EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Health
Private Health Insurance Act 2007
Private Health Insurance (Complying Product) Amendment Rules 2017 (No. 1)
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 and/or section 188-1 of the Act, or necessary or convenient in order to carry out or give effect to Chapter 3 and/or section 188-1 of the Act.
The Private Health Insurance (Complying Product) Amendment Rules 2017 (No. 1)
(the Amendment Rules) amend Rule 8A of the Private Health Insurance (Complying Product) Rules 2015 (the Principal Rules) which commenced on 1 July 2015.
Purpose
The purpose of the amendments to Rule 8A is to change the patient contribution payable per night for nursing-home type patients (NHTP) at public hospitals in each State and at private hospitals in Australia.
Background
Rule 8A of the Principal Rules sets the patient contribution for privately insured NHTPs by restricting the amount of benefit that private health insurers pay for each day of NHTP hospital treatment at a hospital. The amount of benefit is restricted to the hospital’s charge less the patient contribution amount.
The Schedule to the Amendment Rules makes minor changes to Paragraph 8A(3)(a) and 8A(3)(b) of the Principal Rules by amending the NHTP contribution rate at public hospitals in each State and Territory. Changes to the NHTP contribution rate reflect increases in the Adult Pension Basic Rate and the Maximum Daily Rate of Rental Assistance (Pension and Rental Assistance Rates), which took effect on 20 March 2017.
Details
Details of the Amendment Rules are set out in the Attachment.
Consultation
On 3 March 2017, 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 contribution rates in their public hospitals from 20 March 2017. The Australian Capital Territory and the Northern Territory have advised that they will not be increasing the NHTP contribution rates in their public hospitals at this time.
The Amendment Rules commence on 20 March 2017.
The Amendment Rules are a legislative instrument for the purposes of the Legislation Act 2003.
ATTACHMENT
DETAILS OF THE PRIVATE HEALTH INSURANCE (COMPLYING PRODUCT) AMENDMENT RULES 2017 (No. 1)
Section 1 Name of Rules
Section 1 provides that the title of the Rules is the Private Health Insurance (Complying Product) Amendment Rules 2017 (No. 1) (the Amendment Rules).
Section 2 Commencement
Section 2 provides that the Amendment Rules are to commence on 20 March 2017.
Section 3 Amendment of Private Health Insurance (Complying Product) Rules 2015
Section 3 provides that the Schedule to the Amendment Rules amends the Private Health Insurance (Complying Product) Rules 2015 (the Principal Rules) which commenced on
1 July 2015.
Schedule – Amendments
Item 1 – Part 2 General, Paragraph 8A Benefit requirement – nursing home type patients (3)(a)
Paragraph 8A(3) of the Principal Rules set out the patient contribution for privately insured NHTPs at public hospitals.
Item 1 of the Schedule of the Amendment Rules amends Part 2, Paragraph 8A(3)(a) of the Principal Rules by increasing the NHTP contribution at public hospitals in all states except the Australian Capital Territory and the Northern Territory.
Item 2 – Part 2 General, Paragraph 8A Benefit requirement – nursing home type patients (3)(b)
Paragraph 8A(3) of the Principal Rules set out the patient contribution for privately insured NHTPs at private hospitals.
Item 2 of the Schedule of the Amendment Rules amends Part 2, Paragraph 8A(3)(b) of the Principal Rules by increasing the NHTP contribution at private hospitals in Australia.
Overview
The Private Health Insurance (Complying Product) Amendment Rules 2017 (No. 1) were enacted to address discrepancies in patient contributions for nursing home type patients (NHTP) in both public and private hospitals across Australia. These amendments were made under the authority granted by the Private Health Insurance Act 2007, with the objective of aligning the patient contributions with the updated Adult Pension Basic Rate and Maximum Daily Rate of Rental Assistance (Pension and Rental Assistance Rates), effective from 20 March 2017. The rules were developed following consultations with the states and territories, with most agreeing to increase their NHTP contribution rates in public hospitals in line with the new rates, while the Australian Capital Territory and the Northern Territory chose not to make such changes at that time. The rules were issued by the Minister for Health and are effective from the date of their enactment, 20 March 2017.
Scope and Application
The Private Health Insurance (Complying Product) Amendment Rules 2017 (No. 1) amends the Private Health Insurance (Complying Product) Rules 2015 to adjust the patient contributions for nursing home type patients (NHTP) in both public and private hospitals. These rules apply to private health insurers who offer complying health insurance policies in Australia. The amendments specifically target the financial contributions that privately insured NHTPs must pay for their hospital treatment, reflecting changes in the Adult Pension Basic Rate and the Maximum Daily Rate of Rental Assistance (Pension and Rental Assistance Rates). The amendment rules were necessitated by increases in these rates which took effect on 20 March 2017. The adjustments to the patient contributions vary by state, with increases applicable in New South Wales, Queensland, South Australia, Tasmania, Victoria, and Western Australia, while the Australian Capital Territory and the Northern Territory opted not to increase their NHTP contribution rates at this time. These rules are subordinate instruments made under the authority provided by the Private Health Insurance Act 2007 and came into effect on 20 March 2017.
Key Provisions
The Private Health Insurance (Complying Product) Amendment Rules 2017 (No. 1) primarily amend Rule 8A of the Private Health Insurance (Complying Product) Rules 2015, which set the patient contribution for privately insured nursing home type patients (NHTP) at hospitals. Specifically, the Amendment Rules adjust the patient contribution rates for NHTPs in public and private hospitals across Australia (Rule 3). This adjustment is in response to the increases in the Adult Pension Basic Rate and the Maximum Daily Rate of Rental Assistance (Pension and Rental Assistance Rates) that took effect on 20 March 2017. The changes are intended to ensure that the patient contribution rates for NHTPs are in line with these increases.
The obligations under these Amendment Rules require private health insurers to adhere to the new patient contribution rates for NHTPs in both public and private hospitals as outlined in the Schedule. For public hospitals, the NHTP contribution rates are adjusted in all states except the Australian Capital Territory and the Northern Territory (Schedule, Item 1). For private hospitals, the NHTP contribution rate is uniformly adjusted across Australia (Schedule, Item 2). These changes necessitate that insurers update their policies and communications to reflect the new contribution rates, ensuring that they comply with the legislative requirements.
Breach of the provisions set out in these Amendment Rules may result in penalties. Although the Explanatory Statement does not explicitly detail the penalties for non-compliance, under the Private Health Insurance Act 2007, failure to comply with the rules governing complying health insurance products can result in civil penalties. The Act provides for penalties that can be significant, depending on the nature and extent of the non-compliance. It is also possible that breaches could lead to administrative actions or legal proceedings, further underscoring the importance of adherence to the specified contribution rates.