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2022-2023
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
PRIVATE HEALTH INSURANCE LEGISLATION AMENDMENT
(MEDICAL DEVICE AND HUMAN TISSUE PRODUCT LIST AND COST
RECOVERY) BILL 2022
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendment to be moved on behalf of the Government
(Circulated by authority of the Minister for Health and Aged Care,
the Hon Mark Butler MP)
AMENDMENT TO THE PRIVATE HEALTH INSURANCE LEGISLATION
AMENDMENT (MEDICAL DEVICE AND HUMAN TISSUE PRODUCT LIST
AND COST RECOVERY) BILL 2022
OUTLINE
The Private Health Insurance Legislation Amendment (Medical Device and Human
Tissue Product List and Cost Recovery) Bill 2022 (PHI Bill) amends the Private
Health Insurance Act 2007 (PHI Act) to better define the products that may be
eligible for inclusion on the Prostheses List.
The PHI Bill also renames the current Private Health Insurance (Prostheses) Rules
(No. 3) 2022 (current Rules), made under the PHI Act, to the Private Health
Insurance (Medical Devices and Human Tissue Products) Rules (renamed Rules) to
better reflect its purpose and the types of products eligible for inclusion. The renamed
Rules will include a schedule to be known as the Prescribed List of Benefits for
Medical Devices and Human Tissue Products (Prescribed List) (PL).
The PHI Bill also updates the cost recovery arrangements authorised by the PHI Act
and the Private Health Insurance (Prostheses Application and Listing Fees) Act 2007
(PHI Fees Act). This includes providing statutory authority for the Minister for
Health and Aged Care to establish fee for service cost recovery arrangements
consistent with the Australian Government Charging Framework (AGC
Framework).
The new cost recovery provisions established by the PHI Bill include the following
measures:
• amend the PHI Act to permit the making of rules to impose fees for activities
carried out in connection with the PL;
• provide for items to be removed from the PL and for processing and other
activities to cease, where fees or levies remain unpaid;
• provide for late payment penalty, recovery, and waivers in relation to fees and
levies; and
• authorise the rules to provide for other matters in relation to fees and levies.
Amendment to Schedule 2 of the PHI Bill
The Government amendment to the PHI Bill responds to concerns raised by the
Senate Standing Committee for the Scrutiny of Bills (the committee) in relation to the
breadth of each discretion in sections 72-20 and 72-25 of the PHI Bill. The committee
requested whether the PHI Bill could be amended to provide appropriate safeguards in
relation to the exercise of these powers.
The power in section 72-20 provides for the removal of a listing in the PL if there are
unpaid fees or levies and the power in section 72-25 provides that the Minister may
refuse to carry out or direct a person not to carry out specified activities until unpaid
fees or levies are paid.
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The amendment includes matters that the Minister must have regard to when
exercising the powers in sections 72-20 and 72-25 because of unpaid fees or levies.
The amendment requires the Minister to have regard to the following matters when
proposing to remove a listing from the renamed Rules or proposing not to carry out
activities in relation to a debtor until unpaid fees or levies are paid:
• whether the exercise of these powers would be detrimental to the interests of
insured persons (patients); and
• whether the exercise of these powers would significantly limit the professional
freedom of medical practitioners (clinicians) to identify and provide
appropriate treatments.
These measures provide appropriate safeguards and guide the exercise of the powers
in new sections 72-20 and 72-25 of the PHI Bill.
Financial Impact Statement
In the 2021-22 Federal Budget, the Australian Government committed $22 million
over four years as part of the Modernising and Improving the Private Health
Insurance Prostheses List measure.
The financial impact of regulatory costs of the measures in the three bills - the Private
Health Insurance Legislation Amendment (Medical Device and Human Tissue
Product List and Cost Recovery) Bill 2022, the Private Health Insurance (Prostheses
Application and Listing Fees) Amendment (Cost Recovery) Bill 2022 and the Private
Health Insurance (National Joint Replacement Register Levy) Amendment
(Consequential Amendments) Bill 2022, is estimated to be a maximum of
$1.81 million per year.
This Government amendment has no financial impact because it only deals with
matters that the Minister must have regard to in exercising certain powers where there
are unpaid fees or levies.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011
AMENDMENTS TO THE PRIVATE HEALTH INSURANCE LEGISLATION
AMENDMENT (MEDICAL DEVICE AND HUMAN TISSUE PRODUCT LIST
AND COST RECOVERY) BILL 2022
The Government amendment to the Private Health Insurance Legislation Amendment
(Medical Device and Human Tissue Product List and Cost Recovery) Bill 2022 (PHI
Bill) are 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 PHI Bill
The Private Health Insurance Legislation Amendment (Medical Device and Human
Tissue Product List and Cost Recovery) Bill 2022 (PHI Bill) provides for the
renamed Private Health Insurance (Medical Devices and Human Tissue Products)
Rules (renamed Rules). The renamed Rules will include a schedule to be known as
the Prescribed List of Benefits for Medical Devices and Human Tissue Products
(Prescribed List) (PL).
The PHI Bill also updates the cost recovery arrangements authorised by the PHI Act.
This includes fee for service cost recovery arrangements consistent with the
Australian Government Charging Framework (AGC Framework).
The new cost recovery provisions established by the PHI Bill include the following
measures:
• amend the PHI Act to permit the making of rules to impose fees for activities
carried out in connection with the PL;
• provide for items to be removed from the PL, and for processing and other
activities to cease, where fees or levies remain unpaid;
• provide for late payment penalty, recovery, and waivers in relation to fees and
levies; and
• authorise the rules to provide for other matters in relation to fees and levies.
Overview of Government amendment
The Government amendment to the PHI Bill responds to concerns raised by the
Senate Standing Committee for the Scrutiny of Bills in relation to the breadth of each
discretion in sections 72-20 and 72-25 of the PHI Bill. The amendment includes
matters that the Minister must have regard to when exercising the powers in sections
72-20 and 72-25 because of unpaid fees or levies. The power in new section 72-20
provides for the removal of a listing in the PL if there are unpaid fees or levies and the
power in new section 72-25 provides that the Minister may refuse to carry out or
direct a person not to carry out specified activities in relation to a debtor until unpaid
fees or levies are paid.
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Human rights implications
Right to Health
The right to health is contained in Article 12(1) of the International Covenant on
Economic, Social and Cultural Rights (ICESCR), which provides that Parties to the
ICESCR should take measures to ensure enjoyment for everyone of the highest
attainable standard of physical and mental health.
This Government amendment to the PHI Bill will promote the right to health by
requiring the Minister to have regard to whether the exercise of the powers in new
sections 72-20 and 72-25 would be detrimental to the interests of insured persons
(patients). This would include access to safe and clinically effective medical devices
and human tissue products for patients.
Conclusion
The PHI Bill and this amendment to the PHI Bill are consistent with human rights as
they promote the right to health for persons with private health insurance (insured
persons).
[Circulated by the authority of the Minister for Health and Aged Care,
the Hon Mark Butler MP]
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AMENDMENTS TO THE PRIVATE HEALTH INSURANCE LEGISLATION
AMENDMENT (MEDICAL DEVICE AND HUMAN TISSUE PRODUCT LIST
AND COST RECOVERY) BILL 2022
NOTES ON AMENDMENTS
Amendment
Schedule 2, item 4, page 12 (after line 12), after section 72-25
This amendment inserts new section 72-27 into Schedule 2 of the Private Health
Insurance Legislation Amendment (Medical Device and Human Tissue Product List
and Cost Recovery) Bill 2022 (PHI Bill). The amendment responds to concerns raised
by the Senate Standing Committee for the Scrutiny of Bills in relation to the breadth
of each discretion in sections 72-20 and 72-25 of the PHI Bill. The amendment
provides appropriate safeguards in relation to the exercise of these powers.
New section 72-27
New section 72-27 specifies matters that the Minister must have regard to when
exercising powers under the Private Health Insurance Act 2007 (PHI Act) because of
unpaid fees or levies (new sections 72-20 and 72-25 in the PHI Bill). The power in
new section 72-20 provides for the removal of a listing in the Prescribed List (PL) if
there are unpaid fees or levies, and the power in new section 72-25 provides that the
Minister may refuse to carry out or direct a person not to carry out specified activities
until unpaid fees or levies are paid. Additional information about sections 72-20 and
72-25 is provided below.
New section 72-27 requires the Minister to have regard to the following matters when
proposing to remove a listing from the renamed Rules or proposing to not carry out
activities in relation to a debtor, if there are unpaid fees or levies:
• whether the exercise of these powers would be detrimental to the interests of
insured persons (patients); and
• whether the exercise of these powers would significantly limit the professional
freedom of medical practitioners (clinicians) to identify and provide
appropriate treatments.
These measures provide appropriate safeguards and guide the exercise of the powers
in new sections 72-20 and 72-25 in the PHI Bill. The matters specified in Section 72-
27 apply to the transitional provisions (items 14 and 15) of Schedule 2 to the PHI Bill,
as a reference to 'a power' in new section 72-27 would have a corresponding meaning
for those transitional provisions.
Paragraph 72-27(a) refers to 'insured persons' because as the PHI Act applies to
private health insurance, all patients affected by the matters specified in section 72-27
would be 'insured persons'. This paragraph ensures that the Minister has regard to
whether the exercise of the powers in new sections 72-20 and 72-25 would be
detrimental to the interests of insured persons, including, for example, their access to
safe and clinically effective medical devices and human tissue products.
Paragraph 72-27(b) refers to 'medical practitioners' rather than clinicians, as 'medical
practitioner' is already defined in the PHI Act and the concept of professional
freedom for medical practitioners to identify and provide appropriate treatments is
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preserved in other provisions in the PHI Act (see section 172-5, which deals with
agreements with medical practitioners). This paragraph ensures that the Minister has
regard to whether the exercise of the powers in new sections 72-20 and 72-25 would
significantly limit the professional freedom of medical practitioners (clinicians) to
identify and provide appropriate treatments.
Additional information about sections 72-20 and 72-25 of the PHI Bill
Additional information about sections 72-20 and 72-25 is provided below, based on
information in the Explanatory Memorandum for the PHI Bill.
Section 72-20 in the PHI Bill
As described in the Explanatory Memorandum for the PHI Bill, new section 72-20
allows the Minister or the Minister's delegate to remove a kind of medical device or
human tissue product from the renamed Rules when a person is liable to pay a cost
recovery fee or levy and fails to pay this cost recovery fee or levy in accordance with
the requirements in the renamed Rules. This section does not require the automatic
removal of a listing of a kind of medical device or human tissue product from the
renamed Rules if a cost recovery fee or levy is not paid. Instead, it allows the Minister
or their delegate to retain a listing in the case of a cost recovery fee or levy that is not
paid, for example, where it is in the best interests of patients and clinicians. This
safeguard is described in new section 72-27 as outlined above.
This mirrors the previous section 72-15 (current PHI Act), which dealt with the
removal of a kind of prosthesis for an unpaid ongoing listing fee. New section 72-20
in the PHI Bill extends this to provide that a listing in the renamed Rules may be
removed for an unpaid fee or levy, aligning with previous section 72-15 but with
application to reflect that both fees and levies are payable.
Decisions to add or remove items from the legislative instrument (in this case the
renamed Rules) are ordinarily characterised as legislation-like decisions of broad
application, as decisions to list items on or remove items from the current Prostheses
List are made for items each time the legislative instrument is made or varied (which
currently occurs three times per year). That is, decisions relating to legislative
instruments are not directed to the interests of any individual person. However, the
provision that permits removal of a listing for non-payment of fees or levies may be
considered to be a decision that has a particular effect on an individual sponsor.
New section 72-20 provides discretion because it would be inappropriate, for
example, to require removal of a listing for non-payment of cost recovery fees or
levies if this would be detrimental to patient health. The provision therefore allows the
Minister to retain a listing where, for example, that is in the best interests of patients
and clinicians, even though the sponsor has not paid cost recovery fees or levies.
The decision to retain or remove the listing for unpaid cost recovery fees or levies is
an objective decision (as fees are either paid or not paid). However, the decision may
involve consideration of a significant public interest element for patients that require
treatment with the relevant medical device or human tissue products. The decision to
retain a listing would also require an evaluation of complex technical information
(scientific and economic) about the value of a medical device or human tissue product
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in Australia's health system; for example, whether retaining a listing would be in the
best interests of patients and clinicians (rather than sponsors).
For these reasons, the decision to remove a listing for unpaid costs recovery charges,
while discretionary, does not lend itself to merits review. This approach is consistent
with the previous section 72-15 (current PHI Act) that provided for a discretionary
power to remove a listing for unpaid fees, where this decision was also not subject to
merits review.
Section 72-25 in the PHI Bill
As described in the Explanatory Memorandum for the PHI Bill, new section 72-25
allows the Minister, or the Minister's delegate, to refuse to carry out activities for a
person (the debtor) where the person is liable to pay a cost recovery fee or levy and
has not paid this cost recovery fee or levy. In practice, this may mean that all requests
associated with the debtor for any service related to applications for a new listing in
the renamed Rules or administration of an existing listing in the renamed Rules may
be refused until the cost recovery fee is paid.
New section 72-25 prevents a debtor who has unpaid cost recovery fees from
incurring additional liabilities. It also reduces the likelihood that the Commonwealth
will expend further resources in relation to activities for that person where there is an
outstanding debt and will encourage those persons to pay the cost recovery fee or levy
for which they are liable.
It would be inappropriate to mandatorily prevent a listing or other activity to be
carried out if this would, for example, be detrimental to patient health. Therefore, the
provision allows the Minister to continue to carry out activities for a person where, for
example, that is in the best interests of patients and clinicians, even though the
sponsor has not paid cost recovery fees or levies. This safeguard is described in new
section 72-27 as outlined above.
The decision is discretionary because it would be inappropriate to mandatorily prevent
a listing or other activity to be carried out if this would, for example, be detrimental to
patient health. Therefore, the provision allows the Minister to continue to carry out
activities for a person where, for example, that is in the best interests of patients and
clinicians, even though the sponsor has not paid cost recovery fees or levies. Similar
to the decision under new section 72-20, the decision to carry out activities may
involve consideration of a significant public interest element for those patients that
may require treatment with the relevant medical device or human tissue product. This
may involve an evaluation of complex technical information (scientific and economic)
about the value of a medical device or human tissue product in Australia's health
system; for example, whether the activities carried out would be in the best interests
of patients and clinicians (rather than sponsors).
For these reasons, the decision to not carry out activities for unpaid costs recovery
fees and levies, while discretionary, does not lend itself to merits review. This
approach is consistent with other Commonwealth legislation that provides for a
discretionary power to not carry out activities for unpaid fees or levies, where this
decision was also not subject to merits review; for example, section 406 of the Export
Control Act 2020 and section 99YYB of the National Health Act 1953.
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Items 14 and 15 of the PHI Bill
Items 14 and 15 deal with transitional provisions that apply to new sections 72-20 and
72-25 where there are unpaid fees and levies. New section 72-27 would apply for the
purposes of these transitional provisions. If exercising powers under these transitional
provisions, the Minister is to have regard to whether the exercise of these powers
would be detrimental to the interests of insured persons (patients) and whether the
exercise of these powers would significantly limit the professional freedom of medical
practitioners (clinicians) to identify and provide appropriate treatments.
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