Bills Digest No. 115  1999-2000

Numerical Index | Alphabetical Index

Health Legislation Amendment Bill (No.4) 1999

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
Main Provisions
Contact Officer and Copyright Details

Passage History

Health Legislation Amendment Bill (No.4) 1999

Date Introduced: 9 December 1999

House: House of Representatives

Portfolio: Health and Aged Care

Commencement: The provisions outlined in this Digest commence on Royal assent, except for items 36, 38 and 55 which commence on 1 July 2000, and items 3, 8, 10 and 15 which commence 90 days from Royal Assent.


The Health Legislation Amendment Bill (No. 4) 1999 proposes to make several amendments to the Health Insurance Act 1973. These amendments propose to introduce a legislative framework for new arrangements under the Medicare Benefits Schedule for pathology collection centres; to make changes to the rules relating to temporary resident doctors and the circumstances under which they can access Medicare; and to remove a sunset clause due to expire on 1 January 2002 affecting newly trained doctors and their access to Medicare.


Amendments relating to pathology

Pathology services are a major component of Commonwealth Government outlays under the Medicare Benefits Schedule, accounting for over $1 billion of benefits paid in 1998-99. Some 55 million pathology services were provided in that year, of which 80 per cent were direct (bulk) billed.(1)

Historically, pathology services have been of concern under the Medicare arrangements, with several reports in the 1980s investigating claims of fraud and overservicing, inducements and 'kickbacks' in the industry.(2) In the early 1990s, concern over rapidly increasing Medicare outlays for pathology services led to a range of measures aimed at reducing the number of pathology outlets, or collection centres. The 1992 changes have worked to reduce the rate at which pathology outlays were increasing, from around 13 per cent per annum in 1990-91 to an average annual growth of 6 per cent in 1998-99.

In 1996, the Commonwealth Government reached agreement with the two peak bodies representing the pathology profession to cap outlays on pathology services over the course of a three year agreement which ran until June 1999. Achievements claimed for this agreement include:

  • agreed fiscal outcomes - with pathology outlays anticipated to fall within the agreed range of the total three year target on $2.793 billion
  • continuing patient access to high quality pathology testing services and professional care
  • certainty in budget outlays to Government, and
  • a stable operating environment for pathology practices.(3)

In May 1999, the Commonwealth Government and the pathology profession entered into a second agreement, the Pathology Quality and Outcomes Agreement,(4) which is to run from 1 July 1999 to 30 June 2002. Over this period, the agreement aims, in part, to restrict to 5 per cent the average rate of growth in pathology outlays under the Medicare Benefits Schedule. Another important element of the agreement is a change to the licensing arrangements for pathology collection centres. This change forms part of the amendments proposed in the Health Legislation Amendment Bill (No.4) 1999. The background and content of these amendments are covered extensively in the Explanatory Memorandum to the Bill and are not canvassed further here.

Amendments relating to the medical workforce

Although the Commonwealth Government was granted the power to legislate in the health area by a 1946 referendum, an important limitation on this power has restricted the Commonwealth's control over the medical profession. This limitation on 'civil conscription', is taken to mean that while the Commonwealth Government can require medical practitioners who wish to participate in the Medicare arrangements to apply for a Medicare provider number, it (the Commonwealth) is unable to direct the practitioners as to where each may practice. Due to the overwhelming majority of medical practitioners preferring to practice in the capital cities and major centres, people in much of rural and regional Australia have a greatly reduced choice of practitioner and compromised access to many medical services.

Amendments relating to overseas trained doctors

One means of addressing the undersupply of medical practitioners, particularly general practitioners (GPs), in rural and remote areas has been through the use of temporary resident doctors (TRDs) recruited from overseas. These doctors have been recruited to fill particular positions identified as being in 'areas of need' (now described as 'district of workforce shortage'). The positions are usually in rural and remote areas but may also be located in public hospitals which have been unable to recruit sufficient numbers of Australian doctors.

The recruitment process for a TRD has been a complex, cumbersome and time-consuming process, involving (at the very minimum) the State or Territory government department with responsibility for health, the State or Territory Medical Board, the Commonwealth Department of Immigration and Multicultural Affairs, the Commonwealth Department of Health and Aged Care and the Health Insurance Commission. Further complications and conditions arose when a TRD's visa expired. In addition, overseas trained doctors permanently resident in Australia have felt that their qualifications and experience were not always considered adequately in the recruitment process for positions located in districts of workforce shortage.

In an attempt to simplify the process of getting suitably trained medical practitioners to positions in districts of workforce shortage, Australian Health Ministers agreed at their meeting on 4 August 1999 to a new recruitment framework for overseas trained doctors. The framework includes:

  • Overseas trained doctors with formal postgraduate qualifications in general practice may be assessed for registration by Medical Boards upon advice, as an alternative to completing the Australian Medical Council exam
  • Doctors registered on the above basis will be registered as general practitioners only and will be required to work in rural areas for a minimum of five years
  • Assessment processes for overseas trained GPs will be brought into line with those processes in specialist colleges, and
  • Processes will be established to ensure that existing permanent resident overseas trained doctors will be considered before new temporary resident doctors are recruited.(5)

Although measures to simplify the recruitment of overseas trained doctors to districts of workforce shortage have generally been welcomed, concerns have been raised by some rural GPs. For example, the president of the Rural Doctors Association of Australia, Dr David Mildenhall, has been reported as saying that while the use of overseas trained doctors will be useful in the short term, "their arrival would certainly place extra demands on existing rural GPs and rural organisations".(6)

Removal of the 1 January 2002 sunset clause

In December 1996, the Commonwealth Parliament passed the Health Insurance Amendment Act (No. 2) 1996. This Act, which amended the Health Insurance Act 1973 to implement a 1996-97 Budget decision, was passed with several amendments, one of which attached a sunset clause (to expire on 1 January 2002) to the key measure in the Act. This measure essentially required all new medical practitioners who wished to access Medicare benefits to have completed or be undertaking an approved training program by inserting section 19AA of the Health Insurance Act 1973. Previously, new medical graduates had been able to apply for a Medicare provider number upon receiving their basic medical registration. The passage of the Health Insurance Amendment Act (No. 2) 1996 caused considerable consternation within the medical profession and amongst trainee doctors. Claims were made of insufficient training positions for the numbers of graduates and predictions made of the possibility of unemployment for highly trained medical graduates.

In the event, neither the claims of insufficient training positions, nor the predictions of unemployment appear to have been sustained. The recent report of the Mid-Term Review of Provider Number Legislation (also the result of an amendment to the Health Insurance Amendment Bill (No. 2) 1996) indicates that the number of training positions is increasing, from 1350 in 1998 to 1369 in 1999 and 1483 in 2000. In addition, data indicates that "there is a critical shortage of trainees in certain disciplines, including rehabilitation medicine, geriatric medicine, intensive care and psychiatry".(7) Finally, the Clinical Assistantship Program, which was established as a safety net for any doctor who was unsuccessful in gaining a training position, has yet to receive an enrolment.

Measures in the Health Legislation Amendment Bill (No. 4) 1999 propose to remove the sunset clause applying to section 19AA of the Health Insurance Act 1973. The Mid-Term Review of Provider Number Legislation found that in relation to section 19AA:

There is overwhelming agreement with the objective that General Practice be recognised as a vocational specialty (ie graduates without further training should not be practising unsupervised)...This legislation is underpinning other quality and workforce packages that have been put in place.(8)

In addition, the Mid-Term Review recommended (recommendation 10) that:

This review finds no reason why the sunset clause should remain in the legislation. In fact the review finds that it would be counterproductive to morale amongst junior doctors to maintain the illusion that the legislation will ever be repealed. It would also provide certainty for medical students.(9)

The sunset clause was inserted into the legislation as part of a package of measures agreed by the Government and the Australian Democrats to ensure the passage of the Health Insurance Amendment Bill (No. 2) 1996. Views expressed by opposition parties during debate on the Bill included:

The Opposition believes that this bill will have unfair and retrospective effects on current medical students and interns. We are concerned that it may aggravate the shortage of doctors in rural areas and severely restrict the options of medical students and interns who are seeking to postpone their postgraduate training or undertake training part time. (Senator B Neal)(10)

The Democrats support the basic premise of this legislation. We believe that medical graduates wishing to enter general practice should undertake additional training...We accept the argument and indeed we accept the evidence that undergraduate medical education does not prepare graduates for unsupervised general practice. We also note that it is not only medical graduates that face some additional training. (Senator M Lees)(11)

The Australian Medical Association (AMA) has expressed concern at the proposed removal of the sunset clause. Responding to the recommendation of the Mid-Term Review, the AMA President, Dr David Brand, stated that "the sunset clause must remain until the recommendations of the Mid-Term Review are considered carefully by the relevant organisations". The Chair of the AMA's Council of Doctors-in-Training, Dr Chris Merry, said that the report of the Mid-Term Review "appears to be little more than an excuse to continue the draconian provider number legislation".(12)

For newly-graduated doctors, section 19AA of the Health Insurance Act 1973 has undoubtedly caused some hardship through its requirement for them to engage in further training before being able to access Medicare benefits and there are some who still oppose the measures introduced in 1996. For patients, however, ensuring that general practice continues to be regarded as a specialty which requires further training should have some positive outcomes in terms of the quality of services available to them.

Main Provisions

Item 3 of Schedule 1 of the Bill repeals section 3J of the Health Insurance Act 1973 (the Principal Act). The effect of the repeal is to exclude temporary residents from the definition of "medical practitioner". At present, temporary residents are not medical practitioners for the purpose of the Principal Act, and therefore, are not entitled to provide services which attract Medicare unless they obtain an exemption under paragraph 3J(1)(d) of the Principal Act. Consequential to the repeal of section 3J, section 19AB will be amended to included temporary resident medical practitioners. Overseas trained medical practitioners with either Australian citizenship or permanent residence will be subject to a 10 year moratorium which restricts their access to Medicare benefits unless they are granted an exemption.

Items 7 and 9 of Schedule 1 of the Bill remove the 1 January 2002 sunset clause affecting newly trained doctors and their access to Medicare. As noted in the Background to this Digest, the removal will have the effect of continuing the current requirement for all new medical practitioners who wish to access Medicare benefits to have completed or be undertaking an approved training program.

Items 8 and 10 of Schedule 1 of the Bill substitute new subparagraphs 19AA(1)(b)(v) and 19AA(2)(b)(v) in the Principal Act. Currently these paragraphs exempt temporary residents who have been granted an exemption under section 3J from having to satisfy the requirements of section 19AA (eg. first became a medical practitioner after 1 November 1996). Consequential to the repeal of section 3J proposed by item 3, the effect of amendments proposed by items 8 and 10 will require temporary residents to obtain an exemption under subsection 19AB(3) in order to be exempt from the requirements of section 19AA. Subsection 19AB(3) provides that the Minister may grant an exemption from the requirement of section 19AA.

New subsections 19AB(4)-(4D) are inserted in the Principal Act by item 15 of Schedule 1 of the Bill. Section 19AB restricts access to Medicare benefits in respect of services rendered by certain overseas trained medical practitioners and those who are former overseas medical students. The principal effect of the proposed subsections is to require the Minister, or their delegate, to comply with guidelines relating to the exercise of powers accorded by subsections 19AB(3) or (4). These subsections allow the Minister to grant an exemption from the requirements attaching to the payability of Medicare benefits to services rendered by certain overseas trained medical practitioners. The guidelines, which must be determined by the Minister, may require that a person have specified qualifications in order to qualify for an exemption and are subject to disallowance by the Parliament.

Items 12 and 14 of Schedule 1 the Bill deal with transitional arrangements by repealing paragraphs 19AB(1)(d) and 19AB(2)(d) of the Principal Act and substituting new paragraphs 19AB(1)(d)-(f) and 19AB(2)(d)-(f). The effect of these items is to close a loophole which may have permitted overseas trained permanent resident doctors to deem their 10 year moratorium on access to Medicare benefits to have commenced from their first receipt of an exemption under section 3J(1)(d).

Item 29 of Schedule 1 of the Bill inserts a new section 23DBA in the Principal Act. The proposed section will allow the Minister to make a determination prescribing categories of accredited pathology laboratories for the purposes of the definition of eligible pathology laboratory. The term 'eligible pathology laboratory' is defined by item 21 of Schedule 1 of the Bill to mean a specimen collection centre of an approved pathology authority that is also the sole owner of at least one eligible pathology laboratory. The latter term is defined by item 22 of Schedule 1 of the Bill to mean an accredited pathology laboratory in a category determined by the Minister under proposed section 23DBA.

A determination of the Minister may prescribe categories applying, adopting or incorporating section 23DNA principles for accreditation as a pathology laboratory. Determinations are subjection to disallowance by the Parliament.

Item 32 of Schedule 1 of the Bill inserts new sections 23DNBA and 23DNBB in the Principal Act. Proposed section 23DNBA provides the Minister with power to grant an approval to an approved pathology authority for an eligible collection centre. The Minister cannot grant an approval unless the tax (under the Health Insurance (Approved Pathology Specimen Collection Centres) Tax Bill 1999) on the approval has been paid. The Minister must determine principles (Approval Principles) applying to the granting of approvals for eligible collection centres. The Approval Principles, which are subject to disallowance by the Parliament, must be complied with by the Minister when granting an approval. The Approval Principles may provide for certain matters, including the maximum number of approvals that may be granted and review of decisions.

Proposed section 23DNBB provides that when the Minister grants an approval for a specimen collection centre, the Minister must allocate the centre an identification number. A specimen collection centre is defined by section 23DA of the Principal Act to mean a place set up by an approved pathology authority to collect pathology specimens from persons in relation to whom pathology services are to be provided. Documentation issued by or on behalf of an approved pathology authority operating a collection centre relating to the collection of a specimen, or the sending of the specimen to an accredited pathology laboratory must specify the identification number.

A new section 23DNG is inserted in the Principal Act by item 36 of Schedule 1 of the Bill. Proposed section 23DNG provides the Minister with power to revoke an approval for a specimen collection centre in certain circumstances, including that the centre has ceased to be an eligible collection centre, or the centre does not comply with the Collection Centre Guidelines.

Proposed section 23DNI, which is inserted in the Principal Act by item 38 of Schedule 1 of the Bill, provides a mechanism and formula for the partial refund of the tax paid on the grant of the approval for an approved collection centre.

Item 44 of Schedule 1 of the Bill inserts new subsections 23DO(2DA) and 23DO(2DB) in the Principal Act. Under the proposed subsections, where an approved pathology authority has applied for an approval as an approved collection centre and is refused approval, it may within 28 days apply to the Minister for a reconsideration of the decision. The Minister on receiving an application for reconsideration must reconsider the decision and may affirm the decision or grant the approval.

Item 55 of Schedule 1 of the Bill repeals the Health Insurance (Pathology) (Licence) Fee) Act 1999. That Act specified the tax payable for the grant of a licence for a licensed pathology collection centre. That Act is being replaced by the Health Insurance (Approved Pathology Specimen Collection Centres) Tax Bill 1999.


  1. Health Insurance Commission, Annual Report 1998-99, Canberra, Paragon Printers, 1999: 191-2, 194.
  2. See, for example, Joint Committee of Public Accounts, Medical Fraud and Overservicing-Pathology (Report 236), Canberra, Parliament of Australia, 1985.
  3. Pathology Quality and Outlays Agreement 1999-2002: 2
  4. A copy of the agreement can be found at:
  5. Australian Health Ministers' Conference, "Ministers unite to get more doctors into the bush", Media Release, 4 August 1999.
  6. K Murphy, "Rural GPs warn about overseas doctors", Australian Doctor, 17 December 1999.
  7. R Phillips, Mid-Term Review of Provider Number Legislation, Canberra, Department of Health and Aged Care, 1999: 16.
  8. Ibid., 7
  9. ibid., 32
  10. Senator B Neal, Hansard, 13 December 1996: p. 7582.
  11. Senator M Lees, Hansard, 13 December 1996: p. 7587.
  12. Australian Medical Association, 'Provider Number Legislation: Sunset Clause Must Stay', Media Release, 23 December 1999.

Contact Officer and Copyright Details

Paul Mackey and Ian Ireland
11 February 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.

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ISSN 1328-8091
© Commonwealth of Australia 2000

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