EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Health
Private Health Insurance Act 2007
Private Health Insurance (Complying Product) Amendment Rules 2012 (No. 2)
Authority
Section 333-20 of the Private Health Insurance Act 2007 (the Act) provides that the Minister may make Private Health Insurance (Complying Product) Rules providing for matters required or permitted by Chapter 3 of the Act, or necessary or convenient in order to carry out or give effect to the Act.
The Private Health Insurance (Complying Product) Amendment Rules 2012 (No. 2) (the Amendment Rules) amend the Private Health Insurance (Complying Product) Rules 2010 (No. 2) (the Rules) which commenced on 14 January 2011.
Purpose
The purpose of the Amendment Rules is to improve the quality of information available to consumers about private health insurance products and to make it easier for consumers to use and understand Standard Information Statements (SISs).
Background
Under Division 93 of the Act, health insurers are required to make standard product information, known as a SIS, for all of their active complying health insurance products available to consumers. This requirement was included to ensure that consumers can easily compare health insurance policies and understand their entitlements under health insurance policies.
In summary, a SIS must:
- be made available by the insurer for all complying health insurance products;
- contain standard product information in a standard format;
- be comprehensive and comparable by consumers;
- not exceed one A4 page limit for each type and component of a SIS; and
- meet core information requirements to include details on premiums, waiting periods, exclusions, limitations, excesses, co-payments, and hospital and medical gaps.
It is also a requirement under Division 96 of the Act for private health insurers to provide new and updated SISs to the Private Health Insurance Ombudsman (PHIO). PHIO publishes each SIS on its website www.privatehealth.gov.au for the public to access.
The Rules prescribe the standard format and content of SISs and provide detailed instructions for completing the SIS’ templates to ensure consistency.
The use and effectiveness of SISs have been monitored to ensure the statements continue to meet the policy intent under which they were developed. Through the work of PHIO and feedback from stakeholders, the Department of Health and Ageing (the Department) identified issues with the SISs which prompted the Department to undertake a review of the form of the SISs in 2010-11. That review has resulted in the improvements to the form of the SISs made in the Amendment Rules.
Details
The Amendment Rules delete Schedules 1-4 of the Rules. The Amendment Rules insert updated Schedules 1-4 in the Rules.
Further details about the amendments to the SISs are provided in the Attachment.
Statement of Compatibility
The Rules are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Consultation
In accordance with section 17 of the Legislative Instruments Act 2003, the Department consulted with organisations and individuals having expertise in private health insurance and that would likely be affected by any changes to SIS requirements.
In November 2010 the Department, through Private Health Insurance Circular 75/10, sought submissions from stakeholders in regard to the proposed changes to SISs. The circular can be found at:
http://www.health.gov.au/internet/main/publishing.nsf/Content/58F19EFE55CC6AF8CA2577D800159E78/$File/75_10.pdf
Submissions were received from:
- 13 Australian registered health insurers
- PHIO
- PHIO’s Consumer Website Reference Group
- The Private Health Insurance Administration Council
- Private Healthcare Australia (formerly the Australian Health Insurance Association)
- The Health Insurance Restricted Membership Association of Australia
- The Australian Medical Association
- The Consumers Health Forum of Australia
- The Royal Australian College of Physicians
- Health insurance broker iSelect
From March to August 2011 the Department undertook extensive stakeholder consultations.
On the basis of the submissions received, in November 2011 the Department finalised recommendations for the implementation of improvements to the SISs. The final form of the SISs was agreed to by PHIO.
The Department consulted with the Office of Best Practice Regulation (OBPR) to ascertain whether the proposed amendments would have a regulatory impact on business and the not-for-profit sector. OBPR advised that a Regulation Impact Statement (RIS) was not required. This is because the changes to the SISs involve no more than small one-off familiarisation costs for business and the not-for-profit sector.
The Amendment Rules commence on 1 April 2012.
The Amendment Rules are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Authority: Section 333-20 of the Private
Health Insurance Act 2007
PRIVATE HEALTH INSURANCE BRANCH
DEPARTMENT OF HEALTH AND AGEING
MARCH 2012
ATTACHMENT
DETAILS OF THE PRIVATE HEALTH INSURANCE (COMPLYING PRODUCT) AMENDMENT RULES 2012 (No. 2)
- Name of Rules
Rule 1 provides that the title of the Rules is the Private Health Insurance (Complying Product) Amendment Rules 2012 (No.2) (the Amendment Rules).
2. Commencement
(a) Rule 2 provides that these rules commence on 1 April 2012.
3. Amendment of Private Health Insurance (Complying Product) Rules 2010 (No.2)
Rule 3 provides that the Schedule to the Amendment Rules amends the Private Health Insurance (Complying Product) Rules 2010 (No.2), which commenced on 14 January 2011.
Schedule – Amendments
Item 1- Schedule 1- Standard information statements: hospital treatment
Schedule 1 of the Rules is replaced with new Schedule 1- Standard information statements: hospital treatment.
The differences between the old Schedule 1 and the new Schedule 1 are as follows:
- The word ‘medical’ has been deleted from the statements ‘what medical services are not covered at all?’ and ‘what medical services are only covered to a limited extent?’.
These changes were made as consumers may have been confused about the distinction between hospital and medical benefits. The SIS hospital treatment template now permits all type of services that are either excluded or restricted to be included.
Item 2- Schedule 2-Standard information statements: general treatment
Schedule 2 of the Rules is replaced with new Schedule 2- Standard information statements: general treatment.
The differences between the old Schedule 2 and the new Schedule 2 are as follows:
- At the Non PBS Pharmaceuticals item Examples of Maximum Benefits, the word ‘eligible’ has been inserted between ‘per’ and ‘prescription’.
This change alerts consumers that, in order for them to claim benefits, a non-PBS pharmaceutical must be an eligible item. ‘Per prescription’ may be misleading as not all non-PBS pharmaceutical items are eligible for claiming benefits.
- At the ‘Health Care Programs and Other Features’ box, the words ‘Health Care Programs’ have been deleted from the heading, while the words ‘Other Features’ were retained.
This change was made to free up space on the general treatment SIS for information that an insurer may wish to provide, as the free text box on the SIS has capacity limitations.
Item 3- Schedule 3-Standard information statements: combined products
Schedule 3 of the Rules is replaced with new Schedule 3- Standard information statements: combined products.
The differences between the old Schedule 3 and the new Schedule 3 are as follows:
- The word ‘medical’ has been deleted from the statements ‘what medical services are not covered at all?’ and ‘what medical services are only covered to a limited extent?’.
These changes were made as consumers may have been confused about the distinction between hospital and medical benefits. The SIS hospital treatment template now permits all type of services that are either excluded or restricted to be included.
- At the ‘Health Care Programs and Other Features’ box, the words ‘Health Care Programs’ have been deleted from the heading, while the words ‘Other Features’ were retained.
This change was made to free up space on the general treatment SIS for information that an insurer may wish to provide, as the free text box on the SIS has capacity limitations.
Item 4- Schedule 4- Standard information statements: permitted content
Schedule 4 of the Rules is replaced with new Schedule 4- Standard information statements: permitted content.
The differences between the old Schedule 4 and the new Schedule 4 are as follows:
Part 1- all statements
- At Part 1- all statements in the ‘Who is covered?’ permitted content, the words ‘One adult & any dependents’ have been inserted as a permitted category.
This change was made so that consumers can more easily discover single parent extension policies, as insurers are increasingly providing this type of product.
Part 2- hospital treatment
- At Part 2- hospital treatment in the ‘What’s covered if I have to go to hospital’ permitted content, the following statement has been inserted:
‘ A limited number of services is covered, see below (for policies that restrict or exclude all items except for a list of up to 10 items)’
This change was made so that consumers can better identify policies that cover a list of items and exclude or restrict everything else.
- At Part 2- hospital treatment in the ‘What’s covered if I have to go to hospital’ description, the following words have been deleted:
‘Comprehensive cover can only be used to describe ambulance cover where the product covers at least 100% medically necessary ambulance transport’
- At Part 2- hospital treatment in the ‘What’s covered if I have to go to hospital’ permitted content under ‘Ambulance’, the following words have been deleted:
‘ Comprehensive cover for ambulance (see insurer for details) OR ‘ Partial cover for ambulance (see insurer for details)’ OR ‘(Ambulance covered by State government)’
- At Part 2- hospital treatment in the ‘What’s covered if I have to go to hospital’ permitted content under ‘Ambulance’, the following words have been inserted:
‘For state specific policies: Not covered OR Covered, conditions may apply, contact insurer for details OR (Ambulance covered by State Government) For all-state policies: Not covered (state government cover in QLD and TAS) OR Covered (state government cover in QLD and TAS, other states contact insurer for details)’
These changes were made because the provision of ambulance services and their coverage is quite complex and varies between states and territories as well as between policy types. Due to the differences in state government legislation and reciprocal rights between states, it is difficult to provide meaningful information to the consumer. This complexity also makes it difficult for consumers to fully understand what kind of services their policy actually covers and what it excludes.
These changes eliminate consumers’ confusion about current categories of comprehensive and partial that are used to describe ambulance cover under the SIS because different conditions and restrictions that insurers may apply to their ambulance policies cannot be displayed on the SIS.
- At Part 2- hospital treatment, the word ‘medical’ has been deleted from the statements ‘what medical services are not covered at all?’ and ‘what medical services are only covered to a limited extent?’.
These changes were made as consumers may have been confused about the distinction between hospital and medical benefits. The SIS hospital treatment template now permits all type of services that are either excluded or restricted to be included.
- At Part 2- hospital treatment in the ‘What services are not covered at all’ permitted content, the words ‘Surgery by Podiatrists’ have been deleted and the words ‘Gastric Banding and related services’ have been inserted.
- At Part 2- hospital treatment in the ‘What services are only covered to a limited extent’ permitted content, the words ‘Surgery by Podiatrists’ have been deleted and the words ‘Gastric Banding and related services’ have been inserted.
- At Part 2- hospital treatment in the ‘What services are only covered to a limited extent’ description, the following statement has been deleted:
‘Only one of the two surgery by podiatrists items can be used. Surgery by podiatrists- partly covered (see fund for details) is to be used where benefits are payable to a limited extent on the hospital accommodation but not on the podiatrist’s fee. Surgery by podiatrists is to be used where benefits are payable to a limited extent on both the hospital accommodation and the podiatrist’s fee’
These changes were made because weight loss surgery, such as gastric banding, has become more common as a treatment for obesity. Insurers need to keep their clients informed about this and other treatments affected by benefits limitations. However, adding an item to the list of available (medical) services requires removing another item from this list otherwise the general treatment SIS may exceed the A4 page limit. Replacing ‘surgery by podiatrist’ with ‘gastric banding and related services’ is the best option as the benefits and number of services each year provided for podiatric surgery are insignificant compared to those for gastric banding.
- At Part 2- hospital treatment in the ‘What services are only covered to a limited extent’ description, the following words have been inserted:
‘These can be listed under other services without having to prior select a service from the list of available services’
This change was made to alert consumers to the fact that benefit limitation periods (BLPs) may apply for some services that are not available for selection in the list of services and need therefore to be listed in ‘other services’.
Part 3- general treatment
- At Part 3- general treatment in the ‘Covered’ column description, the following words have been deleted:
‘Ambulance is considered to be covered if the description in the “examples of maximum benefits column” indicates it has comprehensive cover or partial cover’
This change was made to eliminate consumers’ confusion about current categories of “comprehensive” and “partial” that are used to describe ambulance cover under the SIS because different conditions and restrictions that insurers may apply to their ambulance policies cannot be displayed on the SIS.
- At Part 3- general treatment in the ‘Covered’ column permitted content, the following words have been inserted:
‘All services except Ambulance: (service is covered) (service is not covered) Not available on this product (for policies that cover only one type of service, such as e.g. dental cover) (see note below)’ and ‘Ambulance: For state specific policies: Covered, conditions may apply, contact insurer for details OR (Ambulance covered by State Government) OR Not covered OR Not available on this product (for policies that cover only one type of service, such as e.g. dental cover) (see note below)’
- At Part 3- general treatment in the ‘Covered’ column permitted content, the following words have been inserted:
‘For all-state policies: Covered (state government cover in QLD and TAS, other states contact insurer for details) OR Not covered (state government cover in QLD and TAS) OR Not available on this product (for policies that cover only one type of service, such as e.g. dental cover) (see note below)’
These changes were made to assist consumers to clearly distinguish between single-service policies and ‘basic’ policies with a wider coverage.
The use of the asterisk option for ambulance cover was added so that consumers can choose ambulance cover from the list of services available for selection when purchasing a ‘Mix and Match’ product.
- At Part 3- general treatment, the word ‘max’ has been deleted from the ‘Waiting Period (max Months) column’.
This change was made to increase the ease with which consumers can use and understand the SISs.
- At Part 3- general treatment in the ‘Benefit Limits (per 12 months) column’ description, the font of the words ‘Sub-limits apply’ has been adjusted to Bold.
This change was made to ensure that consumers no longer miss the detail that sub-limits may apply to some services.
- At Part 3- general treatment in the ‘Benefit Limits (per 12 months) column’ permitted content, the following words have been inserted:
‘OR Lifetime limits for individually grouped services: $[number] per person (combined limit for [a] general dental, major dental, endodontic & orthodontic) $[number] lifetime limit for [b]
(a) insurers may choose any combination of the following services: general dental, major dental, endodontic & orthodontic
(b) insurers may choose any one of the following services: general dental, major dental, endodontic & orthodontic’
This change was made to provide consumers with more accurate information on benefits limits for policies that apply lifetime limits for individually grouped services.
- At Part 3- general treatment in the ‘Examples of Maximum Benefits’ column permitted content, the following words have been inserted:
‘For state specific policies: Covered, conditions may apply, contact insurer for details OR (Ambulance covered by State Government) OR Not covered OR Not available on this product (for policies that cover only one type of service, such as e.g. dental cover) (see note below) For all-state policies: Covered (state government cover in QLD and TAS, other states contact insurer for details) OR Not covered (state government cover in QLD and TAS) OR Not available on this product (for policies that cover only one type of service, such as e.g. dental cover) (see note below)’
- At Part 3- general treatment in the ‘Examples of Maximum Benefits’ column description, the following statement has been deleted:
‘Comprehensive cover can only be used to describe ambulance cover where the product at least covers 100% medically necessary ambulance transport. Otherwise, ‘partly covered’ should be used’
These changes were made to eliminate consumers’ confusion about current categories of “comprehensive” and “partial” that are used to describe ambulance cover under the SIS because different conditions and restrictions that insurers may apply to their ambulance policies cannot be displayed on the SIS.
- At Part 3- general treatment in the ‘Health Care Programs and Other Features: box’ field, the words ‘Health Care Programs’ have been deleted from the heading ‘Other Features’, while the words ‘Other Features’ were retained.
This change was made to free up space on the general treatment SIS for information that an insurer may wish to provide, as the free text box on the SIS has capacity limitations.
PRIVATE HEALTH INSURANCE BRANCH
DEPARTMENT OF HEALTH AND AGEING
MARCH 2012