EXPLANATORY STATEMENT
Issued by Authority of the Minister for Health and Ageing
National Health Act 1953
Determination under Schedule 1, paragraph (bj)
(HIB17/2005)
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 Organization (RHBO) for an episode of hospital treatment provided, other than in emergencies, in a hospital or day hospital facility with which the RHBO does not have a hospital purchaser-provider agreement which covers such treatment. These benefits are known in the industry as “default benefits”.
The current Determination made on 24 June 2005 (HIB11/2005) (as amended) comprises eight schedules setting out the minimum levels of benefit which are payable for a range of hospital treatment. These include benefits for overnight accommodation, day accommodation, prostheses and second tier default benefits.
Schedule 5 sets out the benefits payable by RHBO’s in respect of Prostheses and Human Tissues.
The National Health Amendment (Prostheses) Act 2005 introduces new arrangements for listing and paying benefits for prostheses and human tissues. This Act received Royal Assent on 21 March 2005.
Schedule 1 to the National Health Amendment (Prostheses) Act 2005 will amend the Act to permit the Minister to determine:
- no gap prostheses, and the benefit amount for each no gap prosthesis; and
- gap permitted prostheses, and the minimum and maximum benefit amount for each gap permitted prosthesis.
The effect of these amendments is that Schedule 5 of Schedule 1, paragraph (bj) to the Act will be replaced, in its entirety, by a new determination made under subsections 73AAG(6) and (7) of the Act.
Schedule 1 to the National Health Amendment (Prostheses) Act 2005 will commence by proclamation on 31 October 2005. The Minister’s determination under subsections 73AAG(6) and (7) of the Act will also commence on 31 October 2005. Consequently, this determination removes Schedule 5 from the determination made under Schedule 1, paragraph (bj) to the Act on 24 June 2005 (as amended) with effect on 31 October 2005.
This determination also removes references to Schedule 5 contained in Schedule 6 of the determination made under Schedule 1, paragraph (bj) to the Act on 24 June 2005 (as amended), and replaces them with references to the new subsections 73AAG(6) and (7).
CONSULTATION
Extensive consultations have been carried out with major stakeholder groups in the development and implementation of the new arrangements for listing and setting benefits for prostheses. The major stakeholder groups are:
- the Australian Health Insurance Association;
- the Australian Private Hospitals Association;
- Catholic Health Australia;
- the Australian Medical Association;
- the Consumers’ Health Forum;
- the Medical Industry Association of Australia; and
- the Department of Veterans’ Affairs.
This determination takes effect on 31 October 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
SEPTEMBER 2005
Overview
The National Health Amendment (Prostheses) Act 2005 was enacted to introduce new arrangements for listing and paying benefits for prostheses and human tissues. This Act was designed to address the problem of ensuring that patients receive appropriate benefits for such treatments, particularly in the context of Registered Health Benefits Organizations (RHBO) that do not have hospital purchaser-provider agreements for such treatments. The Minister for Health and Ageing has the authority under the National Health Act 1953 to determine the minimum levels of benefits payable for hospital treatment provided in facilities without such agreements, known as "default benefits". The policy objective of this legislation is to provide a framework for setting these minimum benefits, ensuring that patients are not left with unexpected out-of-pocket expenses for necessary prostheses and human tissue treatments. The determination under Schedule 1, paragraph (bj) of the National Health Act 1953, as amended by the National Health Amendment (Prostheses) Act 2005, will come into effect on 31 October 2005, replacing the previous arrangements for prostheses benefits.
Scope and Application
The National Health Act 1953, through its Schedule 1, paragraph (bj), empowers the Minister for Health and Ageing to determine the minimum levels of benefit payable by Registered Health Benefits Organizations (RHBOs) for hospital treatments provided in facilities with which the RHBO does not have a hospital purchaser-provider agreement, excluding emergencies. This determination, which includes benefits for overnight and day accommodation, prostheses, and second-tier default benefits, applies to RHBOs and patients in need of hospital treatment, thereby impacting the private health insurance sector significantly. The geographic reach of the Act extends nationally, governing practices across Australia. The determination was last amended on 24 June 2005, and the current amendments introduced by the National Health Amendment (Prostheses) Act 2005 will replace Schedule 5, setting out benefits for prostheses and human tissues, with a new determination effective from 31 October 2005. The new arrangements will specify no gap prostheses and gap permitted prostheses along with their respective benefit amounts, and these changes will be implemented through subordinate instruments, ensuring the Minister's determinations are reflected in the regulations.
Key Provisions
The National Health Amendment (Prostheses) Act 2005, as referenced in the Explanatory Statement, introduces significant changes to how benefits for prostheses and human tissues are determined and paid by Registered Health Benefits Organizations (RHBOs) (Schedule 1). Under section 73AAG(6) and (7) of the National Health Act 1953, the Minister now has the authority to determine the minimum levels of benefit payable for prostheses, distinguishing between no gap prostheses and gap permitted prostheses, and specifying the benefit amount for each category. This replaces the previous arrangement under Schedule 5 of the National Health Act 1953, which is effectively removed by this new legislation.
These provisions impose several obligations on RHBOs. Firstly, they must adhere to the new determinations made by the Minister regarding the benefits for prostheses and human tissues. This includes ensuring that the specified benefits are accurately applied when processing claims for hospital treatment involving prostheses. Secondly, RHBOs must be prepared to update their systems and processes to reflect these changes, ensuring compliance with the new legislative framework. Additionally, RHBOs are required to maintain clear and accurate records of all benefits paid under the new determinations for audit and review purposes.
Breach of these obligations can result in significant consequences for RHBOs. Non-compliance with the Minister’s determinations could lead to financial penalties and legal action under the National Health Act 1953. The Act does not specify exact penalties in the explanatory statement, but it is understood that penalties can include substantial fines and potential legal proceedings. Such breaches may also tarnish the reputation of the RHBO and could result in loss of trust among policyholders, leading to further commercial repercussions. The Minister's determination is designed to ensure that patients receive fair and consistent benefits for prostheses, thereby maintaining the integrity of the health benefits system.