EXPLANATORY STATEMENT

HEALTH INSURANCE ACT 1973

SECTION  23DNBA(4)

HEALTH INSURANCE (ELIGIBLE COLLECTION CENTRES) APPROVAL PRINCIPLES 2008

Subsection 23DNBA(4) of the Health Insurance Act 1973 (‘the Act’) requires the Minister to determine principles to be applied by the Minister in granting approvals for eligible pathology specimen collection centres under subsection 23DNBA(1) of the Act.

Under subsection 16A(5AA) of the Act, in order for medicare benefits to be payable for pathology services rendered, pathology specimens must be collected in an approved eligible collection centre (‘ACC’), or in other specified circumstances.  ACCs are currently regulated under arrangements set out in the Health Insurance (Eligible Collection Centres) Approval Principles 2007 (‘the 2007 Principles’).  

Background

• The Health Insurance (Eligible Collection Centres) Approval Principles 2005

In 2006, an independent review of the regulatory arrangements for ACCs was undertaken to ensure that the regulatory arrangements in place at the time (the Health Insurance (Eligible Collection Centres) Approval Principles 2005 (‘the 2005 Principles’) were consistent with the objectives of competition policy.  During the review it became clear that the arrangements were seen as a major issue facing the industry.  They were considered to create a significant barrier to entry for new entrants and inhibit the growth of smaller pathology providers while facilitating the growth of larger providers. 
 

• The Health Insurance (Eligible Collection Centres) Approval Principles 2007

Following the review, the 2007 Principles were made to improve regulatory arrangements.

The 2007 Principles replaced the 2005 Principles. The 2007 Principles provide a more equitable regulatory scheme that allows larger pathology providers to continue to grow their businesses and gives smaller providers a better chance to open additional collection centres yet contain pathology expenditure. 

The key changes that the 2007 Principles made are in the way the maximum number of approvals for external eligible collection centres are determined for Approved Pathology Authorities (APAs) that are proprietors of an accredited category GX or GY pathology laboratory.  Under the 2005 Principles, the maximum number of approvals that could be granted to such an APA in respect of a financial year was based on patient episode throughput.  However, under the 2007 Principles, this figure is based on the “nominal allocation” allotted to the APA for that financial year.  In addition, the 2007 Principles prohibit the inappropriate transfer of nominal allocations that are not part of a broader pathology business transaction. 

• The Health Insurance (Eligible Collection Centres) Approval Principles 2008

The Health Insurance (Eligible Collection Centres) Approval Principles 2008 (‘the Principles’) replace the 2007 Principles. The Principles are substantially similar to the 2007 Principles.  They differ from the 2007 Principles in the following respects:

• the Principles provide for a new section 24A which concerns the adjustment of nominal allocations of APAs that are part of a restructure of government pathology services;
• the definition of ‘nominal allocation’ in section 12 of Part 4 has been revised as a result of the inclusion of new rule 24A;
• sections 20, 21, 22 and 23 of Part 6 have been revised as a result of the inclusion of new rule 24A; and
• minor technical changes have been made to sections 3, 8, 10 and 14.

Consultation

The 2007 Principles were developed in consultation with the Australian Association of Pathology Practices, the National Coalition of Public Pathology (NCOPP) and the Royal College of Pathologists of Australasia.

The Principles were developed in consultation with NCOPP.

The Principles commence on 1 July 2008.

Details of the Principles are provided in Attachment A.  Attachments B and C provide illustrative examples of how the Principles apply in particular circumstances. 

The Principles are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Authority:  Subsection 23DNBA(4) of the

Health Insurance Act 1973

ATTACHMENT A

NOTES ON SECTIONS OF THE PRINCIPLES

Part 1   Preliminary

Section 1   Name of Principles

This section provides that the Principles may be cited as the Health Insurance (Eligible Collection Centres) Approval Principles 2008.

Section 2   Commencement

This section specifies the commencement date of the Principles as 1 July 2008.

Section 3   Definitions

This section defines key terms used in the Principles.

The definition of ‘new APA’ excludes an APA that is, pursuant to subsection 3(4), “related to another APA”.  This definition is designed to prevent pathology businesses from increasing their nominal allocation by setting up another APA, or associating themselves with a newly established APA.

This section also refers to the following document that is referred to in the Principles:

• Rural/Remote Areas Classification document published in January 1994 by the Department of Human Services and Health which is available, on request, from the Australian Government Department of Health and Ageing, Pathology Section, MDP 107, GPO Box 9848, Canberra, ACT 2600.

Part 2   General principles for applications

Section 4   Eligibility of premises for approval

This section specifies the criteria that the specimen collection centre must meet before an application for approval of an eligible collection centre can be considered by the Minister.

Section 5  Application for approval

This section specifies the criteria to be met before an application for approval of an eligible collection centre can be considered by the Minister.  For example that the applicant must be an approved pathology authority (APA):

• who operates a category G pathology laboratory in certain circumstances (see paragraphs 5(2)(a) and 5(2)(b)); or
• who operates a category S pathology laboratory in certain circumstances (see paragraphs 5(2)(c) and 5(2)(d)).

Section 5 also provides that an application must be made in the prescribed form and specifies the documentation to be provided in support of an application.

Section 6   Timing of application

This section specifies the period within which an application for approval of an eligible collection centre should be lodged and the consequence of making a late application.

Section 7   Approvals

Subsection 7(1) specifies the standard commencement and expiration dates of an approval.  Subsection 7(2) indicates that the commencement date of an approval may be backdated in special circumstances.  Subsection 7(3) specifies that the Minister will give to an applicant written notice of the decision to grant, or not to grant, an approval and if the decision is to not grant approval or backdate commencement as requested, the applicant’s right to have the decision reconsidered.

Part 3 Principles determining maximum numbers of approvals in respect of the 2007 – 2008 financial year for applicants operating category G pathology laboratories

Part 3 first appeared in the 2007 Principles.  It sets out the principles that were used in determining the maximum number of approvals that may grant under Part 3 for the 2007-2008 financial year to an APA who operates a category G pathology laboratory.  This Part has been retained in the Principles because it is of continuing relevance. An APA’s 2007-2008 nominal allocation is relevant for other calculations under the Principles, such as determining an APA’s nominal allocation in a future financial year under Part 4 and applying the limitations on the transfer of nominal allocation under section 22.

Section 8  Interpretation

This section provides an interpretation of certain terms used in Part 3 of the Principles.

A key term used in Part 3 is “2006–2007 nominal allocation”.

Essentially, an APA’s 2006–2007 nominal allocation will be the greater of:

(a)   the maximum number of approvals the APA was entitled to on 30 June 2007 (including any approvals granted) under the 2005 Principles, excluding any entitlements under certain provisions of the 2005 Principles; or

(b)   the actual number of approvals held by the APA on 30 June 2007, excluding approvals granted pursuant to certain provisions of the 2005 Principles.

The provisions of the 2005 Principles referred to are:

• ss10(1) – which provides for the ‘three approvals for one’ incentive for Rural/Remote collection centres; and
• ss11(3) and 12(4) – which provide for the granting of an additional approval to an APA described in the respective provision for each eligible collection centre that the APA will operate on the premises it operates a category G pathology laboratory; and
• s15 – which provides for the granting of approvals to an APA who operates a category S pathology laboratory as described in paragraph 5(2)(d) of the 2005 Principles.

Any entitlements held by, or granted to, an APA under these provisions are to be excluded from the calculation of the APA’s 2006–2007 nominal allocation.

Section 9  Maximum number of approvals

This section specifies the method for determining the maximum number of approvals that may be granted under Part 3 (noting that the APA may also obtain approvals under section 19 if they operate a category S laboratory in accordance with paragraph 5(2)(d)) for the 2007 – 2008 financial year to:

(a)   a new APA (as defined in section 3) who operates a category G pathology laboratory as described in paragraph 5(2)(a); or

(b)   an older APA (as defined in section 3) who operates a category G pathology laboratory as described in paragraph 5(2)(a) or 5(2)(b).

Subject to section 11 (which concerns the ‘three approvals for one’ incentive for Rural/Remote collection centres), such an APA may be granted:

• 1 approval for each 2007–2008 nominal allocation allotted to the APA (paragraph 9(c)); and

• where applicable, 1 additional approval for each eligible collection centre that the APA proposes to operate on the premises it operates a category G pathology laboratory (paragraph 9(d)).

Section 10  2007 – 2008 nominal allocation

As mentioned above, the maximum number of approvals that may be granted for the 2007–2008 financial year to:

(a)   a new APA operating a category G pathology laboratory as described in paragraph 5(2)(a); or

(b)   an older APA operating a category G pathology laboratory as described in paragraph 5(2)(a) or 5(2)(b);

is determined by reference to, inter-alia, the 2007–2008 nominal allocation allotted to the APA.

Section 10 specifies the method for calculating the 2007–2008 nominal allocation for such APAs.

Subsection 10(1) provides that an APA described in paragraph 9(a) (i.e. a new APA operating a category G pathology laboratory as described in paragraph 5(2)(a)) will be allotted a 2007–2008 nominal allocation of 4.

Subsection 10(2) provides that an APA described in paragraph 9(b) (i.e. an older APA operating a category G pathology laboratory as described in paragraph 5(2)(a) or 5(2)(b)) will be allotted a 2007–2008 nominal allocation that is the higher of the following:

• a number that is calculated by reference to the APA’s 2006–2007 nominal allocation (the detail of these calculations is set out in subsections 10(3) and (4)); or
• the maximum number of approvals to which the APA would have been entitled in respect of the 2007–2008 financial year under the 2005 Principles (excluding entitlements under certain provisions of the 2005 Principles) had those Principles not been repealed.

Further details and examples are provided in Attachment B.

It should be noted that subsections 10(1) and (2) are to be read subject to Part 6 (which concerns the ‘transfer’ of nominal allocation).  This is so that if an APA acquires or disposes of pathology business during the 2007–2008 financial year, their 2007–2008 nominal allocation may be adjusted in accordance with Part 6.

Section 11   Consequence of location of eligible collection centre

This section outlines the ‘three approvals for one’ incentive that is applicable if an APA elects to operate eligible collection centres in locations specified as Rural Other or Remote Other statistical local areas in the Rural/Remote Areas Classification (defined in section 3). 

The APA is not obliged to open all three collection centres, it may open one, two or three.

This section also specifies that the ‘three approvals for one’ incentive does not apply to an approval, the grant of which is allowed by operation of paragraph 9(d) – that is, an ‘additional’ approval granted to an APA for each eligible collection centre that the APA operates on the same premises it operates a category G pathology laboratory.

Part 4 Principles determining maximum numbers of approvals in respect of a relevant financial year for applicants operating category G pathology laboratories

Part 4 sets out the principles to be used in determining the maximum number of approvals that may be granted under Part 4, in respect of a financial year subsequent to the 2007–2008 financial year, to an APA who operates a category G pathology laboratory.

Section 12  Interpretation

This section provides definitions of certain terms used in Part 4 of the Principles.

An important definition is that of ‘nominal allocation’. This is defined to mean the number determined in accordance with section 14 of the Principles, or the nominal allocation allotted to a government APA in accordance with subsection 24A(3). The definition of ‘government APA’ is provided in section 20 of the Principles.

Section 13  Maximum number of approvals

This section specifies the method for determining the maximum number of approvals that may be granted under Part 4 for a relevant financial year (defined in section 12), to:

(a)   a new APA (as defined in section 3) who operates a category G pathology laboratory as described in paragraph 5(2)(a); or

(b)   an older APA (as defined in section 3) who:

• operates a category G pathology laboratory as described in paragraph 5(2)(a) or 5(2)(b) and;
• previously had a 2007–2008 nominal allocation determined in accordance with section 10 or a nominal allocation (as defined in section 12); or

(c)   an APA who:

• operates a category G pathology laboratory as described in paragraph 5(2)(a); and
• in the previous financial year operated a category S pathology laboratory as described in paragraph 5(2)(c) or 5(2)(d) (whether or not they still operate that laboratory); and
• has not previously had a 2007–2008 nominal allocation determined under section 10 or a nominal allocation determined under subsection 14(1); and
• is not related to another APA (subsection 3(3) outlines when an APA is related to another APA).

Subject to section 15 (which concerns the ‘three approvals for one’ incentive for Rural / Remote collection centres), an APA described in paragraph 13(a), (b) or (c) may be granted:

• approvals up to the nominal allocation of the APA for the relevant financial year to which the approval relates (paragraph 13(d)); and
• where applicable, 1 additional approval for each eligible collection centre that the APA proposes to operate on the premises it operates a category G pathology laboratory (paragraph 13(e)).

Section 14  Nominal allocation

As mentioned above, the maximum number of approvals that may be granted, for a relevant financial year, to an APA described in paragraph 13(a), (b) or (c), is determined by reference to, inter-alia, the APA’s nominal allocation.

Section 14 specifies the method for calculating the nominal allocation for such APAs.

Subsection 14(1) provides that:

• an APA described in paragraph 13(a) (i.e. a new APA operating a category G pathology laboratory as described in paragraph 5(2)(a)); or
• an APA described in paragraph 13(c) (i.e. an APA who in the previous financial year operated a category S pathology laboratory, now operates a category G pathology laboratory, has not previously been allocated a 2007–2008 nominal allocation or a nominal allocation and is not related to another APA);

will be allotted a nominal allocation of 4.

Subsection 14(2) provides that an APA described in paragraph 13(b) (i.e. an older APA operating a category G pathology laboratory as described in paragraph 5(2)(a) or 5(2)(b)) will be allotted a nominal allocation that is:

• the number calculated by adding the APA’s previous nominal allocation to the number obtained by multiplying the previous nominal allocation by the national population growth rate; or
• the APA’s previous nominal allocation plus 1 – if this number is higher than the number calculated above.

Further details and examples are provided at Attachment C.

It should be noted that in setting out the nominal allocation to be allotted to APAs described in section 13, subsections 14(1) and (2) are to be read subject to Part 6 (which concerns the ‘transfer’ of nominal allocation).  This is so that if an APA acquires of disposes of a pathology business during a financial year, their nominal allocation for that financial year may be adjusted in accordance with Part 6.

Section 15   Consequence of location of eligible collection centre

This section outlines the ‘three approvals for one’ incentive that is applicable for eligible collection centres in locations specified as Rural Other or Remote Other statistical local areas in the Rural/Remote Areas Classification (defined in section 3). 

The APA is not obliged to open or obtain approvals for all three collection centres, it may open one, two or three.

This section also specifies that the ‘three approvals for one’ incentive does not apply to an approval, the grant of which is allowed by operation of paragraph 13(e) – that is, an ‘additional’ approval granted to an APA for each eligible collection centre that the APA operates on the premises it operates a category G pathology laboratory.

Part 5  Principles determining maximum numbers of approvals in respect of a relevant financial year for applicants operating category S pathology laboratories

Part 5 sets out the principles to be used in determining the maximum number of approvals that may be granted under Part 5, in respect of a relevant financial year to an APA who operates a category S pathology laboratory.

Section 16  Interpretation

In Part 5, the term relevant financial year refers to the financial year to which a particular APA’s application for approval relates.

Section 17  Maximum number of approvals

This section specifies that the maximum number of approvals that may be granted under Part 5 in respect of a relevant financial year, to APAs operating category S pathology laboratories as described in paragraphs 5(2)(c) and 5(2)(d) is determined in accordance with Part 5.  In this context it should also be noted that APAs that also operate a category G laboratory may also obtain approvals under Part 3 or 4.

Section 18 Applicants operating a category S pathology laboratory who held units of entitlement

Prior to 1 December 2001, a small number of APAs operating only category S pathology laboratories held ‘units of entitlement’ to operate external licensed collection centres (i.e. collection centres not located on the same premises as the laboratory).  Eligibility for approval of these collection centres was ‘grandfathered’ under new legislative arrangements that took effect on 1 December 2001.

Section 18 specifies the method for determining the maximum number of approvals that may be granted under Part 5, for a relevant financial year, to an APA to whom:

• paragraph 5(2)(c) applies (i.e. an APA operating a category S pathology laboratory who held a unit of entitlement immediately prior to 1 December 2001); and
• paragraph 5(2)(d) may also apply (i.e. the APA may also operate a category S pathology laboratory that was accredited after 1 December 2001 and is co-located with a collection centre that is the subject of the application for approval); and
• neither paragraph 5(2)(a) nor 5(2)(b) applies (i.e. the APA does not operate a category G pathology laboratory).

The maximum number of approvals that may be granted to an APA who meets the requirements outlined above is a number equal to:

• the number of licensed collection centres that the APA was operating immediately before 1 December 2001; plus
• where applicable, 1 additional approval for each of the premises on which the APA operates a category S pathology laboratory of a kind described in paragraph 5(2)(d).

Section 19 Applicants operating a category S pathology laboratory who have not held units of entitlement

This section outlines the maximum number of approvals that may be granted under Part 5 for a relevant financial year, to an APA to whom:

• paragraph 5(2)(d) applies (i.e. the APA operates a category S pathology laboratory that was accredited after 1 December 2001 and is co-located with a collection centre that is the subject of the application for approval); and
• section 18 does not apply (i.e. the APA did not hold a unit of entitlement immediately prior to 1 December 2001 and/or operates a category G laboratory as described in paragraph 5(2)(a) or 5(2)(b)).

The maximum number of approvals that may be granted to an APA who meets these requirements is one for each of the premises on which the APA operates a category S pathology laboratory of a kind described in paragraph 5(2)(d).

Part 6  Transfer of nominal allocation

Section 20 Interpretation

This section provides definitions of  ‘government APA’ and ‘operational approved collection centre’, which are relevant for Part 6 of the Principles which concerns the transfer of nominal allocation.

A ‘government APA’ is defined as an APA that is owned, operated or employed by the Commonwealth, State or internal Territory or an authority of the Commonwealth, State or internal Territory. This definition is for the purpose of describing when section 24A of the Principles applies.

The definition of ‘operational approved collection centre’ is designed to ensure that a collection centre must be up and running before its sale will enable its nominal allocation to be transferred to another APA.  It also ensures that only a collection centre whose approval resulted from the use of the disposing APA’s nominal allocation can be used to justify a transfer of that nominal allocation to an acquiring APA.

Section 21 Effect of acquisition or disposal of APA business

This section specifies the circumstances in which an APA, who acquires or proposes to acquire business from another APA to which an approval has been granted, may request that the Minister transfer the nominal allocation pertaining to that business to the acquiring APA.

The nominal allocation of an APA will only be able to be transferred to another APA where the latter APA acquires business from the former APA and the acquisition includes at least one category G pathology laboratory and at least one operational approved collection centre (see subsection 21(2) and the definition of “operational approved collection centre” in section 20).

Subsection 21(3) sets out the information that must be included in a request made to the Minister under subsection 21(1).

Subsection 21(4) outlines certain qualifications on the Minister’s ability to transfer nominal allocation, in accordance with section 23 or section 24A (whichever is the case), to an acquiring APA, for so much of the financial year as remains from the specified date of transfer (see paragraph 21(3)(e)).  Although the transfer is for the remainder of the financial year, such transfers will flow on to effect the calculation of the relevant APAs’ nominal allocations for subsequent financial years because the transfer will affect their ‘previous nominal allocation’ in respect of those subsequent years.

Section 22 Limitation on transfer of nominal allocation

This section defines limitations that apply for a period of 5 years on the transfer of nominal allocation from APAs who received a ‘top-up’ to ‘a floor of four’ (see Attachments B and C) on 1 July 2007, from new APAs, and from APAs that are allotted a nominal allocation in accordance with subsection 24A(3) .

Subsection 22(2A) provides that the 5 year limitations on the transfer of nominal allocation referred to in subsections 22(1) and 22(2) do not apply to a transfer occurring in circumstances to which subsection 24A(1) applies, namely, where the acquiring and disposing APAs are government APAs and the disposing APA ceases to operate as an APA as a result of the acquisition of business.

Subsection 22(3) also stipulates that the nominal allocation of an APA cannot be transferred to another APA except in accordance with Part 6 following a request made under subsection 21(1); or to correct an error.

Section 23  Adjustment of nominal allocation

This section outlines the adjustments to be made to the nominal allocation of, as the case requires, an acquiring APA, an APA resulting from a merger and a disposing APA, in circumstances where an APA acquires business from another APA in accordance with section 21.

Subsection 23(1) concerns the adjustment to be made to the nominal allocation of an acquiring APA and subsection 23(2) concerns the adjustment to be made to the nominal allocation of a disposing APA.

It should be noted that subsections 23(1) and (2) are subject to subsection 23(3), which outlines the nominal allocation adjustments to be made where an approved collection centre, whose approval resulted from the operation of section 11 or 15, is the subject of a transaction referred to in section 21 (sections 11 and 15 concern the ‘three approvals for one’ incentive for Rural/Remote collection centres).

Subsection 23(5) provides that subsections 23(1) to (3) do not apply to an acquisition of business occurring in a circumstance described in subsection 24A(1).

Section 24 References to nominal allocation

This section specifies that a reference to “nominal allocation” in Part 6 includes the 2007–2008 nominal allocation (as defined in section 8).

Section 24A Adjustment of nominal allocation in the event of a restructure of government pathology services

This section outlines the adjustments to be made to the nominal allocation of an acquiring APA and a disposing APA in the event of a restructure of government pathology services.

Subsection 24A(1) sets out that section 24A is to apply where an acquiring APA that is a government APA (as defined in section 20) acquires business, in accordance with section 21, from a disposing APA or APAs that are also government APAs and where, as a result of the acquisition, the disposing APA or APAs cease to operate as an APA. If government APAs are involved in acquisition and disposal of business in circumstances other than those described in subsection 24A(1), then section 23 of the Principles is to apply to the adjustment of the nominal allocation in relation to that acquisition of business.

The purpose of subsection 24A(2) is to cover the scenario where an existing government APA acquires the whole business of another government APA or APAs. Subsection 24A(2) only applies in circumstances where subsection 24A(3) does not apply.

Subsection 24A(2) provides that where the circumstances set out in subsection 24A(1) apply, the nominal allocation of the acquiring APA after the acquisition of business is the sum of the nominal allocation held by the acquiring APA immediately prior to the acquisition of the business plus the nominal allocation held by the disposing APA, or the sum of the nominal allocation held by each of the disposing APAs, immediately prior to the acquisition of the business. For the avoidance of doubt, paragraph 24A(2)(b) provides that the nominal allocation of the disposing APA or of each disposing APA, following the acquisition of business, is zero.

The purpose of subsection 24A(3) is to cover scenarios where a new government APA is formed as part of a government restructure to acquire the whole of the business previously undertaken by another government APA or APAs.  The new government APA does not, in these circumstances, receive its initial nominal allocation under subsection 14(1) of the Principles. Rather, its initial nominal allocation is determined by this subsection.

Subsection 24A(3) provides that where the circumstances set out in subsection 24A(1) apply and where the acquiring APA has not operated an approved collection centre prior to the acquisition, then  the nominal allocation of the acquiring APA is the sum of the nominal allocation held by the disposing APA, or by each of the disposing APAs, immediately prior to the acquisition of the business. For the avoidance of doubt, paragraph 24A(3)(b) provides that the nominal allocation of the disposing APA or of each disposing APA, following the acquisition of the business, is zero.

Subsection 24A(4) provides, for the avoidance of doubt, that a reference to “acquires business” in section 24A includes the transfer of business that takes place between government APAs as a result of a government restructure,  

Part 7  Other Matters

Section 25  Applicants operating both a category G pathology laboratory and a category S pathology laboratory

The purpose of this section is to clarify that an APA who operates a category G pathology laboratory (as described in paragraph 5(2)(a) and/or 5(2)(b)) and a category S pathology laboratory (as described in paragraph 5(2)(d)) may be granted approvals under Part 3 or 4 and section 19 of Part 5.

Section 26  Compliance with the Collection Centre Guidelines

This section deals with the giving of an undertaking by an APA under paragraph 5(3)(a) of these Principles.  This undertaking must include an undertaking that the APA will inform Medicare Australia of any failure to comply with the Collection Centre Guidelines in operating an approved collection centre and provide a reason for the non-compliance.

Section 27  Review of decisions

Subsection 27(1) specifies the time-frame within which the Minister must respond to an application for reconsideration made under subsection 23DO(2DA) of the Act. 

Subsection 27(2) provides that an applicant who is dissatisfied with the Minister’s decision under paragraph 5(3)(a) of the Principles (under this provision, the Minister can accept that compliance with some, or all, provisions of the Collection Centre Guidelines is not reasonably practicable) may apply to the Administrative Appeals Tribunal for review of the decision.

The note to this section also refers to the Code of Practice created under section 27B of the Administrative Appeals Tribunal 1975, which is accessible on the Internet at: http://www.comlaw.gov.au

Section 28   Delegation of powers and functions

This section provides that the Minister may delegate his/her powers and functions under these Principles to the Chief Executive Officer of Medicare Australia.

ATTACHMENT B

DETERMINATION OF 2007 - 2008 NOMINAL ALLOCATION

FOR APAs OPERATING CATEGORY G LABORATORIES
 

Section 10 of the Principles sets out the method by which nominal allocation was determined under the 2007 Principles for APAs in the 2007-2008 financial year. An APA’s 2007-2008 nominal allocation is relevant for other calculations under the Principles, such as, determining an APA’s nominal allocation in a future financial year under Part 4 and applying the limitations on the transfer of nominal allocation under section 22. The examples below are provided to illustrate how nominal allocations were determined under Part 3.

An older APA with a category G pathology laboratory will be allotted a 2007–2008 nominal allocation that is the higher of the following:

(a) 4 (per paragraph 10(3)(a); or

(b) the number determined by multiplying the APA's 2006-2007 nominal allocation by the population growth rate and rounding to the nearest whole number (per paragraph 10(3)(b)(i); or

(c) the APA's 2006-2007 nominal allocation plus 1 (per paragraph 10(3)(b)(ii); or

(d) the maximum number of approvals to which the APA would have been entitled in respect of the 2007–2008 financial year under the 2005 Principles (excluding certain entitlements under the 2005 Principles) (per subsection 10(5)).

These calculations are illustrated in the examples below.

New APAs with a category G pathology laboratory will receive a 2007 - 2008 nominal allocation of 4.

The 2007 – 2008 nominal allocation calculated by the methods outlined above (and subject to any transfers under Part 6) would determine the maximum number of approvals for external eligible collection centres (i.e. those not co-located with a category G or S laboratory) that may be granted to new and older APAs with a category G laboratory in respect of the 2007 - 2008 financial year.

Examples:

Based on a population growth rate of 1.3 % (most recent Australian Bureau of Statistics figure as at 1 April 2007).

APA 1

APA 1 has a 2006 – 2007 nominal allocation (per section 8 of the Principles) of 250, and a 2006 throughput of patient episodes that would have entitled it to 225 approvals in 2007/08 under the 2005 Principles.

APA 1’s 2007 – 2008 nominal allocation is therefore calculated in accordance with paragraph 10(3)(b)(i) of the Principles as follows:

2006 - 2007 nominal allocation: 250

Additional nominal allocation:     3  ( 250 x 1.3 % = 3.25 rounded to nearest whole number = 3)

2007 - 2008 nominal allocation:      253                

APA 2

APA 2 has a 2006 – 2007 nominal allocation (per section 8 of the Principles) of 10, and a 2006 throughput of patient episodes that would have entitled it to 10 approvals in 2007/08 under the 2005 Principles.

APA 2’s 2007 – 2008 nominal allocation is therefore calculated in accordance with paragraph 10(3)(b)(ii) of the Principles as follows:

2006 - 2007 nominal allocation:   10

Additional nominal allocation:     1 

2007 – 2008 nominal allocation:   11  

APA 3

APA 3 has a 2006 – 2007 nominal allocation (per section 8 of the Principles) of 1, and a 2006 throughput of patient episodes that would have entitled it to 1 approval in 2007/08 under the 2005 Principles.

APA 3’s 2007 – 2008 nominal allocation is therefore 4 in accordance with paragraph 10(3)(a) of the Principles.

APA 4 (new APA)

APA 4 is a new APA in 2007 - 2008. 

APA 4’s 2007 – 2008 nominal allocation is therefore 4 in accordance with subsection 10(1) of the Principles.

ATTACHMENT C

DETERMINATION OF NOMINAL ALLOCATION FOR APAs WITH CATEGORY G LABORATORIES IN SUBSEQUENT FINANCIAL YEARS
 

1. Older APAs with a category G laboratory will have their nominal allocation for a particular financial year (after the 2007 – 2008 financial year) calculated on the basis of their nominal allocation from the end of the previous financial year.

2.       An additional nominal allocation will be added to the APA’s nominal allocation from the end of the previous financial year, on the basis of ABS national population growth rate figures, and subject to a minimum growth in nominal allocation of 1. 
 

3.       New APAs (who cannot be related to an existing APA) will receive an initial nominal allocation (“floor”) of four, except for those APAs that are allotted an initial nominal allocation under subsection 24A(3).
 

4.       The nominal allocation calculated by this method, subject to any transfer of nominal allocation under Part 6, would determine the maximum number of approvals for external ECCs that may be granted to the APA in the relevant financial year. 
 

Examples (continuing from Attachment B):

Assuming unchanged population growth rate of 1.3 %, using the APA scenarios from attachment B and assuming allocation numbers have not been affected by e.g. mergers or acquisitions during the
2007 – 2008 financial year.

APA 1

2007 - 2008 nominal allocation: 253

Additional nominal allocation:     3    (253 x 1.3 % = 3.289 rounded to nearest whole number = 3)

2008 - 2009 nominal allocation: 256   

APA 2

2007 - 2008 nominal allocation:   11

Additional nominal allocation:            1  (11 x 1.3 % = 0.143, rounds down to zero)

2008 - 2009 nominal allocation:    12   

APA 3 and 4

2007 - 2008 nominal allocation:      4

Additional nominal allocation:      1      (4 x 1.3 % = 0.052, rounds down to zero)

2008 - 2009 nominal allocation:      5   

New APA

2007 - 2008 nominal allocation:      0

Initial nominal allocation (“floor”)      4     

2008 - 2009 nominal allocation:      4