Bills Digest No. 132 2002-03
Health Insurance Amendment (Diagnostic Imaging,
Radiation Oncology and Other Measures) Bill 2002
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
Contact Officer & Copyright Details
Health Insurance Amendment
(Diagnostic Imaging, Radiation Oncology and Other Measures) Bill
11 December 2002
House: House of Representatives
Portfolio: Health and Ageing
Schedule 2, which
establishes the Radiation Oncology Register commences immediately
after Royal Assent. The remainder of the Bill commences on the day
of Royal Assent.
To amend the Health Insurance Act 1973
- require registration of premises that offer diagnostic imaging
and radiation oncology services before Medicare benefits are
payable for such services
- make changes in patient referral procedures in relation to
diagnostic imaging services, and
- allow all osteopaths to refer patients for diagnostic imaging
Diagnostic imaging refers to a variety of
services including diagnostic radiology, ultrasound, computed
tomography, magnetic resonance imaging and nuclear medicine
imaging. Diagnostic imaging services consist of two distinct parts:
the procedure, which is the capturing of the images (for example,
the x-ray film); and reading of, and reporting on, those images by
a medical practitioner. For many diagnostic imaging services, these
two components need not necessarily be done at the same time or at
the same location. . Radiation oncology is the study and discipline
of treating malignant disease with radiation. The treatment is
referred to as radiotherapy or radiation therapy.
Diagnostic imaging accounts for approximately
15.5 per cent of Medicare Benefits paid in 2001-02.(1)
Advances in technology and more widespread use of magnetic
resonance imaging, ultrasound and computerised tomography scanning
have made diagnostic imaging a significant area of growth within
the health sector.(2) In 2001-02 radiation oncology
accounted for 0.9 per cent of Medicare benefits paid, an increase
of over 50 per cent.(3) The growth in radiation oncology
is partly attributable to the increase in the incidence and
detection of cancer in Australia.(4) Together,
diagnostic imaging and radiation oncology account for 16.4 per cent
(or approximately $1.3 billion) of Medicare benefits paid.
The number of health professionals entering
medical imaging as an occupation rose by 27.6 per cent between
1996-97 and 2000-01.(5) However, a recent report on
radiation oncology in Australia indicates that as the need for
radiotherapy increases there will be significant workforce
shortages in this area.(6) The Commonwealth has taken
steps to increase the number of radiation therapist students,
increase retention of qualified radiation oncology staff and
improve access to radiation oncology services in rural and regional
Australia. In the 2002-2003 budget, $72.7 million was provided for
the development and funding of new radiation oncology facilities in
rural and regional areas.
Despite the high costs associated with the
provision of diagnostic imaging and radiation oncology services,
little is known about the nature of the practices that provide
these services. Some information about service delivery is
currently collected through Medicare provider numbers and patient
identifiers; this provides insight into the size of the workforce
and number of patient services. However, information about the
practices and equipment used to deliver diagnostic imaging services
is not collected.
The lack of data about premises and mobile
facilities that provide diagnostic imaging services has in the past
compromised the capacity of the Commonwealth, the medical
profession and health researchers to:
- examine and ensure equity of access to such services (for
example by examining the geographic distribution of services)
- target education and information campaigns, and
- assess compliance with legislation and regulation and ensure
that equipment meets the eligibility requirements for Medicare
While more information is currently collected
about radiation oncology services, radiation oncology has been
included under the 'location specific practice number' (LSPN)
registration arrangements (Schedule 2) in order to standardise the
information collected across public and private radiation oncology
practices and consolidate registration processes.
The corporatisation of general practice
medicine, particularly the trend towards vertical integration, has
provided added impetus to the need for more information about the
premises and facilities that provide diagnostic imaging and
radiation oncology services. Vertical integration is a form of
corportisation that refers to the co-location of different
practitioners and services, such as GPs, specialists, pathology and
diagnostic imaging services. Often a third party (not directly
involved with the provision of health care) owns and receives the
profit generated by such services. Diagnostic imaging and radiation
oncology are two services where there have been significant
movements in ownership from individual practitioners to corporate
The impact of corporatisation has become a
significant issue within the health sector. In particular
professional associations and governments have become concerned
with the potential for professional and clinically rigorous
practice to be compromised in favour of corporate
There is Australian and overseas evidence to
suggest that the co-ownership and co-location of GP and diagnostic
imaging services results in higher rates of ordering diagnostic
tests.(9) It is widely believed that there are a number
of corporate practices that have encouraged practitioners to
increase their requests for diagnostic imaging
services.(10) This is not to suggest that all increases
in the rates of ordering of diagnostic tests in these circumstances
are clinically unsound, however such evidence does encourage
caution about the level of servicing within practices where there
is co-ownership and / or co-location of GPs and diagnostic imaging
As noted, professional organisations have been
concerned with the potential for corporatisation to compromise
professional practice. These concerns have been magnified since the
introduction of capped funding for diagnostic
imaging.(12) Because there is an upper
limit on funding under the current arrangements, the costs of
over-servicing and associated practices are re-distributed amongst
the entire industry. This has provided a further prompt for
increased regulation in the area.
Currently the Health Insurance Commission (HIC)
is unable to collect detailed information about whether a practice
is part of a corporate structure or about the ownership of a
practice. This means that neither the Commonwealth nor professional
associations in the field can identify corporate (or individual)
practices that are over-servicing.
Access to more extensive information about the
location of practices and equipment will enable the Commonwealth,
the diagnostic imaging profession and the health sector to better
monitor the location and use of diagnostic imaging services. More
specifically, one of the key objectives of the legislation is
Monitor the impact of corporatisation of
diagnostic imaging and radiation oncology
In response to the concerns of the Commonwealth
and various professional bodies, legislation regulating the
relationship between referring practitioners and service providers
was introduced in 1991. Referred to as 'arms length' legislation in
the Explanatory Memorandum for this Bill, the 1991 legislation
meant that referring practitioners and service providers could not
be operating in such a way where a financial or other inducement
exists for them to perform or refer a service. 'Arms length'
relationships are intended to limit inappropriate servicing by
ensuring that no financial or other gain could be obtained through
The 1991 legislation was reviewed in 2000. The
outcome of this review, conducted by the Diagnostic Imaging
Arrangements Review Committee (DIARC) considered the current
legislation to be an adequate framework for regulating the
relationship between referring practitioners and service
providers.(14) Despite the acceptability of the current
legislative framework, the DIARC recommended a number of measures
designed to enhance the operation of 'arms length' legislation.
These measures are included in the Bill.
Items 1-9 insert various
definitions relating to the proposed Diagnostic Imaging Register
into the Health Insurance Act 1973 ('the Act').
Item 10 inserts new
sections 16D-16E, which restrict the circumstances in
which Medicare benefits are payable for the provision of diagnostic
imaging services.(15) In particular, new
subsection 16D(1) contains three requirements that must,
unless the Minister directs otherwise, be satisfied before Medicare
benefits become payable. These requirements are:
- the premises that provide the service, or in the case of mobile
imaging equipment, their usual storage location ('base'), must be
- the equipment used in the diagnostic imaging procedure must be
ordinarily located at the registered premises or base, and
- the register must have recorded on it at least one item of the
same type(16) of equipment as was used in the
There is no guidance in the Bill about the
circumstances in which the Minister's power to direct payment of a
Medicare benefit (that is, where one or more of the above
requirements are not satisfied) can be exercised. The
Explanatory Memorandum to the Bill comments
The intention is so that the Minister can give
consideration as to whether the patient has been disadvantaged in a
particular case through no fault of their own. Examples of when it
would be envisaged that this power would be exercised include:
- where there was a delay in the processing of the registration;
- when the patient was unable to use a registered practice to
have the diagnostic imaging procedure, which in similar
circumstances would be eligible for a Medicare benefit.
Where the Minister does direct a benefit to be
paid in accordance with this provision and the proprietor has
failed to notify the patient that the premises or base was not
registered, the benefit paid is a debt recoverable from the
proprietor of the premises or mobile base.
New section 16E deals with the
situation where premises or base have been suspended from the
Register under new section 23DZX. Medicare
benefits become payable again once the suspension is lifted,
provided that suspension is not replaced by cancellation of
registration under new section 23DZY.
Item 11 inserts new
Division 4 (new sections 23DZK-23DZZI).
Division 4 covers the 'nuts and bolts' of the establishment and
operation of the Diagnostic Imaging Register.
New section 23DZK establishes a
statutory obligation on the Minister to keep a diagnostic imaging
services Register and sets out the purposes for which it is kept.
To paraphrase them, these purposes are:
- the gathering of information on the provision of diagnostic
imaging services, including (but not limited to) the structure of
medical practices connected with the provision of those services,
for the purposes of planning and developing the Commonwealth
Medicare benefits program;
- identifying whether a Medicare benefit is payable for a
particular diagnostic imaging service rendered to a person
- assisting in identifying whether any inappropriate
practices(18) are taking place, and
- assisting in identifying whether prohibited diagnostic imaging
practices(19) are taking place.
The register may be maintained in an electronic
form: new section 23DZS.
New section 23DZO defines a
'proprietor' of a diagnostic imaging premise or base. These are the
only entities that may apply for registration of a premise or base.
Essentially, a proprietor is the person or government agency who
has effective control(20) of:
- the relevant premises or base
- the use of the relevant diagnostic imaging equipment, and
- the employment of staff (including medical practitioners)
connected with the premises.
Proprietors may also be partnerships, in which
case each partner is equally responsible for the various
obligations under the Bill: new paragraph
23DZZI(3)(a) and see discussion of new sections
23DZZF-G. As noted in the Explanatory Memorandum,
this statutory obligation regarding responsibility overrides
anything contained in the relevant partnership
agreement.(21) However, no more than one partner may be
fined for the one offence: new paragraph
Under new section 23DZP,
applications for registration must contain certain information
listed in new subsection 23DZR(1) ('primary
information'(22)) plus any prescribed
information,(23) provided that the latter is 'relevant'
to the purposes of the Register mentioned in new section
23DZK. The Minister may require further information even
after registration, again providing it is 'relevant' to the
purposes of the Register: new section 23DZW. A
failure to provide this information will result in suspension or
cancellation of registration: new sections
Upon registration, a premise or base is given a
unique location specific practice number (LSPN): new
New section 23DZT provides that
an extract of the Register be made available to any person who
requests it, providing the 'purpose' of the request is to
'determin[e] whether [a] Medicare benefit is likely to be payable
in respect of a particular diagnostic imaging service'. It is not
clear how the purpose of the request is to be determined by whoever
is responsible for issuing extracts. The Explanatory
This provision will allow anyone, including the
referring doctor, to check the registration status (including
whether the registration is currently suspended or cancelled) of a
premises or mobile base
The Minister has the power to publish an extract
on the Internet for any purpose: new section
The Minister may cancel a registration under
new section 23DZZA where:
- a registration was obtained improperly, or
- the proprietor fails to notify changes to the primary
information under new section 23DZR within 28 days of the
Before cancelling a registration, the Minister
must invite the proprietor to provide reasons within 28
days(25) why the registration should not be cancelled:
new section 23DZZD. There is no obligation on the
Minister to give the reasons why he / she is considering a
cancellation. Note also there is no requirement in the Bill for the
Minister to take any submission of reasons into account: indeed
there is no requirement for the Minister to wait until the
proprietor's submission is received before acting. However, a
decision by the Minister to cancel a registration is reviewable by
the Administrative Appeals Tribunal (AAT): new section
23DZZE. A failure to take into account submissions may
well lead to an overturning of a decision by the AAT. Formal
cancellation of registration must be in writing and this notice
must set out the reasons for the cancellation: new
There are restrictions on the proprietor's
ability to apply for re-registration of a premise or base where
registration was cancelled under new section 23DZY or
DZZA. Specifically a proprietor must have the Minister's
permission to apply if they are doing so within 12 months of the
cancellation. In considering whether to grant permission, the
Minister must take into account whether:
- the act or omission that gave rise to the cancellation was
- it is reasonable to conclude, in all the circumstances, that
the proprietor will comply with this Division in making the
application and after registration of the premises or base.
A proprietor of an unregistered
premises or mobile base commits an offence if the patient is not
informed before undertaking the diagnostic imaging procedure that a
Medicare benefit is not payable: new sections
23DZZF-G. A person is deemed to have informed the patient
if either they have given a written notice to the patient or
'prominently' displayed a notice where the procedure is being
performed. The offence is one of strict liability - the prosecution
does not need to prove any 'fault' (eg recklessness, negligence
etc) but the defence of reasonable mistake is available to an
accused person. As mentioned earlier, if the proprietor is a
partnership, any one of the partners can be prosecuted, even if
they have no direct involvement in the failure to inform the
patient. The offence carries a maximum penalty of 10 units ($1
Should the Minister direct that a patient be
paid a Medicare benefit for a service done in an unregistered
premises where the patient was not informed as required under
new sections 23DZZF-G, the relevant proprietor is
liable for this amount: new section 23DZZH.
Schedule 2 establishes the Radiation Oncology
Register. Schedule 2 is virtually identical to Schedule 1 in terms
of the requirement for registration in order for Medicare benefits
to be payable, registration and cancellation processes, liability
of radiation oncology proprietors' etc.
As mentioned in the background to this Digest,
the Act is designed to ensure an 'arms length' situation between
the providers of diagnostic imaging services and the practioners
who refer patients to these providers. The policy objective behind
this is to prevent inappropriate or unnecessary imaging being done.
This objective is achieved by (i) prohibiting a provider from
offering any inducement or other form of encouragement to
practitioners to refer patients to them (existing section 23DZG)
and (ii) generally making the service ineligible for Medicare
benefits unless it was done by a person acting on the written
request (referral) of a practitioner (existing subsection
However, there are number of exceptions to the
rule outlined in (ii). For example, a follow-up ('additional')
service is eligible for Medicare if an initial service - which was
duly requested by a practitioner - indicates the need for a
follow-up: existing subsection 16B(10). Under current subsection
16B(10), there is no specific limit on what this service might be.
New subsection 16B(10) will limit such additional
services to diagnostic imaging services (item
New subsection 16B(10A) will
insert another exception. This covers the situation where a
diagnostic imaging service provider considers that a service
different from that requested is more appropriate in diagnosing the
patient's condition. This exception requires both that the provider
take 'all reasonable steps to consult' with the requesting
practitioner and that the planned different service must
be one that would be accepted by the 'general body' of
practitioners / consultants as being the more appropriate service
than the one originally requested.
Existing sections 23DT-DZE collectively form
another exception to the subsection 16B(1) restriction on Medicare
payments. They allow a person in specified remote
areas(26) to apply for an exemption from subsection
16B(1) if the referral requirement would result in 'patients in the
area suffer[ing] physical or financial hardship'.
Items 3-19 make a number of
amendments to existing sections dealing with the remote area
exemption issue. The most significant change is to allow, in
certain situations, a prohibited practice to be undertaken in
remote areas via the granting of an exemption: new section
23DXA (Item 5). Currently, a person is prohibited from
stationing equipment and /or employees at the place of a second
person for the purpose of that person providing imaging services on
behalf of the first person. The proposed amendments will allow a
specialist to apply for an exemption to this rule. The Minister may
restrict the exemption to certain equipment or employees. The
applicant may ask the Minister to review any such a decision. The
Minister's decisions (including review decisions) are reviewable by
the AAT: item 15, new subsection 23DZD.
Osteopaths are practitioners who specialise in
treatment of bones and related skeletal issues.
Currently, osteopaths are not included in the
existing subsection 16B(1) list of practitioners who may request a
service to be done so that a Medicare benefit is payable for the
service. In contrast, registered chiropractors are listed.
According to the Second Reading speech,(27) many
osteopaths have historically also been registered as chiropractors
under State legislation, thus enabling them participate in the
Medicare benefit arrangements for diagnostic imaging services.
However, it seems that some States now have separate legislation
for the registration of the two types of practitioners with the
effect that osteopaths may no longer by registered as
chiropractors. Under the current Act, this means some osteopaths
are no longer able to request a service covered by Medicare.
Items 2-7 amend existing
section 16B to add osteopaths to the subsection 16B(1) list and
make various related changes. Items 8-14 make
other consequential amendments to the Act to bring them into line
vis-à-vis the rights and responsibilities of other classes
of practitioners currently listed in subsection 16B(1).
- Commonwealth Department of Health and Ageing, Medicare
- Australian Institute of Health and Welfare, Australia's
Health 2002, p. 268. Medicare benefits paid for radiation
oncology have increased by approximately 52 per cent since 1996 97.
In the same period Medicare benefits paid for diagnostic imaging
have increased by approximately 28 per cent (Health Insurance
- Medicare benefits paid for radiation oncology have increased by
approximately 52 per cent since 1996 97, Medicare
- Report of
the Radiation Oncology Inquiry 2002.
- Ibid., p. 268.
- Report of
the Radiation Oncology Inquiry 2002.
- Ian Porter, 'Mayne buys 10 radiology practices', Sydney
Morning Herald, Tuesday, 3 December 2002.
- Amanda Elliot, The Decline in Bulk Billing: Explanations and
Implications, Current Issues Brief No. 3 2002-03,
Department of the Parliamentary Library, 24 November 2002, http://www.aph.gov.au/library/pubs/cib/2002-03/03CIB03.htm.
- Nicola Ballenden, Doctors in the house, Consuming
Interest, Autumn 2002, Volume: no.91, pp. 18 19.
- Professional Services Review, Annual Report 1999-2000,
- Recent research by the Australian Institute of Health and
Welfare indicates that there is also evidence of a significant
relationship between practice size and high image ordering rates.
Large practice sizes (ie: 11 or more GPs) are most associated with
corporatised practices, see Australian Institute of Health and
Orders by General Practitioners in Australia 1999-00 General
Practice Series No. 7.
- The funding arrangements for diagnostic imaging services are
outlined in an agreement between the Commonwealth, the Royal
Australian and New Zealand College of Radiologists, and the
Australian Diagnostic Imaging Association. The main purpose of this
agreement is to ensure predictable Commonwealth outlays for
diagnostic imaging services, consequently within the agreement are
agreed annual targets for growth in the number of scans provided
per year and Medicare outlays.
- Explanatory Memorandum, Health Insurance Amendment (Diagnostic
Imaging, Radiation Oncology and Other Measures) Bill 2002, p. 9.
- Diagnostic Imaging
Referral Arrangements Review Committee - Final report 2002.
- Note that these new provisions are to come into effect for
services rendered on or after 1 May 2003. However, it is understood
that an amendment to the Bill may be introduced to push this date
back a little.
- It is not necessary for the actual piece of equipment used in
the procedure to be listed on the Register for the premises or base
at the time the procedure is carried out
- Explanatory Memorandum, p. 27.
- 'Inappropriate practice' is defined in section 82 of the Act.
The concept centres on practice that would be 'unacceptable to the
general body' of practitioners or specialists in the relevant
- Such prohibited practices are defined in section 23DZG of the
- This term is not defined, but is currently used elsewhere in
- p. 36.
- This is basic information such as the relevant proprietor's
name(s), Australian Business Number, address of premises or base,
listing of types of equipment etc.
- It is unknown whether what is required under new subsection
23DZP(2) 'prescribed information' would be specified by the
Government through administrative means or by passing regulations.
- At: p. 31.
- A longer period for a response may be given.
- Generally speaking, this is normally regarded as a location
that is at least 30 kilometres by road to the nearest radiology
practice at which the services are provided. See Medicare Benefits
Schedule, March 1999 Update, Category 5, diagnostic imaging
- The Hon Kevin Andrews MP, House of Representatives,
Debates, 11 December 2002 p. 10078.
Angus Martyn and Amanda Elliot
24 March 2003
Bills Digest Service
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