EXPLANATORY STATEMENT
Issued by the authority of the Minister for Health
Private Health Insurance (National Joint Replacement Register Levy) Act 2009
Private Health Insurance (National Joint Replacement Register Levy) Amendment Rules 2014 (No. 1)
The Private Health Insurance (National Joint Replacement Register Levy) Act 2009 (the Act) provides for the imposition of a levy on sponsors of joint replacement prostheses listed in the Private Health Insurance (Prostheses) Rules. Section 8 of the Act allows the Minister to make rules providing for matters required or permitted by the Act to be provided, which includes the setting of the rate of levy for section 7 of the Act.
In accordance with subsection 33(3) of the Acts Interpretation Act 1901, the power to make rules under section 8 of the Act includes the power, exercisable in a like manner and subject to like conditions (if any), to amend those rules. The power to make rules under section 8 of the Act is not subject to any conditions.
The national joint replacement register levy (the levy) is used to fund the Australian Orthopaedic Association’s National Joint Replacement Registry (the NJRR). The purpose of the NJRR is to assess the performance of all joint replacements and to define, improve and maintain the quality of care of patients receiving joint replacement surgery.
The NJRR collects data from hospitals and State and Territory health departments on the implantation of prosthetic joint replacement devices and reports on the rate of revision surgeries required, complications and other outcomes. This information is then used to inform surgeons and other health care professionals, governments, sponsors of joint replacement products, private health insurers and patients. The NJRR also provides post-market surveillance of joint replacement prostheses, assisting with the prompt identification and removal from the market of devices showing high failure rates.
The levy on sponsors of joint replacement prostheses ensures ongoing funding for the NJRR on a cost recovery basis, while preserving its independence. The levy is imposed twice a year, in April and October.
The purpose of the Private Health Insurance (National Joint Replacement Register Levy) Amendment Rules 2014 (No. 1) (the Amendment Rules) is to amend the formula for calculating the rate of levy imposed on sponsors as set out in the Private Health Insurance (National Joint Replacement Register Levy) Rules 2011 (the Principal Rules).
Subrule 5(1) of the Principal Rules sets the rate of levy so that the sum of the amounts levied on all sponsors on a levy day totals $850,000, providing for funding for the NJRR of $1,700,000 per financial year. For the 2013-14 and future financial years, budgeted costs for the NJRR have risen to $2,612,000.
The Amendment Rules:
- insert a new rule 5A into the Principal Rules which sets a rate of levy applying on the levy day of 30 April 2014 so that the sum of amounts levied on all sponsors on that day will total $1,312,000, providing the NJRR with total funding of $2,162,000 in the 2013-2014 financial year; and
- amend subrule 5(1) of the Principal rules so that the sum of the amounts levied on all sponsors on a levy day will total $1,081,000, providing the NJRR with total funding of $2,162,000 per year for future financial years.
The cap of $5,000 on the amount of levy that may be imposed on a sponsor in respect of the same joint prosthesis in a financial year is not affected by these amendments.
The increase in funding to the NJRR is necessary for the NJRR to maintain its service to all stakeholders. Since 2003, the first year of complete national data collection by the NJRR, the number of hip replacement procedures has increased by 39.2% and the number of knee replacement procedures by 63.2%. The NJRR is currently monitoring data for over 843,000 arthroplasty procedures collected since its inception in 1999.
The volume of data now maintained by the NJRR has increased the value of the data to all stakeholders, including surgeons, sponsors, regulators and the international community. For example, the number of requests to the NJRR for ad hoc reports has increased by 38% since 2010.
The NJRR has also being tasked with the linking of Billing Codes to Catalogue Numbers. Billing Codes are allocated by the Department as an identifier for rebate purposes for devices listed on the Prostheses List. By comparison, the Catalogue Number is a unique identification code assigned specifically to a device by the manufacturer for worldwide distribution and tracking purposes.
In 2012-13 the Australian Government funding of the Australian Orthopaedic Association (AOA) for the NJRR was not sufficient to cover costs of current workloads. Additional funds were utilised from internal AOA reserve funds, which are now fully expended.
Consultation
Joint replacement prostheses sponsors, private health insurers and the NJRR were consulted regarding the development of the Principal Rules, and in relation to arrangements for the administration and collection of the NJRR levy. Between 2006 and 2009, in developing the NJRR cost recovery arrangements, the Department of Health and Ageing consulted widely with industry, including face‑to‑face meetings in Sydney, Melbourne and Brisbane, and the public circulation of draft rules for comment. The Department consulted with the Medical Technology Association of Australia, the AOA and the NJRR.
The Office of Best Practice Regulation has advised that no Regulatory Impact Statement is required. The amendment to the Principal Rules reflects the Australian Government’s publicly announced 2009-10 NJRR Budget measure to recover the operating costs of the NJRR.
In 2010 the Department prepared a cost recovery impact statement in regard to the NJRR, including the forward cost recovery estimates for 2011-12 and 2012-13. The cost recovery impact statement fulfilled a commitment by the Department to transparently account for the NJRR cost recovery activities. A new cost recovery impact statement has been drafted to inform stakeholders of the levy increase.
In July 2013, the Medical Technology Association of Australia (MTAA), the peak representative body for sponsors was advised regarding the proposed increase in levy for 2013-14.
The NJRR cost recovery impact statement is publicly available and can be found on the Department’s website at:
http://www.health.gov.au/internet/main/publishing.nsf/Content/phib-njrr
The Amendment Rules commence on the day after registration on the Federal Register of Legislative Instruments.
The Amendment Rules are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Private Health Insurance (National Joint Replacement Register Levy) Amendment Rules 2014 (No. 1)
This Legislative Instrument is 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.
Overview of Legislative Instrument
The purpose of the Private Health Insurance (National Joint Replacement Register Levy) Amendment Rules 2014 (No. 1) (the Amendment Rules) is to amend the formula for calculating the rate of levy imposed on sponsors of joint replacement prostheses for the purposes of the Private Health Insurance (National Joint Replacement Register Levy) Act 2009.
The levy is only imposed on a sponsor in respect of those joint replacement prostheses for which the sponsor has successfully sought listing on the Prostheses List made under the Private Health Insurance (Prostheses) Rules. The levy is imposed twice a year, in April and October.
The levy is used to fund the Australian Orthopaedic Association’s National Joint Replacement Registry (the NJRR). The NJRR aims to define, improve and maintain the quality of care of patients receiving joint replacement surgery. It collects data from hospitals and State and Territory health departments on the implantation of prosthetic joint replacement devices and reports on the rate of revision surgeries required, complications and other outcomes. This information is then used to inform surgeons, other health care professionals, government authorities including the Therapeutic Goods Administration, sponsors of joint replacement products, private health insurers and patients.
The NJRR also provides post-market surveillance of joint replacement prostheses, assisting with the prompt identification and removal from the market of devices showing high failure rates. Any devices showing high failure rates can be identified quickly and promptly removed from the market.
The Private Health Insurance (National Joint Replacement Register Levy) Rules 2011 (the Principal Rules) sets the rate of levy so that the sum of the amounts levied on all sponsors at each levy day totals $850,000. However, in 2012-13 the Australian Government funding of the Australian Orthopaedic Association (AOA) for the NJRR was not sufficient to cover costs of current workloads, which have increased significantly in recent years, due in part to an increase in the number of joint replacement procedures being performed. Additional funds were utilised from internal AOA reserve funds which are now fully expended. Funding for the NJRR of $2,162,000 is required for the 2013-14 and for future financial years.
The Amendment Rules:
- set a one-off rate for the levy day of 30 April 2014 so that the sum of amounts levied on that day totals $1,312,000, providing the NJRR with total funding of $2,162,000 for the 2013-2014 financial year; and
- amend the levy formula in subrule 5(1) of the Principal Rules so that the sum of amounts levied on each levy day from 31 October 2014 onwards totals $1,081,000.
Human rights implications
The NJRR levy is imposed on sponsors of joint replacement prostheses listed on the Prostheses List, and is not payable by individuals.
The NJRR levy is payable in respect of joint replacement prostheses included on the Prostheses List, inclusion on which guarantees patients the payment of a minimum private health insurance benefit where the prosthesis is provided as part of an episode of hospital treatment and the patient’s insurance product covers the treatment. The payment (or non-payment) of an NJRR levy amount does not affect whether a prosthesis may be listed on the Prostheses List. The NJRR levy also does not affect the minimum private health insurance benefit payable in respect of a prosthesis. Accordingly, a change to the rate of levy will not affect patient access to joint prostheses for which a minimum private health insurance benefit is payable.
The NJRR plays an important role in ensuring consumer confidence in the quality of joint replacement devices used in Australia. Information from the NJRR is accessible by the public, increasing the ability of consumers to inform themselves about the safety and reliability of prostheses and joint replacement procedures. The data produced by the NJRR also enables the timely identification of devices which show high failure rates which, if necessary, can be removed from the market. Manufacturers of devices can draw on reliable performance information for existing devices and designs to inform the development of new prostheses.
The increase to the NJRR levy will enable the NJRR to continue to perform its functions and contribute to a high quality health system in Australia.
Conclusion
This Legislative Instrument is compatible with human rights because it does not engage any of the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
The Hon. Peter Dutton
Minister for Health