EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Health
Private Health Insurance Act 2007
Private Health Insurance (Benefit Requirements) Amendment Rules 2016 (No.6)
Authority
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) Amendment Rules 2016 (No. 6) (the Amendment Rules) amends the schedule of the Private Health Insurance (Benefit Requirements) Rules 2011 (the Principal Rules) which commenced on 1 November 2011.
Purpose
Schedule A of the Amendment Rules amends Schedule 4 of the Principal Rules. The purpose of the amendments to Schedule 4 of the Principal Rules is to change the minimum benefits payable by private health insurers per night for nursing-home type patients (NHTP) at public hospitals in the Australian Capital Territory and at private hospitals nationally.
Background
The Principal Rules, which commenced on 1 November 2011, 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 benefits 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).
Schedule 1 categorises MBS item numbers into overnight patient classifications comprising ‘Advanced surgical patient’, ‘Obstetric patient’, ‘Surgical patient’, ‘Psychiatric patient’, ‘Rehabilitation patient’ and ‘Other patients’. Schedule 3 sets out MBS items for the same day hospital accommodation benefits which are payable for privately insured patients in all states and territories.
The minimum benefits payable per night for hospital treatment provided to NHTP in Schedule 4 of the Principal Rules is subject to review and change twice annually, to reflect the indexation applied to the Adult Pension Basic Rate and Maximum Daily Rate of Rental Assistance (Pension and Rental Assistance Rates). The latest indexation of these rates takes effect on 20 September 2016.
Schedule 5 of the Principal Rules requires a private health insurer to pay second-tier default benefits for most episodes of hospital treatment provided in private hospital facilities that are specified in Schedule 5 if the private health insurer does not have a negotiated agreement with the hospital. Schedule 5 sets a higher minimum level of benefit (for overnight treatment and day only treatment provided in specified facilities) than the minimum benefit set for such treatment by Schedules 1, 2 and 3 of the Principal Rules.
Details
Details of the Amendment Rules are set out in the Attachment.
Consultation
Schedule A of the Amendment Rules - Item 1
On 29 August 2016, States and Territories were asked whether they would be increasing the NHTP contribution and accommodation rates in their jurisdiction in line with increases in the Pension and Rental Assistance Rates. New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia have advised that they will increase the NHTP accommodation rates in their public hospitals from 20 September 2016. The Australian Capital Territory and the Northern Territory have advised that they are not increasing their NHTP contribution and accommodation rates at this time.
The Amendment Rules commence on 20 September 2016.
The Amendment Rules are a legislative instrument for the purposes of the
Legislation Act 2003.
ATTACHMENT
DETAILS OF THE PRIVATE HEALTH INSURANCE (BENEFIT REQUIREMENTS) AMENDMENT RULES 2016 (No. 6)
Section 1 Name of Rules
Section 1 provides that the title of the Rules is the Private Health Insurance (Benefit Requirements) Amendment Rules 2016 (No. 6) (the Amendment Rules).
Section 2 Commencement
Section 2 provides that the Amendment Rules are to commence on 20 September 2016
Section 3 Amendment of Private Health Insurance (Benefit Requirements) Rules 2011
Section 3 provides that Schedule A to the Amendment Rules amend the Private Health Insurance (Benefit Requirements) Rules 2011 (the Principal Rules) which commenced on
1 November 2011.
Schedule A – Amendment
Item 1 – Schedule 4, Clause 6 Minimum benefit, Table 1
Item 1 of the schedule to the Amendment Rules amends the minimum benefit payable per night for nursing-home type patients in public hospitals in the following territory: in clause 6, Table 1:
- Australian Capital Territory $119.55
Overview
The Private Health Insurance (Benefit Requirements) Amendment Rules 2016 (No. 6) were enacted to amend the minimum benefits payable by private health insurers for nursing-home type patients (NHTP) in public hospitals within the Australian Capital Territory and private hospitals nationally. These rules were introduced under the authority of Section 333-20 of the Private Health Insurance Act 2007, which empowers the Minister to establish rules for matters required or permitted by Part 3-3 of the Act. The overarching policy objective of these amendments is to align the benefits with the indexation of the Adult Pension Basic Rate and Maximum Daily Rate of Rental Assistance (Pension and Rental Assistance Rates). The rules were crafted following consultations with the states and territories, where most agreed to increase the NHTP accommodation rates in their jurisdictions. Notably, New South Wales, Queensland, South Australia, Tasmania, Victoria, and Western Australia agreed to increase their rates effective from 20 September 2016, while the Australian Capital Territory and the Northern Territory decided not to increase their rates at that time.
The Amendment Rules, which commenced on 20 September 2016, adjust the minimum benefits payable per night for NHTP in public hospitals in the Australian Capital Territory and in private hospitals nationally. This legislative instrument ensures that the private health insurance benefits remain consistent with the changes in the Pension and Rental Assistance Rates, thereby maintaining the intended level of support for patients requiring nursing-home type care. These amendments aim to provide a clear and updated framework for the minimum benefits that private health insurers must offer, ensuring that patients receive adequate coverage in line with the current socio-economic indices.
Scope and Application
The Private Health Insurance (Benefit Requirements) Amendment Rules 2016 (No. 6) is an amendment to the Private Health Insurance (Benefit Requirements) Rules 2011, which commenced on 1 November 2011. These rules apply to private health insurers in Australia, who are required to provide minimum levels of benefits for hospital treatment. The Amendment Rules specifically alter the minimum benefits payable per night for nursing-home type patients (NHTP) at public hospitals in the Australian Capital Territory and at private hospitals nationally. The amendments to Schedule 4 of the Principal Rules are driven by the indexation applied to the Adult Pension Basic Rate and Maximum Daily Rate of Rental Assistance (Pension and Rental Assistance Rates). The rules do not apply to any specific exclusions or exemptions, but rather are designed to ensure that private health insurers comply with the updated benefit requirements. The Amendment Rules are made under the authority of the Private Health Insurance Act 2007 and are a legislative instrument for the purposes of the Legislation Act 2003.
Key Provisions
The Private Health Insurance (Benefit Requirements) Amendment Rules 2016 (No. 6) (the Amendment Rules) amends the Private Health Insurance (Benefit Requirements) Rules 2011 (the Principal Rules) to update the minimum benefits payable by private health insurers for nursing-home type patients (NHTP) at public hospitals in the Australian Capital Territory and at private hospitals nationally. These changes are effective from 20 September 2016. The main changes are detailed in Schedule A of the Amendment Rules, which amends Schedule 4 of the Principal Rules. Specifically, Schedule A amends the minimum benefit payable per night for NHTP in public hospitals and private hospitals.
The Amendment Rules impose obligations on private health insurers to ensure they provide the updated minimum benefits to eligible patients. This includes adjusting their payment schedules to reflect the new rates specified in the Amendment Rules. Insurers must comply with the updated rates for NHTP as of the commencement date of the Amendment Rules. For public hospitals, this involves ensuring that the updated rates are applied in the Australian Capital Territory, while for private hospitals, the changes apply nationally.
Breach of these requirements can result in penalties and other consequences. Although the Amendment Rules themselves do not specify penalties for non-compliance, private health insurers found to be in breach of their obligations under the Private Health Insurance Act 2007 (the Act) could face enforcement actions by the Australian Prudential Regulation Authority (APRA) or other regulatory bodies. Penalties for non-compliance with the Act can include fines, corrective action requirements, and in severe cases, revocation of the insurer's license. These penalties are determined based on the severity and frequency of the breach, as well as the impact on consumers.