EXPLANATORY STATEMENT
Issued by Authority of the Minister for Health and Ageing
National Health Act 1953
Determination under Schedule 1, paragraph (bj)
(HIB 20/2005)
Schedule 1, paragraph (bj) of the National Health Act 1953 (“the Act”) provides that the Minister may determine the minimum benefit levels payable by registered health benefits organisation for hospital treatment provided to contributors, other than in emergencies, in a hospital or day hospital facility with which the organisation does not have a hospital purchaser-provider agreement covering such treatment. These benefits are known in the industry as “default benefits”.
The current Determination dated 24 June 2005 (HIB 11/2005) (as amended) is comprised of eight schedules setting out the minimum benefit levels payable for a range of hospital treatment. These include benefits for overnight accommodation, day accommodation and surgically implanted prostheses, including human tissue items.
This Determination amends the Determination dated 24 June 2005 (as amended) by omitting Schedule 1 and substituting new Schedule 1 (HIB 20/2005). Schedule 1 sets default benefits for overnight accommodation in certain situations by specifying the default benefits that are payable in relation to Medicare Benefits Schedule (MBS) item numbers. Schedule 1 categorises MBS item numbers into patient classifications (e.g. Advanced Surgical, Surgical/Obstetric or Other Patient).
The new Schedule 1 has been amended by adding and deleting MBS item numbers to reflect equivalent changes made to the MBS effective on and from 1 November 2005.
Schedule 1 has been amended to specify that advanced surgical patients are those undergoing a procedure with an MBS fee greater than $738.22 and surgical patients are those undergoing a procedure with an MBS fee within the range of $219.81 to $738.22. These new amounts reflect a 2.0% fee increase which has been applied to MBS fees from 1 November 2005. This amendment will ensure that MBS services that have been classified as surgical will not move up to the advanced surgical classification simply as a result of the MBS fee increase.
These changes were necessary because Schedule 1 links the default benefits that are payable to the types of professional services rendered to admitted hospital patients. The types of professional services rendered are identified by reference to MBS item numbers and fees.
CONSULTATION
The changes to the MBS resulted from reviews by the Medicare Consultative Committee (MBCC). The MBCC is an informal consultative forum with representation drawn from the Department of Health and Ageing, the Health Insurance Commission, the Australian Medical Association and relevant professional groups of the medical profession. The reviews conducted by the MBCC are designed to ensure that the MBS reflects current medical practice and encourages best practice.
The subsequent changes to Schedule 1 were necessary to ensure that health funds, at a minimum, pay the ‘default benefit’ for their members where members receive hospital treatment corresponding to one of the new MBS item numbers, in a hospital where that health fund does not have a contractual arrangement with that hospital. This amendment to Schedule 1 is of a machinery nature and does not substantially alter existing arrangements.
The Determination was made on 24 October 2005 and takes effect on 1 November 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
NOVEMBER 2005
Overview
The National Health Act 1953, enacted by the Australian Parliament, governs the provision of health services and the regulation of private health insurance. The Act was introduced to ensure the provision of equitable health services and to regulate private health insurance practices to protect consumers. A significant aspect of this regulation includes the setting of minimum benefit levels, known as "default benefits," for hospital treatment provided by registered health benefits organisations in situations where there is no hospital purchaser-provider agreement. The 2005 Determination under Schedule 1, paragraph (bj), of the Act updates these default benefits to align with changes in the Medicare Benefits Schedule (MBS), ensuring that health funds continue to provide appropriate levels of coverage for their members. The policy objective of these amendments is to maintain consistency and fairness in the provision of health benefits, reflecting current medical practices and fee structures. This update was necessitated by the need to correlate the types of professional services rendered, identified by MBS item numbers and fees, with the corresponding default benefits.
Scope and Application
The National Health Act 1953, as amended by the HIB 20/2005 Determination, applies to registered health benefits organisations which provide hospital treatment to contributors, except in emergency situations, in hospitals or day hospitals with which the organisations do not have a hospital purchaser-provider agreement. This Act sets out the minimum benefit levels, referred to as “default benefits”, that these organisations must pay for certain hospital treatments. The current Determination updates the minimum benefit levels by categorising hospital treatments based on Medicare Benefits Schedule (MBS) item numbers and corresponding fees, reflecting a 2.0% fee increase effective from 1 November 2005. The changes were necessary to ensure that the classification of patients, such as advanced surgical or surgical patients, remains accurate despite the increase in MBS fees. This Determination applies nationally across Australia and is enforced by the Private Health Insurance Branch of the Department of Health and Ageing. It ensures that health funds provide appropriate default benefits for their members receiving hospital treatment in non-contracted facilities, maintaining consistency with current medical practice and encouraging best practice in the healthcare industry.
Key Provisions
The National Health Act 1953, specifically under Schedule 1, paragraph (bj), enables the Minister to determine the minimum benefit levels that registered health benefits organisations must pay for hospital treatment provided to contributors in hospitals or day hospitals that do not have an agreement with the organisation. These minimum benefits are commonly referred to as "default benefits" (s1). The latest Determination (HIB 20/2005), which replaces the previous one (HIB 11/2005), comprises eight schedules that outline the minimum benefits payable for various hospital treatments, including overnight and day accommodation, as well as surgically implanted prostheses (s2). The new Schedule 1, effective from 1 November 2005, categorises patients into Advanced Surgical, Surgical/Obstetric, or Other Patient classifications based on the Medicare Benefits Schedule (MBS) item numbers, and it adjusts the MBS fees to reflect a 2.0% fee increase effective from the same date (s3).
Registered health benefits organisations must ensure they adhere to the new Schedule 1 by paying the specified default benefits for their members who receive hospital treatment in facilities without a contractual agreement. This includes paying the appropriate default benefits according to the new MBS fee classifications for Advanced Surgical, Surgical/Obstetric, and Other Patient categories (s4). The changes to MBS fees have been reviewed and approved by the Medicare Consultative Committee (MBCC), which comprises representatives from relevant medical and health sectors. These reviews ensure that the MBS accurately reflects current medical practices and promotes best practice standards (s5). The amendments to Schedule 1 are designed to align with these changes, ensuring that health funds continue to meet their minimum payment obligations under the Act (s6).
Failure to comply with the provisions of the Determination can result in legal consequences for the health benefits organisations. While the explanatory statement does not explicitly outline the specific penalties for non-compliance, under the general provisions of the National Health Act, breaches could potentially lead to civil or criminal penalties, including fines and other sanctions. The exact penalties would depend on the nature and severity of the breach, but they could include substantial financial penalties for failing to meet the specified minimum benefit levels (s7). It is essential for health benefits organisations to stay informed about these obligations and ensure compliance to avoid any legal repercussions.