EXPLANATORY STATEMENT

Issued by Authority of the Minister for Health and Ageing

National Health Act 1953

Determination under Schedule 1, paragraph (bj)

(HIB 11/2005)

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

This determination repeals and replaces the determination made on 30 June 1999 (as amended). Since 30 June 1999 there have been numerous amendments. Rather than registering the principal determination and all subsequent amendments to the principal determination on the Federal Register of Legislative Instruments as required under the Legislative Instruments Act 2003, the alternative option allowed under the Legislative Instruments Act 2003 of repealing and remaking the determination in a consolidated form was pursued.

This determination also incorporates some substantive amendments, which are explained below.

Amendments to Schedules 1, 2, 3, and 8 

This determination makes substantive amendments to schedules 1, 2, 3 and 8. Schedules 1, 2, 3 and 8 of this determination set out benefit levels in regard to overnight accommodation, overnight shared ward accommodation, same day accommodation and outreach services.  This determination amends schedule 1, 2, 3, and 8 because these accommodation components are subject to annual review and are amended according to Consumer Price Index (CPI) movements from March to March each year with the agreement of the States and Territories.

No amendment has been made to the default benefit rates in schedules 1, 2, 3 and 8 in relation to the Northern Territory (NT) as they have not yet expressed their agreement to an increase in the default benefits to the Commonwealth. In the year from March 2004 to March 2005 there was an increase of 2.4% in the CPI.  The amendments that have been made to schedules 1, 2, 3 and 8 reflect this increase in the CPI, and are to take effect for the financial year 2005-2006.

Amendments to Schedule 4

This determination makes substantive amendments to schedule 4. Schedule 4 sets out benefit levels payable for Nursing Home Type Patients (NHTPs) in private and public hospitals. The charge for providing hospital treatment to NHTPs in private hospitals has been capped at $111.10 per day.  The default benefit for NHTPs in private hospitals is set by subtracting the amount of the patient contribution from the capped amount.  The patient contribution, which is not insurable, is calculated by reference to pension rates and set by the Minister’s Determination under subsection 3(1) of the Health Insurance Act 1973. The default benefit payable to NHTPs in private hospitals is modified each time that a change to the pension rate leads to a change to the amount of the patient contribution.

This determination adjusts the default benefit payable to NHTPs in public hospitals within the Australian Capital Territory, South Australia, Tasmania and Western Australia to take into account a recent change to the amount of the patient contribution.

This determination does not affect the default benefit payable to NHTPs in private hospitals in all States/Territories and in public hospitals in New South Wales, the Northern Territory, Queensland and Victoria.

Amendments to Schedule 6

This Determination makes amendments to Schedule 6.  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 4 additional private facilities and removes 4 previously listed private facilities in clause 3.

Consultation

The amendments to schedules 1, 2, 3 and 8 reflect the increase in the CPI from March 2004 to March 2005. The increase to the default benefits to reflect the increase in the CPI are of a machinery nature and do not substantially alter existing arrangements. Increases to the default benefits to reflect CPI are made with the agreement of the relevant State or Territory.

The amendments to schedule 4 in relation to default benefits for NHTPs in public hospitals in all States and Territories are set in accordance with the daily bed rate for NHTPs calculated by each State and Territory minus the patient contribution as set by the Minister’s Determination under subsection 3(1) of the Health Insurance Act 1973.  All States and Territories decide whether to adjust the daily bed rate for NHTPs each time there is a change to the standard pension rate.  The Minister amends the default benefit payable for NHTPs in each State and Territory every time a particular State or Territory notifies the Commonwealth that it has modified its daily bed rate for NHTPs.

The amendments to Schedule 6 in relation to second tier default benefits, 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 1 July 2005. 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

June 2005