Bills Digest No. 41  2000-01 Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000


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
Concluding Comments
Endnotes
Contact Officer & Copyright Details

Passage History

Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000

Date Introduced: 31 August 2000

House: House of Representatives

Portfolio: Health and Aged Care

Commencement: On Royal Assent

Purpose

To amend the Health Insurance Act 1973 to exclude payment of Medicare benefits where a medical practitioner has breached a contract to work in a rural or remote area.

Background

For some time there have been well-recognised problems in attracting and retaining medical practitioners in rural and remote areas in Australia. Between 1984-85 and 1998-99 there has been a 60 per cent increase in the number of full time medical practitioners in metropolitan areas, compared to 39 per cent in regional and rural areas. In 1998-99 there were 115 general practitioners per 100 000 in metropolitan areas (1 practitioner for 870 people) compared to 87 in rural and regional areas (1 practitioner for 1150 people). There is decreasing supply of medical practitioners with increasing rurality.(1) This under-supply of practitioners in rural areas gives rise not only to under-servicing and unmet need, but also to higher patient co-payments compared to metropolitan areas (average co-payment of 14 per cent compared to 7.4 per cent respectively).(2)

In 1998, 60 per cent of general practitioner trainees elected to work in capital cities compared to 31 per cent in rural and regional areas.(3) The turnover of general practitioners in rural areas is also greater. These trends might be attributed to a number of things, including the facts that the average number of hours worked by rural practitioners is higher, the proportion of general practitioners on call is lower, and the number of hours on call is higher in rural areas, and there is a higher proportion of small practices in rural areas (with correspondingly lower profitability).(4) Other major factors for physicians' choices against rural practice will include personal background, family and spousal considerations, professional education/support/practice factors, and community factors.(5)

In this context, the Australian Medical Association (AMA) has gone so far as to claim that:

There is a health care crisis in rural and remote areas of Australia. Good health outcomes for people living outside urban areas are jeopardised because of their significant disadvantage in accessing timely and comprehensive health care... one major exacerbating factor is the difficulty in attracting and retaining doctors, both general practitioners and specialists. ... It is urgent that an adequately trained and appropriate medical workforce is encouraged to work in rural and remote areas.(6)

To address this need, the AMA proposed a number of measures, including a voluntary rural medical bonded scholarship scheme. It also suggested a national co-ordinating council for medical services; a minimum quota for students from rural areas entering medical schools; and a national training strategy to increase the number of indigenous health professionals.(7)

The Government, while not describing the situation in terms of 'crisis' and 'urgency', has acknowledged that there is 'a need for more doctors in rural and remote Australia.'(8) In the 2000-2001 Budget, the Government announced the Medical Rural Bonded Scholarship Scheme (the MRBS Scheme), which is part of 'the government's long-term strategy of delivering more doctors to rural communities'.(9)

Under the MRBS Scheme, the Government will provide 100 new medical students with a scholarship worth $20,000 per annum to study medicine, on condition that 'they agree to work in a rural community for six years once they have completed their basic medical training and GP or specialist fellowship.'(10) In addition to funding the scholarships, the Government will also fund the cost of 100 additional places in Australian medical schools for the MRBS Scheme medical students.

Main Provisions

Item 1 of Schedule 1 of the Bill inserts proposed section 19ABA into the Health Insurance Act 1973. This section provides that no Medicare benefit is payable in respect of any professional service rendered by or on behalf of a medical practitioner who has breached a contract with the Commonwealth to work in a rural or remote area. As the Explanatory Memorandum notes, this section may also apply to other contracts entered into between the Commonwealth and medical practitioners under which medical practitioners agree to work in rural or remote areas, not just contracts under the MRBS Scheme.(11)

The period for which Medicare benefits are not payable is twice the length of the contract. As the contracts will be for six years, this means no Medicare benefit will be payable for 12 years after the contract is breached. The period may be shorter if the contract so provides.(12)

There is no discretion reposed in anyone to avoid the operation of this section. It takes effect by operation of law upon breach of the contract to work in a rural or remote area. There is also no avenue for review: because the ineligibility for Medicare benefits is automatic, no 'decision' is made for the purposes of the Administrative Decisions (Judicial Review) Act 1977.

Item 2 of Schedule 1 of the Bill amends section 19CC of the Health Insurance Act 1973. It is currently an offence for a medical practitioner to provide professional services if a Medicare benefit is not payable, either because the medical practitioner is not registered, or because the person is an overseas trained doctor whose qualifications have not been recognised in Australia or who has not become Australian registered. Item 2 will make it also an offence to provide professional services if a Medicare benefit is not payable because the medical practitioner has breached a contract to work in a rural or remote area. However, it is not an offence if the patient is told prior to the services being provided that no Medicare benefit is payable.

Concluding Comments

Reasonable requirements or 'draconian measures'?

The AMA is in favour of a voluntary rural bonded scholarship scheme, having in fact proposed the idea.(13)

The Government considers the requirement to work in a rural or remote area for six years 'is absolutely reasonable, considering the Commonwealth will pay between $80,000 and $120,000 during the course of their degree and will have to meet a similar amount again for the cost of the place in medical school.'(14) The AMA is not opposed to six years of service in rural areas in return for the scholarship assistance. The AMA's Position Statement on Medical Workforce and Training recognises that there is a maldistribution of the medical workforce, and encourages measures to provide incentives for medical practitioners to practise in rural areas.(15)

However, although the AMA is in favour of incentives for medical practitioners to practise in rural areas, it is opposed to the specific provisions proposed in the Bill. AMA Federal President, Dr Kerryn Phelps, has criticised the Bill, saying:(16)

the good idea could be rendered a complete lemon because of draconian measures the Government is attempting to build into the scheme. ... The Federal Government is entitled to include reasonable measures to deter doctors from breaching their contract. But they must be flexible, sensible arrangements - not draconian penalties that will deny the public the benefit of fully-trained specialists.

The AMA has called for the 12 year ban on access to Medicare benefits where the contract to work in rural or remote areas is breached to be scrapped, and for an inquiry to be held into the Bill.(17) This ban effectively precludes medical practitioners from private practice for 12 years, and will permit them to work only in hospitals or in medical research, where it is not necessary to attract Medicare benefits.(18) The Government, on the contrary, considers that without the Medicare ban 'there will not be the incentive for bonded scholars to honour their obligation.'(19)

The measures proposed in the Bill make no allowance for the circumstances in which the contract is breached. Medical practitioners may need to cut a contract short for reasons such as personal illness, family tragedy, family responsibilities or other circumstances.

Although certain decisions about ineligibility for Medicare benefits are reviewable, first by the Minister and then by the Administrative Appeals Tribunal,(20) no review is available of the Medicare ban. This is because no decision is made: the ban takes effect automatically by operation of law when the contract to work in a rural or remote area is breached. The AMA has recommended the establishment of an independent tribunal which would have 'power to vary contracts between doctors and the Government to allow for changed circumstances such as family tragedy, hardship or illness.'(21)

Further, the set 12 year ban period for breach and the requirement to repay the total amount of the scholarship(22) are strangely insensitive to the period of the contract already complied with. So with a six year contract, a medical practitioner who complies for 5 and a half years is penalised as heavily as one who complies for 5 and a half weeks. No allowance is made in calculating either the scholarship repayment or the length of the Medicare ban for the length of service already rendered.

The other point of criticism by the AMA is that the six years of rural service does not start until both university training and the general practitioner or specialist fellowship have been completed. This excludes the work medical practitioners have undertaken in rural areas prior to completion of their fellowship, which could amount to years.(23)

Civil conscription

A constitutional issue is also raised by the Bill, namely whether the Bill authorises civil conscription and hence is beyond the power of the Parliament. The Commonwealth's power to legislate for Medicare benefits, and to pass the Health Insurance Act 1973, is probably found in section 51(xxiiiA) of the Constitution. That placitum permits legislation with respect to:

the provision of ... pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription).

The prohibition on any law which constitutes a form of 'civil conscription' means that medical practitioners cannot be compelled to perform any compulsory service, that is, they cannot be compelled to engage in practice or to perform any particular services.

It is not clear how far this prohibition extends. In an early case, it was held by a majority of the High Court that a condition that doctors must write prescriptions on prescribed forms for a number of listed medicines constituted a form of civil conscription. It was said that, as a doctor cannot carry on a practice without writing many prescriptions, the effect of the provision is that he or she would be compelled to either use the Commonwealth forms or go out of practice.(24) However, later cases have affirmed that, so long as a person voluntarily undertakes a career or particular task, the mere compulsion to do something in a particular manner does not offend the prohibition on civil conscription.(25) Thus, conditions such as filling out forms, or a requirement for medical practitioners to be registered or to pay a registration fee do not amount to civil conscription.

It is clear from the few decided cases on the meaning of 'civil conscription' that both legal and practical compulsion will offend the prohibition. Thus, if a law exerts 'economic pressure such that it would be unreasonable to suppose that it could be resisted', it may amount to civil conscription although legally there is no compulsion.(26) As Latham CJ pithily stated:(27)

There could in my opinion be no more effective means of compulsion than is to be found in a legal provision that unless a person acts in a particular way he shall not be allowed to earn his living in the way, and possibly in the only way, in which he is qualified to earn a living.

Aickin J considered 'the prohibition of the performance of medical ... services by particular qualified practitioners other than in some designated place' would be a 'clear example' of civil conscription.(28) It may be argued that the Medicare ban and the requirement to repay the scholarship in full if a medical practitioner does not serve the full six years of his or her contract amount to practical compulsion to practise in rural or remote areas for the duration of the contract.

The counter argument is that no medical practitioner is compelled to practise in those areas, as there are real alternatives, such as not accepting a MRBS scholarship. It could be contended that a person voluntarily enters into a contract under the MRBS scheme knowing the conditions which are attached to it. However, it has been suggested by one judge that the fact that a person voluntarily engages in employment may not be enough to negate the civil conscription argument:(29)

It is true that no one is compelled to adopt the profession of medicine. But if he does do so he is affected in his freedom of practice and in his means of living unless he subscribes to the scheme [which controlled access to free medication by requiring medical practitioners to prescribe the medication on a prescription form prescribed by the Commonwealth].

These comments have not received majority support. Indeed, more recently, doubt has been cast on whether there is practical compulsion in circumstances where a person has voluntarily entered into a Commonwealth scheme. In Alexandra Private Geriatric Hospital Pty Ltd v Commonwealth, the High Court upheld a detailed scheme of Commonwealth control of nursing homes, through registration and other conditions. Although an argument that the scheme amounted to civil conscription was not pursued, the High Court made comments about practical compulsion and freedom of choice more generally. The Court acknowledged that the scheme gave the Commonwealth effective control of the entire nursing home industry, because 'as a matter of practical reality ... there would be few proprietors who would find it profitable to conduct a nursing home without the benefit of the very substantial government subsidy.'(30) Nevertheless, it commented that as a matter of law nursing home proprietors were not required to obtain Government approval, and a proprietor's 'participation in the scheme is ultimately a matter of his own choice.'(31)

Another matter to bear in mind is that civil conscription does not prohibit the regulation of matters 'done incidentally in the course of practice', only the conscription of medical services themselves.(32) Regulation of the manner in which a service is performed is not prohibited, only the compulsion to provide medical services.(33)

It is unclear where the MRBS scheme lies in this dichotomy. Clearly, it does more than merely control the manner in which medical practitioners are to provide their services. A combination of the following factors indicates the onerous nature of the conditions and obligations imposed on medical practitioners who have signed up under the MRBS scheme:

  • the requirement to practice for six years in rural or remote areas
  • the dependence of medical practitioners on Medicare eligibility for their ability to earn a living (other than in hospital practice)
  • the dependence of the entire Australian community on Medicare benefits being available in respect of services rendered by medical practitioners
  • the punitive length of the ineligibility for Medicare if the MRBS contract is breached, and
  • the requirement to repay the scholarship in full regardless of the length of rural service rendered by a medical practitioner under the MRBS scheme.(34)

However, other factors counter the suggestion that this amounts to compulsion to perform medical services. Firstly, individuals are not required to participate in the MRBS scheme, but voluntarily enter into it with full awareness of the conditions of the contract and the penalties for breaching the contract. Further, those who do choose to participate in the MRBS scheme but do not fulfil their obligations will still be able to practice in hospitals or participate in medical research. Finally, it seems from more recent authority that Commonwealth regulation of the medical profession through the Medicare system can include practical compulsion to submit to certain obligations.(35) Ultimately, the constitutional question whether, in a practical sense, the MRBS scholarship conditions compel medical practitioners who have signed up under the scheme to perform medical services, in contravention of section 51(xxiiiA) of the Constitution, remains unresolved.

Effectiveness of bonded scholarships

A further issue, beyond the legality of the proposed measures, is whether the MRBS scheme itself will be effective to achieve its desired purpose, namely, attracting medical practitioners to and retaining them in rural and remote areas. There is question as to whether bonded scholarships are successful as a measure to encourage long-term retention of medical practitioners in rural areas. Research in the United States of America shows that bonded scholarships are not successful in retaining doctors in rural areas beyond the period of the bond, compared to non-bonded doctors who choose rural practice for other reasons.(36)

The MRBS scheme is open to any student, although consideration will be given to students' interest in rural health and motivation to work in rural areas.(37) Places for MRBS scheme scholars will be allocated to universities with a proven track record of attracting rural medical students.(38) The preference is for students with a rural background, who are known to be more likely to continue in practice in rural areas. But with respect to this group, the 12-year ban would appear to be misplaced as a disincentive to breaching the contract with the Government.

Endnotes

  1. Australian Institute of Health and Welfare, Health in Rural and Remote Australia (1998).
  2. Australian Institute of Health and Welfare, Medical Workforce Supply and Demand in Australia (October 1998).
  3. Labour Force Unit, Australian Institute of Health and Welfare.
  4. Australian Bureau of Statistics, Private Medical Practice Industry Survey 1994-95.
  5. Centre for Health Services and Policy Research, University of British Columbia, Discussion Paper: Improving Access to Needed Medical Services in Rural and Remote Canadian Communities.
  6. AMA, Federal Government Budget Submission, Chapter 10, Rural Health, the text of which can be found at:
  7. AMA, Federal Government Budget Submission, Chapter 10, Rural Health, p. 2; AMA, AMA Calls for Better Deal for Public Hospitals, Public Health , Media Release, 25 February 2000.
  8. The Hon Dr Michael Wooldridge, Minister for Health and Aged Care, Second reading speech on the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, House of Representatives, Hansard, p. 17939.
  9. The Hon Dr Michael Wooldridge, Minister for Health and Aged Care, Second reading speech on the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, House of Representatives, Hansard, p. 17939.
  10. The Hon Dr Michael Wooldridge, Minister for Health and Aged Care, Second reading speech on the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, House of Representatives, Hansard, p. 17939; Explanatory Memorandum to the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, p. 1.
  11. Explanatory Memorandum to the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, p. 1.
  12. The Hon Dr Michael Wooldridge, Minister for Health and Aged Care, Second reading speech on the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, House of Representatives, Hansard, p. 17939.
  13. AMA, Federal Government Budget Submission, Chapter 10, Rural Health, p. 2; AMA, 'AMA Calls for Better Deal for Public Hospitals, Public Health', Media Release, 25 February 2000.
  14. The Hon Dr Michael Wooldridge, Minister for Health and Aged Care, Second reading speech on the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, House of Representatives, Hansard, p. 17939.
  15. AMA, Position Statement on Medical Workforce and Training.
  16. AMA, 'AMA's Rural Bonded Scholarships Scheme: How To Turn A Good Idea Into A Dog's Breakfast ... Give It To Government, Media Release, 3 September 2000.
  17. AMA, 'AMA's Rural Bonded Scholarships Scheme: How To Turn A Good Idea Into A Dog's Breakfast ... Give It To Government, Media Release, 3 September 2000.
  18. The Hon Dr Michael Wooldridge, Minister for Health and Aged Care, Second reading speech on the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, House of Representatives, Hansard, p. 17939.
  19. The Hon Dr Michael Wooldridge, Minister for Health and Aged Care, Second reading speech on the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, House of Representatives, Hansard, p. 17939.
  20. Section 19AC (decision not to grant an exemption from the requirement to be registered as a medical practitioner) and section 19CA (refusal to issue a direction that Medicare benefits are payable despite the particular professional services not being authorised by the medical practitioner's licence) of the Health Insurance Act 1973.
  21. AMA, 'AMA's Rural Bonded Scholarships Scheme: How To Turn A Good Idea Into A Dog's Breakfast ... Give It To Government, Media Release, 3 September 2000.
  22. See The Hon Dr Michael Wooldridge, Minister for Health and Aged Care, Second reading speech on the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, House of Representatives, Hansard, p. 17939.
  23. AMA, 'AMA's Rural Bonded Scholarships Scheme: How To Turn A Good Idea Into A Dog's Breakfast ... Give It To Government, Media Release, 3 September 2000.
  24. British Medical Association v Commonwealth (1949) 79 CLR 201 at 252 per Latham CJ.
  25. General Practitioners Society v Commonwealth (1980) 145 CLR 532 at 556-557 per Gibbs J.
  26. General Practitioners Society v Commonwealth (1980) 145 CLR 532 at 566 per Aickin J. See also at 550 per Gibbs J; and British Medical Association v Commonwealth (1949) 79 CLR 201 at 252-253 per Latham CJ, 255-256 per Rich J, 292-293 per Webb J.
  27. British Medical Association v Commonwealth (1949) 79 CLR 201 at 253 per Latham CJ. See also at 293 per Webb J.
  28. General Practitioners Society v Commonwealth (1980) 145 CLR 532 at 566 per Aickin J.
  29. British Medical Association v Commonwealth (1949) 79 CLR 201 at 256 per Rich J.
  30. Alexandra Private Geriatric Hospital Pty Ltd v Commonwealth (1987) 162 CLR 271 at 278.
  31. Alexandra Private Geriatric Hospital Pty Ltd v Commonwealth (1987) 162 CLR 271 at 279.
  32. General Practitioners Society v Commonwealth (1980) 145 CLR 532 at 559-560 per Gibbs J.
  33. General Practitioners Society v Commonwealth (1980) 145 CLR 532 at 557 per Gibbs J.
  34. The requirement for full repayment is not part of the Bill, but is contemplated as one of the measures for implementation of the MRBS scheme, and presumably will be one of the terms of individual contracts entered into under the MRBS scheme. The notion of full repayment, as opposed merely to pro rata repayment of an amount representing the unserved proportion of the contract, may suggest a punitive component in addition to cost recovery.
  35. This is a result of the wide view of the scope of the incidental power to regulate matters incidental to the provision of sickness benefits (which enables control of the manner in which medical practitioners conduct their practices) and the narrow view of the prohibition on civil conscription adopted in General Practitioners Society v Commonwealth (1980) 145 CLR 532.
  36. Pathman D. E., Konrad T. R., Ricketts, T. C. "The Comparative Retention of National Health Service Corps and Other Rural Physicians: results of a 9 year follow up study" (1992) Journal of the American Medical Association 23/30
  37. The Hon Dr Michael Wooldridge, Minister for Health and Aged Care, Second reading speech on the Health Insurance Amendment (Rural and Remote Area Medical Practitioners) Bill 2000, House of Representatives, Hansard, p. 17939.
  38. Dept of Health and Human Services, More Doctors, Better Services Regional Health Strategy (2000).

Contact Officer and Copyright Details

Katrine Del Villar and Maurice Rickard
7 September 2000
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 2000

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 2000.

Back to top


Facebook LinkedIn Twitter Add | Email Print