EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Health and Ageing
Private Health Insurance Act 2007
Private Health Insurance (Benefit Requirements) Amendment Rules 2010 (No.8)
Section 333-20 of the Private Health Insurance Act 2007 (the Act) provides that the Minister may make Private Health Insurance (Benefit Requirements) Rules providing for matters required or permitted by Part 3-3 of the Act, or necessary or convenient to be provided in order to carry out or give effect to Part 3-3 of the Act.
The Private Health Insurance (Benefit Requirements) Rules 2010 (the Principal Rules), which commenced on 29 January 2010, provide for the minimum benefit requirements for psychiatric, rehabilitation and palliative care and other hospital treatment. Schedules 1 to 5 of the Principal Rules set out the minimum levels of benefit which are payable for hospital treatment. Namely, benefits for overnight accommodation (Schedules 1 and 2), same day accommodation (Schedule 3), nursing-home type patients (Schedule 4), and second tier default benefits (Schedule 5).
The Private Health Insurance (Benefit Requirements) Amendment Rules 2010 (No.8) (the Amendment Rules) amend Part 1 rule 3, Part 2 subrule 5 and Clause 3 of Schedule 5 to the Principal Rules.
The purpose of these amendments is to clarify that registered health insurers and hospitals can contract with each other for the payment of particular benefits. The minimum benefits in the Schedules to the Principal Rules only operate to regulate the benefits that an insurer must pay in the absence of a contract between the insurer and the hospital.
The amendment makes clear that the minimum benefits in the Schedules to the Principal Rules do not operate as a minimum baseline which cannot be overridden through an agreement between an insurer and a hospital. The Amendment Rules do not significantly alter existing arrangements, but confirm the current practice of health insurers and hospitals contracting with each other for particular benefits, where the minimum benefits in the Schedules to the Principal Rules only regulate benefits that an insurer must pay in the absence of a contract between the insurer and the hospital. This amendment does not change the requirement for insurers to pay benefits for psychiatric, rehabilitative and palliative care, or the requirements for insurers to pay minimum benefits for prostheses as set out in the Private Health Insurance (Prostheses) Rules.
Details of the Amendment Rules are set out in the Attachment.
The Act specifies no condition that needs to be satisfied before the power to make Amendment Rules may be exercised.
The Amendment Rules are a legislative instrument for the purposes of the Legislative Instrument Act 2003.
Consultation
Consultation was undertaken in relation to the amendments with registered private health insurers and the Australian Private Hospitals Association. The level of consultation is appropriate and sufficient as these amendments are designed to clarify and reinstate the ability of insurers and hospitals to negotiate contracts with benefits less than the Minimum Benefit.
Authority: Section 333-20 of the
Private Health Insurance Act 2007
PRIVATE HEALTH INSURANCE BRANCH
DEPARTMENT OF HEALTH AND AGEING
SEPTEMBER 2010
ATTACHMENT
DETAILS OF THE PRIVATE HEALTH INSURANCE (BENEFIT REQUIREMENTS) AMENDMENT RULES 2010 (No.8)
Rule 1 Name of Rules
Rule 1 provides that the title of these Rules is the Private Health Insurance (Benefit Requirements) Amendment Rules 2010 (No.8).
Rule 2 Commencement
Rule 2 provides that the Rules commence on the day after registration.
Rule 3 Amendment of Private Health Insurance (Benefit Requirements) Rules 2010
Rule 3 provides that the Schedule to the Amendment Rules amends the Private Health Insurance (Benefit Requirements) Rules 2010 (the Principal Rules).
Schedule – Amendments
Item [1] – Part 1, rule 3
Part 1, rule 3 of the Principal Rules will be amended by inserting the definition of negotiated agreement, which currently exists in Schedule 5, subclause 1(1) of the Principal Rules. This amendment makes clear that the definition of negotiated agreement applies to the whole of the Principal Rules, in particular to Part 2.
Item [2] – Part 2, subrule 5(2)
Part 2, subrule 5(2) of the Principal Rules will be omitted and substituted with a new subrule 5(2) and subrule 5(3). New subrule 5(2) clarifies that for hospital treatment, other than psychiatric care, rehabilitation and palliative care referred to in Part 2, rule 4, the minimum benefit is the amount specified in the negotiated agreement.
Item [2] inserts a new subrule 5(3) which replicates, in substance, the previous subrule 5(2). Subrule 5(3) makes clear that a minimum benefit for hospital treatment as specified in the Schedules to the Principal Rules, or as specified in a negotiated agreement, may be reduced the amount of any co-payment or excess that is required to be paid under a person’s health insurance policy in respect of that treatment.
Item [3] – Schedule 5, subclause 1(1), definition of negotiated agreement
Item [3] repeals the definition of negotiated agreement in Schedule 5 of the Principal Rules as the definition as been moved to Part 1, rule 3 of the Principal Rules (see Item [1] above).
Item [4] – Schedule 5, subclauses 3(1) and 3(2)
Schedule 5, subclauses 3(1) and 3(2) of the Principal Rules will be omitted and substituted with new subclauses 3(1) and 3(2). These new subclauses are necessary as a consequence of amendments described above as they apply to second-tier default benefits.
The amendment makes clear that the second-tier default benefits for specified private hospital facilities must be equal to the amount worked out in accordance with Schedule 5, clause 2 unless the second-tier default benefit works out to be less the minimum benefit in accordance with Schedules 1, 2 or 3, the second‑tier default benefit cannot be worked out in accordance with clause 3, or the second-tier default benefit worked out for the hospital treatment would be nil. In these circumstances the minimum benefit is to be worked out in accordance with Schedules 1, 2 or 3.
If the hospital facility, specified in clause 4 of Schedule 5 has a negotiated agreement with an insurer for particular hospital treatment, the minimum benefit for that treatment, in accordance with new Part 2 subrule 5(2), is the amount specified for the treatment in the negotiated agreement.