Bills Digest no. 156 2005–06
Health Legislation Amendment (Private Health Insurance)
Bill 2006
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
Legislation Amendment (Private Health Insurance) Bill
2006
Date introduced: 31 May 2006
House: House of
Representatives
Portfolio: Health and Ageing
Commencement: 1 July 2006
This Bill amends the National Health Act 1953 (NHA) to
expand the powers of the Private Health Insurance Ombudsman (PHIO)
in dealing with complaints and conducting investigations.
The Bill also makes a minor amendment to the Private Health
Insurance Incentives Act 1998 (PHIIA) to allow for additional
time for Medicare Australia to provide the Australian Taxation
Office (ATO) with information on the Private Health Insurance
Rebate (PHIR).
The PHIO is a government-funded, independent service whose main
role is to help consumers with private health insurance problems
and enquiries. The PHIO also addresses complaints from hospitals,
medical practitioners and health funds, although complaints must be
about a health insurance arrangement. The PHIO also publishes
reports and consumer information about private health insurance,
including (from 2004) an annual State of the Health
Funds Report.
The functions and powers of the Ombudsman are specified in the
NHA (Section 82ZRC).
Under the Private Health Insurance Complaints Levy Act
1995, levies are imposed on health funds based on membership
levels to offset the cost of the operations of the PHIO. The
Private Health Insurance Complaints Levy was increased in 2005-06
to allow for an increase in funding for the Private Health
Insurance Ombudsman to undertake additional activities (such as the
publication of the State of the Health Funds
Report).(1)
This Bill expands the powers of the PHIO in two main ways.
First, it expands the responsibilities of the PHIO to include
receiving, investigating and making recommendations in relation to
complaints from and about health care providers (such as hospitals)
and health insurance brokers.(2) (It should be noted,
though, that the Ombudsman claims to be already able to receive
complaints from hospitals and medical practitioners under
current arrangements).(3)
Currently the Ombudsman s powers are restricted to complaints
about health funds. The Government argues that this is necessary
to:
- ensure the Ombudsman is able to represent consumers in relation
to all aspects of their privately insured experience , and
- ensure that all parties involved in a privately insured episode
are held to the same level of accountability.(4)
Examples of the types of complaints that may be investigated
under these powers include hospitals that refuse to treat certain
patients, doctors not warning patients about potential
out-of-pocket costs and contract disputes between hospitals and
health funds. According to the Ombudsman, Mr John Powlay:
In the past, some hospitals have been selective in
terms of what type of patients they might take some hospitals were
not likely to take older medical-type patients [who did not need
surgery], because they made more money from surgical patients And
there s a continuing issue about unexpected gaps and whether
patients are told in advance about out-of-pocket
gaps.(5)
Given the longstanding focus of the Ombudsman on the activities
of health funds, this measure represents a relatively significant
expansion of accountability within the PHI sector (that is, to
include health care providers and insurance brokers) and expansion
of powers for the PHIO.
Second, the Bill provides the Ombudsman with the
power to compel parties to a dispute in relation to a PHI matter to
undertake mediation where the Ombudsman deems it appropriate (for
example, in impasses involving contract disputes between health
funds and providers). Currently, the Ombudsman may receive and
investigate complaints but has no power to resolve them. The
Government has indicated that this measure will benefit consumers
who, it notes, currently have no clear alternative path of redress
.(6)
The Bill also:
- expands the types of documents the Ombudsman can require in the
investigation of a PHI matter
- includes penalties for parties (other than consumers) who fail
to comply with matters relating to providing records, participation
in mediation and reporting to the Ombudsman, and
- protects the Ombudsman and staff from civil and personal
liability in the exercise of the increased powers in the Bill.
Finally, the Bill extends the time allowed for Medicare
Australia to provide the ATO with information on the PHIR from 90
days to 120 days. The measure responds to a recommendation of the
Australian National Audit Office (ANAO). The recommendation
referred to is No. 5 of the 2002 ANAO audit, Administration of
the 30 Per Cent Private Health Insurance Rebate, ( the ANAO
recommends that HIC and ATO review their data exchange arrangements
to ensure that ATO obtains timely access to the data it requires to
undertake adequate data matching checks for inappropriate multiple
claiming under the PHIR ).(7)
The Government has indicated that it consulted with stakeholders
(including the Australian Health Insurance Association (AHIA), the
Australian Medical Association (AMA) and the Australian Private
Hospitals Association (APHA)) in the development of this Bill and
that each supported the above measures.(8) In general,
this support has been reflected in press coverage of the Bill.
For example, APHA has welcomed the new powers to compel parties
to a dispute to undertake mediation as something we have been
calling for for some time and indicated that it may now be possible
for hospitals to use the Ombudsman in contract disputes with
insurers.(9) Chairman of the Consumers Health Forum, Mr
Mitch Messer, has also welcomed the changes as providing greater
protection for consumers.(10)
Possible impacts of the key measures of this Bill include:
- enhanced protection for consumers in relation to PHI
matters
- enhanced capacity for resolution of disputes between
parties involved in a privately insured episode such as hospitals,
health funds and consumers (notwithstanding the fact that the PHIO
would have no power to impose or require a
settlement)
- an increase in complaints to the Ombudsman as a result of the
increased dispute resolution powers (for example, as a result of
rising expectations from private hospitals or health funds that the
PHIO will be capable of resolving contract or other disputes)
- increased demands on parties subject to the power to supply
documents and/or attend mediation
- increased workload for and cost to the PHIO, given that:
- disputes between, for example, health funds and health care
providers are not uncommon, and
- the PHIO will fund costs associated with
mediation(11)
- increased cost to health funds (and possibly also consumers in
the form of higher premiums) if, as has been flagged by the
Government, the levy on health funds is increased to cover any
increased cost to the PHIO in exercising its new
powers.(12)
At this stage,
neither the ALP, the Australian Democrats, Australian Greens or
Family First has expressed a view on the proposed changes.
The Bill will have no financial implications for the Government.
However, as indicated above, there may be an increased cost to the
Ombudsman in exercising its new powers. As such, the levy on health
funds may be slightly increased to cover any increased cost to the
PHIO. There is a possibility that any increase in the levy could be
passed on to consumers.
Item 1 sets out the principal object of the
part of the Act that deals with the PHIO (Part VIC). This item
emphasises the role of the Ombudsman in protecting the interests of
people with private health insurance.
Items 2, 10-12, 14, 16, 18, 20, 22-31, 35-38, 41-46,
50-53, 55-63, 65-69, 71-72, 74, 76-79, 81, 84-86, 90-94, 96, 98 and
100 make minor amendments to align the provisions of the
Act with the measures in the Bill.
Items 3, 4, 5, 6, 8 and 9 define or redefine
terms necessary for implementation of the measures in the Bill.
Item 7 adds six arrangements to the definition
of private health insurance arrangements .
Items 13 and 15 provide the PHIO with
additional functions in relation to reporting and making
recommendations to the Minister or Department on matters related to
its work.
Items 17 and 18 add health funds, health care
providers and brokers to the list of those who can make a complaint
to and those who against whom complaints can be made to the
Ombudsman.
Item 21 establishes additional criteria
necessary for a complaint to be considered as meeting the grounds
for complaint set out in the Act. In brief, these refer to the
types of matters and parties to a matter that can be
considered.
Items 32 and 33 extends the scope of the
existing criminal offence to fail to provide specified records
requested by the Ombudsman in relation to a complaint to apply to
an officer of a health care provider or broker.
Item 34 authorises the provision, in certain
circumstances, of personal information to the Ombudsman for use in
addressing a complaint.
Item 39 provides that the Ombudsman must not
act on a complaint for which complaints cannot be made by virtue of
the fact that they are prescribed by regulations.
Item 40 provides for the Ombudsman to be able
to direct a subject of a complaint to participate in mediation and
establishes the framework for the mediation process (including
making it a criminal offence not to participate in mediation if so
directed by the Ombudsman).
Items 47-49 make it a criminal offence (of
strict liability) for an officer of a health care provider or
broker, in relation to a complaint, (a) not to report to the
Ombudsman on the action proposed to be taken in relation to a
recommendation from the Ombudsman if so directed, and (b) provide
false or misleading information in any such report.
Item 64 enables the Ombudsman to decide not to
proceed with addressing a complaint under certain circumstances and
provides that the Ombudsman must refer any complaint best dealt
with by the Australian Competition and Consumer Commission (ACCC)
to the Commission.
Item 70 provides protection from civil actions
in respect of complaints made in good faith to the Ombudsman.
Items 73-75 provide for the Ombudsman to,
together with an investigation of a health fund, investigate the
practices and procedures of a health care provider (either at his
or her own initiative, or at the request of the Minister).
Item 80 provides for circumstances under which
information relating to an individual must not be requested by the
Ombudsman.
Item 81 extends the scope of the existing
criminal offence to fail to provide specified records requested by
the Ombudsman in relation to an investigation to apply to an
officer of a health care provider or broker.
Item 82 authorises the provision, in certain
circumstances, of personal information to the Ombudsman for use in
undertaking an investigation. It also provides for the Ombudsman to
mediate between a health fund or provider, to be able to direct a
health fund or provider to participate in mediation and establishes
the framework for the mediation process (including making it a
criminal offence not to participate in mediation if so directed by
the Ombudsman).
Item 87-89 make it a criminal offence (of
strict liability) for an officer of a health care provider or
broker, in relation to an investigation, (a) not to report to the
Ombudsman on the action proposed to be taken in relation to a
recommendation from the Ombudsman if so directed, and (b) provide
false or misleading information in any such report.
Item 95 limits the extent to which the
Ombudsman can make recommendations concerning health care providers
when reporting to the Minister on the outcome of
investigations.
Item 97 provides for the appointment of a
person to conduct mediation and establishes the terms under which
they will operate.
Item 99 lists additional matters in respect of
which the Minister may issue guidelines (for example, the
circumstances in which it is, or is not appropriate, for the
Ombudsman to direct the subject of a complaint or investigation to
participate in mediation) and provides that any such guidelines are
a legislative instrument for the purposes of the Legislative
Instruments Act 2003.
Item 101 provides the framework for
reconsideration of a request made by the Ombudsman to the subject
of a complaint or investigation for records.
Items 102 and 103 provide for Administrative
Appeals Tribunal review of any decision by the Ombudsman not to
extend the time for provision of records and the circumstances
under which an appeal can be made.
Item 104 provides that nothing in Section 135A
( Officers to observe secrecy ) prohibits the Ombudsman from
referring information relating to a contravention or possible
contravention of the prohibition of persons (other than registered
organisations) from carrying on health insurance business to the
Minister or Department.
Items 1 and 2 extend the time allowed for Medicare Australia to
provide the ATO with information on the PHI Rebate from 90 days to
120 days for the 2005-06 financial year and later financial
years.
Concluding comments
The increased powers in relation to addressing complaints and
undertaking investigations provided for in this Bill will most
likely increase the capacity for the PHIO to protect the interests
of consumers and resolve disputes between parties involved in a
privately insured episode. There is some possibility that any
increased workload arising from the exercise of these powers may
result in the need to provide additional resources for the
Ombudsman. This would be funded through an increase in the levy
applied to health funds and may be passed on to consumers in the
form of increased premiums.
The change to arrangements for provision of information about
the PHI Rebate from Medicare Australia to the ATO is relatively
uncontroversial.
- Department of Health and Ageing, Portfolio Budget
Statements 2006-07, p. 457
- A broker is defined in the Bill as a person who deals
(otherwise than by carrying on health insurance business within the
meaning of section 67) in insurance provided under contracts of
insurance entered into by registered organizations, and who acts on
behalf of persons intending to become insured persons .
- Private Health Insurance Ombudsman, Complaints, at
http://www.phio.org.au/complaints.php,
accessed 15 June 2006.
- Hon. Tony Abbott, Minister for Health and Ageing, Health
Legislation Amendment (Private Health Insurance, Second Reading,
House of Representatives, Debates, 31 May 2006, p. 1.
- A. Stafford, New powers to probe hospitals , Australian
Financial Review, 10 November 2005.
- Hon. Tony Abbott, op. cit, p. 1.
- Australian National Audit Office, Administration of the 30
Per Cent Private Health Insurance Rebate, Performance Audit,
Report No. 47, 2002.
- Hon. Tony Abbott, op. cit, p. 2.
- S. Dunley, Guarding private patients , Daily
Telegraph, 11 November 2006.
- A. Stafford, op. cit.
- Explanatory Memorandum, p. 9.
- Explanatory Memorandum, p. 9.
Dr Luke Buckmaster
19 June 2006
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
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