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2009-2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
PRIVATE HEALTH INSURANCE LEGISLATION AMENDMENT BILL (NO. 2) 2009
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health and Ageing,
the Hon. Nicola Roxon, MP)
PRIVATE HEALTH INSURANCE LEGISLATION AMENDMENT BILL (NO. 2) 2009
OUTLINE
The Bill provides for amendments to the Private Health Insurance Act 2007
(the Act) to allow for conditional listing of prostheses in the Private
Health Insurance (Prostheses) Rules (the Prostheses Rules), and allow the
Minister for Health and Ageing to make Rules specifying criteria for
listing prostheses in the Prostheses Rules.
Commonwealth Prostheses List
The Commonwealth Prostheses List (the List), contained in the schedule to
the Private Health Insurance (Prostheses) Rules (the Prostheses Rules),
sets out the private health insurance benefits payable for prostheses
listed in the schedule.
Under subsection 72-1(2) of the Act there must be a benefit for hospital
treatment covered under the policy (or for hospital-substitute treatment
where it is covered) that is the provision of a prosthesis of a kind listed
in the Prostheses Rules (i.e. a listed prosthesis) in circumstances:
. in which a Medicare benefit is payable; or
. set out in the Prostheses Rules.
The Prostheses Rules must only list a kind of prosthesis if an application
is made under subsection 72-10(2) of the Act in relation to that kind of
prosthesis and the Minister has granted the application. In considering
whether or not to grant an application, the Minister's current practice is
to assess the application against what are known as 'mandatory criteria'
and 'non-mandatory' criteria. The mandatory criteria reflect the
requirements of item 4 of the table in subsection 72-1(2) of the Act, and
the additional requirement that the kind of prosthesis to which the
application relates must be included on the Australian Register of
Therapeutic Goods. The non-mandatory criteria reflect policy requirements
and are set out in administrative guidelines.
Conditional Listing
Where a listed prosthesis is provided in circumstances in which a Medicare
benefit is payable there is currently some ambiguity in item 4 of the table
in subsection 72-1(2) of the Act as to whether the Prostheses Rules can set
out additional circumstances or conditions that must be satisfied before a
private health insurance benefit is payable for hospital treatment or
hospital-substitute treatment that is the provision of that kind of
prosthesis.
A situation has recently arisen in which a Medicare benefit is payable in
relation to the professional service associated with the provision of a
kind of prosthesis. It has been decided that, in addition to requiring
that the kind of prosthesis be provided in circumstances in which a
Medicare benefit is payable, further limiting conditions should be imposed
on when a private health insurer must provide a benefit for hospital
treatment or hospital-substitute treatment that is the provision of a
prosthesis of that kind.
The Bill will amend item 4 of the table in subsection 72-1(2) of the Act to
allow for the Prostheses Rules to specify conditions that must be satisfied
in relation to the provision of a listed prosthesis in addition to the
circumstances currently set out in item 4.
It is likely that with further developments in medical technology there
will be a greater need for listing kinds of prostheses on a conditional
basis.
New Criteria for Listing Prostheses on the List
A number of kinds of prostheses on the List have recently been identified
as not meeting the non-mandatory criteria for listing. Although these
prostheses do not meet all of the current criteria for listing, some are
clinically effective, cost effective, provide significant health benefits
to patients and often prevent the need for expensive downstream medical
costs, so there are good reasons to keep such prostheses listed.
In the future, these kinds of prostheses and other kinds of prostheses may
be included in a new Part of the List, provided that they meet newly
established criteria (including mandatory criteria) for listing kinds of
prostheses in this new Part. The Bill will enable the new mandatory
criteria relevant to listing prostheses in the new Part to be set out in
the Prostheses Rules. The new mandatory criteria will not negate any of
the current mandatory criteria for listing.
The Bill will allow the Prostheses Rules to specify criteria that must be
satisfied in order for an application under subsection 72-10(2) of the Act
to be granted. The Bill will allow for the Prostheses Rules to provide for
different listing criteria to apply in different circumstances.
The Bill will provide that the Minister must not grant an application under
subsection 72-10(2) of the Act if any applicable listing criteria are not
satisfied in relation to the application. However, the Minister may refuse
to grant an application under subsection 72-10(2) even where the applicable
listing criteria specified in the Prostheses Rules are satisfied. This is
consistent with the discretion currently afforded to the Minister with
respect to granting applications under subsection 72-10(2) of the Act.
Financial Impact Statement
There are no financial impacts for the Government as a result of this Bill.
PRIVATE HEALTH INSURANCE LEGISLATION AMENDMENT BILL (NO. 2) 2009
NOTES ON CLAUSES
Clause 1 - Short Title
This clause provides that the Bill, once enacted, may be cited as the
Private Health Insurance Legislation Amendment Act (No. 2) 2009
Clause 2 - Commencement
This clause provides that the Bill will commence on Royal Assent.
Clause 3 - Schedule(s)
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.
The Bill amends the Private Health Insurance Act 2007 (the Act).
SCHEDULE 1-AMENDMENTS
Private Health Insurance Act 2007
Item 1 - Subsection 72-1(2)
Item 1 of the Bill amends the benefit requirement contained in item 4 of
the table at subsection 72-1(2) of the Act.
Item 4 of the table in subsection 72-1(2) of Part 3-3 of the Act currently
provides for the benefit requirements that a complying health insurance
policy that covers hospital treatment must meet. There must be a benefit
for hospital treatment covered under the policy (and, if the policy covers
hospital-substitute treatment, for hospital-substitute treatment covered
under the policy) that is the provision of a prosthesis of a kind listed in
the Prostheses Rules (i.e. a listed prosthesis) in circumstances:
. in which a Medicare benefit is payable; or
. set out in the Prostheses Rules.
New item 4 of the table provides that the benefit requirement that a
complying health insurance policy that covers hospital treatment must meet
is that there must be a benefit for hospital treatment covered under the
policy, and if the policy covers hospital-substitute treatment there must
be a benefit for hospital-substitute treatment covered under the policy,
that is the provision of a prosthesis of a kind listed in the Prostheses
Rules as described in either of the paragraphs below:
. the prosthesis is provided in circumstances in which a Medicare benefit
is payable, and, if the Prostheses Rules set out conditions that must be
satisfied in relation to the provision of the prosthesis in those
circumstances, those conditions are satisfied; or
. the prosthesis is provided in other circumstances (i.e. other than those
in which a Medicare benefit is payable) which are set out in the
Prostheses Rules, and, if those Rules set out conditions that must be
satisfied in relation to the provision of the prosthesis in those
circumstances, those conditions are satisfied.
The purpose of this amendment is to clarify an ambiguity which currently
exists in item 4 of the table as to whether, where a listed prosthesis is
provided in circumstances in which a Medicare benefit is payable, the
Prostheses Rules can set out additional circumstances or conditions which
must be satisfied before a private health insurance benefit is payable for
hospital treatment or hospital-substitute treatment that is the provision
of that kind of prosthesis.
Item 2 - At the end of section 72-10
Item 2 inserts new subsections 72-10(6) and (7).
Under subsection 72-10(1) of the Act, Prostheses Rules made for the
purposes of item 4 of the table in subsection 72-1(2) of the Act must only
list a kind of prosthesis if an application is made under subsection 72-
10(2) of the Act in relation to that kind of prosthesis and the Minister
has granted the application. Under subsection 72-10(2) of the Act, a
person may apply to the Minister to have the Prostheses Rules list a
prosthesis of the kind to which the application relates. Where the
Minister grants the application and the applicant pays the relevant initial
listing fee, the kind of prosthesis to which the application relates is
listed in the Prostheses Rules, appearing in the schedule of the Prostheses
Rules which is known as 'the List'.
New subsection 72-10(6) states that the Prostheses Rules may set out
criteria (listing criteria) to be satisfied in order for an application
made under subsection 72-10(2) of the Act to be granted. The Prostheses
Rules may provide for different criteria to apply in different
circumstances.
New subsection 72-10(7) states that the Minister must not grant an
application which was made under subsection 72-10(2) of the Act if any
applicable listing criteria are not satisfied in relation to that
application.
The Note at the end of subsection 72-10(7) makes clear that the Minister
may refuse to grant an application which was made under subsection 72-10(2)
of the Act even if the applicable listing criteria are satisfied. This is
consistent with the discretion currently afforded to the Minister with
respect to granting applications under subsection 72-10(2) of the Act.
The purpose of the new subsections is to make it clear that the Prostheses
Rules can set out mandatory criteria in relation to the listing of kinds of
prostheses, and that the Prostheses Rules can provide for different
criteria to apply in different circumstances. These new provisions will
provide the Minister with flexibility to set out, in the Prostheses Rules,
mandatory criteria relevant to listing prostheses in, for example,
different Parts of the List.