Bills Digest No. 125   1997-98 Health Legislation Amendment Bill (No. 2) 1997


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose

Background

Main Provisions

Endnotes

Contact Officer and Copyright Details

Passage History

Health Legislation Amendment Bill (No. 2) 1997

Date Introduced: 27 November 1997
House: House of Representatives
Portfolio:Health and Family Services
Commencement: Apart from certain amendments relating to the Private Health Insurance Complaints Commissioner and some minor technical amendments, the Act commences on the date on which it receives the Royal Assent.

Purpose

To amend the National Health Act 1953 and the Health Insurance Act 1973 and make minor changes to the Social Security Act 1991 and the Veterans' Entitlements Act 1986 with a view to:

  • bringing certain products which are designed to avoid the regulatory framework of private health insurance within the ambit of that framework;
  • removing the requirement that the payment of benefits to private hospitals is at an acute care rate for the first 35 days of a patient's stay regardless of whether acute care is in fact provided;
  • making agreements between health insurers and hospitals and practitioners available for inspection by any person and requiring health insurers and hospitals who make agreements with practitioners to give an undertaking that the general professional freedom of the practitioner will be maintained;
  • amending the composition of the Private Health Insurance Administration Council;
  • extending the waiting period for benefits for obstetrics from 9 months to 12 months; and
  • providing that visitors to Australia from countries with a Reciprocal Health Care Agreement with Australia can claim under their Australian overseas visitors health insurance for benefits above the Medicare rebate for out-of-hospital medical services.

Background

The central objective of the Bill is to make private health insurance more attractive to consumers by making it better value for money.

The Government states clearly in the Explanatory Memorandum to the Bill that private health insurance plays a key role in the Australian health system and that policy measures in this area aim to:

maintain private health insurance as an essential feature of the mixed public/private health financing framework, with Medicare's ability to deliver being dependant on a stable and viable private insurance sector.

It is well known that the proportion of the population covered by private health insurance has been in decline for a considerable period of time and that premiums for private health insurance have been continually increasing. At 30 June 1983, some 63.6 per cent of the population were covered by private health insurance, while the most recent figure, for the September quarter 1997, was 32.0 per cent of the population (note that this was a slight increase over the figure for the previous quarter, 31.9 per cent of the population). In part, this decline has been due to the popularity of Medicare, in part due to only a small proportion of the population requiring hospitalisation at any one time (ie most people assess themselves at low risk of requiring insurance) and, related to both these points, in part due to a perception that private health insurance represented poor value for money. A range of initiatives has been introduced in recent years to address some of the problems and shortcomings of private health insurance, including:

  • the passage of the Health Legislation (Private Health Insurance Reform) Amendment Act 1995 which, in part, facilitated contracting between private health insurance funds and hospitals (Hospital Purchaser Provider Agreements), private health insurance funds and doctors (Medical Purchaser Provider Agreements) and hospitals and doctors (Practitioner Agreements);
  • the Private Health Insurance Incentives Scheme was announced in the 1996-97 Budget and commenced on 1 July 1997. Under the Scheme, the Commonwealth Government will outlay some $600 million per year to reduce the cost of private health insurance for low to middle income earners. The Government estimates that nearly 80 per cent of families are eligible for the incentives and expects that their health insurance costs will be reduced by up to 20 per cent. The intention of the Scheme is to stop the decline in the number of people covered by private health insurance;
  • an additional policy measure, introduced at the same time as the incentives scheme, is the Medicare levy surcharge for certain higher income earners without private health insurance. This measure is also aimed at stopping the decline in the numbers of people covered by private health insurance and will add a surcharge of 1 per cent to the Medicare levy for individuals and families above specified income levels without private health insurance. People thus affected will pay a Medicare levy of 2.5 per cent;
  • the Treasurer, Mr Costello, issued the Industry Commission with terms of reference for an inquiry into private health insurance on 17 September 1996. The Commission issued a discussion paper, a draft report and its final report was released in April 1997;
  • the Government issued its response to the Industry Commission's report on 10 April 1997, supporting most of the Commission's 22 recommendations;
  • on 19 August 1997, the Minister for Health and Family Services, Dr Wooldridge, announced a range of reforms to private health insurance including informed financial consent for patients on the costs of medical and hospital treatment prior to a hospital episode. This package of measures foreshadowed a number of the amendments included in the Health Legislation Amendment Bill (No. 2) 1997;
  • on 2 November 1997 Dr Wooldridge announced that eight trials involving 20 000 privately insured patients would be conducted during the next six months in NSW, Victoria, Queensland and South Australia to test methods of simplified billing and informed financial consent; and
  • provisions of the Health Legislation Amendment Bill (No. 2) 1997 complement the measures outlined above and several measures represent the Government's response to recommendations of the Industry Commission.

Background on some of the major changes to the private health insurance arrangements proposed in this Bill is provided below.

Health insurance business

Community rating is regarded as an essential element of private health insurance, providing protection from excessive premiums for the elderly and chronically ill. Community rating of premiums means that all contributors to private health insurance pay the same premium for the same product. It can be contrasted with risk rating, which applies to most other types of insurance. Under this system the risk profile of the individual seeking insurance is assessed and a premium is calculated accordingly. Risk rating applies to much private health insurance in the United States.

In order to protect community rating, the National Health Act 1953 defines health insurance business and restricts its provision to registered health insurance organisations. From time to time, attempts are made to market various insurance products designed to appeal to younger and healthier people which, while seemingly attractive, can have the effect of undermining community rating by avoiding the regulatory framework of private health insurance. This could occur if products were permitted to be marketed which effectively 'cream skim' the low risk members of the community, leaving the older and sicker people in the more traditional forms of private health insurance.

The latest manifestation is a form of trauma insurance which proposed to offer specified lump sum benefits where a contributor is diagnosed with a particular disease or condition which requires hospitalisation. Measures proposed in this Bill further extend the definition of health insurance business to effectively outlaw this type of insurance while still permitting accident and sickness insurance, liability insurance and other business as prescribed.

Changes to benefits for nursing home type patients

Benefits may be paid under the Health Insurance Act 1973 at an acute care rate and also at a lower rate to a nursing home type patient (NHTP) occupying a hospital bed. The Act presently defines a nursing home type patient as 'including a hospital patient who has been in care for a continuous period exceeding 35 days but does not include a patient that has been issued with either a 3A determination or a 3B certificate' (a certificate issued by a medical practitioner certifying that the patient requires acute care). The Bill proposes that the present definition of a nursing home type patient be repealed and replaced with a new definition, under which 'a nursing home patient is a patient in a hospital who is included in a class of person identified by the Minister by written notice but does not include a patient that has been issued with either a 3A determination or a 3B certificate'.(1)

The Act presently requires that benefits be paid at an acute care rate for the first 35 days of a patient's hospitalisation regardless of whether acute care is actually provided. Measures in this Bill propose that this provision be removed and replaced with a regulation 'that provides for determination of benefits for nursing home type patients at an appropriate level and structure (including that acute care benefits are paid when acute care is provided)'.(2) The Australian Private Hospitals Association:

opposes this proposal unless the NHTP benefit is significantly increased, preferably to the level of the default benefit ($210 per day). Individual funds and hospitals could negotiate different rates in their contracts where appropriate.(3)

In addition, in its submission to the Industry Commission inquiry into private health insurance, the Australian Catholic Health Care Association (ACHCA):

"strongly endorsed" the present system noting that "private hospitals have been called on to fill the aged services gap left through the inadequate resourcing of the aged care system".(4)

One issue which does not appear to be addressed by this Bill is the current problem which may be faced by patients issued with a 3B certificate (ie a certificate issued by a medical practitioner certifying that the patient requires acute care). The Private Health Insurance Complaints Commissioner notes in her latest annual report that provisions exist for the review of this certificate where health funds believe that members may not be receiving acute care. None of the agencies involved in the review is required to inform the patient that the certificate is under review. The Commissioner argues that:

health funds should be required to notify their members as soon as possible when a certificate is under challenge and that there is a danger that only nursing home benefits will be paid. Hospitals and doctors should also be required to inform their patients of the ramifications of the certificate at the time the patient's doctor signs the certificate. Perhaps there should be provision on the certificate that the import and ramification of the certificate has been explained to the patient.(5)

Given the emphasis now being placed on the issue of informed financial consent for people with private health insurance, consideration should perhaps be given to the recommendations of the Private Health Insurance Complaints Commissioner for informed consent for nursing home type patients in cases where eligibility for benefits is being reassessed.

Purchaser Provider Agreements

The Health Legislation (Private Health Insurance Reform) Act 1995, in part, facilitated contracting between private health insurance funds and hospitals (Hospital Purchaser Provider Agreements), private health insurance funds and doctors (Medical Purchaser Provider Agreements) and hospitals and doctors (Practitioner Agreements).

While many Hospital Purchaser Provider Agreements have been signed between private health insurance funds and hospitals, very few Medical Purchaser Provider Agreements have been signed. This is primarily due to the opposition by the medical profession and, in particular, the Australian Medical Association (AMA) which has mounted a vocal campaign likening the agreements to US-style managed care. In the United States, there have been instances of private health funds using their power to place limits on clinical decisions. However, it is important to note that the Australian health system, including the Australian private health insurance system, is very different to that of the United States and also that there are various forms of managed care operating in the USA.

The intent of the 1995 legislation was to address one of the key complaints about private health insurance - the often high level of out-of-pocket costs faced by people even on the top level of cover. The 1995 legislation, in part, permits private health insurance funds to negotiate with medical practitioners on an agreed level of fees so that patients will, if they so wish, be able to insure themselves for up to 100 per cent cover. This Bill proposes to provide greater flexibility to the Agreements by enabling health insurance funds to pay medical benefits in excess of the Medicare Benefits Schedule to doctors who have Practitioner Agreements with private hospitals which also have Hospital Purchaser Provider Agreements with the fund. In order to address the concerns of the medical profession about managed care, all contracts offered by funds or hospitals:

will need to include a clause guaranteeing the general professional freedom of doctors to identify the appropriate treatment for their patients within the scope of accepted clinical practice. With the exception of the price arrangements entered into by the parties which will remain commercial-in-confidence, the contracts will be open to public scrutiny.(6)

The initial reaction from the AMA has not been encouraging. Despite welcoming the changes proposed in the Bill, the AMA is persisting in its campaign to link any form of contracting with managed care, as is indicated by the title of an AMA press release reacting to the Minister's proposals: 'Managed care contracts not on, AMA tells Wooldridge'.(7) There are some signs, however, that there is not a united opposition to the Agreements within the medical profession. The National Association of Specialist Obstetricians and Gynaecologists has reportedly been discussing with health insurance funds proposals for patients to trade off shorter lengths of stay in hospital in return for minimising out-of-pocket costs.(8) Given the often quite short length of stay in hospital for mothers following childbirth, such proposals may have limited appeal to patients.

In addition, the Minister for Health and Family Services, Dr Wooldridge, in answer to a Question Without Notice on 2 December 1997, announced that Melbourne Private Hospital had reached agreement with its cardiac surgeons, neurosurgeons, cardiologists and anaesthetists 'so that anyone going into hospital for these procedures would have no out-of-pocket expenses and would receive a single bill'.(9)

Private Health Insurance Administration Council

The Bill proposes to make significant changes to the powers and functions of the Private Health Insurance Administration Council (PHIAC). These changes were first announced by the Minister for Health and Family Services, Dr Wooldridge, on 19 August 1997.

The PHIAC was established with effect from 28 June 1989. The key roles for PHIAC to this point have been monitoring the financial performance of the health funds, administering the reinsurance arrangements and the collection and dissemination of statistical information on the performance of the private health insurance industry. It is PHIAC which collects, analyses and publishes quarterly statistics on the level of coverage of private health insurance in Australia.

At present, the Council consists of a Commissioner, three members representing registered health insurance organisations and one other member, an independent actuary. Appointments are made by the Minister for Health and Family Services. The terms of the current Commissioner and Council members are due to expire in April 1998.

Proposed amendments to PHIAC include disbanding the present Council and restructuring it by vesting the powers of PHIAC in a Council to consist of a Commissioner and two to four other individuals. The members of the Council will be appointed by the Minister for Health and Family Services.

Private Health Insurance Complaints Commissioner

The Private Health Insurance Complaints Commissioner was appointed in November 1995. In each of her two annual reports to date, the Commissioner has requested amendments to the legislation establishing her office to strengthen the role and function of the Complaints Commissioner. This Bill proposes to change the name of the Commissioner to the Private Health Insurance Ombudsman and provides for several measures intended to enable the Ombudsman to provide a more efficient operation. For example at present, the Complaints Commissioner is restricted to recommending that a health fund request a hospital or medical practitioner to take a specific course of action where it is felt that a consumer complaint is justified. The Bill proposes that the Ombudsman will be able to directly recommend that a hospital or medical practitioner take a specific course of action. Other measures include providing the Health Insurance Ombudsman with the power not to investigate complaints. The Complaints Commissioner received 1211 complaints and a further 1190 inquiries during 1996-97.

Changes to waiting periods

The National Health Act 1953 mandates the maximum waiting periods which health insurance funds may apply prior to benefits being paid. The maximum waiting period for initial membership is two months. The waiting period for obstetrics is currently nine months, which the Bill proposes to increase to 12 months. This measure responds to allegations by health insurers that obstetric patients comprise a high proportion of so-called 'hit and run' contributors who join for the necessary waiting period, take their benefits and then cease their membership. The Bill also proposes to widen the 12 month waiting period for pre existing 'illness' or 'ailment' to include pre-existing 'condition'.

In its report on private health insurance, the Industry Commission estimated that the costs to the health funds of 'hit and run' contributors could be 'between 1-2 per cent of annual benefits payable (around $40m-$80m in 1995-96)'.(10)

Simplified billing and informed financial consent

On 19 August 1997, the Minister for Health and Family Services, Dr Wooldridge, announced a range of reforms to private health insurance including informed financial consent for patients on the costs of medical and hospital treatment prior to a hospital episode. On 2 November 1997 Dr Wooldridge announced that eight trials involving 20 000 privately insured patients would be conducted during the next six months in NSW, Victoria, Queensland and South Australia to test methods of simplified billing and informed financial consent. Melbourne Private Hospital is to commence a system of no out-of-pocket costs and the provision of a single bill for patients undergoing treatment by its cardiac surgeons, neurosurgeons, cardiologists and anaesthetists.

In order to facilitate simplified billing, measures in this Bill propose the establishment of 'approved billing agents' to whom a patient can request that Medicare benefits be paid. In cases where doctors have Practitioner Agreements, the Bill proposes that the 75 per cent Medicare benefit be paid to the health insurance fund. In these cases, assignment of the Medicare benefit by the patient to the fund will be mandatory. The Bill proposes that billing agents be approved by the PHIAC. Where a patient payment is required for procedures and/or hospital accommodation, regulations will require that simplified billing arrangements must include informed financial consent.

Medical insurance for visitors to Australia

Australia currently has reciprocal health agreements with eight countries: New Zealand, the United Kingdom, Italy, Malta, Sweden, the Netherlands, Finland and Ireland. The terms of the reciprocal agreements vary, depending on the unique features of each country's health system. For example, the agreements with Italy and Malta are limited to six months for eligible visitors; the agreement with the United Kingdom includes subsidised access to out-of-hospital medical services, while the agreement with Ireland excludes access to subsidised out-of-hospital medical services. The agreements do not entitle visitors to elective or prearranged hospital treatment.

This measure proposes that visitors to Australia from countries with which Australia has a reciprocal health agreement, be permitted to insure for 100 per cent of out-of-hospital costs. Currently, visitors from countries without a reciprocal agreement with Australia, such as the United States, are able to insure for 100 per cent of out-of-hospital costs. This measure is aimed particularly at people from overseas who are working in Australia for large multinational corporations, rather than short-term visitors.

Australian residents are not permitted to insure for out-of-hospital medical costs beyond the 85 per cent Medicare rebate.

Notification of health insurance premium increases

The regulatory powers of the Minister for Health and Family Services in relation to changes in health insurance premiums are covered by section 78 of the National Health Act 1953. Changes to premiums are defined as changes to the rules of a health insurance fund under the Act. A fund is required to notify the Department of Health and Family Services no later than seven days prior to its proposed change to premiums. This Bill proposes to increase the minimum period of notification to 14 days or such other period as declared in writing by the Minister. There is no formal approval by the Minister or the Department of changes to rules, including changes to premiums, however, the Minister does have the power to disallow changes to rules (including premiums) where they:

could breach a condition of registration or other section of the National Health Act 1953;

impose an unreasonable or inequitable condition affecting the rights of any contributor; or

adversely affect a fund's stability.(11)

It was announced on 29 August 1996 that changes to the rules of a fund affecting premiums would be approved by the Minister for Health and Family Services and the Prime Minister. The Department has requested funds to provide 21 days notice of changes to premiums, however it should be noted that this is not a formal requirement under the Act.

Recently, the Minister for Health and Family Services and the private health insurance industry reached an agreement that future increases in premiums would occur on the same day for all funds.

For-Profit and Not-for-Profit health insurance organisations

In New South Wales, the two largest insurers hold some 55 per cent of the market, while in other states one or two insurers dominate. For example, in Western Australia, HBF has 74 per cent of the market, while Medibank Private has a further 19 per cent. In Queensland, the two major insurers (MBF and Medibank Private) hold 90 per cent of the market, while in South Australia, National Mutual has nearly three times the coverage of its closest competitor, Medibank Private.

At 30 June 1997 there were 45 registered health insurance organisations, of which only three were for-profit organisations. This Bill proposes to amend provisions of the National Health Act 1953 to remove obstacles to for-profit organisations applying for registration as health funds as well as making it easier for existing not-for-profit funds to become for-profit funds.

Although private health insurance has not been particularly profitable in recent years, measures in this Bill, taken together with earlier measures such as the Purchaser Provider Agreements, may stimulate competition within the private health insurance industry. It is possible that these measures may promote interest among other players, including perhaps some of the larger private hospital corporations, in complementing their existing profile with participation in the private health insurance industry. However, the trend of history is against wholesale change, because since the 1970s 'there have been only 3 cases of large scale new entrants into the private health insurance market'.(12)

Main Provisions

The amendments which the Bill proposes are grouped into 11 Schedules. Schedules 10 (miscellaneous) and 11 (minor technical amendments) will not be considered.

Schedule 1 - Health Insurance Business

Section 67 of the National Health Act 1953 provides that only registered organisations may carry on health insurance business. Item 1 of this Schedule amends the definition of 'health insurance business' to extend it to circumstances in which the insurance cover provided is in respect of the happening of an event which ordinarily requires hospital treatment regardless of whether the payment of a benefit is contingent on hospitalisation or treatment or on the insured actually requiring such treatment or on fees and charges being payable by the insured in relation to such treatment.

As mentioned above in the Background under the heading 'Health insurance business', this amendment is an attempt to prevent the marketing of certain insurance products which could undermine community rating.

Schedule 2 - Nursing-home type patients

It is presently the case that health insurers are required to pay benefits to hospitals at an acute care rate for the first 35 days, irrespective of whether acute care is provided. Patients who remain in a hospital for longer than 35 days are regarded as nursing-home type patients (unless the patient has been issued with a section 3B certificate) and the benefit paid is reduced for this type of patient. The amendments contained in this schedule have the effect of omitting the arbitrary 35 day rule and allow the Minister to determine the class of person who are nursing-home type patients.

Schedule 3 - Agreements and related matters

Under the National Health Act 1953 the following agreements are permitted:

  • agreements between health insurers and hospitals (Hospital Purchaser Provider Agreements) that provide that the health insurer will make payment directly to the private hospital and except to the extent provided, that payment will be in full satisfaction of any amount that would otherwise be owed by the patient (section 73BD).
  • agreements between health insurers and medical practitioners (Medical Purchaser Provider Agreements) that provide that the health insurer will make payment directly to the practitioner and except to the extent provided, that payment will be in full satisfaction of any amount that would otherwise be owed by the patient (section 73BDA).
  • agreements between hospitals and medical practitioners (Practitioner Agreements) that provide that the hospital will make payment directly to the practitioner and except to the extent provided, that payment will be in full satisfaction of any amount that would otherwise be owed by the patient. The Hospital Purchaser Provider Agreement between the hospital and the relevant insurer may then provide for the payment of the medical practitioner fees by the health insurer to the hospital (section 73BDAA).

Item 1 inserts new section 73ABC into the National Health Act 1953. That section will require that copies of each of the three types of agreements be made available to any person who requests them, subject to deletion of information which could identify an individual or medical practice or which relates to amounts payable for rendering treatment. This new section will not apply in respect of agreements entered into before the commencement of the section.

Items 2 and 4 impose a requirement that Practitioner Agreements and Medical Purchaser Provider Agreements must oblige the hospital to maintain the medical practitioner's professional freedom.

Paragraph (ea) of Schedule 1 to the National Health Act 1953 presently allows health insurers to pay fees in excess of the medicare benefit schedule fee for professional services where the health insurer has a Medical Purchaser Provider Agreement with the practitioner. Items 5 to 7 have the effect of allowing payment in excess of the schedule fee under a Hospital Purchaser Provider Agreement where the hospital has a Practitioner Agreement with the practitioner.

Schedule 4 - Health benefits reinsurance arrangements

Section 73BB of the National Health Act 1953 makes it a condition of registration that a health insurer establishes and maintains a reinsurance account in the health benefits fund conducted by it. Section 73BC provides for the establishment of a reinsurance trust fund out of which funds can be paid in circumstances determined by the PHIAC.

PHIAC determines the amount to be paid into the reinsurance trust fund by health insurers and is entitled to charge penalties where a health insurers fail to pay amounts as notified by the PHIAC.

Item 1 inserts proposed new section 73BB into the Act. That section will empower the PHIAC to determine the records that must be kept by health insurers to enable the PHIAC to perform its functions in respect of the reinsurance trust fund.

Schedule 5 - The Private Health Insurance Administration Council

Health insurers must be registered as health benefits organisations. Applications for registration are referred to a Registration Committee for examination and report to the Minister. The Committee is constituted by two officers of the Department of Health and Family Services and a representative of the Commonwealth Actuary.

Item 1 amends section 70 of the National Health Act 1953 so that the Registration Committee will include a person appointed by the PHIAC.

Item 19 will allow two or more members to request a meeting of the Council.

At present a quorum of the Council requires the presence of the Commissioner and two other members and decisions are made by the Commissioner having regard to the advice of the members present (section 82N). Under Item 20, a majority of members will now constitute a quorum and under item 21 questions are to be decided by a majority of the votes of members with the Commissioner having a deliberative and casting vote, if necessary.

Section 14 of the Commonwealth Authorities and Companies Act 1997 requires the preparation of budget estimates by directors of Commonwealth Authorities. Item 22 inserts new section 82PAA which provides that section 14 does not apply in respect of the PHIAC.

Schedule 6 - The Private Health Insurance Complaints Commissioner

The Private Health Insurance Complaints Commissioner is be renamed as the Private Health Insurance Ombudsman.

Item 9 expands the category of person who may complain to the Commissioner from those people who are contributors to a health benefits fund to those people who are covered by a private health insurance policy.

Section 82ZSB of the National Health Act 1953 allows the Commissioner to refer complaints to registered organisations who conduct health insurance funds for the purpose of investigating and reporting on the complaint. Item 11 repeals section 82ZSB and substitutes a new section in its place. The new section will allow the Private Health Insurance Ombudsman to attempt to mediate a settlement between the parties in addition to the present ability to refer the complaint for investigation and reporting.

At present, following the receipt of a report from a registered organisation in respect of a complaint or following an investigation of a complaint by the Commissioner, the Commissioner may recommend that a registered organisation take a course of action in relation to the complaint or that it request a hospital or practitioner to take a course of action in relation to the complaint (section 82ZSD). Item 24 will allow the Health Insurance Ombudsman to make a recommendation directly to a hospital or practitioner in respect of the complaint.

Items 31 and 32 provide for additional circumstances in which the Health Insurance Ombudsman may decide not to investigate or continue to investigate a complaint:

  • when the complaint has been dealt with or is being dealt with;
  • when the complainant will not assist the Health Insurance Ombudsman;
  • when the complainant chooses to have the matter reviewed by a court or tribunal;
  • when the complainant does not have sufficient interest in the subject matter;
  • when the complainant has a right to have the matter reviewed by a court or tribunal but has not exercised that right where it would be reasonable for him or her to do so.

Item 46 adds two new sections to the end of the Division which deals with complaints. Proposed new section 82VD allows the Health Insurance Ombudsman to delegate any of his or her powers and functions. Proposed new section 82ZVE exempts the Health Insurance Ombudsman and his or her staff from personal liability in respect of any action taken in good faith in the performance of the functions of the Health Insurance Ombudsman.

Schedule 7 - Waiting Periods

At present the maximum waiting period that a health insurer may impose in respect of obstetric conditions is 9 months. Items 2 and 3 have the effect of increasing that maximum waiting period to 12 months.

Schedule 8 - Approved Billing Agents

This Schedule creates a regime of approved billing agents. When a health insurer or hospital obtains approval as an approved billing agent, it will be entitled to take an assignment of the Medicare benefit that the patient would have otherwise received in respect of a professional medical service provided to the patient by a practitioner. In practice, the health insurer or hospital will then be responsible for payment of the full amount of the practitioner's fees as determined in accordance with an agreement between the health insurer or hospital and the practitioner.

Schedule 9 - Medical insurance for visitors to Australia

Section 7 of the Health Insurance Act 1973 permits the Commonwealth government to enter agreements with governments of other countries which result in the people of those countries being treated as residents or citizens for the purposes of the provision of medical, hospital and other care. A visitor from a country which has such an agreement with Australia is eligible to receive a Medicare benefit. Section 126(1) prohibits an insurer from being made liable to pay a medical expense for a professional services in respect of which a Medicare benefit is payable.

Item 1 of this Schedule provides that the prohibition contained in section 126(1) does not apply in respect of persons who are eligible to receive medicare benefits because of the operation of an agreement made under section 7.

Endnotes

  1. Explanatory Memorandum: 9-10.
  2. Explanatory Memorandum: 6.
  3. 'Health insurance changes - what next?', Private Hospital, July/August 1997: 6.
  4. Industry Commission, Private Health Insurance, Canberra, AGPS, 1997: 60.
  5. Private Health Insurance Complaints Commissioner, Annual Report 1997, Canberra, AGPS, 1997: 32.
  6. Minister for Health and Family Services, 'Consumers to gain from private health insurance reforms', Media Release, 19 August 1997.
  7. Australian Medical Association, 'Managed care contracts not on, AMA tells Wooldridge', Media Release, 19 August 1997.
  8. Dodson, L 'AMA hammers minister's plan', Australian Financial Review, 3 November 1997.
  9. House of Representatives Debates, 2 December 1997: 11362.
  10. Industry Commission, Private Health Insurance, Canberra, AGPS, 1997: 66.
  11. Ibid: 494.
  12. Ibid: 102.

Contact Officer and Copyright Details

Lee Jones
Paul Mackey
23 January 1998
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

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Published by the Department of the Parliamentary Library, 1997.



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