Bills Digest No. 16   1997-98 Health Insurance (Pathology Services) Amendment Bill 1997

Numerical Index | Alphabetical Index

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.


Passage History

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.

Main Provisions

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)


  1. Health and Family Services Portfolio, Budget Facts Sheet , 1996–97.
  2. Australian National Audit Office, Medifraud and Inappropriate Practice: Health Insurance Commission , (Audit Report No 31, 1996–97) Canberra, AGPS, 1997.
  3. Explanatory Memorandum to Health Insurance (Pathology Services) Amendment Bill 1997: 3.
  4. ibid, p4.
  5. ibid, p5.

Contact Officer and Copyright Details

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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