threshold
counting only relevant services. Rules around accumulation of children's expenses prevent one
family that did not have the burden of paying the out-of-pocket cost from using services paid for
21
by another family to benefit from the safety net. Allowing the child to qualify in their own right
will direct safety net benefits to sick children and assist families at a difficult time.
Section 10HD
New subsection 10HD(1) provides that, for the purposes of Division H, a family incurs the
medical expenses as the family responsible for the current service if the person who incurs the
expense for the current service is confirmed as a member of the family at the test time.
Under subsection 10HD(2) the test time for a person to whom the service is rendered or who
incurs medical expenses for the current service, for the calendar year in which it is rendered, is
the day on which the claim is made, if it is made in the same calendar it was rendered, or the last
day of the calendar year in which the service was rendered, if the claim is made in a later year.
Subdivision J - Other consequences of varying the registration of a family
Section 10J
New section 10J provides that where a family registration is varied to add a new family member,
no increase in the benefit is payable for claims that have already been paid because of the new
family composition.
Subdivision K - Confirmed singles
Section 10K
The purposes of new section 10K is that a person who is an 'unconfirmed single' under section
10L may confirm they are a single person in a manner and form approved by the CEM.
Section 10KA
New section 10KA provides that the CEM must request a person who is likely to be eligible for
safety net benefits to confirm that they wish to register as a confirmed single and outlines the
conditions that apply to the confirmation request and response.
New subsection 10KA(1) provides the section applies if the CEM reasonably believes that the
medicare benefit payable in respect of a safety-net service rendered, or that may in the near future
be rendered, to a person would be increased by a safety-net amount if the person were a
confirmed single. A confirmed single has a lower threshold than members of a registered
safety-net family or an unconfirmed single.
New subsection 10KA(2) provides that the CEM must request the person to give the CEM notice
under section 10K if the person wishes to be treated as a confirmed single.
New subsection 10KA(3) provides that the request must be made in the manner and form
approved by the CEM.
New subsection 10KA(4) provides that if the person gives the CEM notice under section 10K
that the person wishes to be treated as a confirmed single, the person is a confirmed single for the
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period beginning at the time specified under subsection (5) and ending at the time specified under
subsection (6).
New subsection 10KA(5) provides that the period begins either:
(a) if the person has given notice under section 10K that they wish to be treated as a confirmed
single, on or after the first day of the calendar year to which the request relates but before the
end of 60 days after the day on which the request is made--on the first day during the
calendar year to which the request relates; or
(b) if paragraph (a) is not satisfied--on the first day during the calendar year to which the request
relates on which the person confirms they wish to be treated as a confirmed single.
New subsection 10KA(6) provides that period ends on the earliest of the day on which the person
is registered as a member of a family or the day immediately after the calendar year ends.
The purpose of this section is to ensure that people who are genuinely single, rather than those
people who have not registered their family for the safety-net are eligible for the lower single
threshold.
Section 10KB
New section 10KB provides that there are restrictions about who a confirmed single may include
as part of any family during a calendar year.
New subsection 10KB(1) provides this section applies if there is an application for the confirmed
single person to join a registered safety-net family and the confirmed single had previously
equalled or exceeded their safety-net threshold.
New subsection 10KB(2) provides that for the remainder of the safety-net year, the only people
who can form a safety-net family is the person and a dependent child of the person.
New subsection 10KB(3) provides that the remainder of the safety-net year is the day on which
the decision on the application is made to register a family to the end of that calendar year.
The purpose of this section is to prevent a family seeking to take advantage of the safety-net
arrangements by confirming one member as a confirmed single, then subsequently adding a
spouse to the family who would benefit from the confirmed single's out-of-pocket expenses.
Subdivision L - Unconfirmed singles
Section 10L
New section 10L states that a person is an unconfirmed single at a particular time if the person is
not one of the following at that time:
(a) a concessional person;
(b) an FTB(A) person;
(c) a person confirmed as a member of a family; or
(d) a confirmed single.
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By way of example, a person who is registered as a member of a family but has not confirmed
their family registration is considered an unconfirmed single. Under section 10DC (safety-net
thresholds) that person will have a threshold of $1,000 in 2016 and under paragraph 10DA(f)(i)
will only be able to cross the threshold using the out-of-pocket expenses from services they
received. Once the family confirms it's composition that person will become a 'person
confirmed as a member of a family' and under paragraph 10DA(f)(ii) will be able to consider all
services received by members of the family in order to cross the safety-net threshold.
The purpose of this section is to ensure that every person has a safety-net threshold.
Subdivision M - FTB person and members of FTB(A) families
Section 10M
New section 10M outlines the definition of FTB(A) person.
New subsection 10M(1) provides that a person is an FTB(A) person at all times during a
calendar year after the person has received an instalment payment of Family Tax Benefit, which
has a Part A (FTB(A)) rate greater than nil, or the person receives a lump-sum FTB(A) payment
for a past financial year ("last income year") or if a determination made under new subsection
10M(2) is in force.
New subsection 10M(2) provides that the Minister may determine for the purposes of subsection
10M(1)(c) that a person is an FTB(A) person for the safety-net.
Under new subsection 10M(3) the determination must specify the time, or how to work out the
time, after which the person is an FTB(A) person.
DHS is automatically notified that a person has received an FTB(A) payment. The definitions of
FTB(A) person are drawn from the existing definitions of FTB(A) family set out for the current
arrangements. The concept of FTB(A) person has been introduced to enable people that are
FTB(A) recipients but choose not be registered as a safety-net family, to be eligible for the
FTB(A) threshold.
Section 10MA
New section 10MA provides the definition of a FTB(A) family for the purposes of the safety-net.
A group of people is a FTB(A) family at the time an FTB(A) person is confirmed as a member of
the safety-net family.
Subdivision N - Concessional persons
Section 10N
New section 10N provides the definition of a concessional person. If a person holds a concession
card at any time in the calendar year, the person is considered a concessional person for the
whole calendar year. DHS is automatically notified when a person holds a concession card. The
definition of concessional person is unchanged from the existing safety net arrangements.
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Subdivision P - Safety-net expenses
Section 10P
New section 10P provides the method for calculating a person's 'safety-net expenses'.
New subsection 10P(1) states that the amount of the 'safety net expenses' for a safety net service
is:
(a) the out-of-pocket expenses for the service; or
(b) if the out-of-pocket expenses for the service exceed the 'maximum amount to be
included in safety net expenses for the service'--the 'maximum amount to be included in
safety net expenses for the service'.
New subsection 10P(2) provides that the maximum amount to be included in safety net expenses
for a safety net service is worked out by multiplying the threshold percentage by the fee for the
service (schedule fee) and then deducting the basic medicare benefit from this amount. The
basic medicare benefit means the medicare benefit in respect of the service, ignoring any increase
in the medicare benefit by a safety-net amount.
New subsection 10P(3) provides definitions for the purposes of calculating the maximum amount
to be included in safety-net expenses. Subsection 10P(3) provides the following definitions:
(a) basic medicare benefit for the service - means the medicare benefit that would be
payable for a safety-net service, ignoring any increase in the medicare benefit by a
safety-net amount. For a safety-net service prescribed under subsection 10BA(3), the
basic medicare benefit payable is equal to the sum of the basic medicare benefit
payable for each of the professional services that are taken to be the one safety-net
service; and
(b) fee for the service - means the Schedule fee for the service or any other higher
amount, or way of working out such a higher amount, that is made under regulations
for a safety-net service prescribed under subsection 10BA(3) (where more than one
professional service is taken to be a single safety -net service).
Threshold percentage for a safety net service - is 150%.
New subsection 10P(4) provides that if an amount worked out under subsection (2) is not a
multiple of 1 cent, that amount is to be rounded up to the nearest cent.
For example, a service has a threshold percentage of 150% and a schedule fee of $100 and a
basic medicare benefit of $85.
The maximum amount to be included in safety-net expenses for the service is (150% x $100) -
$85 which is $65. In this case, the safety-net expenses counted to the safety-net threshold could
not exceed $65.
A full example of how safety-net expenses are calculated is set out below. A person is charged
$200 for a service. The schedule fee for the service is $100 and basic medicare benefit is $85.
This means that the out-of-pocket expenses for the service is $200 - $85 = $115.
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As the out-of-pocket cost is more than the maximum amount to be included as safety-net
expenses, the maximum amount ($65) is counted as safety-net expenses.
The default threshold percentage that will apply to all services is 150%.
New subsection 10P(5) provides that for the purposes of working out safety-net expenses for the
purposes of paragraph 10D(a) and subsection 10R(3), assume that no safety-net amount is
payable in respect of that current service.
Subdivision Q - Amount paid to the practitioner
Section 10Q
New section 10Q provides that a safety net amount is payable for a safety-net service when the
amount between the medical expenses incurred for the service (the fee charged) and the medicare
benefit payable for the service has been paid to the person who rendered the service. The
medicare benefit includes the safety net amount.
For example, a patient is charged $200 for a safety-net service. For this service, the schedule fee
is $100 and the basic medicare benefit is $85. The patient is eligible for a maximum safety-net
amount of $65, which is calculated by (150% x $100) - $85. This gives the patient a total
medicare benefit of $150 ($85+$65). Before the patient can receive the $65 safety-net amount,
the patient is required to pay the practitioner at least $50 ($200-$150) of the practitioner's bill.
This ensures that safety net benefits are paid accurately when out-of-pocket costs occur.
Subdivision R - Safety-net amount
Section 10R
New section 10R sets out the method statement for calculating the safety-net amount.
The effect of new subsection 10R(1) is that the safety-net amount for a safety-net service is the
lesser of:
(a) The adjusted expenses (as calculated under subsection (2) and (3)) or
(b) The maximum safety-net amount (calculated under subsection (4).
Adjusted expenses
New subsection 10R(2) states that if the sum of safety-net expenses for relevant services for the
person equals or exceeds the safety-net threshold for that person for that calendar year, then the
adjusted expenses are equal to 80% of the out-of-pocket expenses for the current service. The
out-of-pocket expenses for the current service are equal to the medical expense incurred less the
basic medicare benefit for the current service. The result should always be rounded up to the
nearest 5 cents.
For example, a person has already reached their safety-net threshold. They have $20 in
out-of-pocket cost for the current service. Their adjusted expenses would be 80% of $20, which
is $16. In this case, $16 would be the adjusted expenses amount, which would be paid as the
safety-net amount if it was less than the maximum safety-net amount for the service.
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New subsection 10R(3) states that if a person had not equalled or exceeded their safety net
threshold before the current service, but would reach their threshold if the safety-net expense for
the current service were included, then the adjusted expenses are calculated as 80% of
out-of-pocket expenses, where the out-of-pocket expenses for the current service have been
reduced by the balance of the safety-net threshold. The result should always be rounded up to the
nearest 5 cents.
For example, a person requires $10 in order to equal their safety-net threshold and they have $25
in out-of-pocket costs for the current service. Their adjusted expenses would be 80% of $15 (as
$10 was required to reach the threshold). In this case, $12 would be the adjusted expense which
would be paid as the safety-net amount if it was less than the maximum safety-net amount for the
service.
Maximum safety-net amount
New subsection 10R(4) provides the method for calculating the maximum safety-net amount.
The safety-net amount paid can never exceed the maximum safety-net amount.
The maximum safety-net amount is worked out by first multiplying the safety-net cap percentage
for the service by the fee for the current service (schedule fee). The basic medicare benefit is then
subtracted from this amount.
For example, a service has a safety-net cap percentage of 150% and a schedule fee of $100 and a
basic medicare benefit of $85.
The maximum safety-net amount is (150% x $100) - $85 which is $65. In this case, the safety-net
amount paid could not exceed $65.
A full example of how safety-net amounts are calculated is set out below. A person is charged
$200 for their current service. They have previously reached their safety-net threshold. The
schedule fee for the service is $100 and basic medicare benefit is $85. This means that the
out-of-pocket cost for the current service is $200 - $85 = $115. The safety-net cap percentage is
150%.
The adjusted expenses are 80% x $115 = $92
The maximum safety-net amount for the service is (150% x $100) - $85 = $65.
As the adjusted expenses are greater than the maximum safety-net amount, the maximum safety-
net amount of $65 is paid as the safety-net amount.
New subsection 10R(5) specifies that for the purposes of the definition of relevant service in
section 10R, the test time for the person to whom the current service is rendered, for the calendar
year in which it is rendered is the day on which the claim is made, if the claim for medicare
benefit in respect of the current service is made during that calendar year. If the claim for
medicare benefit in respect of the current service is made after the end of that calendar year, the
test time is the last day of the calendar year.
New subsection 10R(6) provides definitions for the purposes of calculating the maximum
safety-net amount. Subsection 10R(6) provides the following definitions:
27
(a) basic medicare benefit for the current service - means the medicare benefit that would
be payable in respect of the current service ignoring any increase in the medicare benefit
by a safety-net amount. For a safety-net service prescribed under subsection 10BA(3), the
basic medicare benefit payable is equal to the sum of the basic medicare benefit payable
for each of the professional services that are taken to be the one safety-net service;
(b) fee for the current service - means the Schedule fee for the service or any other higher
amount, or way of working out such a higher amount, that is made under regulations for a
safety-net service prescribed under subsection 10BA(3) (where more than one
professional service is taken to be a single safety -net service).
Safety-net cap percentage for a safety net service - is 150%. This means that the default
maximum safety-net cap percentage that will apply to all services is 150%.
Subdivision S - Other matters
Section 10S
New subsection 10S sets out the method for annual indexation of the safety net thresholds. This
method is a continuation of the method used for indexing the thresholds of the original and
extended safety nets.
New subsection 10S(1) provides the definitions of indexation number and year for the purposes
of section 10S.
(I)ndex number refers to the All Groups Consumer Price Index number that is the weighted
average of the 8 capital cities, which is published by the Australian Statistician in respect of a
quarter.
For the purposes of section 10S, year, refers to the calendar year beginning 1 January 2016 or a
later year beginning on 1 January.
New subsection 10S(2) provides that the amount of the safety-net threshold is to be indexed
under section 10S on 1 January each year (indexation day) using the September reference
quarter. The September reference quarter is used to ensure that there is sufficient time for the new
threshold amounts to be calculated and communicated to the public before the commencement of
the next safety-net year on 1 January.
New subsection 10S(3) states where an amount is to be indexed on the indexation day, this Act
has effect as if the indexed amount were substituted for that amount on that day.
New subsection 10S(4) provides for working out the indexed amount. Under paragraph (a) the
amount is worked out by multiplying the amount to be indexed (in this case the safety-net
threshold) by the indexation factor. Under paragraph (b) if the amount worked out under
paragraph (a) is not a multiple of 10 cents, the amount is rounded down to the nearest multiple of
10 cents.
New subsection (5) provides the method for working out the indexation factor. This subsection
specifies that subject to subsection (6), (7) and (8), the indexation factor is worked out by
dividing the most recent indexation number by the previous index number.
28
The most recent index number is the index number for the last reference quarter before the
indexation day (1 January) that is the reference quarter for the indexation of the amount. For
indexing the safety-net threshold, the September reference quarter is used.
The previous index number means the index number for the reference quarter in the CPI
Indexation table
New subsection 10S(6) provides that the indexation factor is to be worked out to 3 decimal
places.
New subsection 10S(7) states that if the indexation factor worked out under subsections (5) and
(6) would, if rounded to four decimal places, end in a number greater than 4, then the indexation
factor is increased by 0.001.
New subsection 10S(8) states that if the indexation number worked out under subsections (5), (6)
and (7) would be less than 1, the indexation factor is to be increased to 1.
New subsection 10S(9) states that, subject to subsection (10) if the Australian Statistician
publishes a substitution for a previously published indexed number for that quarter, the
publication of the later number is to be disregarded for the purposes of this section.
New subsection 10S(10) provides that if the Australian Statistician changes the index reference
period for the Consumer Price Index, then for the purposes of applying 10S after the change takes
place, regard is to be had only the index numbers published in terms of the new index reference
period.
Division 4 - Medicare benefits not to exceed medical expenses incurred
New section 11 inserts a simplified outline for Division 4.
Item [8]: After section 14
Item [8] inserts a new heading: Division 5 - Circumstances in which medicare benefit not
payable or require different calculation
Item [8] inserts a new section 14A to provide a simplified outline for Division 5.
Item [9] inserts in paragraph 19CA(4)(b) "medicare" before "benefit" . This amendment makes
it clear that the Minister, upon reviewing a decision, may make a decision that a medicare benefit
is payable for a service.
Item [10]: After section 19DB
Item [10] inserts a new heading: Division 6 - Who is entitled to medicare benefit and claims
process.
Item [10] inserts a new section 19DC to provide a simplified outline for Division 6.
29
Item [11]: Before subsection 20(1)
Item [11] inserts a sub-heading "Medicare benefit payable to person who incurs medical
expenses" before subsection 20(1) to make it clear that this subsection outlines that medicare
benefit is payable to the person who incurs medical expenses.
Item [12]: Before subsection 20(1A)
Item [12] inserts the sub-heading "Manner in which medicare benefit paid" before subsection
20(1A) to make it clear that this subsection deals with the method in which medicare benefit is
paid.
Item [13]: Subsection 20(1A)
Item [13] removes (2A) and replaces it with (2A) to (2C) in subsection 20(1A). This amendment
is required due to consequential amendments to the Act made to remove references to the
repealed subsections relating to the original and extended safety-nets.
Item [14]: Before subsection 20(1B)
Item [14] inserts a new subheading before subsection 20(1B) 'Paying medicare benefit
electronically' to make it clear that this subsection deals with paying the medicare benefit
electronically.
Item [15]: Before subsection 20(2)
Item [15] inserts a new subheading 'Issuing a cheque to the medicare benefit recipient payable to
the practitioner' before subsection 20(2) to make it clear that this subsection deals with the
issuing of cheques to medicare recipients,
which are payable to the practitioner.
Item [16]:Subsection 20(2A)
Item [16] repeals the subsection 20(2A) and substitutes with new subsection 20(2A) to 20(2C).
This amendment was required due to the repeal of the original and extended safety-nets.
New subsection 20(2A) provides that subsections (2B) and (2C) apply if the medicare benefit
payable for the service is increased by a safety-net amount and the person has not paid the whole
of the medical expenses that the person incurred in respect of the service.
New subsection 20(2B) provides that if the medicare benefit is less than, or equal to the unpaid
amount, then the person will not be paid the medicare benefits and if the person requested there
will be a cheque given personally or sent to the person by post at the person's last known
address, for the amount of the medicare benefit made payable to the person by whom, or one
whose behalf, the safety-net service was rendered.
New subsection 20(2C) provides that if the medicare benefit is more than unpaid amount then the
person will not be paid so much of the medicare benefit as is equal to the unpaid amount and if
the person requested there will be a cheque given personally or sent to the person by post at the
30
person's last known address, for the amount of the medicare benefit made payable to the person
by whom, or one whose behalf, the safety-net service was rendered.
Subsections 20(2A) to 20(2C) provide for pay doctor via claimant cheques to include safety-net
amounts. A pay doctor via claimant cheque is a cheque made payable to the doctor for the
amount of the medicare benefit.
Item [17]: Before subsection 20(3)
Item [17] insert a new heading "Direct payment to practitioner where cheque not presented" to
make clear that the subsection deals with circumstances where direct payment is made to the
practitioner where the pay doctor via claimant cheque is not presented.
Item [18]: Paragraph 20(3)(a)
Item [18] amends section 20(3)(a) to remove reference to subsection "(2A)" and to substitute
subsections "(2B) or (2C)".
Item [19]: Subsection 20(3)
Item [19] amends subsection 20(3) to omit "an amount equal to the amount of the medicare
benefit" and substitute "an amount equal to the amount of the cheque". This is a clarifying
amendment to make clear that the amount that will be paid directly to the practitioner when the
pay doctor via claimant cheque is not present will be the amount of the cheque (as at times the
amount of the cheque is less than the medicare benefit payable as the patient has already paid that
portion to the practitioner).
Item [20]: Subsection 20(4)
Item [20] removes cross references to "or (2A)" wherever occurring in subsection 20(4) and to
substitute subsections "(2B) or (2C)". .
Item [21]: After section 20B
Item [21] inserts a new heading: Division 7 - "Other matters affecting medicare benefit" and a
new simplified outline in section 20BAA for Division 7.
Item [22]: Subsection 21A(3)
Item [22] amends section 21A(3) to insert the word "professional" before "service" where it
appears it that subsection. This is a clarifying amendment stating that medicare benefits are only
payable for professional services, within the meaning of subsection 3(1).
Item [23]: Subsection 22(3)
Item [23] amends section 22(3) to insert the word "professional" before "service" where it
appears it that subsection. This is a clarifying amendment stating that medicare benefits are only
payable for professional services, within the meaning of subsection 3(1).
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Item [24]: Paragraph 23A(2)(a)
Item [24] amends paragraph 23A(2)(a) to insert the word "professional" before "service". This is
a clarifying amendment stating that medicare benefits are only payable for professional services,
within the meaning of subsection 3(1).
Item [25]: Paragraph 23A(2)(e)
Item [25] amends paragraph 23A(2)(e) to replace the words "the benefits payable" with the
words "the medicare benefits payable".
Part 2 - Application of amendments
Health Insurance Act 1973
Item [26] Application of Part 1
Item [26] provides for the application of Part 1 of Schedule 1 of the Bill. Part 1 of Schedule 1
applies to professional services rendered on or after 1 January 2016. This means that all services
that are rendered before this date would be processed under the Act prior to 1 January 2016 that
is, under the original and extended safety-net arrangements.
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