EXPLANATORY STATEMENT

Issued by Authority of the Minister for Health and Ageing

National Health Act 1953

Determination under Schedule 1, paragraph (1)(bj)

(HIB 14/2006)

Schedule 1, paragraph (1)(bj) of the National Health Act 1953 (the Act) provides that the Minister may determine the minimum levels of benefits payable by a registered health benefits organization (RHBO) for hospital treatment provided to contributors, other than in emergencies, in a hospital or day hospital facility with which the RHBO does not have a hospital purchaser-provider agreement (HPPA) which covers such treatment. These benefits are known in the industry as “default benefits”. 

This determination repeals and replaces the determination made on 20 March 2006 (HIB 06/2006). Rather than registering the principal determination and registering all subsequent amendments to the principal determination on the Federal Register of Legislative Instruments as required under the Legislative Instruments Act 2003, I have pursued the alternative option allowed under the Legislative Instruments Act 2003 of repealing and remaking the determination in a consolidated form.

This determination is comprised of seven Schedules setting out the minimum levels of benefit which are payable for a range of hospital treatment.  Namely, benefits for overnight accommodation (Schedules 1 and 2), same day accommodation (Schedule 3), nursing-home type patients (Schedule 4), second tier benefits (Schedule 5), care plans and case conferencing (Schedule 6) and outreach services (Schedule 7).

Schedule 5

The determination HIB 06/2006 has been repealed and revoked in its entirety by this determination to remake Schedule 5 (second tier default benefit for overnight and day only treatment).

Schedule 5 requires a RHBO to pay no less than the benefit set by Schedule 5 in relation to most episodes of hospital treatment provided in private hospitals and private day hospital facilities that are specified in Schedule 5 with which the RHBO does not have a HPPA. The new Schedule 5 includes forty-nine new or renewed private facilities recommended to and approved by the delegate of the Minister for Health and Ageing by the Second Tier Advisory Committee to be entitled to second tier benefits.  The forty-nine facilities are:

The purpose of the Schedule 5 minimum benefit is to protect quality private facilities and to provide an incentive for private facilities to become accredited, hence increasing the level of quality hospital care available to consumers.

Schedule 5 sets a higher minimum level of benefit (for overnight treatment, day only treatment provided in specified facilities) than the minimum benefit set for such treatment by Schedules 1, 2, 3 and 7 of the determination.

Schedule 5 sets the minimum level of benefit payable to not less than 85% of the average charge for the equivalent episode of hospital treatment in specified HPPAs.  This benefit will generally be higher than the basic minimum benefit set by Schedules 1, 2, 3 or 7.  However, if in a particular case the level of benefit set by Schedule 5 should be less than the level of benefit set by Schedules 1, 2, 3 or 7, then the level of benefit set by Schedules 1, 2, 3 or 7 (as applicable) will apply.

Consultation

Consultation with industry occurred through the Second Tier Advisory Committee, which includes equal representation from both the private hospital and health fund sectors.

This determination commences on 19 April 2006. The determination and this explanatory statement have been lodged for registration on the Federal Register of Legislative Instruments.

PRIVATE HEALTH INSURANCE BRANCH

DEPARTMENT OF HEALTH AND AGEING

APRIL 2006