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This Digest was prepared for debate. It reflects the legislation as
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CONTENTS
Health Insurance (Pathology Services) Amendment Bill
1997
Date Introduced: 27 June 1997
House: House of Representatives
Portfolio: Health and Family Services
Commencement: The day after the Bill receives
Royal Assent
To amend the Health Insurance Act 1974 to:
- allow payments of Medicare benefits for pathology services
under certain circumstances where the pathology provider's approval
has lapsed;
- make it harder for pathology providers to offer certain
inducements to medical practitioners; and
- give the Commonwealth the power to set penalties for minor
pathology offences.
The 1996-97 Budget announced the successful negotiation of a
three-year agreement between the Commonwealth Government and the
pathology industry, as represented by its peak bodies, the
Australian Association of Pathology Practices (AAPP) and the Royal
College of Pathologists (RCPA). The essence of the agreement, which
commenced on 1 July 1996, is to cap expenditure for pathology under
the Medicare Benefits Scheme to predetermined amounts over the
period 1996-97 to 1998-99(1). Concerns that the basis of the
agreement could be undermined by inappropriate practices have
prompted the amendments proposed in this Bill. The measures
proposed in the Bill have been developed in consultation with the
AAPP and the RCPA and have the support of both organisations.
In seeking to amend the Health Insurance Act 1973 (the
Act), the Health Insurance (Pathology Services) Amendment Bill 1997
has three key objectives. Firstly, the Bill seeks to achieve a more
efficient approval regime for those pathology organisations which
either inadvertently, or for reasons beyond their control, fall
behind in their applications for renewal of approval to operate and
supply approved services under Medicare. The Bill seeks to amend
the Act to provide the Minister for Health and Family Services with
the discretion to backdate approvals where applications are no more
than one month late, thus allowing Medicare benefits to be paid for
the pathology services rendered from the commencement of the
backdated approval.
The second key objective of the Health Insurance (Pathology
Services) Amendment Bill 1997 relates to inappropriate pathology
services. The Health Insurance Commission (HIC) is responsible for
monitoring and detecting inappropriate practice under Medicare and
enforcing the provisions of the Act. The Bill seeks to strengthen
the powers of the HIC in this area. In order to deter unlicensed
pathology collection centres, amendments contained in the Bill seek
to ensure that licensed pathology collection centres display
prominently a notice indicating that the centre is licensed. The
Bill also seeks to strengthen the provisions of the Act to clearly
prevent an approved pathology practitioner (APP) entering into
arrangements whereby inducements or kickbacks are provided to a
medical practitioner or entrepreneur. An example of an arrangement
which the Bill seeks to deter is where an APP enters into an
arrangement with a medical practitioner or entrepreneur for the use
or occupation of premises, but merely oversees the use of the
premises through agents or employees and provides kickbacks to the
medical practitioner or entrepreneur by way of rent.
In its recent report on Medifraud and Inappropriate Practice,
the Australian National Audit Office (ANAO) noted attempts by some
pathologists (and radiologists) to enter into these types of
arrangements and indicated that its 'concern with these
arrangements is that unnecessary services will be ordered by the
primary service providers (eg GPs) in return for benefits from the
secondary service provider'(2) (eg pathologists). An amendment
contained in the Bill seeks to ensure that where premises are
occupied by an APP, then that APP must personally use them to
render professional services.
The powers of the HIC are also strengthened by the third element
of this Bill which seeks to allow the Governor-General to make
regulations which will permit the HIC to deal quickly and directly
with what the Bill's Explanatory Memorandum describes as 'less
serious infringements relating to pathology'. An example is
provided of this type of offence as follows: where an approved
pathology authority (APA) has failed to inform the public that a
pathology laboratory is no longer approved and that services
rendered there do not attract Medicare benefits. In the second
reading speech on the Bill the proposed system of penalty notices
is described as 'operating in a similar manner to traffic
infringement fines'. The objective of this amendment is to achieve
a greater level of compliance with the legislative provisions which
apply to pathology.
This is a short Bill containing just one Schedule with 13
items.
The first seven items in Schedule 1 seek to amend the Health
Insurance Act 1973 to allow for the payment of Medicare
benefits in some circumstances for services provided by a pathology
provider who's approval is out-of date.
Item 2 inserts a new section
23DDA. This establishes a new scheme under which the
Minister for Health and Family Services has the discretion to
back-date the approval for a pathology practioner whose undertaking
has lapsed (thus ensuring that Medicare benefits will be paid).
Conditions include:
- the application for approval must be no more than one month
late;
- the late application must be due to either minor inadvertence
or circumstances beyond the person's control;
- the Minister must be satisfied it is in the public interest to
backdate approval; and
- the acceptance fee has been paid.
When making the decision, the Minister must take into
account:
- whether the person lodging the application would suffer
financial hardship if approval was not backdated; and
- whether other people would be substantially inconvenienced if
the approval was not backdated because they would be unable to
claim Medicare benefits for services provided.
Item 4 inserts almost identical provisions in
relation to lapsed pathology authority undertakings.
Item 6 inserts almost identical provisions in
relation to lapsed accreditation for pathology laboratories.
Item 7 makes it clear that if an approval is
back-dated, then the Commonwealth will not try to recover money
paid out as Medicare benefits while the approval had lapsed.
Item 8 repeals and replaces section
23DNK. This amendment tightens the rules regarding the
displaying of a licence at licensed pathology collection centres.
Under the current law, the centre is required to ensure that a
notice letting the public know that the centre is licensed must
always be displayed in a prominent place. The penalty for breaching
this is $100. Under the proposed changes, the centre is required to
ensure the notice is clearly visible from outside the centre
when the centre is closed. The only exception to this is if
displaying the notice so its visible from outside would be contrary
to a lease/tenancy agreement etc in force when this measure becomes
law. The fine also increases to 10 penalty points - or $1 000.
The Bill's Explanatory Memorandum says the amendment will
protect members of the public by making it easier to check whether
the collection centre is licensed (Medicare benefits are not paid
for tests performed on specimens collected at unlicensed premises).
It will also make it easier for the authorities to check whether a
centre is licensed because while these centres often do not operate
during normal business hours, they are often located within
premises that do.(3)
Items 9 to 11 insert new
provisions dealing with appeals against a decision to refuse a
back-dated approval applied for under the new measures discussed
above in items 2, 4, and 6.
Item 12 inserts a new provision designed to
further deter pathology providers from providing kickbacks to
practitioners. New sub-section 129AAA(3B) is, on
its face, innocuous. It merely says, in part, that a reference in
the previous section to 'an approved pathology practitioner
rendering professional services does not include a reference to the
rendering of professional services on behalf of the approved
pathology practitioner'.
However, the Explanatory Memorandum says this measure is aimed
at stopping pathology providers from offering certain sorts of
kickbacks.
'The intention of the amendment is to prevent arrangements where
the APP (Approved Pathology Provider) merely oversees the use of
the premises through agents or employees, and where the purpose of
the arrangement is to provide inducements or kickbacks to a medical
practitioner or entrepreneur in the form of rent or to operate an
unlicensed collection centre'.(4)
Item 13 gives the Governor-General the power to
make regulations imposing penalties for minor pathology offences.
The penalties may be imposed as an alternative to prosecution, but
must not be worth more than one-fifth of the maximum penalty for
committing the offence in question. Offences subject to lesser
penalties are to be specified in the regulations. The Explanatory
Memorandum puts it this way.
'This amendment will enable regulations to be made to allow the
Health Insurance Commission (HIC) to deal more efficiently and
expeditiously with the less serious infringements relating to
pathology. An example of the type of breach that would fall into
this system includes the failure by APAs to advise the public that
a pathology laboratory is no longer approved and that the services
rendered there do not attract Medicare benefits.'(5)
- Health and Family Services Portfolio, Budget Facts
Sheet , 1996–97.
- Australian National Audit Office, Medifraud and
Inappropriate Practice: Health Insurance Commission , (Audit
Report No 31, 1996–97) Canberra, AGPS, 1997.
- Explanatory Memorandum to Health Insurance (Pathology Services)
Amendment Bill 1997: 3.
- ibid, p4.
- ibid, p5.
Bronwyn Young and Paul Mackey
25 August 1997
Bills Digest Service
Information and Research Services
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.
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.
This page was prepared by the Parliamentary Library,
Commonwealth of Australia
Last updated: 27 August 1997
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