EXPLANATORY STATEMENT
Issued by the Authority of the Minister for Health
Private Health Insurance Act 2007
Private Health Insurance (Complying Product) Amendment Rules 2018 (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 2018 (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 and private hospitals nationally. 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 2018.
Details
Details of the Amendment Rules are set out in the Attachment.
Consultation
On 28 February 2018, States and Territories were asked whether they would be increasing the NHTP contribution 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 2018 to $60.05. The Australian Capital Territory and the Northern Territory have advised that they are not increasing their NHTP contribution rates at this time.
The Amendment Rules commence on 20 March 2018.
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 2018 (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 2018 (No. 1) (the Amendment Rules).
Section 2 Commencement
Section 2 provides that the Amendment Rules are to commence on 20 March 2018.
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 2018 (No. 1) were introduced to update the patient contribution rates for nursing-home type patients (NHTP) in public and private hospitals across Australia. Enacted under the authority of the Private Health Insurance Act 2007, these rules were necessary to align the patient contributions with the increases in the Adult Pension Basic Rate and the Maximum Daily Rate of Rental Assistance (Pension and Rental Assistance Rates), which came into effect on 20 March 2018. The rules were developed following consultations with states and territories, six of which agreed to increase the NHTP contribution rates to $60.05, while the Australian Capital Territory and the Northern Territory chose not to increase their rates at that time. The primary objective of these amendments is to ensure that the patient contributions for NHTPs at public and private hospitals reflect the updated rates, thereby maintaining the integrity of the private health insurance system.
Scope and Application
The Private Health Insurance (Complying Product) Amendment Rules 2018 (No. 1) amend the Private Health Insurance (Complying Product) Rules 2015, which commenced on 1 July 2015, to adjust the patient contributions payable per night for nursing-home type patients (NHTP) at public and private hospitals in Australia. The amendment 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), which took effect on 20 March 2018. The changes apply to the patient contributions for NHTPs at public hospitals in New South Wales, Queensland, South Australia, Tasmania, Victoria, and Western Australia, as well as at private hospitals across Australia. This amendment is necessary to align the benefits paid by private health insurers with the updated rates set by the government. The rules came into effect on 20 March 2018 and are a legislative instrument under the Legislation Act 2003.
Key Provisions
The Private Health Insurance (Complying Product) Amendment Rules 2018 (No. 1) (the Amendment Rules) primarily amend Rule 8A of the Private Health Insurance (Complying Product) Rules 2015 (the Principal Rules), which were established to regulate the benefits that private health insurers must provide for specific hospital treatments, including those for nursing-home type patients (NHTP) in both public and private hospitals. Under section 333-20 of the Private Health Insurance Act 2007, these amendment rules are necessary to update the patient contribution rates for NHTPs, aligning them with the 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 2018. The amendments to Rule 8A, detailed in the Schedule of the Amendment Rules, specifically adjust the patient contribution amounts for NHTPs in public hospitals across most states and in private hospitals nationwide.
The Amendment Rules impose specific obligations on private health insurers to adhere to the updated patient contribution rates as outlined in the amended Rule 8A. Insurers must ensure that their policies reflect these new contribution rates for NHTPs, ensuring that the amounts charged to insured patients are in compliance with the rules. These obligations extend to both public and private hospitals, requiring insurers to adjust their benefit structures accordingly. The rules are designed to maintain consistency and fairness in the provision of benefits for NHTPs, ensuring that changes in the Pension and Rental Assistance Rates are accurately reflected in the private health insurance offerings.
Breach of these rules could lead to significant consequences for non-compliance. Under the Private Health Insurance Act 2007, failure to adhere to the specified patient contribution rates could result in civil or criminal penalties. The exact penalties are not specified in the Amendment Rules themselves but are likely to be governed by the broader provisions of the Act, which could include fines or other sanctions. The severity of the penalties would depend on the extent and impact of the non-compliance, as well as any resultant financial loss to policyholders. Insurers are therefore required to implement the changes specified in the Amendment Rules promptly and accurately to avoid potential legal repercussions.