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1998
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF
REPRESENTATIVES
HEALTH
LEGISLATION AMENDMENT BILL (NO. 4) 1998
EXPLANATORY
MEMORANDUM
(Circulated
by authority of the Minister for Health and Aged Care,
the Hon. Dr Michael
Wooldridge, MP)
ISBN: 0642 378746
This Bill makes a number of amendments to the National Health Act
1953 and the Health Insurance Act 1973. These reforms will improve
the efficiency of the private health insurance industry and make private health
insurance more attractive to consumers by enabling greater product
flexibility.
The main items contained in this Schedule of the Bill
will:
(a) allow registered organizations (“health funds”) to
offer discounted premiums to contributors based on administrative savings;
(b) allow health funds to offer loyalty bonus schemes to contributors in
recognition of the period of time over which contributions have been paid by or
on behalf of the contributor;
(c) allow waiting periods to be modified
for certain conditions, ailments or illnesses;
(d) allow health funds to
cover the patient co-payment for prescribed pharmaceutical benefits for
in-hospital treatment;
(e) allow health funds to pay benefits for
‘out-of-hospital procedures’ which are undertaken in ‘approved
procedures facilities’; and
(f) create a new class of benefit
payable by health funds to cover selected specialist services.
The main items contained in this Schedule of the Bill
will:
(g) make consequential amendments to the Health Insurance Act
1973 to allow ‘simplified billing’ arrangements to apply with
respect to (e) and (f) above;
(h) make minor consequential amendments to
the National Health Act 1953 with respect to (a), (b), (e) and (f)
above.
(i) modify the definitions of ‘accident and sickness
insurance business’ and ‘health insurance business’ to ensure
that only health funds may provide insurance with respect to (e) and (f) above;
(j) modify the scope of services that may be contracted for through
medical purchaser-provider agreements to enable such agreements to cover the
services referred to in (e) and (f) above.
The main items contained in this Schedule of the Bill
will:
(k) broaden the Minister’s power to monitor changes to health
fund rules relating to contribution rates (i.e. premiums) of health funds
so that the Minister can look beyond the impact of those rule changes upon the
individual health fund or its members – the existing grounds - and allow
the Minister to consider the interests of the health insurance industry and the
overall public interest;
(l) transfer the premium monitoring provisions
from the Minister to Private Health Insurance Administration Council within two
years; and
(m) increase, at an appropriate time, the independence and
flexibility that health funds have with respect to premium
increases.
The Health Legislation Amendment Bill (No. 4) 1998 will have no
significant impact upon the finances of the Commonwealth.
HEALTH LEGISLATION AMENDMENT BILL (NO. 4) 1998
The amendments in this Bill aim to:
• improve the
efficiency of the private health insurance industry;
and
• introduce a number of measures to make private health
insurance more attractive to consumers.
These objectives are consistent
with a number of recommendations of the 1997 Industry Commission report on
Private Health Insurance.
The Commission’s recommendations were
intended to enhance community welfare by increasing the efficiency and equity of
the private health care system. At the same time pressure would be taken of the
public system and health fund premiums stabilised.
The Government’s
position on the role of private health insurance is to maintain it as an
essential feature of the mixed public/private health financing framework, with
Medicare’s ability to deliver being dependant on a stable and viable
private health sector.
• to protect themselves financially from ‘hit and run’
members by carefully applying waiting periods (while not exceeding the maximum
periods determined by regulations);
• to utilise ‘simplified
billing’ arrangements and medical purchaser-provider agreements when
implementing an expand product range (i.e. ‘out-of-hospital
procedures’ rendered in ‘approved procedures facilities’ and
selected specialist services); and
• at a time determined by the
Government, to increase their independence and flexibility with respect to
premium increases.
Impact on private hospitals and day hospital
facilities: Hospitals and day hospital facilities will benefit financially
from an increase (on what would otherwise have been the case) in the number of
private patients utilising their facilities because of the increased the
attractiveness of the private health insurance product for
consumers.
Impact on medical practitioners: Medical practitioners
will benefit financially from measures to make private health insurance more
attractive through:
• the ability to perform ‘out-of-hospital
procedures’ in ‘approved procedures facilities’;
and
• ‘gap’ coverage for selected specialists’
consultations.
The Health Legislation Amendment Bill (No. 4) 1998 supports
changes to existing legislation which were agreed by Cabinet on 4 August 1998.
All relevant Departments were consulted in the process of taking the Submission
to Cabinet. This included the Departments of the Prime Minister and Cabinet,
Treasury and Finance and Administration.
In addition, the key industry
associations plus major funds and consumer representatives have been consulted.
Those associations are the Australian Private Hospitals Association, Australian
Health Insurance Association, Health Insurance Restricted Membership Association
of Australia, Medibank Private, Medical Benefits Fund, Australian Consumers
Association, Australian Catholic Health Care Association, State and Territory
based health insurance councils and State and Territory based private hospital
associations.
Other agencies affected by the legislation have also been
consulted. These are the Private Health Insurance Ombudsman and the Private
Health Insurance Administration Council.
These amendments will be implemented in the time frame set out in the
Commencement section (page 2) of the Bill.
The amendments made to the National Health Act 1953 will be given
sufficient time to have full effect before consideration is given to further
review.
This section cites the short title of the proposed legislation as the
Health Legislation Amendment Act (No. 4) 1998.
This section provides that, except for the particular commencement days
in this Section, the Act commences on the day on which the legislation receives
Royal Assent. Items with commencement dates specified as being other than the
day of Royal Assent are as follows:
1. items of Schedule 1 and 2 commence
on a day to be proclaimed or otherwise on a day six months from the day of Royal
Assent;
2. items 1 to 7 of Schedule 3 commence on a day to be proclaimed
or otherwise on a day six months from the day of Royal Assent;
3. items 8
to 15 of Schedule 3 commence on a day to be proclaimed or otherwise on a day not
more than 24 months after the commencement of items 1 to 7 referred to in (2)
above; and
4. items 16, 17 and 18 of Schedule 3 commence on a day to be
proclaimed or otherwise on a day not more than 24 months after the commencement
of items 8 to 15 referred to in (3) above.
Section 3:
Schedule(s)
This section notes that each Act that is specified in the
Schedules is to be amended as set out in the applicable items in the Schedule
concerned.
This part allows health funds to offer discounted premiums to
contributors based on the administrative savings of health funds. The amendment
allows the Minister to determine the maximum percentage of discount that a
health fund can offer contributors. Further, the Minister may request
documentary evidence from health funds so that they might justify the level of
discount offered with respect to their administrative savings.
This item inserts two new subsections at the end of section 73BA of
the National Health Act 1953 (the Act). These new subsections allow the
Minister to make a determination in writing of the maximum percentage of
discount that health funds may offer to contributors for each payment class. The
Minister, in making a determination in regard the maximum percentage of discount
that health funds may offer, is required to look to the cost of health fund
administration across the industry. Any determination made by the Minister is a
disallowable instrument.
This item repeals paragraph (q) of Schedule 1 of the Act and inserts
seven new paragraphs; paragraphs (q), (r), (s), (t), (u), (v), and
(w).
Paragraph (q) of a health fund defines the membership categories
available within each applicable benefits arrangement (i.e. insurance table) of
a health fund. Subparagraph (q)(i) provides a ‘family’ category;
subparagraph (q)(ii) provides a ‘single parents’ category;
subparagraph (q)(iii) provides a ‘singles’ category; and
subparagraph (q)(iv) provides a ‘couples’ category. Except to the
extent that paragraph (q) refers to the provision of a discount, the conditions
of registration captured by this paragraph are currently imposed upon health
funds through powers granted to the Minister under subsections 73 and 73B of the
Act. The imposition of such conditions through the Act is now the preferred
approach.
Paragraph (r) defines dependent child for the purposes of each
membership category spelt out in paragraph (q). The conditions of registration
captured by this paragraph are currently imposed upon health funds through
powers granted to the Minister under subsections 73 and 73B of the
Act.
Paragraph (s) determines who will be eligible for a discounted rate
of contribution (i.e. premium). There are four payment circumstances for
which a person is eligible for a discounted premium. These four circumstances
are: payment of a contribution at least 6 months in advance; payment through a
payroll deduction; payment through a direct debit from an account at a bank or
other financial institution; and payment on behalf of the contributor when the
contributor is deemed to belong to a particular contribution group.
Note that subparagraph (s)(iv) allows health funds to determine those
groups who will be eligible for discounted premiums (because payment are made on
their behalf). Thus, for example, a health fund may (through its rules) allow
discounts to be provided to a group of employees where the premiums are paid for
those employees through one regular payment made on their behalf by their
employer.
Paragraph (t) defines the pre-requisites for the provision of a
discount. Subparagraph (t)(i) stipulates that the discounted premium must not
exceed the ministerial maximum. Subparagraph (t)(ii) requires discounts to be
available to each membership categories (e.g. ‘family’ etc.) spelt
out in paragraph (q). Subparagraph (t)(iii) states that the discount must not
be for a period greater than 12 months. Subparagraph (t)(iv) stipulates that
the fund must be able to justify the amount of discount offered in respect of
each payment circumstance.
Paragraph (u) requires health funds to
distinguish in their rules the undiscounted rates of contribution (i.e. base
premiums) and discounted rates of contribution (i.e. base premium less
discount). Further, funds are also required to clearly identify each respective
discounted premium and the corresponding payment circumstance. Lastly, it shall
not be possible for cumulative discounts to apply in respect of the same
purchase of health insurance. For example, a person who has paid their premiums
12 months in advance and via direct debit from a financial institution may only
receive the discount for paying 12 months in advance or for paying through a
financial institution (but not both).
Paragraph (v) allows the Minister
to request documentary evidence from health funds in regard to how they have
determined the level of discount and whether such a discount is justifiable with
respect to any reductions in management expenses.
Paragraph (w) obliges
the health fund to follow any direction of the Minister served on it under the
Act. This paragraph is a restatement of the original paragraph (q).
This is a transitional provision. This item makes provision for the
continuation of a discount in respect to an applicable benefit arrangement
(insurance table) that was in force before the commencement of items 1 and 2,
notwithstanding the fact that the original discount may have been
unlawful.
PART 2 – AMENDMENTS RELATING TO LOYALTY BONUS
SCHEMES
This part allows health funds to offer loyalty bonus schemes to
contributors in recognition of the period of time over which rates of
contributions (i.e. premiums) have been paid by or on behalf of the
contributor. Loyalty bonuses offered by health funds may be pecuniary in nature
or may be provided through goods and services, irrespective of whether those
goods and services are provided by the health fund or by a third party. A
loyalty bonus cannot be offered by health funds on any other basis other than
the period of time over which premiums have been paid by or on behalf of the
contributor. This Part also ensures that health funds uphold the principle of
“community rating” with respect to the provision of a loyalty bonus
scheme to persons covered under a given insurance table.
This items inserts two subsections after subsection 73BA(2). The new
73BA(2A) subsection allows the Minister to issue guidelines relating to loyalty
bonus schemes. The new subsection 73BA(2B) specifies those matters that may be
included in the Minister’s guidelines. Any guidelines made by the
Minister are disallowable instruments.
This item inserts two paragraphs after paragraph (m) of Schedule 1,
paragraphs (ma) and (mb).
Paragraph (ma) creates a condition
allowing health funds to implement a loyalty bonus scheme. All loyalty bonus
schemes must relate to the period of time that a contribution has been paid by
or on behalf of such a contributor. There are no other grounds under which a
loyalty bonus may be offered.
Paragraph (mb) requires of the health fund
that they uphold the principle of “community rating” with respect to
all persons covered under a given applicable benefits arrangement (i.e. health
insurance table). For example, with respect to a “100% cover”
insurance table, all contributors and dependents who are covered by the same
“100% cover” insurance table, and who have been covered by that
table over the same period of time, must be equally eligible to participate in
the loyalty bonus scheme.
This part allows for waiting periods to be extended for certain
conditions, ailments or illnesses. The definition of pre-existing ailment
continues unchanged. Health funds are able under this amendment to waive
waiting periods established either before, on or after the day on which this
Part commences.
Item 6
This item inserts a new section after
section 73BA to allow health funds to waive waiting periods, whether those
waiting periods were established before, on or after the day on which the item
commences.
This item allows reference to paragraph (j) [where paragraph (j) is to be
the common reference point in the Act for waiting periods]. This item also
repeals reference to the now redundant paragraph (bc) in paragraph (bb) of
Schedule 1 of the Act.
This item repeals the now redundant paragraph (bc) of Schedule 1.
This item repeals paragraph (j) and replaces it with a new paragraph (j).
The new paragraph (j) removes the legislatively prescribed waiting periods and
allows these periods to be determined by regulation, thus allowing greater
flexibility with respect to the application and duration of waiting times.
Subparagraph (j)(iv) is worded in such a way that it can include all or any
condition, thus allowing a continuation of the current policy that all new
health fund contributors have (at the discretion of health funds) a maximum
waiting period of two months before they will be covered for care received. In
addition, the formulation of words also allows coverage for specific
conditions.
This item repeals the redundant paragraph (k) of Schedule 1 of the
Act.
This item amends paragraph (ka) so that it no longer refers to the now
redundant paragraph (k) of Schedule 1 of the Act.
This item amends paragraph (kc) and allows reference to paragraph (j)
(which, as noted above, is to be the common reference point in the Act for
waiting periods). This item also repeals reference to the now redundant
paragraph (k) in (kc) of Schedule 1 of the Act.
This item amends paragraph (kd) to remove reference to the now redundant
paragraph (bc).
This is a transitional provision. The item ensures the continuation of a
waiting period that was in force before the commencement of items 6 to 13 of
Schedule 1.
PART 4 AMENDMENTS RELATING TO COVERAGE OF PHARMACEUTICAL
BENEFITS COSTS
Introduction
This part allows health
funds to cover the Pharmaceutical Benefits Scheme patient co-payment for
prescribed pharmaceutical benefits for in-hospital treatment. This part will
only apply to situations where a health fund purports that they are providing
100% cover for in-hospital care.
This item amends paragraph 73A(1)(a) to allow an exception to the general
prohibition against pharmaceutical benefit refund agreements.
This item repeals section 92B, which is the general prohibition against
pharmaceutical benefit refund agreements. The item reinserts a new section 92B.
The new section 92B reasserts the general prohibition but provides for an
exception to the general prohibition, that is, an exception is provided where a
contributor to a health fund has purchased cover which purports to provide 100%
cover for hospital treatment. In this situation health funds are lawfully able
to pay the pharmaceutical benefits co-payment on behalf of the contributor.
This provision is strictly controlled and only relates to those Pharmaceutical
Benefits Scheme pharmaceuticals that are dispensed while the contributor is in
hospital.
PART 5 – AMENDMENTS RELATING TO CERTAIN
PROCEDURES RENDERED IN APPROVED PROCEDURES FACILITIES
These amendments are made in response to the advancement of medical
technology. The continuing development of medical technology and anaesthetics
has now enabled some procedures to be undertaken safely outside of the hospital
or day hospital setting.
The amendments allow procedures which would
otherwise have been performed in a hospital or day hospital facility to be
performed in an ‘approved procedures facility’
(i.e. in an appropriately equipped and staffed facility which is
based within a medical practitioners rooms or suite).
The amendments also
allow the Minister to specify which Medicare Benefit Schedule items are
appropriate to performed as an ‘out-of-hospital procedure’ and to
approve the ‘approved procedures facility’ itself. This dual
approval process allows the Minister to guarantee that minimum safety and like
requirements are adhered to in the rendering of these services.
Item
17
This item inserts a new definition into subsection 4(1) of the Act
for an ‘approved procedures facility.’
Item 18
This
item amends subsection 5A(1) of the Act. A new paragraph is inserted to allow a
health fund to contract with contributors to cover liabilities arising from
those professional services to which the paragraph is expressed to extend. One
such circumstance to which this paragraph is expressed to extend is the
rendering of ‘out-of-hospital procedures’ in ‘approved
procedures facilities.’
This item inserts a new subsection 5A(1A) and 5A(1B) into the Act. The
new subsection 5A(1A) extends those professional services referred to in item 19
to include those procedures that Minister has determined (through a new
subsection 5A(2C)) to be ‘out-of-hospital procedures.’ The new
subsection (1B) states that any additional charges arising because of the
operation of the new subsection (1A) may also be covered by the health
fund.
Thus, it is anticipated that if a medical practitioner is to be
able to provide ‘out-of-hospital procedures’ outside of a hospital
or day hospital facility, the practitioner is likely to be required to make a
significant investment in capital and additional staffing to ensure that such
procedures are carried out safely and in accordance with acceptable clinical
protocols. The additional charges alluded to above would be necessary to
recover (over time) any capital or staffing expenditure made by the
practitioner.
This item inserts a new section 5C into the Act. The new section allows
the Minister to declare in writing that selected premises are ‘approved
procedures facilities.’ The Minister may make guidelines for the purposes
of declaring ‘approved procedures facilities.’ Any guidelines made
by the Minister are disallowable instruments.
Thus, for example, a group
of specialists may establish an ‘approved procedures facility’
within their rooms. And, assuming the ‘approved procedures
facility’ meets the Minister’s guidelines (which, it is anticipated,
will require compliance with relevant local government laws, State and Territory
laws and other safety and professional practice requirements) and gains
Ministerial approval, those specialists will be able to perform
‘out-of-hospital procedures’ in their ‘approved procedures
facility’ and attract both relevant Medicare benefits and payments from a
health fund.
This item inserts new subsections (2C) and (2D) before subsection
73BA(3). Subsection (2C) allows the Minister to determine those
‘out-of-hospital procedures’ that may be performed in an
‘approved procedures facility.’ Subsection (2C) only allows the
Minister to determine that a procedure is an ‘out-of-hospital
procedure’ if the performance of that procedure would otherwise have
required admission to a hospital or day hospital facility.
This subsection
also allows the Minister to determine a minimum ‘facility benefit’
payable with respect to those services. The Minister’s determinations of
‘out-of-hospital procedures’ and the minimum ‘facility
benefit’ are disallowable instruments. As noted above, the
‘facility benefit’ is a payment made in recognition of the
investment a medical practitioner would have been required to make in order to
allow such an ‘out-of-hospital procedure’ to be performed safely in
an ‘approved procedures facility.’
This items inserts new paragraphs (bka) and (bkb) after paragraph (bk) of
Schedule 1. Paragraph (bka) determines the minimum level of benefit a health
fund must pay in respect of an out-of-hospital procedure undertaken in an
approved procedures facility. The minimum level of benefit in respect of any
given procedure will equal 25% of the Medicare Benefits Schedule fee and
the ‘facility benefit’ determined by the Minister. Paragraph (bkb)
states that benefits payable by the health fund in respect to a professional
service must not exceed 25% of the Schedule fee unless the health fund
has entered into a medical purchaser-provider agreement with the medical
practitioner providing the service at the ‘approved procedures
facility.’
PART 6- AMENDMENTS RELATING TO SPECIALIST
SERVICES
Introduction
These amendments create a new
class of benefit payable by health funds to cover specialist medical services.
These amendments make clear that any coverage for specialist services is to be
an additional health insurance product that health funds may offer contributors.
Under this arrangement, agreements between health funds and specialists will be
in the nature of medical purchaser-provider agreements.
Medical
purchaser-provider agreements require the maintenance of the medical
practitioner’s professional freedom, within the scope of accepted clinical
practice, to identify appropriate treatments in the rendering of professional
services to which the agreement applies. Medical purchaser-provider agreements
must also be made available for public scrutiny.
This item inserts a new subsection (1C) before subsection 5A(2).
Subsection (1C) extends allowable health insurance to include professional
services provided by a specialist to a contributor or their dependent. However,
for the purposes of the specialist medical services covered by a health fund
under this scheme, those services may not include a service that is rendered to
a person while they are a patient in a hospital or day hospital or any service
which has been identified by the Minister to be an ‘out-of-hospital
service’ (and is thus a service which would, prior to the existence of
‘approved procedures facilities,’ have been undertaken in a hospital
or day hospital).
Item 24
Item 26 inserts two new paragraphs
after paragraph (bd) of Schedule 1. The new paragraph (bda) states that a
health fund may only pay a benefit to a specialist (in respect to those
professional services identified in item 23) where there is in existence a
medical purchaser-provider agreement between the health fund and that specialist
with respect to the professional service in question.
The new paragraph
(bdb) requires the health fund to clearly distinguish any contributions payable
in respect to specialist services under this scheme separately from all other
classes of benefit (e.g. hospital or ancillary).
SCHEDULE 2
CONSEQUENTIAL AMENDMENTS OF VARIOUS ACTS RELATED TO THE AMENDMENTS IN SCHEDULE
1
Introduction
These are consequential amendments
to both the Health Insurance Act 1973 and the National Health Act
1953 which are required to appropriately implement the schemes outlined in
Schedule 1 of this Bill.
This item repeals paragraph 20A(2A)(a) and replaces it with a new
paragraph. The new paragraph 20A(2A)(a) incorporates the new schemes outlined
in Parts 5 and 6 of Schedule 1 and allows Medicare benefits in respect of the
professional services provided under those schemes to be assigned to the health
fund (thus allowing one form of ‘simplified billing’).
‘Simplified billing’ with respect to health funds may therefore be
utilised in all circumstances where a person receives a professional service in
a hospital, day hospital facility, an ‘approved procedures facility’
or where the person has received a specialist service of a type allowed for in
Schedule 1, Part 6 of the Bill.
This item repeals paragraph 20A(2C)(a) and replaces it with a new
paragraph. The new paragraph 20A(2C)(a) incorporates the new schemes outlined
in Parts 5 and 6 of Schedule 1 and allows Medicare benefits in respect of the
professional services provided under those schemes to be assigned to an approved
billing agent (thus allowing another form of ‘simplified billing’).
‘Simplified billing’ handled by approved billing agents may
therefore be utilised in all circumstances where a person receives a
professional service in a hospital, day hospital facility, an ‘approved
procedures facility’ or where the person has received a specialist service
of a type allowed for in Schedule 1, Part 6 of the Bill.
National
Health Act 1953
This item inserts a new subsection (2A) after section 5A(2). This
subsection confirms that when a contributor and health fund contract to cover
the liability arising from the provision of professional services the contract
can also extend to one or more of the types of services to which paragraph
(1)(ba) is expressed to extend. That is, a person may (whether or not they are
also covered for liabilities arising in respect to hospital treatment and/or
professional services related to that hospital treatment) obtain coverage for
‘out-of-hospital procedures’ rendered in an ‘approved
procedures facility’ and/or specialist services of a type allowed for in
Part 6, Schedule 1 of the Bill.
Item 4
This item inserts a new
section 5AB after section 5A. This new section 5AB ensures that changes to
health fund constitutions, articles or rules that relate to either discounting
and/or loyalty bonus schemes are not to be considered to be changes related to
rates of contributions changes (i.e. premium changes).
Item
5
This item repeals paragraph (a) of the definition of
‘accident and sickness insurance business’ in subsection 67(4) and
replaces it. The new paragraph (a) incorporates the schemes referred to in
Parts 5 and 6 of Schedule 1, thus ensuring that a person carrying on accident
and sickness insurance business may not cover those types of
services.
Item 6
This item repeals paragraph (a) of the
definition of ‘health insurance business’ in subsection 67(4) and
replaces it. The new paragraph (a) incorporates the schemes referred to in
Parts 5 and 6 of Schedule 1, thus ensuring that a person carrying on a health
insurance business may cover those types of services.
Item
7
This item repeals subsection 73BDA(6) and replaces it. The new
subsection (6) expands the type of services to which a medical
purchaser-provider agreement may apply. Thus, a medical purchaser-provider
agreement may now relate to: professional services provided to a patient in a
hospital or day hospital facility; professional services, being
‘out-of-hospital procedures’ determined by the Minister, provided in
an ‘approved procedures facility’; and specialist services of a type
referred to in Part 6 of Schedule 1 of the Bill.
Item
8
This amendment to subsection 73BDA ensures that every person has
the right to individually contract for services from any medical practitioner,
notwithstanding the fact that the medical practitioner may have entered into a
medical purchaser-provider agreement with one or more health funds.
Item 9 amends (bf) of Schedule 1. This amendment limits the requirement
that health funds include within any contract for the provision of hospital
treatment, treatment in respect of palliative care, psychiatric care or
rehabilitation care. Those products related exclusively to
‘out-of-hospital procedures’ undertaken in ‘approved
procedures facilities’ and specialist services of a type referred to in
Part 6 of Schedule 1 of the Bill are not required to cover liabilities arising
form the provision of palliative care, psychiatric care or rehabilitation
care.
SCHEDULE 3 – AMENDMENTS RELATING TO MONITORING OF CHANGES
IN CONTRIBUTION RATES OF ORGANIZATIONS
Health funds specify both their premium levels and benefits for a
particular insurance product in health fund rules. (Note that, historically,
the constitution and articles of some health funds have also included clauses
relating to premium levels and benefits. Consequently changes to the
constitution or articles of the heath fund relating to premium levels and
benefits are, for the purposes of these provisions, to be considered equivalent
to rule changes.)
A change to any health fund rule is subject to
Ministerial scrutiny. These amendments establish separate provisions to deal
with rule changes that relate to a change in the rates of contribution of
contributors (i.e. change in premium levels) and all other rule changes.
Further, the Minister has two additional grounds upon which to base a decision
to disallow any given rule change (both of these additional grounds allow the
Minister to look beyond the impact of those rule changes upon the health fund or
its members – the existing grounds – and allow the Minister to
consider the broader interests of the health insurance industry and the overall
public interest). These amendments commence on a day to be
proclaimed.
In addition, these amendments allow, on a day to be
proclaimed (but not longer than 24 months after the proclamation referred to
above) the transfer of rates of contribution rule change provisions from the
Minister to the Private Health Insurance Administration Council.
Lastly,
these amendments will, on a day to be proclaimed (but not longer than 24 months
after the transfer of the rates of contribution rule change provisions to the
Private Health Insurance Administration Council) provide increased independence
and flexibility to health funds with respect to rates of contribution rule
changes.
Items 1 to 7 commence on a day to be proclaimed.
Item 1 amends
subsection 78(1) of the Act to allow health fund rule changes relating to rates
of contribution (premiums) to be dealt with in the new section 78A (see below).
All rule changes not relating to premium changes will be dealt with through the
modified section 78 of the Act.
Subsection 78(1A) is repealed and replaced. The new subsection 78(1A)
simply reiterates the original restrictions related to non-premium rule changes.
That is, health funds must provide non-premium rules changes to the Secretary of
the Department (to allow scrutiny by the Minister) not later than 60 days (or
such other period as determined by the Minister) before the change is to come
into operation.
Item 3
Subsection 78(2A) is amended. The
amendment demands that, if the Minister wishes to vary the 60 day limit
(referred to in item 2), the variation is to be a disallowable
instrument.
Item 4
Subsection 78(4) is repealed and
replaced. The new subsection 78(4) reiterates the original three grounds for
disallowing a rule change (i.e. the rule change would or might result in a
breach of the Act or condition of registration; imposes an unreasonable or
inequitable condition upon the health fund’s members; might, having regard
to the advice of the Private Health Insurance Administration Council, adversely
affect the financial stability of the health fund). However, two additional
grounds are added.
The first additional ground allows the Minister to
disallow the rule change where he or she is of the opinion that it might, if the
substance of the change were adopted by other health funds, adversely affect the
interests of the private health insurance industry. The phrase ‘interests
of the private health insurance industry’ is intended to include all
aspects of the private health insurance industry including the number of people
who subscribe to health insurance, the confidence the community has in the
viability of the private health insurance industry and the financial
sustainability of the industry.
The second additional ground allows the
Minister to disallow a rule change where he or she is of the opinion that the
rule change is contrary to the public interest. The ‘public
interest’ is intended to include the impact upon the Commonwealth
Government’s financial position due to changes in the level of coverage of
private health insurance, the viability of private health care service
providers, and the viability of public insurance mechanisms including Medicare
and the public hospital funding arrangements between the Commonwealth and the
States and Territories.
In addition, the new subsection 78(4) puts beyond
doubt the fact that the Minister may only declare a rule change be disallowed
(or, as the Bill describes, “declare in writing that the change is not to
come into operation”) within the 60 day (or other) period noted
above.
Note that a decision to disallow a rule change under section 78
may be reviewed by the Administrative Appeals Tribunal (see subsection
105AB(5)).
A new section 78A is inserted after section 78 (as modified). The new
section 78A only deals with health fund rule changes that are changes in the
rates of contribution paid by contributors (i.e. premium changes). Section 78A
mirrors the original section 78 (as modified) in terms of process and grounds
upon which a rule change may be disallowed (see item 4 above). However, section
78A contains a shorter notification period (14 days rather than
60 days).
Item 6
Inserts a new subsection 105(5A) after
subsection 105(5) of the Act. The new subsection 105(5A) allows a decision to
disallow a rule change that changes the rates of contribution paid by
contributors (ie premium changes) to be reviewed by the Administrative Appeals
Tribunal. Thus, decisions to disallow a rule change made under the new section
78A are reviewable, as are decisions made under the original section 78 (as
modified).
Item 7
This item contains two transitional
provisions related to rule changes. The first transitional provision states the
new provisions in items 1 to 6 only relate to notifications of rule changes
submitted to the Secretary of the Department after those provisions commence.
The second transitional provision states that where a notification of a rule
change was made to the Secretary of the Department prior to the commencement of
the provisions in items 1 to 6, those changes are to be dealt with under the
original rule change scheme.
Items 8 to 15 relate to the transfer of functions to the Private Health
Insurance Administration Council. Items 8 to 15 commence on a day to be
proclaimed, not being a day longer than 24 months from the day items 1 to 7 of
Schedule 3 are proclaimed.
Item 8 repeals paragraph 73BE(1)(a) of the
Act. This paragraph allows the Minister to make a direction to health funds
with respect to rates of contribution paid by contributors (i.e. premium
changes). Such a power is inappropriate once the premium related rule change
disallowance powers are transferred to the Private Health Insurance
Administration Council.
This item amends subsections 78A(1), (2) and (3) to transfer functions
carried out by the Secretary (with respect to a rule change that changes the
rates of contribution paid by contributors) to the Private Health Insurance
Administration Council. Item 9 commences on a day to be proclaimed, not being a
day longer than 24 months from the day items 1 to 7 of Schedule 3 are
proclaimed.
This item amends paragraph 78A(2)(a) and (b) and subsection 78A(4) and
(8) to transfer functions carried out by the Minister (with respect to a rule
change that changes the rates of contribution paid by contributors) to the
Private Health Insurance Administration Council. Item 10 commences on a day to
be proclaimed, not being a day longer than 24 months from the day items 1 to 7
of Schedule 3 are proclaimed.
Item 11
This item amends
paragraph 78A(8)(c). This amendment means that the Private Health Insurance
Administration Council is not required to undertake the anachronistic task of
advising itself with respect to the impact of a rule change upon the financial
stability of a health fund. Item 11 commences on a day to be proclaimed, not
being a day longer than 24 months from the day items 1 to 7 of Schedule 3 are
proclaimed.
Item 12
This items repeals subsections 78A(9)
and (10) and replaces them with subsections that are substantially the same in
nature but that now require the Private Health Insurance Administration Council,
where they make a declaration to disallow a rule change that changes the rates
of contribution paid by contributors (i.e. premiums) they are to
communicate their decision to both the health fund and the Secretary of the
Department. In addition, the Private Health Insurance Administration Council is
required, at least once each financial year, to provide a report on all rule
changes (and, where applicable, changes to constitutions and articles) that
relate to premium increases. Item 12 commences on a day to be proclaimed, not
being a day longer than 24 months from the day items 1 to 7 of Schedule 3 are
proclaimed.
This item inserts a new paragraph 82G(1)(da) after paragraph 82G(1)(d) in
the Act. Subsection 82G(1) lists the functions of the Private Health Insurance
Administration Council. The insertion of the new paragraph 82G(1)(da) allows
the Private Health Insurance Administration Council to disallow rule changes
that change health fund premiums (and all related tasks). Item 13 commences on
a day to be proclaimed, not being a day longer than 24 months from the day items
1 to 7 of Schedule 3 are proclaimed.
This item repeals subsection 105(5A) and replaces it with a new
provision. The new subsection 105(5A) allows a decision by the Private Health
Insurance Administration Council to disallow a rule change that changes the
rates of contribution paid by contributors (ie premium changes) to be reviewed
by the Administrative Appeals Tribunal. Thus, decisions to disallow a rule
change made under the new section 78A continue to be reviewable (notwithstanding
the transfer of the function to the Private Health Insurance Administration
Council from the Minister). Item 14 commences on a day to be proclaimed, not
being a day longer than 24 months from the day items 1 to 7 of Schedule 3 are
proclaimed.
This item contains two transitional provisions related to rule change
that changes the rates of contribution paid by contributors (i.e. premiums).
The first transitional provision states that the provisions in items 8 to 14
only relate to notifications of rule changes submitted to the Private Health
Insurance Administration Council after those provisions commence. The second
transitional provision states that where a notification of a rule change was
made to the Secretary of the Department, prior to the commencement of the
provisions in items 8 to 14, those changes are to be dealt with by the Private
Health Insurance Administration Council.
Item 15 commences on a day to be
proclaimed, not being a day longer than 24 months from the day items 1 to 7 of
Schedule 3 are proclaimed.
This item increases the flexibility and independence of health funds with
respect to rates of contribution rule changes (i.e. premium rule changes). The
item achieves this increased flexibility by repealing section 78A of the
Act.
This item removes from the Private Health Insurance Administration
Council their ability to monitor rates of contribution rule changes.
This item repeals the now redundant Administrative Appeals Tribunal
review mechanism for rates of contributions rule change decisions made by the
Private Health Insurance Administration Council.