EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Health and Ageing
Subject: National Health Amendment (Prostheses) Act 2005
Proclamation
Section 2 of the National Health Amendment (Prostheses) Act 2005 (the Act) provides the commencement details for the provisions contained in the Act. The table in subsection 2(1) of the Act provides that Schedule 1 to the Act will commence on a single day to be fixed by proclamation, or, if not within the period of nine months after Royal Assent, then on the day following the end of that period.
The Act amends the National Health Act 1953, and introduces new arrangements for listing of, and setting benefits for, prostheses which registered health benefits organisations (health funds) must fund when provided as part of an episode of hospital treatment. The Act received Royal Assent on 21 March 2005, thus the Act would automatically commence on 22 December 2005.
The purpose of the Proclamation is to implement provisions that:
- give the Minister for Health and Ageing (the Minister) the power to determine, in writing, the prostheses for which health funds are required to pay benefits for and the benefit amounts payable for those prostheses; and
- regulate the payment of benefits for prostheses.
Benefits for prostheses will fall under two categories:
- no gap prostheses – where the listed benefit amount is the amount to be paid by the health fund and the patient will not be required to pay any gap amount for the prosthesis; and
- gap permitted prostheses – which will have a minimum and a maximum benefit amount listed. The health fund must pay the listed minimum benefit amount, but may cover up to the maximum benefit amount. Any difference between the minimum and maximum benefit amounts is known as the gap. Any portion of the gap not covered by the health fund will be payable by the patient.
The effect of the Proclamation is to fix 31 October 2005 as the day on which Schedule 1 to the Act commences. The Minister’s determination of no gap and gap permitted prostheses will take effect on 31 October 2005.
Commencement on 31 October 2005 is to provide sufficient time to enable health funds and hospitals to establish new systems to support the new arrangements. It is also to allow time for patients to be appropriately informed by doctors, hospitals and health funds of the health fund benefit they can expect for their prosthesis, on and after 31 October 2005.
The Act does not specify any conditions that need to be met before the power to make the Proclamation may be exercised.
The Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Consultation
Extensive consultation was undertaken with the major stakeholder groups on the development and implementation of the provisions of the Act. The major stakeholders 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.
Overview
The National Health Amendment (Prostheses) Act 2005, enacted to address the need for a more structured approach to the funding of prostheses under the National Health Act 1953, was assented to on 21 March 2005 and subsequently proclaimed to commence on 31 October 2005. This Act was introduced by the Australian Parliament to provide the Minister for Health and Ageing with the authority to determine which prostheses health funds must cover and the corresponding benefit amounts, thereby regulating the payment of benefits for prostheses. The policy objective is to ensure that patients receive adequate coverage for prostheses, which are categorised into 'no gap' and 'gap permitted' prostheses, with the former being fully covered by health funds and the latter having a specified range of coverage with any uncovered portion paid by the patient. This legislation was developed following extensive consultation with key stakeholders, including health funds, hospitals, medical associations, and consumer groups, to ensure a balanced approach to the funding and provision of prostheses.
Scope and Application
The National Health Amendment (Prostheses) Act 2005 applies to registered health benefits organisations, also known as health funds, that provide health insurance in Australia. This Act amends the National Health Act 1953 and sets out new arrangements for the listing and benefit setting of prostheses that health funds must fund when provided as part of hospital treatment. The Act was proclaimed to commence on 31 October 2005, giving the Minister for Health and Ageing the authority to determine which prostheses are covered under the Act and the benefit amounts payable for those prostheses. The benefits for prostheses are categorised into no gap prostheses, where the listed benefit amount is paid by the health fund and the patient does not incur a gap amount, and gap permitted prostheses, where there is a minimum and maximum benefit amount listed, and any difference between these amounts constitutes the gap, which the patient may have to pay if the health fund does not cover the full amount. The Act does not specify any conditions for the exercise of the power to make the Proclamation, which is a legislative instrument under the Legislative Instruments Act 2003.
Key Provisions
The National Health Amendment (Prostheses) Act 2005, commencing on 31 October 2005, introduces significant changes to how prostheses are funded under the National Health Act 1953. Section 2 of the Act details the commencement of its provisions, ensuring that the new arrangements for listing and setting benefits for prostheses provided as part of hospital treatment are implemented effectively. The Act grants the Minister for Health and Ageing the authority to determine which prostheses are subject to benefit payments and the amounts to be paid, distinguishing between "no gap prostheses" and "gap permitted prostheses." For "no gap prostheses," health funds are required to cover the entire listed benefit amount, leaving patients with no additional costs. Conversely, "gap permitted prostheses" come with a specified minimum and maximum benefit amount, where the health fund must cover at least the minimum but may pay up to the maximum. Any shortfall between the minimum and maximum amounts, known as the gap, is to be paid by the patient.
Under the new legislative framework, registered health benefits organisations, or health funds, have specific obligations to adhere to the Minister's determinations regarding prostheses benefits. These organisations must ensure they are funding prostheses according to the listed benefits, which are categorized as either "no gap" or "gap permitted." Health funds are also required to update their systems and processes to accommodate the new arrangements, ensuring that they are providing the correct benefits to patients for prostheses provided during hospital treatment. Additionally, health funds must communicate clearly with patients about the benefits they can expect for their prostheses, ensuring transparency and informed decision-making.
Breaches of the Act's provisions could result in significant legal and financial consequences. Although the Act does not explicitly outline specific offences or penalties within its text, the broader legislative context under which the Act operates, such as the National Health Act 1953, may impose penalties for non-compliance. These penalties could include fines or other enforcement actions against health funds that fail to adhere to the Minister's determinations. Furthermore, patients who are not accurately informed about the benefits they are entitled to may have grounds for complaint or legal recourse against the health funds. It is essential for health funds to comply with the Act to avoid potential civil or criminal liabilities, as well as to maintain the integrity and fairness of the national health system.