EXPLANATORY STATEMENT

Issued by Authority of the Minister for Health and Ageing

National Health Act 1953

Determination under Schedule 1, Paragraph (bj)

(HIB 02/2005) 

1. Paragraph (bj) of Schedule 1 to 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 organization does not have a hospital purchaser-provider agreement (HPPA) which covers such treatment. A HPPA is an agreement between an RHBO and a hospital under which, amongst other things, the parties agree on the amount of benefit that the RHBO will pay for episodes of hospital treatment provided to its contributors at a hospital.

2.      The current Determination was made on 30 June 1999 (the Determination) and comprises eight schedules setting out the minimum levels of benefit 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), prostheses (Schedule 5), care plans and case conferencing (Schedule 7) and outreach services (Schedule 8).

3.      This determination amends the previous Determination made on 30 June 1999 by replacing Schedule 6 (second tier default benefits for overnight and day only treatment) with a new Schedule 6.

4.      Schedule 6 requires a RHBO to pay no less than the benefit set by Schedule 6 in relation to most episodes of hospital treatment provided in private hospitals and private day hospital facilities (facilities) that are specified in Schedule 6 with which the RHBO does not have a HPPA.  The new Schedule 6 specifies an additional 10 private facilities in clause 3.  One facility for which approval was due to expire on 30 June 2005 has been re‑assessed against the eligibility criteria in Part 5 of the Administrative Arrangements for the Second Tier Default Benefit for Overnight and Day Only Treatment and will continue to be specified in clause 3.  One other facility that was specified as a private day hospital facility has been specified as a private hospital facility and removed from the list of day hospital facilities in clause 3.

5.      The purpose of the Schedule 6 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.

6.      Schedule 6 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 8 of the Determination.

7.      Schedule 6 sets the minimum level of benefit payable by reference 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 8 of the Determination. However, if in a particular case the level of benefit set by Schedule 6 should be less than the level of benefit set by Schedules 1, 2, 3 or 8, then the level of benefit set by Schedules 1, 2, 3 or 8 (as applicable) will apply.

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

9.      A clause-by-clause explanation of new Schedule 6 is set out in Attachment 1.

10.  This determination was made on 9 March 2005 and this determination commences on the day after registration on the Federal Register of Legislative Instruments.

PRIVATE HEALTH INSURANCE BRANCH

DEPARTMENT OF HEALTH AND AGEING

     MARCH 2005

Attachment 1

DETERMINATION UNDER PARAGRAPH (bj) OF SCHEDULE 1 OF THE NATIONAL HEALTH ACT 1953 (HIB 1/2005) 

1. This determination amends the Determination made under paragraph (bj) of Schedule 1 of the National Health Act 1953 (the Act) on 30 June 1999 (the Determination) by replacing Schedule 6 (second tier default benefits for overnight and day only treatment) with a new Schedule 6.

Details of Schedule 6

Clause 1 – Interpretation

2.      This clause defines terms used in the Schedule.

Clause 2 – Minimum level of benefit

3.      This clause specifies the minimum benefit set by Schedule 6.

4.      Subclauses 2(1) and 2(2) specify when the minimum benefit set by Schedule 6 is payable.  Essentially, it is payable for all overnight shared ward accommodation, day only treatment and outreach services provided in a private hospital or private day hospital facility (facility) specified in clause 3 when a HPPA does not exist between the facility and the relevant RHBO.  The minimum benefit payable for such episodes or hospital treatment provided in facilities that are not specified in clause 3 is that set by Schedule 1, 2, 3 or 8 of the Determination for the episode.

5.      The benefit set by Schedule 6 is not payable in respect of episodes of hospital treatment referred to in Schedules 4 (nursing-home type patients), 5 (surgically implanted prostheses and human tissue items) and 7 (care plans and case conferencing) of the Determination made under paragraph (bj) of Schedule 1 of the Act.  The minimum benefit payable in respect of these episodes of hospital treatment remains that set by either Schedule 4, 5 or 7 of the Determination.

6.      Subject to subclauses 2(6) and 2(8), subclause 2(3) sets the minimum level of benefit payable under Schedule 6 in respect of non-rehabilitation episodes of hospital treatment.  The benefit payable by a RHBO in respect of a non-rehabilitation episode of hospital treatment between 1 September of any year and 31 August of the next year (the payment year) is set by reference to that RHBO’s HPPAs (or similar arrangements) that were in force on 1 August of the year preceding the payment year with comparable facilities in each State.  For the purposes of calculating the benefit, the Australian Capital Territory is taken to be part of New South Wales and the Northern Territory is taken to be part of South Australia. 

7.      For treatment provided in a private hospital, the minimum benefit payable for a non-rehabilitation episode of hospital treatment must be no less than 85% of the average charge for the equivalent episode of hospital treatment under that RHBO’s HPPAs (or similar arrangements) with comparable private hospitals in the State in which the facility is located.

8.      For treatment provided in a private day hospital facility, the minimum benefit payable for a non-rehabilitation episode of hospital treatment must be no less than 85% of the average charge for the equivalent episode of hospital treatment under that RHBO’s HPPAs (or similar arrangements) with all private day hospital facilities in the State in which the facility is located.

9.      Subclauses 2(4) and 2(5) set out rules relating to the calculation of the average charge for the equivalent episode of hospital treatment under the relevant RHBO’s HPPAs (or similar arrangements).

10.  Subclause 2(6) sets the default benefit payable if a particular RHBO has less than 5 HPPAs (or similar arrangements) in force on 1 August of a particular year with a particular class of comparable private hospitals in a State.  When subclause 2(6) applies, all of that RHBO’s HPPAs (or similar arrangements) with all classes of private hospitals in that State are to be used to calculate the minimum benefit payable.

11.  Subclause 2(7) sets the minimum level of benefit payable under Schedule 6 in respect of a rehabilitation episode of hospital treatment. The minimum benefit payable must be no less than 85% of the average charge for rehabilitation episodes of hospital treatment under the RHBO’s HPPAs (or similar arrangements) with comparable private hospitals or private day hospital facilities in the State (as appropriate) where the RHBO has directly linked the payment of benefits under its HPPAs (or similar arrangements) to the AN-SNAP rehabilitation classification system. In other cases, the minimum level of benefit payable under Schedule 6 is an amount, based on the AN-SNAP rehabilitation classification system, negotiated by the RHBO and the facility.

12.  Subclause 2(8) provides that if the minimum level of benefit payable under subclauses 2(3), 2(6) or 2(7) in respect of an episode of hospital treatment is less than the level set by Schedule 1, 2, 3 or 8 of the Determination, then the minimum level of benefit payable under Schedule 6 is that set by Schedule 1, 2, 3 or 8 of the Determination for that episode of hospital treatment.  The purpose of this subclause is to ensure that the level of benefit set by Schedule 6 is never less than the basic default benefit set by Schedule 1, 2, 3 or 8 of the Determination.

Clause 3 – Specified Private Hospitals And Private Day Hospital Facilities

13.  This clause specifies private hospitals and private day hospital facilities for the purpose of Schedule 6.  RHBOs are only required to pay the minimum level of benefit set by clause 2 in relation to treatment provided to a contributor in a private hospital or private day hospital facility that is specified in clause 3.

Clause 4 – Transitional provision for facilities no longer specified in clause 3

14.  This clause is a transitional provision that applies when a facility ceases to be specified in clause 3, whether because a determination is made under paragraph (bj) of Schedule 1 of the Act removing the facility from clause 3 or because the facility changes its name or address.  The purpose of the provision is to ensure that patients who were already receiving, or booked for, treatment in the facility at the time it ceased to be specified are not disadvantaged.  It provides that a RHBO must pay the minimum level of benefit set by Schedule 6 to all of its members who were admitted patients of, or booked for treatment at, the facility prior to the date the facility ceased to be specified in clause 3.