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2000
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF REPRESENTATIVES
EXPLANATORY
MEMORANDUM
(Circulated
by authority of the Minister for Health and Aged Care,
The Hon. Dr Michael
Wooldridge, MP)
ISBN 0 642 42885 9
This Bill amends the National Health Act 1953 (NHA) and the Health
Insurance Act 1973 (HIA) to provide for gap cover schemes. The
purpose of these schemes is to enable registered health benefits organisations
to provide no gap and/or known gap private health insurance without the need for
contracts.
The Medicare rebate covers 75% of the Schedule fee for
in-hospital medical expenses while private health insurance covers the remaining
25%. The “gap” is the difference, paid by the policy holder,
between fees charged by doctors for in-hospital medical services and the
combined health insurance benefit and Medicare benefit.
Current
legislation allows the gap to be covered in circumstances where the service is
rendered by or on behalf of a medical practitioner:
− with whom the registered health fund has a medical purchaser-provider agreement; or
− who has a practitioner agreement that applies to the professional
service provided, with the hospital where treatment occurred, and that hospital
has a hospital purchaser-provider agreement with the registered fund.
This Bill provides a third mechanism through which the medical gap may
be covered by funds. The operation of the gap cover schemes provided for in
these amendments is in no way intended to affect the operation of any medical
purchaser-provider agreements, hospital purchaser-provider agreements or
practitioner agreement.
The Government is committed to reducing or
eliminating the gap as much as possible. The Private Health Insurance
Incentives Act 1998 (PHIIA), which introduced the 30% Government Rebate on
private health insurance premiums, provides that if a health fund on or after 1
July 2000 does not offer its members a choice of no or known gap policies, then
the Minister may revoke a health fund’s status as a participating fund in
the premium reduction scheme. That is, the policy holders of funds that do not
offer at least a no gap or a known gap policy by 1 July 2000 may only be able to
access the rebate through their annual tax return or as a direct cash rebate
from Medicare offices.
This Bill establishes the framework which allows
health insurance funds to develop gap cover schemes, subject to Ministerial
approval and review, to provide no gap and/or known gap private health insurance
cover.
This Bill is designed to improve the attractiveness to consumers
of private health insurance products in the market by allowing funds to provide
no gap and/or known gap insurance cover. The current restricted availability of
such cover has been a major contributor to the perception that private health
insurance does not offer value for money, and has thus discouraged consumers
from subscribing to health cover.
Research has found that consumers
essentially want no gap or known gap insurance. This Bill will provide the
framework to allow funds to design schemes that satisfy this market
demand.
The main items contained in this Bill amend the NHA to:
• enable a registered organisation to prepare a gap cover scheme under which it can offer no gap and/or known gap policies;
• provide for Ministerial approval of gap cover schemes;
• provide that much of the machinery related to gap cover schemes, such as:
- the form and content of applications;
- the Ministerial approval process, including the criteria for approval;
- the Ministerial power to impose conditions on the operation of schemes and to vary such conditions;
- annual reports and periodic reviews; and
- revocation and variation of schemes
will be contained in regulations.
• empower PHIAC to obtain regular reports from registered organisations about matters relating to the operation of gap cover schemes and to provide advice to the Minister on the operation of those schemes with particular reference to the extent to which the schemes genuinely reduce or eliminate the cost to consumers of hospital treatment and associated professional attention;
• allow a registered organisation to pay a benefit in excess of the Schedule fee if the service is rendered by or on behalf of a medical practitioner under a gap cover scheme approved by the Minister, by amending Schedule 1 to the NHA.
The Bill also amends the HIA to provide for the automatic assignment of a contributor’s Medicare benefit to a registered organisation, an approved billing agent, a hospital or day hospital facility, or other prescribed person, as provided for under the terms of the gap cover scheme, when that benefit relates to a professional service rendered by a practitioner pursuant to an approved scheme.
The Health Legislation Amendment (Gap Cover Schemes) Bill 1999 will have no
significant impact upon the finances of the Commonwealth.
This Regulation Impact Statement relates to the Health Legislation
Amendment (Gap Cover Schemes) Bill 2000 and amendments required to
National Health Regulations 1954 dealing with gap cover schemes.
The gap has proven one of the most intractable problems facing the
private health industry and is a major contributor to the perception that
private health insurance does not offer value for money. The gap is the
difference between fees charged by doctors for in-hospital medical services and
the combined health insurance and Medicare benefit.
For private patients
receiving in-hospital medical services, the Medicare rebate is 75% of the
Medicare Benefit Schedule (MBS) fee. Health funds are required to cover the
remaining 25% of the MBS fee and can cover the full doctor’s fee, when the
doctor charges in excess of the MBS, only where the doctor has a negotiated
agreement, either directly with the fund, or with a hospital that has a
negotiated agreement with the fund. In contrast, public patients are covered
for one hundred per cent of costs in most cases.
Doctors have been
reluctant to enter into agreements with the funds and hospitals. A significant
cause of this reluctance has been the perception by doctors that formal
agreements are “the first step towards US styled managed care”,
regarding them as a potential threat to their clinical
independence.
Hospital Casemix Protocol data in 1997-98 indicates that
the average medical gap for an episode in a private hospital was $151. The
average medical gap for an episode in a public hospital was $69. However, for
some procedures the gap payment can be much higher.
The Government
determines the MBS fee. Fees are generally adjusted on an annual basis having
regarded selected economic indices. The average MBS fee per service has
increased by approximately 80% since the introduction of Medicare in 1984. That
increase is in line with the increases in the Consumer Price Index (CPI) for the
same period.
However, doctors determine their own charges based on their
views of what the market can bear. It is not uncommon for specialists to charge
differently for the same service, depending on the circumstances of the patient.
Consumers essentially want no gap or a known gap in return for their
insurance premiums. It is one of the major causes of complaint about private
health insurance, particularly when the requirement to pay the gap is not
realised by the patient prior to receipt of the bill for services.
The
private sector makes an invaluable contribution to the overall viability of the
Australian health care system, and for this to continue a way must be found to
cater to the consumer’s demand for no or known gap services.
The objective is to allow for private health insurance contributors to be
provided with a choice of products that offer either no medical gap or known
medical gap payments. Such a reform would be consistent with the
Government’s desire to make private health insurance more attractive to
consumers, to stabilise the health insurance participation rate, and take some
of the pressure off the public hospital system.
The Government is keen to
redress the decline in membership and to ensure that Australia’s health
system offers choice as well as universal access (and has a vibrant private
sector to make that possible).
This measure is part of the
Government’s overall strategy to address the decline in health insurance
membership.
To address affordability, the Government introduced the 30%
Rebate on private health insurance on 1 January 1999, which is equal to 30% of
the cost of private health insurance premiums. The Rebate is available to
everyone who has a policy provided by a registered fund, whatever their level of
cover or type of membership. The Government has also taken steps to stimulate
product innovation through, for example, the introduction of loyalty bonuses and
private sector coordinated care trials, and is increasing industry stability
through measures such as Lifetime Health Cover.
In addition, a Senate
amendment in relation to the Rebate legislation requires all health funds to
offer no or known gap policies by 1 July 2000, to ensure they are eligible to
continue to offer the Rebate as a premium reduction.
The Government
does not have a preference for the development of no gap as opposed to known gap
products. This should be a matter for individual choice and the market place.
Options
Contributors could continue to pay the gap when they use their private
health insurance for in-hospital medical services.
The Government could raise the level of the MBS for those items where
contributors are most likely to face gaps.
This option allows funds freedom to provide supplementary insurance to
cover gaps. This kind of ‘add-on’ product could only be offered if
legislative changes were made to allow payment above the MBS without a formal
agreement between funds and doctors and/or hospitals.
This option is to allow the health insurance industry to develop schemes,
subject to ministerial approval and review, which would enable registered health
benefits organisations to provide no gap and/or known gap insurance policies.
Where a scheme has been approved health funds would be able to fully meet the
difference between the 75% Medicare benefit and the cost of the medical service.
These schemes would be entirely voluntary arrangements between health
funds, doctors and hospitals. Schemes will provide an additional mechanism to
the current provisions provided by health insurance legislation that allows
health insurers to pay above the MBS (Medical Purchaser Provider Agreements and
Practitioner Agreements). Unlike the formal contract arrangements these schemes
have the support of the AMA.
The following is provided as an example of arrangements that might develop as a gap cover scheme. A fund might agree to provide 100% medical cover for members who are treated by doctors who have agreed to participate in an approved gap cover, but would limit benefit payments to the MBS made in relation to charges by other practitioners (that is, contributors, in some instances, would still have an unknown gap payment to meet). This agreed benefit may be related to the MBS or the AMA schedule fees or funds may prefer to establish their own schedules. These arrangements might be negotiated on an industry wide basis, or with reference to a particular hospital, or group of hospitals, or to particular craft groups.
Approvals of schemes by the Minister would be by reference to certain
criteria specified in the regulations. The regulations will also provide for
periodic reviews by the Minister of the operation of schemes. These criteria,
which will be the subject of further development in consultation with the
industry, are:
• the scheme must be a genuine scheme that would reduce or eliminate gaps;
• the scheme contains proposals under which patients are offered informed financial consent, that is, a contributor to a fund is informed of any amounts that they can reasonably be expected to pay in respect of the professional service, including the amount of any Medicare benefit, health insurance benefit and the amount (if any) that the contributor may be liable to pay for the professional service;
• where appropriate, the scheme provides for simplified billing arrangements;
• the fund must demonstrate the scheme will not have an inflationary impact;
• arrangements made by the fund to ensure that contributors will not be disadvantaged by revocation of the scheme;
• the scheme requires all parties to maintain the professional freedom
of medical practitioners involved in the scheme, within the scope of accepted
clinical practice, to identify appropriate treatments in the rendering of
professional services to which the scheme applies.
Impact analysis
The groups primarily affected by the problem of the gap and the
consequent decline in private health insurance membership
are:
• private health fund members;
• consumers prepared
to purchase private health insurance if no or known gap cover is available;
and
• private health insurance funds.
In addition, other groups
such as health professionals, private hospitals, public hospitals, Commonwealth,
State and Territory governments are affected by any shift in demand between
private and public sector health care.
Health funds will continue to lose members because of frustration with an
often unknown medical gap.
Private health insurance is the way most favoured by Australians to gain
access to the hospitals and doctors of choice. If the uninsured medical gap
continues more and more people will perceive that health insurance is not
offering value for money and adverse selection will continue.
Addressing the gap is perceived to be the most important reform of
private health insurance still to be achieved. Each year, private health
insurance contributes around $3 billion in hospital benefits and the private
sector cares for roughly a third of all hospital patients. This contribution is
invaluable to the financial viability of the Australian health care system, and
each and every fall in health insurance participation feeds directly through
into the public system as greater numbers of people become entirely reliant on
the public system for their health care.
Doctors are currently charging what the market will bear. If the MBS was
increased to reduce or eliminate gaps without an agreement from the profession
not to increase fees (or without control of doctors’ fees) doctors could
simply increase their charges to restore the patient contribution.
While
it is acknowledged that the skill and/or the workload required for some doctor
interventions would justify an increase/reduction in some MBS levels, a move to
increase the MBS for items where gaps are common would by and large simply
reward those areas of medicine where commercial advantage allows them to bill
above the MBS in the first place, rather than optimising expenditure on the best
health outcomes.
Funds would have to make increased payouts. Health
funds are required by legislation to pay 25% of the MBS, as the MBS increases so
would fund benefit payouts.
Gaps may be temporarily removed but there would be no mechanism to
prevent them from reappearing. As noted above, the temptation with any increase
in the MBS would be for doctors simply to increase their charges to restore the
patient contribution.
Premiums would increase as health funds would
need to increase their benefit payouts.
It would be a significant cost to the Government. The value of medical
gaps for in-hospital services (insured and uninsured) was $260 million in
1997-98.
Currently, funds can cover members’ costs fully when doctors charge
above the MBS only where formal agreements are in place. Under this option,
funds would be able to offer supplementary insurance, as an ‘add-on’
product to cover the gap, separate and additional to their existing hospital
tables, instead of entering into negotiated agreements. These supplementary
‘add-on’ products would not be subject to an approval process
wherein funds would have to demonstrate that they would not have an inflationary
impact (as is the case with option five). Nor would these products be bound by
the current agreement framework. There is a real danger that if doctors’
fees were not controlled under an agreement, some doctors might respond to
higher fund benefits by raising their charges to reinstate the patient
contribution. It is not Government policy to allow unregulated above-MBS
payments, as without negotiated agreements in place which would cap charges,
increases in Government expenditure and inflation could result.
‘Add on’ gap products may result in adverse selection.
People who are sicker or older (and therefore more likely to use hospital
services) would be highly attracted to such products. If, as expected, these
are the people who are most likely to take up ‘add on’ gap
insurance, this option would simply result in the elderly and the chronically
ill sharing the cost of gaps, and premiums would likely be very high.
Other groups may be attracted to ‘add on’ products, for
example, the highly risk averse or very wealthy. This may help to reduce the
problem of adverse selection, however consumers who feel they are unlikely to
use health services in the near future would probably not perceive such a
product to be value for money. These products would probably do little to
achieve a stabilisation of the participation rate or to attract new
members.
The industry view is that such a product, attracting as it would
high users of health care, would need to be very highly priced if it was to be
self-funding.
Allowing supplementary gap insurance would provide consumers with a wider
choice to better match their individual circumstances.
However, such
cover would be most likely to be purchased by people who expect to make high use
of health services, or for a small proportion of people for whom price is not a
factor. The high risk of adverse selection would make the premiums expensive,
which would decrease the attractiveness of these products for most contributors.
‘Add-on’ gap cover products would not offer an incentive for
wide participation in line with the Government’s objective. These
products would not help to achieve reduction or elimination of gaps across the
board for all private health fund members. Contributors who choose not to
purchase such products, or are unable to afford the extra cost represented by
‘add-on’ gap cover would still be faced with unknown gaps.
This option by itself would have little impact on the Government.
These schemes will provide the industry with the flexibility to determine
the mechanics of achieving no or known gap products.
The value of medical
gaps for in-hospital services for the insured was around $200 million in
1997-98. All other things being equal hospital premiums would need to rise by
6% if funds were to fully cover existing in-hospital medical charges. However,
higher premiums are likely to be ameliorated by the effect on the participation
rate because of a perceived improvement in value for money.
These schemes
are a response to very strong demand for no gap private health insurance. They
will also provide for simplified billing and informed financial consent. The
ability to cover gaps will make private health insurance a better value product
for many existing and potential consumers. This will help to stabilise the
declining health insurance participation rate and will complement other measures
being taken by the Government to stabilise the industry such as the 30% Rebate
and the introduction of Lifetime Health Cover.
The regulations will
specify criteria for the approval of gap cover schemes. These criteria will
include provisions that funds applying for approval of schemes must demonstrate,
to the satisfaction of the Minister, that the operation of the scheme will not
have an inflationary impact.
With the introduction of these schemes there
is some prospect that doctors will have to accept some limitation on their
ability to charge whatever they like ie. they will need to adhere to some sort
of schedule of fees. For many this fee might represent an increase over their
usual charges. Others may be prepared to lower their charges in return for
access to a source of patients (health fund members with that particular
product) and a reduction in bad debts due to the simplification of billing
procedures and the assignment of the Medicare benefit to the health fund, an
approved billing agent, a hospital or day hospital facility, or other prescribed
person as provided for under the terms of the gap cover scheme. Others might be
motivated to limit their charges because of the obvious benefit to their
patients and the private health industry as a whole.
The industry is
unlikely to develop stand-alone no or known gap products as this would encourage
adverse selection. It is more likely that existing products will progressively
cover the gap as gap cover schemes are introduced. This is what has occurred so
far with gap coverage under existing arrangements.
Health funds will need
to provide information to their current and potential clients on what will be
covered by products which provide either no or a known gap.
Consumers will be able to purchase products that provide for either no or
a known gap. Health insurance will be seen by many contributors as representing
better value for money.
As is the case with some policies offered under
the current agreement framework, it is possible that the design of some health
insurance policies offered under a gap cover scheme will not provide the
contributor with a known or nonexistent gap in relation to all episodes of
treatment provided by all doctors in all hospitals. In cases where a contributor
receives treatment from a practitioner who is not a party to the scheme, that
contributor may face an unknown gap.
Health insurers and doctors would need to agree on some sort of schedule
fee for there to be no or a known gap. The acceptance of schedules other than
the MBS could create pressure on the level of the MBS and hence Commonwealth
outlays and could undermine the MBS itself. It could be seen as an
acknowledgment that the MBS has not kept pace with medical costs and doctors
claims of inadequate indexation.
Given the diversity of charging
practices, fixing a price at any one level is likely to result in over-paying
many doctors. However, in deciding whether to approve a scheme the Minister
must have regard to whether the scheme will have an inflationary impact. The
regulations will also provide for periodic reviews by the Minister of the
operation of schemes. Also, because these schemes are voluntary, its impact
will obviously depend upon the extent to which doctors agree to such
arrangements.
Increasing the perceived value of health insurance will
encourage contributors to maintain their coverage. In turn this will help to
take pressure off the public hospital system.
Gap cover schemes require
only minor legislative change and represent an extension of existing policy
measures to address the gap, rather than a new policy direction. Thus, schemes
are ideally suited to the tight timeframe imposed by the Rebate legislation,
which necessitates the availability of a workable alternative to contract based
approaches to addressing the gap well in advance of the deadline.
The views of all relevant stakeholders have been canvassed. Health funds
and their representative bodies, peak medical bodies and consumer groups all
support the preferred Option 4. A solution to the gap problem is increasingly
being seen by all stakeholders as an essential reform.
Health insurers
did not support option 3 – supplementary gap insurance, because of the
identified problems of adverse selection and the likely cost of the product.
The Government will continue to seek input from stakeholders in its
implementation of the proposed arrangements.
The Government considers that the options of maintaining existing
arrangements, increasing the MBS for selected items and supplementary gap
insurance are not viable options.
Option 1 – maintain current
arrangements, would see the continued decline in the credibility of, and hence
demand for, private health insurance.
Option 2 - increase the Medicare
Benefit Schedule, may remove gaps temporarily but they would most likely return
within a short period of time. This option would be a significant cost to the
Commonwealth and increase the cost of private health insurance as benefit
payouts increase with the MBS.
Option 3 - supplementary insurance to
cover gaps would be expensive because of adverse selection and the lack of a
Ministerial approval mechanism might endanger the system as a whole.
Contributors without this product would still be faced with unknown
gaps.
Option 4 – gap cover schemes, is the preferred option. This
approach offers an additional option for the funds to offer no or known gap
insurance products. The measure has the potential to see the issue of
in-hospital medical gaps addressed in the short to medium term.
Although
under the Rebate legislation funds are required to offer no or known gap
policies in order to offer the Rebate as a premium reduction, the manner in
which they choose to implement such policies is entirely a matter for the fund.
The preferred option provides scope for different arrangements for the various
participants and therefore it is very flexible. It is the first time health
funds and doctors have been able to agree on a strategy for dealing with
gaps.
Implementation and review
The preferred option will
be implemented through amendments to the National Health Act 1953 and the
Health Insurance Act 1973.
Each of the schemes will need to be
approved and reviewed by the Minister. The effectiveness of this measure will
be addressed on a regular basis. These reviews will be based on reports from
the funds, which will be provided to the Minister on an annual
basis.
This clause provides that the amending Act may be cited as the Health
Legislation Amendment (Gap Cover Schemes) Act 2000.
This clause provides that the Act commences on a day or days to be fixed
by proclamation or otherwise on a day six months from the day of Royal
Assent.
Clause 3: Schedule(s)
This clause provides that the
Acts specified in the Schedule are amended as set out in the applicable items in
the Schedule concerned.
SCHEDULE 1 – GAP COVER SCHEMES
The Schedule amends the National Health Act 1953 (NHA) to allow
registered organisations to submit gap cover schemes to the Minister for
approval under which health insurance funds can provide no gap and/or known gap
cover. The Schedule also makes a consequential amendment to the Health
Insurance Act 1973 (HIA) to permit the assignment of a contributor’s
Medicare benefit to a fund, approved billing agent, hospital or day hospital
facility or other prescribed person, when that benefit relates to a professional
service rendered by a practitioner pursuant to an approved scheme.
This item inserts a new subsection (2AA) into section 20A of the HIA.
Section 20A of the HIA deals with the circumstances under which
assignment of a Medicare benefit may occur, or is taken to occur.
The new
subsection 20A(2AA) provides an additional circumstance in which assignment of a
Medicare benefit may occur. Where:
- a Medicare benefit would be payable to a person in relation to professional services rendered to a patient in a hospital or day hospital facility; and
- the person has entered into an applicable benefits arrangement with a fund which covers his or her liability for fees and charges in relation to that professional service; and
- the professional service is provided under a gap cover scheme that has been
approved by the Minister;
the person will be taken to have assigned his
or her right to the payment of a Medicare benefit for those services to:
- the fund; or
if provision is expressly provided for such assignment under the terms of the approved scheme to:
- an approved billing agent;
- the hospital or day hospital facility;
- a prescribed person.
This provision enables the payment process under gap cover schemes to be simplified, making it consumer, and doctor, friendly. Automatic assignment of the Medicare benefit relating to a service provided under an approved schemes frees the patient from the need to claim the Medicare benefit directly, and allows a consolidated payment incorporating both Medicare and private insurance benefits to be made to the treating practitioner.
This item amends subsection 20A(2D) of the HIA as a consequence of the
amendments made by Item 1. The effect of this amendment is to provide that the
assignment circumstances set out in subsections 20A(2A), (2AA) and (2C) are
mutually exclusive.
This item inserts a definition of gap cover scheme at
subsection 4(1) of the NHA. A “gap cover scheme” is a scheme
prepared by a registered organisation under which it is able to offer no gap or
known gap policies.
This item inserts a definition of known gap policy at subsection
4(1) of the National Health Act 1953 (NHA). A “known gap
policy” is a private health insurance policy that will provide a
benefit for all but a specified amount or percentage of the full cost of
hospital treatment and associated professional attention, for the persons
insured by the policy.
Contributors to such policies will have certainty
as to the maximum amount they will be liable for in relation to professional
services covered by the known gap policy. Such knowledge will address one of the
more frequent causes for complaint in this area, which is that currently in many
situations the “gap” payment that the policyholder will be expected
to cover is not known prior to it being incurred, which lessens the
attractiveness of private health insurance.
This item inserts a definition of no gap policy at subsection 4(1)
of the NHA. A “no gap policy” is a private health insurance
policy that covers the full cost of hospital treatment and associated
professional attention for the person or persons involved. Such policies will
provide consumers with certainty that additional expenses will not be incurred
for any services covered by the policy.
This item inserts a new Division 4A after Division 4 of Part 6 of the
Act. This Division contains machinery provisions dealing with the approval,
variation, review and revocation of gap cover schemes.
73BDD –
Registered organisations may apply to Minister for approval of gap cover schemes
Subsection 73BDD(1) allows a registered organisation to prepare a
gap cover scheme at any time.
Subsection 73BDD(2) provides that subject
to any relevant regulations, a registered organisation may apply to the Minister
for approval of a gap cover scheme. This subsection also provides that a scheme
is of no effect unless an approval by the Minister is in force in relation to
it.
Subsection 73BDD(3) emphasises that the Minister’s approval of
a scheme does not limit the further application of the Trade Practices Act
1974 (TPA) or the Competition Code of any participating jurisdiction in
relation to that scheme.
Broadly speaking, the TPA prohibits
anti-competitive trade practices, such as:
− anti-competitive agreements which have the purpose or effect of substantially lessening competition in a market in which the parties to the agreement operate;
− agreements that contain an exclusionary provision. Sometimes referred to as a “primary boycott”, these are agreements between persons in competition with each other which exclude or limit dealings with a particular supplier or customer or a particular class of suppliers or customers;
− agreements that fix prices;
− secondary boycotts where action by one person in concert with a second person (where “a person” can be an individual, corporation or trade union) hinders or prevents a third person from supplying or acquiring goods or services from a business; or
− misuse of market power.
The onus will be on registered
organisations to develop schemes which comply with the TPA and Competition
Codes.
Subsection 73BDD(4) clarifies that any arrangement entered into
for the purposes of a gap cover scheme does not constitute a hospital
purchaser-provider agreement, a medical purchaser-provider agreement or a
practitioner agreement. A gap cover scheme, and any attendant arrangements which
enable the scheme to operate, are different in kind from other agreements under
the NHA which rely on contractual arrangements.
Subsection 73BDD(5)
provides that regulations must be made in relation to the approval of gap cover
schemes by the Minister dealing with:
- the form, content and manner of dealing with these applications;
- the criteria to be considered by the Minister; and
- the power of the Minister to impose and vary conditions on these
schemes.
These regulations are mandatory. They will provide detail
necessary for the Ministerial approval process to function efficiently.
Subsection 73BDD(6) provides that the criteria specified in the
regulations to be taken into account by the Minister in determining whether to
approve schemes must include the provision of particulars sufficient to
demonstrate, to the satisfaction of the Minister, that the operation of the gap
cover scheme for which approval is sought will not have an inflationary impact.
This provision ensures that arrangements to cover the gap which are
negotiated under gap cover schemes will not result in increased medical fees,
nor increase the total cost borne by consumers of health services. This will
guarantee that gap cover schemes will genuinely reduce or eliminate the current
in-hospital medical gap.
Section 73BDE – Other matters
concerning gap cover schemes
Subsection 73BDE(1) enables regulations
to be made relating to the operation and regulation of gap cover schemes
approved by the Minister.
Subsection 73BDE(2) states that the regulations
must provide, in relation to each approved gap cover scheme:
- for the provision of annual reports by registered organisations to the Minister in respect of the operation of the scheme; and
- for the provision of a copy of such reports to the Private Health Insurance Administration Council (PHIAC).
Subsection 73BDE(3) provides further details on matters to be included in the regulations in relation to scheme annual reports. The regulations:
- must provide for the form and content of such reports;
- must provide for the date by which each report is to be provided to the Minister and to PHIAC;
- may provide for the Minister to permit the provision of a report after the date on which it would usually be required in certain circumstances;
- may provide for the initial report to be provided in respect of a period of more or less than a year in certain circumstances.
The provision of annual reports to the Minister on the operation of gap cover schemes will enable continual monitoring of the effects of the schemes in practice. This will ensure that schemes are achieving the results they were designed to provide, namely a real reduction in the level of out-of-pocket payments by patients with private health insurance. As the Minister will remain informed of the impact of schemes, conditions may be imposed, or variations made to conditions, to ensure that progress is continually made toward the elimination of the gap.
Subsection 73BDE(4) provides that the regulations made in relation to gap cover schemes may also include, but are not limited to, the following matters:
- periodic reviews of scheme operations by the Minister;
- revocation of schemes by the Minister in circumstances identified by regulation;
- the capacity of registered organisations to seek variation or revocation of schemes, or conditions imposed on schemes, in circumstances identified by regulations;
- the review of specified decisions under the Administrative Appeals
Tribunal Act 1975 in relation to specified decisions relating to the
approval, revocation or the conditions of operation to which they are
subject.
Item 7
This item inserts a new paragraph (bc)
after paragraph 82G(1)(bb), to expand PHIAC’s functions to include
obtaining regular reports from funds about matters relating to gap cover schemes
and providing advice to the Minister on the operation of those schemes. PHIAC
will report with particular reference to the extent to which schemes genuinely
reduce or eliminate the cost to consumers of hospital treatment and associated
professional attention.
PHIAC’s independent monitoring will provide
a concrete basis from which to assess the efficacy of gap cover schemes, and aid
in the determination of any condition or variations which might appropriately be
applied to schemes.
Item 8
This item adds a new
subparagraph (eb)(iii) after (eb)(ii) in Schedule 1 of the NHA. This allows the
benefit provided by a fund to exceed the gap between the amount paid under the
Health Insurance Act 1973 and the Schedule fee when a service is rendered
by or on behalf of a medical practitioner under a gap cover scheme approved by
the Minister.
ABBREVIATIONS USED IN NOTES ON CLAUSES
fund health benefits fund
HIA Health Insurance Act
1973
MBS Medicare Benefits Schedule
Minister
Minister for Health and Aged Care
NHA National Health Act
1953
organisation registered health benefits
organisation
PHIIA Private Health Insurance Incentives Act
1998
registered organisation registered health benefits
organisation
scheme gap cover scheme
TPA Trade
Practices Act 1974