Bills Digest No. 194  1999-2000Health Legislation Amendment Bill (No. 3) 2000

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
Main Provisions
Concluding Comments
Contact Officer & Copyright Details

Passage History

Health Legislation Amendment Bill (No. 3) 2000

Date Introduced: 31 May 2000

House: House of Representatives

Portfolio: Health and Aged Care

Commencement: On Royal Assent, except:

  • Schedule 1 (outreach services) commences on a day fixed by Proclamation, or 6 months after Royal Assent if no day is fixed by Proclamation;
  • Schedule 3 (Lifetime Health Cover amendments) commences on 1 July 2000, when the National Health Amendment (Lifetime Health Cover) Act 1999 is due to commence.



The main purpose of the Bill is to enable the private health insurance industry to fund outreach services as an alternative to in-hospital care for admitted patients.

The Bill also makes minor amendments to the National Health Act 1953 which:

  • protect health insurance funds from legal proceedings if they disclose patient information to a hospital or day hospital so that the facility may provide the patient with informed financial consent, and
  • clarify certain definitions in the Lifetime Health Cover rules.



For some time, public hospitals have been able to provide post-acute care in patients' homes. Initially, this occurred on an ad hoc basis and was funded either by tied Commonwealth grants to the States, or directly from State governments to specific hospitals.(1)

In 1997, the Minister for Health and Family Services, Dr Wooldridge, outlined a general vision for the changing role of hospitals in the health system. He stated:

Hospitals in the future will coordinate and provide many forms of care to people who are not in hospital, while continuing their vital role in complex acute surgery, research teaching and other necessary inpatient services - but the need for acute inpatient care will not be as large as it is today.(2)

Dr Wooldridge listed a number of flexible alternatives to traditional hospital services, which would allow for 'a continuum of care covering the person's entire period of illness.' These included day surgery, step-down facilities (allowing patients to move out of a hospital ward into hotel-style accommodation for post-surgery care), pre-admission clinics and 'hospital in the home' programs.(3) The Australian Health Care Agreements between the Government and public hospitals, which commenced in July 1998, allow Commonwealth funding to be used not only for hospital care, but also for these types of health services.(4)

Hospital in the home programs (or outreach services) can provide an extensive range of services, including intravenous antibiotic therapy, chemotherapy and anti-coagulant therapy. Advantages claimed for the initiative include:

  • patients can be treated in familiar surroundings (this is particularly important for elderly people and children)
  • a decreased risk of infection (as it is established that longer stays in hospital increase the risk of infection)
  • lower costs to hospitals and private health insurance funds, and
  • freeing up hospital beds for acutely ill patients.(5)

Currently, private health insurance funds can only pay benefits from hospital cover tables for admitted patients. This means that funds can only offer outreach services to members who have both hospital and ancillary cover, not members with hospital cover only.(6) As a result, some private hospital patients may remain in hospital longer than necessary, simply to take advantage of insurance coverage.(7) Further limitations are that ancillary health care services cannot be re-insured with a health benefits reinsurance trust fund,(8) and that Medicare benefits are not available to the attending doctor under ancillary cover tables.(9)

On 1 November 1999, the Parliamentary Secretary for the Minister for Health and Aged Care, Senator Tambling, launched a trial of the 'Hospital In The Home' program. This involves private sector trials to transfer selected patients home for a part of the normal period of hospital stay, while still being covered under their private health insurance. Six trials were conducted across a range of health care services, including psychiatric, rehabilitation, post-operative and palliative care,(10) and involved six health insurance funds.(11) The Explanatory Memorandum reports that the outcomes and feedback from these trials to date has been positive, although the National Evaluation has yet to be completed.(12)

The Bill extends the definition of 'hospital treatment' in the National Health Act 1953 to include specific outreach services at particular hospitals which are approved by the Minister. This will allow private health funds to pay benefits for outreach services from private hospital insurance, and to reinsure themselves in respect of the provision of such services. The background to the other amendments proposed in the Bill is discussed in the Main Provisions section.

Main Provisions

Outreach services

Proposed section 5C extends the meaning of 'hospital treatment' to include outreach services provided by or on behalf of a hospital or day hospital. This will apply throughout the National Health Act 1953 and the Health Insurance Act 1973 with the exception of:

  • subsection 5B(3) of the Health Insurance Act 1973
  • section 67 of the National Health Act 1953,(13) and
  • Division 5A of Part VI of the National Health Act 1953.

Subsection 5B of the Health Insurance Act 1973 provides that persons on low incomes may be declared 'disadvantaged persons'. Such a declaration may cover periods of hospital treatment prior to the application for a declaration, if the person was on a low income prior to the hospital treatment. 'Hospital treatment' will not include outreach services. No policy explanation is provided as to why disadvantaged persons who have received outreach services will not be covered, whereas those who have received services in hospitals will.

Division 5A of Part VI of the National Health Act 1953 contains a procedure by which the Minister may determine that benefits are no longer payable in respect of certain treatments provided at particular hospitals and day hospitals, if the standard of treatment is unacceptable. This Division will not apply to outreach services. It is not clear why substandard treatment provided by hospitals and day hospitals will be tolerated where it occurs in people's homes, but not where it occurs within the hospital building.

The Bill also expands the definition of 'patient' of a day hospital to include a person who receives outreach services provided by or on behalf of the day hospital (item 3 of Schedule 1).

The Minister may make a written determination that certain outreach services provided by a specific hospital or day hospital are approved for private hospital insurance purposes (proposed section 5D). Only those outreach services that the Minister has approved are eligible to be covered under private hospital insurance. No criteria are specified by reference to which the Minister must make his or her determination. The Explanatory Memorandum states that administrative guidelines will be established to help in determining whether to approve an outreach service. Approved outreach services would need to be:

  • safe
  • sound clinical practice
  • accepted by all levels of the profession
  • beneficial for the patients, and
  • able to demonstrate cost efficiencies.(14)

The determination must specify the period for which it is in force (proposed subsection 5D(2)). A determination may be disallowed by the Parliament under s 46A of the Acts Interpretation Act 1901 (proposed subsection 5D(3)).

The Bill also makes related amendments to ensure that hospital purchaser-provider agreements and practitioner agreements(15) extend beyond services provided at a hospital or day hospital, to include outreach services provided at home (items 5 and 6 of Schedule 1).

Disclosure of information

Immunity from civil or criminal liability for breach of a duty of confidence already exists for:

  • the disclosure of certain case mix information under a hospital purchaser-provider agreement, because the disclosure is required by law, and
  • the disclosure of information by a hospital or day hospital if the information is needed to assess whether or not to make payments of private health insurance.(16)

The Bill creates an additional immunity from liability for disclosure necessary for a hospital or day hospital to provide a private patient with information about the amount he or she will be liable to pay for hospital treatment (proposed subsection 73G(2A) of the National Health Act 1953). The immunity only covers disclosure made by a health fund to a hospital or day hospital with which the health fund has a hospital purchaser-provider agreement. It only applies to disclosures made on or after Royal Assent to the Bill (section 4).

Lifetime Health Cover

Lifetime Health Cover will come into effect on 1 July 2000 as part of the National Health Act 1953 and will require health funds to charge different premiums depending on the age at which people take out health insurance. People who join a health funds after the age of 30 will be required to pay a 2% additional premium for every year that they remain uninsured.

The Lifetime Health Cover rules operate on the definition of 'adult beneficiary', that is, a person with private hospital insurance. Currently, a person cannot be an 'adult beneficiary' if he or she is under 31 years of age and dependent on a person who contributes to private hospital insurance. This would exclude dependent children, but also a dependent spouse under 31 years of age. The Bill amends the definitions of 'adult beneficiary' and 'hospital cover' so that a dependent spouse (including a de facto spouse)(17) under 31 years of age is not excluded from being an adult beneficiary in his or her own right (items 1 and 2 of Schedule 3).

Refugees who enter Australia after 1 January 2000 have 12 months after becoming eligible for Medicare to take out private hospital insurance without being subject to any additional premium under the Lifetime Health Cover rules.(18) The Bill amends the description of the class of visa granted to a refugee before entering Australia (item 3 of Schedule 3).

Concluding Comments

The introduction of 'Hospital In The Home' programs or outreach services for patients with private hospital insurance has the potential to significantly improve the quality of care and efficiency of the provision of health services. For example, it has recently been reported that some drugs commonly used in palliative care are not subsidised by the Government under the Pharmaceutical Benefits Scheme. Such drugs are provided free to hospital patients, but can cost up to $600 a week for home-based patients.(19) Accordingly, a number of patients choose hospital-based care as they are unable to afford the cost of these drugs. The coverage of home-based palliative care under private hospital insurance could allow terminal patients to receive appropriate medication at home rather than in a hospital.

However, the introduction of the amendments will not guarantee the availability of alternative services to in-hospital services. Whether alternative services are offered will depend on the hospital establishing suitable programs that receive ministerial approval. The Explanatory Memorandum contains the only indication of the criteria the Minister might apply in making such determinations. These suggested guidelines include cost-effectiveness. It may be that certain services that could appropriately be provided at home will not be available if they are not cost-effective. By way of illustration, a trial (under the public health system) for the home treatment of children suffering cystic fibrosis and diabetes at the Royal Children's Hospital in Brisbane was recently discontinued after 18 months, despite being well patronised and enthusiastically received, as it was not cost-effective.(20)


  1. Senator Herron, Speech on second reading of the Health Legislation (Private Health Insurance Reform) Amendment Bill 1994 and Private Health Insurance Complaints Levy Bill 1994, Senate Hansard, p. 214, 10 May 1995.

  2. Dr Wooldridge, Minister for Health and Family Services, Press Release, 18 November 1997.

  3. Dr Wooldridge, Minister for Health and Family Services, Press Release, 18 November 1997.

  4. Dr Wooldridge, Minister for Health and Family Services, Press Release, 18 November 1997. See also Dr Nelson, Speech on second reading of the Health Legislation Amendment (Health Care Agreements) Bill 1998, House of Representatives Hansard, p. 1570, 25 March 1998.

  5. See generally Dr Wooldridge, Minister for Health and Family Services, Press Release, 18 November 1997; Explanatory Memorandum to the Health Legislation Amendment Bill (No. 3) 2000, pp. 5-6.

  6. Dr Wooldridge, Minister for Health and Aged Care, Speech on second reading of the Health Legislation Amendment Bill (No 3) 2000, House of Representatives Hansard, p. 15695, 31 May 2000.

  7. See Explanatory Memorandum to the Health Legislation Amendment Bill (No. 3) 2000, p. 3.

  8. Reinsurance of private hospital cover supports community rating of health insurance by spreading the burden of insuring high-risk members.

  9. See generally Dr Wooldridge, Minister for Health and Aged Care, Speech on second reading of the Health Legislation Amendment Bill (No. 3) 2000, House of Representatives Hansard, p. 15695, 31 May 2000, Explanatory Memorandum to the Health Legislation Amendment Bill (No. 3) 2000, p. 3-4.

  10. The trials being conducted are: the Hospital-to-Home Trial at Ashford Community Hospital in Adelaide, the Domiciliary Palliative Care Program at St Francis Xavier Cabrini Private Hospital, Melbourne, the South Australian Psychiatric Patient Trial operated by the Adelaide Clinic, Kahlyn Private Hospital and Fullarton Private Hospital, the Victorian Rehabilitation Patient Trial operated by the Cedar Court Health South Rehabilitation Hospital, the Victorian Private Psychiatric Early Discharge Trial operated by the Albert Road Clinic, Dandenong Pinelodge Clinic, Delmont Private Hospital and the Melbourne Clinic Private Hospital, and the Epworth Hospital-in-the-Home Pilot Project. Benefits are payable for these trials under National Health Regulations 1954, Schedule 3.

  11. Participating funds are MBF, Medibank Private, the South Australian Police Employees Fund, IOR Health, Mutual Community and AXA Australia. See Senator Tambling, Parliamentary Secretary for the Minister for Health and Aged Care, Press Release, 1 November 1999.

  12. Explanatory Memorandum to the Health Legislation Amendment Bill (No. 3) 2000, p. 7.

  13. This section provides that only registered funds can provide health insurance for hospital treatment and ancillary health benefits. The existing definition of 'hospital treatment', not extended to outreach services, is preferred for this requirement. Retaining the narrow definition of hospital treatment will not affect the quality of services provided, as both health funds which provide hospital treatment and those which provide ancillary benefits are required to be registered.

  14. Explanatory Memorandum to the Health Legislation Amendment Bill (No. 3) 2000, p. 12.

    15 In general terms, these are agreements under which a health fund contracts to pay the hospital or medical practitioner directly, in satisfaction of all or most of a patient's liability.

  15. Subsections 73G(1) and (2) of the National Health Act 1953.

  16. Subsection 4(1) of the National Health Act 1953.

  17. Paragraph 5(1)(c) of Schedule 2 of the National Health Act 1953.

  18. Button, Victoria 'Drug costs force terminally ill into public hospitals', The Age, 21 February 2000.

  19. Sands, Judy 'Home treatment axed', The Courier-Mail, 29 April 2000.

Contact Officer and Copyright Details

Katrine Del Villar
23 June 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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Published by the Department of the Parliamentary Library, 2000.

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