Bills Digest No. 114   1997-98 Health Legislation 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 Legislation Amendment Bill 1997

Date Introduced: 1 October 1997
House: House of Representatives
Portfolio: Health and Family Services
Commencement: Apart from the provisions relating to the supply of pharmaceuticals by private hospitals and residential aged care services which commence on 1 May 1998, the significant provisions of this Bill commence on the day on which the Act receives the Royal Assent.


To make a number of amendments to certain health related legislation in respect of the following topics:

  • approval of hedging contracts entered into by the Health Insurance Commission
  • electronic payment of Medicare benefits
  • fees chargeable by optometrists
  • Medicare benefits in respect of services rendered outside Australia
  • medical practitioners receiving payment for the provision of public hospital services
  • the provision of pharmaceuticals by private hospitals and residential aged care services


Electronic Claiming for Medicare Benefits

This measure proposes the introduction of electronic claiming of Medicare benefits directly from doctors' surgeries and the electronic transmission of rebates to the accounts of patients and medical practitioners. Previously, only direct billed (bulk-billed) claims could be lodged electronically.Under this measure, it will be possible to lodge electronically both a patient claim (where the bill has been paid) and a pay doctor claim (where the bill has not been paid).

The amendments also provide for the electronic payment of Medicare rebates into bank, building society or credit union accounts. The 1997-98 Budget papers indicate that the implementation of this measure is expected to result in increased outlays of $28.1 million over four years due to the increased costs to Medicare benefits because of reduced payment delays from electronic claiming. These increased outlays are expected to be 'short term costs only and will not be relevant when the new system is fully implemented'(1).


As a condition of their participation in Medicare, optometrists are required to sign an undertaking which, amongst other provisions, prohibits them charging above the schedule fee for any item in the Schedule of Medicare Benefits for Consultations by Optometrists (approximately 96 per cent of optometrical services are direct billed at no cost to the patient). All other practitioners who participate in Medicare may charge any fee they wish and are not restricted to charging the schedule fee.

This measure proposes that optometrists be permitted to charge above the schedule fee in certain circumstances, specified in a revised optometrical undertaking, which has been developed in consultation with the Australian Optometrical Association. These amendments will apply in cases where a patient receives an initial comprehensive consultation within 24 months of a previous consultation.

It is accepted by the Commonwealth and the Australian Optometrical Association that 24 months is a suitable interval for 'check-up' consultations. Other items in the optometry schedule apply where a problem arises with a patient's vision within this 24 month period. Optometrists seeking to charge above the schedule fee in the specified circumstances are required to advise the patient prior to the consultation of the total cost of the consultation and the amount of rebate the patient can expect to receive. In cases where an optometrist charges above the schedule fee, the patient will bear the increased out-of-pocket cost.

These measures are included in the Schedule of Medicare Benefits for Consultations by Optometrists, effective 1 November 1997.

Charging public hospital patients for services

The Medicare Agreements between the Commonwealth and each State and Territory specify that:

hospital services in the State are available to all eligible persons without charge as public patients; and

out-patient and accident and emergency services are, subject to subclause 10.4, provided to eligible persons free of charge (subclause 10.4 specifies some services which do not have to be provided free of charge to out-patients such as dental services and pharmaceuticals)(2).

Instances have arisen in various States whereby public hospital patients have been offered inducements such as queue-jumping on waiting lists for elective surgery, in return for payment. This amendment proposes to provide for a penalty to be levied on a medical practitioner who charges a public patient for the provision of public hospital services in certain prescribed circumstances. The prescribed circumstances will be set out in regulations. The thrust of this provision is directed at unethical behaviour by individual medical practitioners.


The Australian Childhood Immunisation Register was established in January 1996 to 'assist in the monitoring of immunisation coverage at a national state and local level and to enable providers and parents to obtain a record of a child's immunisation history'(3). At 30 June 1997 some 15 408 immunisation providers had provided information to the Registrar and more than 3 million valid vaccinations were recorded during the financial year. This measure proposes that de-identified data be released from the Register for research purposes. In her second reading speech on the Bill, the Parliamentary Secretary to the Minister for Health and Family Services, Hon Trish Worth MP, noted that advice from the Privacy Commissioner indicated that the release of information from the Register in this way 'is not in conflict with privacy principles'.

Medicare benefits and overseas travel

Medicare benefits are not payable for treatment received by Australian residents when travelling overseas. Access to Medicare benefits is currently denied once a resident has travelled beyond the twelve kilometre territorial sea limit, which can also have the effect of denying Australian residents access to benefits should they receive medical treatment during some domestic journeys. This measure proposes to insert into the Health Insurance Act 1973 a new concept of 'domestic journey', which will enable Australian residents receiving medical treatment during a journey to have access to Medicare benefits for that treatment. The definition of 'domestic journey' will include domestic travel prior to or at the end of an international flight and will also include overseas journeys where a patient is required through ill health to return to Australia before arrival at the intended overseas destination (without having had any stopovers).

Pharmaceutical Benefits Scheme

The Health Legislation Amendment Bill 1997 also proposes amendments to the operation of the Pharmaceutical Benefits Scheme (PBS) in relation to residential care facilities (nursing homes and hostels) and private hospitals. The present situation is that a medical practitioner must write a prescription for the supply of a drug for an individual patient and the prescription is then filled by a pharmacist who is reimbursed by the Commonwealth. The amendments propose to permit a pharmacist to be reimbursed by the Commonwealth for the supply in bulk of certain drugs (eg painkillers) to a private hospital or residential care facility following the prescribing of the bulk supply of the drug by a medical practitioner. The drugs can then be dispensed to patients within the institution as required.

Some savings can be expected as a result of this measure, arising from fewer prescriptions being written and savings in dispensing costs due to larger quantities of drugs per prescription. The drugs affected by this measure will be specified in a determination by the Minister. The new prescription order form (which is likely to be similar to the existing 'doctor's bag' arrangements) will be presented as an amendment to the regulations under the National Health Act 1953.

It should be noted that an incorrect statement is included in the Explanatory Memorandum to the Bill in relation to these proposed amendments to the PBS. In the 'outline' (page 1) of the Explanatory Memorandum, the seventh paragraph includes the statement that the Bill:

introduces a system which will enable a private hospital or residential care facility to be reimbursed for the administration of some pharmaceutical benefits to its patients or residents from the institution's own stocks. (emphasis added)

This statement is also included in the Parliamentary Secretary's second reading speech. These statements are incorrect. Schedule 3 of the Explanatory Memorandum correctly describes the insertion of new section 93A which will 'enable approved suppliers to be reimbursed for the supply to institutions such as private hospitals and residential care facilities of certain pharmaceutical benefits administered to patients of the institution from stocks held by the institution'. The effect of the amendments will be to permit the supplier (pharmacist) to be reimbursed by the Commonwealth, not the institution (private hospital, nursing home or hostel).

Main Provisions

The amendments made by this Bill are incorporated into 4 Schedules.The fourth Schedule contains a minor amendment which corrects a drafting error and will not be considered. The main provisions will be summarised under headings of the first three Schedules.

Schedule 1 - Amendment of the Health Insurance Commission Act 1973

Section 36AA of the Health Insurance Commission Act 1973 (HIC Act) permits the Health Insurance Commission (HIC) to enter into various types of hedging contracts where the hedging relates to borrowing or investments by the HIC or a transaction in a foreign currency.A hedging contract is a type of transaction designed to offset potential losses which may occur as a result of, for example, inflation or foreign currency fluctuations.Some specific types of hedging contracts referred to in section 36AA are:

  • forward exchange rate contracts
  • contracts with respect to currency futures
  • contracts with respect to financial futures
  • interest rate contracts
  • contracts relating to dealings known as currency swaps
  • contracts relating to dealings known as interest rate swaps

The Minister for Health and Family Services (Minister) is empowered to determine guidelines to be followed by the HIC in the exercise of this power.

Section 38 of the HIC Act obliges the HIC to obtain the approval of the Minister before entering into a contract involving the payment or receipt of an amount of more than $10,000,000.

Item 1 of Schedule 1 amends section 38 to remove the requirement to obtain Ministerial approval when the HIC is entering a hedging contract under section 36AA.

Schedule 2 - Amendment of the Health Insurance Act 1973

Electronic transmission of claims for, and payments of, Medicare benefits

Section 20 of the Health Insurance Act 1973 deals with the payment of Medicare benefit and provides that the benefit shall be paid in such manner as the Managing Director of the HIC determines.Section 20A deals with the situation where a person attends a practitioner or pathology service who 'bulk bills'.Those practitioners and services obtain payment directly from the HIC.Again, the Medicare benefit is payable in such manner as the Managing Director of the HIC determines.

Items 1 and 2 make identical amendments to sections 20 and 20A respectively.The amendments specifically allow the Managing Director of the HIC to specify electronic transfer to a bank, building society or credit union as a method of payment.

Section 20B provides for the method of lodging claims.A claim must be made in accordance with the approved form.

Items 3 to 5 amend section 20B to provide for the electronic transmission of claims to Medicare.

Recognition of specialists and consultant physicians

The Specialist Recognition Advisory Committee is a committee of five practitioners established in each State.Under section 61 of the Health Insurance Act 1973, the Minister may refer to a Specialist Recognition Advisory Committee the question whether a particular medical practitioner should be recognised for the purposes of the Act as a consultant physician or as a specialist, in a particular specialty or continue so to be recognised.When the Committee makes a recommendation, the Minister is obliged to make a determination giving effect to that recommendation.

Item 6 amends section 61 to allow a Committee to recommend that the medical practitioner should be recognised as a consultant etc. for a certain period.

Item 8 allows the Minister to revoke a determination, in respect of recognition, after a request by the practitioner for revocation.

Provisions relating to optometrists

A Medicare benefit is payable in respect of the provision of a 'professional service'.For a benefit to be payable in respect of optometrical service, the optometrist must be a 'participating optometrist', i.e. one who has agreed to give an undertaking containing certain terms determined by the Minister (the undertaking is determined under section 23A of the Health Insurance Act 1973).One of the terms of that undertaking is that the optometrist agrees not to charge a fee of more than the fee specified for the particular service in the health insurance fee table (referred to as the 'schedule fee').The basic fee for an initial consultation is $51.70 (the same patient cannot have more than one initial consultation once every two years at the same optometrist).The basic fee for a subsequent consultation is $26.35.

Optometrists will now, in certain circumstances, be allowed to charge in excess of the schedule fee.

Item 11 amends section 23A to allow the Minister to specify, in the undertaking, circumstances in which an optometrist may charge above the Schedule fee.

The Explanatory Memorandum explains that an additional type of service will be added to the fee table.That service will be the provision of an initial consultation where the patient has attended an optometrist (other than the treating optometrist) within the last 2 years.Under those circumstances at present, the schedule fee is $51.70.Under this proposal the schedule fee for this new service will be only $25.90 but the optometrist will be allowed to charge in excess of that amount up to a maximum fee of $51.70.

Digest Comment: The Explanatory Memorandum states that the circumstances in which an optometrist will be allowed to charge more than the schedule fee will include a requirement that the client has agreed to pay the additional fee having been made aware of the reduced level of benefit available from Medicare.

This requirement to notify the client in advance is essential.Until now, a person has been able to attend an initial consultation with any optometrist, except one which they have visited in the past two years, and pay a maximum difference between the consultation fee and the Medicare reimbursed amount of about $7.80.The maximum difference upon the commencement of this provision could be up to about $30.00.If a client was not notified of this possible 'gap' at the time of consultation, it could be that the first they know about it is when they obtain their Medicare refund and receive only $22.00 instead of $44.00.

Other Amendments

At present, there is only an entitlement to receive a Medicare benefit where medical expenses are incurred in respect of a professional service rendered in Australia (Section 10(1) of the Health Insurance Act 1973).

Item 15 amends section 10(1) to provide that a Medicare benefit will be payable even if the professional service was rendered outside Australia where it was rendered to the person in the course of a 'domestic journey'.A 'domestic journey' is one which begins and ends in Australia without any intermediate stopping place outside Australia.The term expressly includes:

  • a journey that was intended to end outside Australia
  • such a journey that occurs as part of a longer journey ending or intended to end outside Australia
  • a journey that is part of a longer journey that began outside Australia

Item 22 inserts proposed new section 128C which penalises medical practitioners who charge a fee or receive a payment for the provision of a public hospital service if the practitioner knows that the person to whom the service is provided is or intends to be a public patient in the hospital.A hospital service is defined in section 23E as a health service of a kind provided in a hospital and it includes:

  1.   accommodation in a hospital for the purposes of receiving treatment;
  2.   nursing care and treatment;
  3.   medical care and treatment including diagnostic services; and
  4.   outpatient, accident and emergency services.

Schedule 3 - Amendment of the National Health Act 1953

Item 3 of this Schedule inserts proposed new section 93A into the National Health Act 1953.This will allow the Minister to determine a list of pharmaceuticals which may, after prescription by a medical practitioner, be supplied in bulk to private hospitals and residential care services (i.e. hostels and nursing homes) and for which the supplier will be reimbursed.

Payment in respect of that supply will be made by the Commonwealth in accordance with a scheme to be prescribed.

Items 5 to 9 and 12 to 14 repeal the arrangements dealing with the amalgamation and closure of pharmacies which took place as a part of the restructure ofpharmacies in the early 1990's.Any claims for financial assistance had to be made by 28 February 1995 and the Explanatory Memorandum states that all applications for those grants have been finalised.


  1. Health and Family Services Portfolio, Portfolio Budget Statements 1997 98: 124.
  2. Agreement between the Commonwealth of Australia and the State of New South Wales in relation to the provision of Public Hospital Services and Other Health Services: 14
  3. Health Insurance Commission, Annual Report 1996 97: 49.

Contact Officer and Copyright Details

Lee Jones (Main Provisions)
Paul Mackey(Background)
25 November 1997
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 1997

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, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 26 November 1997

Back to top