Bills Digest no. 40 2009–10
Private Health Insurance Legislation Amendment Bill (No.
2) 2009
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
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Private Health Insurance Legislation
Amendment Bill (No. 2) 2009
Date introduced: 17 September 2009
House: House of
Representatives.
Portfolio: Health and Ageing
Commencement: On Royal Assent
Links: The
relevant
links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The Private Health Insurance
Legislation Amendment Bill (No. 2) 2009 (the Bill), proposes to
amend the Private Health Insurance Act 2007 (the Act), to
allow for:
- conditional listing of prostheses on the Commonwealth
Prostheses List (the List)
- the Minister for Health and Ageing to make rules to specify
criteria for listing of prostheses on the List.
Prostheses are artificial devices attached to the body as an
aid, or substitute for body parts that are missing or
non-functional. Prostheses can include: cardiac pacemakers and
defibrillators, cardiac stents, hip and knee replacements,
intraocular lenses, and human tissues such as human heart valves,
corneas, bones (part and whole) and muscle tissue.[1]
The Act requires private health insurers to pay benefits for
prostheses that are provided as part of an episode of hospital
treatment or hospital substitute treatment and for which a Medicare
benefit is payable for the associated professional service.[2] Prostheses and human
tissue products that attract benefits are specified in the
Commonwealth Prostheses List, contained in the schedule to the
Private Health Insurance (Prostheses) Rules (the Rules), which also
specify the benefit amount. There are more than 9500 products on
the Prostheses List.[3]
The Prostheses List derives from a long-established system for
funding of surgically implanted devices by health insurers. In the
past, the term surgically implanted prosthesis was used to
distinguish the listed products from devices such as artificial
limbs, which, while meeting the ordinary meaning of prostheses, are
not part of these arrangements.[4]
In order for a new prosthesis to be listed, an application
requesting this must be made to the Minister for Health and Ageing.
The Minister may take advice from the Prostheses and Devices
Committee (PDC) when deciding whether or not to grant an
application to list.[5] Applications are assessed against mandatory criteria as
specified in the Act, and non-mandatory criteria. Mandatory
criteria include:
- the product must registered on the Australian Register of
Therapeutic Goods
- the product must be provided to a person as part of an episode
of hospital treatment or hospital-substitute treatment and
- a Medicare benefit must be payable in respect of the
professional service associated with the provision of the product
(or the provision of the product is associated with podiatric
treatment by an accredited podiatrist).[6]
Non-mandatory criteria are set out in administrative guidelines
which specify that the product should:
- be surgically implanted in the patient and be purposely
designed in order to either replace an anatomical body part; combat
a pathological process; or modulate a physiological process or
- be essential to and specifically designed as an integral
single-use aid for implanting a product, as described above, which
is only suitable for use with the patient in whom that product is
implanted or
- be critical to the continuing function of the surgically
implanted product and which is only suitable for use by the patient
in whom that product is implanted and
- has been compared to alternate products on the Prostheses List
or alternate treatments and:
- assessed as
being, at least, of similar clinical effectiveness and
- the cost of
the product is relative to its clinical effectiveness.[7]
Under current arrangements, it is not clear if additional
conditions can be considered or required when granting an
application for listing: devices are either listed for general use
or not listed at all.[8] Allowing for such a conditional listing may be desirable
where a prosthesis is clinically effective in specific
circumstances, but where it may not be considered appropriate for
general use . For example, while insulin infusion pumps are
considered life-saving for some people with diabetes, the current
rules only allow for an unconditional listing of these devices. The
Minister points out this could lead to health insurers being
required to pay benefits for the device, regardless of the clinical
circumstances in which it was provided.[9]
The proposed amendments to subsection
72-1(2) would permit the Rules to set out additional
conditions or circumstances that need to be satisfied in order for
a health insurer to provide a benefit for a listed device. The
Rules are legislative instruments subject to Parliamentary
scrutiny. Further, proposed subsection
72-10(6) would allow for the Rules to specify listing
criteria that are in addition to those mandatory criteria contained
in the Act but not so as to over-ride them, and would also allow
for different listing criteria to apply in different circumstances.
This would allow for the listing of new kinds of prostheses in a
yet to be developed section of the Prostheses List.[10]
In her second reading speech, the Minister highlighted the
significance of the proposed amendments for insulin pumps.[11] Although private
health insurance companies reimburse the cost of insulin
pumps,[12] there
has always been some uncertainty about their long-term status on
the Prostheses List because they are not surgically implanted, do
not require hospital admission for initialisation and are not
associated with a Medical Benefits Schedule (MBS) item.
However, insulin pumps for people with type 1 diabetes (T1D) are
in effect a prosthetic because they replace the function of
pancreatic cells which produce insulin and which are destroyed by
an autoimmune process that induces T1D. For people with diabetes,
particularly T1D, insulin pumps are an alternative method of
insulin delivery which, as a number of studies have substantiated,
offer improved glycaemic control and blood glucose
stability.[13]
Optimum glycaemic control is a clinical goal of diabetes management
because of the relationship between poor glycaemic control and the
greater risk of diabetes complications.[14]
Given that insulin pump wearers have to calculate insulin doses
based on carbohydrate consumption and blood glucose levels and
program the pump accordingly, change cannulas and monitor insertion
sites, some may question, particularly in relation to young
children, the Minister s assertion that: Pumps reduce the need for
parental supervision in looking after a child with type 1 diabetes.
[15] A recent
Australian insulin pump review highlights the parental management
implications for children with T1D:
In the case of toddlers, preschoolers and
primary-school-aged children, the initiation of insulin pump
therapy requires the child s parent(s) or caregivers to be
committed to being the pump user and active participants in
diabetes management young children are cognitively unable to learn
nor manipulate the pump functions, and cannot be relied upon to
appropriately calculate and administer doses independently.[16]
It should also be noted that while, as the Minister notes,
improved lifestyle can be a benefit for insulin pump users,
improved glycaemic control is the paramount goal.
The Government s Review of the Prostheses Listing Arrangements
(2007) acknowledged the ongoing uncertainty surrounding devices
such as insulin pumps which were listed on the Prostheses List, but
do not meet the listing criteria. While the Review recommended that
items not meeting the listing criteria be removed by December 2008
a recommendation accepted and since implemented by the
Government[17] it
also suggested separate arrangements to ensure their private health
insurance cover:
There is also the matter of how to deal with
high value devices such as replacement speech processors or insulin
pumps which do not require hospital admission as part of the
provision process and are not associated with an MBS item. Under
current arrangements insurers are not required to pay benefits for
products provided in these circumstances, even though the items are
included on the List. As long as insurers take a sensible approach
to paying benefits for these items I see no need to change current
regulatory requirements. However, I note that if it proves
necessary the Minister could establish arrangements to require
insurers to pay benefits through an alternative mechanism, as it is
clear that they do not meet the criteria to be a prosthesis.
[18]
In relation to insulin pumps, the Bill s provisions complement
other government measures, introduced by the current and previous
governments, which support insulin pump usage. In 2004, National
Diabetes Services Scheme subsidies were introduced for insulin pump
consumables.[19]
More recently, the 2008 09 Budget provided means-tested
subsidies of up to $2500 towards the cost of insulin pumps for
people under the age of 18 with T1D, where insulin pump therapy is
deemed clinically necessary.[20] However, while this measure was welcomed by some
stakeholders, there is a question about the adequacy of the
subsidy. Those receiving the maximum subsidy of $2500 will need to
pay at least that amount again for the most basic model of insulin
pump. The low uptake figures would appear to substantiate the
inadequacy of the subsidy. Departmental advice provided in response
to a Senate Estimates question confirmed that the uptake has been
lower than anticipated , with total expenditure of around
$419 000 up to June 2009, well below the budget estimate of $1
million.[21] The
scheme is also a limited one because it does not take into account
other people who may have a clinical need for an insulin pump and
need support, including young adults with T1D and women with
gestational diabetes.
The Explanatory Memorandum states that the Bill has no financial
impact.[22]
Item 1 proposes to amend paragraphs (c) and (d)
of table item 4 in existing subsection 72-1(2) of
the Act, in relation to the prosthesis benefit circumstances.
Proposed paragraph (c) provides
that a health insurance benefit would be payable if the prosthesis
is provided in circumstances where a Medicare benefit is payable
(the same as the current provision) and if the Rules
specify other conditions that are to be met, that these conditions
are satisfied. Proposed paragraph
(d) provides that a health insurance benefit may also be
payable if the prosthesis is provided in circumstances (other than
where a Medicare benefit is payable) set out in the Rules, and
where the Rules set out conditions, those conditions are
satisfied.[23]
Item 2 proposes to insert
new subsections 72-10(6) and (7)
into the Act, in relation to the listing of a prosthesis in the
Rules. Proposed subsection
72-10(6) enables the Rules to specify the listing
criteria that must be satisfied in order for an application to list
a prosthesis to be granted. This proposed subsection also enables
the Rules to provide for different listing criteria to apply in
different circumstances. Proposed subsection
72-10(7) provides that the Minister would not be able to
grant an application for listing if any applicable listing criteria
is not satisfied. A proposed note to
proposed subsection 72-10(7)
clarifies that the Minister would have discretion to refuse to
grant an application, even where the listing criteria are
satisfied.
Concluding comments
To date, the proposed measures have not generated significant
public commentary from stakeholders,[24] although the surety of private health
insurance coverage will no doubt be welcomed by consumers.
However, while the proposed amendments would allow for the
conditional listing of devices that do not meet the current
criteria for the Prostheses List, the Minister notes that with
further developments in medical technology there is likely to be a
greater need for listing devices on a conditional basis in the
future .[25] In
relation to insulin pumps, there is already another challenge with
new insulin pumps incorporating continuous glucose monitoring
devices. The costs of the transmitter components of these devices
are reimbursed through ancillary health insurance by only some
private health insurers; the sensor components are not covered nor
are they eligible for any government subsidy.[26]
The challenge will be balancing access to these new technologies
while containing costs for all stakeholders, including private
health insurers and consumers.
Amanda Biggs
19 October 2009
Bills Digest Service
Parliamentary Library
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