Bills Digest no. 172 2008–09
Private Health Insurance (National Joint Replacement
Register Levy) Bill 2009
WARNING:
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.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date introduced: 28 May 2009
House: House
of Representatives
Portfolio: Department of Health and Ageing
Commencement: Everything other than sections 3-9: on
Royal Assent
Sections 3-9: the later of 1 July 2009 or on Royal Assent
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The purpose of the Private Health
Insurance (National Joint Replacement Register Levy) Bill 2009 (the
Bill) is to establish the National Joint Replacement Register Levy
(the levy) to fund the National Joint Replacement Registry (the
Registry).[1]
The Australian Orthopaedic Association (AOA) established the
Registry in 1999 to improve the results of joint replacement
surgery in Australia through detailed information about joint
replacement surgery. Another aim of the Registry is to reduce the
number of redo operations. The Registry provides information about
the types of joints available and surgical techniques. It also
includes information about factors known to influence the outcome
of joint replacement surgery such as the health concerns of the
patient and their overall health status, the type of joint
replacement used and the way the operation is conducted.
The Registry collects information on each joint replacement
surgery in Australia, except in instances where the patient does
not consent. The following details are collected; details of the
patient, the reason for the surgery, which joint was replaced and
the side of the operation, type of joint replacement and all the
individual components used in the operation.
The Registry also records information if a joint replacement is
redone (known as a revision procedure). This procedure is recorded
as it relates to the first (or primary) operation. This enables the
Registry to determine how many of the initial primary procedures
have been revised, the reason why it was redone, how long after the
original surgery the revision occurred and which of the components
(if any) was replaced.
As all hospitals which undertake joint surgery (around 300) in
Australia participate in the Registry, comprehensive information
about joint replacement surgery is collected. This allows for
comparative analysis to be undertaken about types of surgery done
and the joints that are replaced. The Registry does not recommend
what is the best joint replacement for a particular patient.
The Registry has been funded by the Australian Government since
its inception in 1999. Additional funding was granted in 2007 to
expand the role of the Registry to collect information on other
types of joint replacements such as shoulder, elbow, wrist, ankles
and spinal disc.[2]
Although not expressly stated, it appears that the decision to
cost recover expenditure associated with the Registry is consistent
with the broader government agenda to cost recovery generally.
Since its election, the government has also sought to introduce
cost-recovery arrangements for consideration by the Pharmaceutical
Benefits Advisory Committee (PBAC) for products to be listed on the
Pharmaceutical Benefits Scheme (PBS).[3]
This measure was introduced in the context of the 2009-10
Budget. The Budget papers note that Government has funded the
Registry since 1998 and that it is considered
‘appropriate’ for ‘significant stakeholders in
this sector to meet the cost of the Registry’.[4]
In its submission to the Senate inquiry, the Department of
Health and Ageing (DoHA) noted that the Registry effectively
performs a post-marketing surveillance role which provides
financial benefit to manufacturers of joint replacement prostheses
as well as providing information about safety, quality and
efficacy. The United Kingdom’s National Joint Registry was
provided in support of the proposal as it operates on a levy which
is applied to all joint replacement products. It also argued that
the levy was required to ensure stability of funding for the
Registry.[5]
The Bill has been referred to the Senate Standing Committee on
Community Affairs (the Committee) for review. The report is due on
16 June 2009. The Committee conducted two public hearings that are
discussed elsewhere in this Digest.
Although this measure has failed to generate significant media
commentary, the submissions to the Senate inquiry indicated a wide
range of views. Most stakeholders were opposed to the introduction
of the levy. The AOA did not have ‘specific comments’
on the proposal, but noted that the introduction of the levy would
have no impact ‘on the continued independence, integrity and
world-renowned quality of the NJRR’.[6] The Australian Health Insurers
Association (AHIA) was in favour of the proposal.
There were several recurring themes raised in the submissions
and public hearings. The perceived lack of consultation about
implementation and limited timeframes to respond to the inquiry
were strongly criticised. Other stakeholders focused on the
inequity of the arrangements, suggesting that the full cost of the
levy should not be borne by the industry but other stakeholders (or
beneficiaries) who should also contribute.[7] Some considered it to be no more than a
tax and another additional cost for the industry to bear
(especially for sponsors with products listed on the Prostheses
List, which is also subject to cost recovery arrangements).[8] It was suggested that
this may result in low volume products being withdrawn from the
Australian market with significant implications for patient
access.[9] There was
also concern that this Registry would serve as a model for future
registries and that further consultation was required to ensure the
best possible approach.[10]
Another issue raised in the submissions was the appropriateness
of cost recovery arrangements for an outcome that could essentially
be considered a ‘public good’.[11] The information provided by the
Registry ultimately offers significant benefits to patients (and
clinicians) as it provides information about safety, quality and
efficacy of joint replacement procedures. It also provides
benefits to government, taxpayers and insurers as it may reduce
overall health expenditure.
Although there was much commentary about the imposition of
additional cost to the industry, only one submission considered the
appropriateness of the levy amount. Medtronic argued that 99% of
the Registry (around 9,000 items) attracted a benefit of less than
$8,000, rather than the $67,000 that was quoted in the Explanatory
Memorandum.[12]
Other submissions also suggested that the levy should be
applied by volume rather than listing, so companies with several
low volume products on the Registry are not penalised and do not
ultimately withdraw products from the Australian market.[13]
According to the Government, the Bill will result in estimated
budget savings of $5 million dollars over four years.[14]
Clause 5 contains definitions of terms used in
the Bill.
Importantly, under subclause 5(2), a
sponsor of a joint replacement prosthesis is defined
as:
(a) a joint replacement prosthesis is currently
listed in the Private Health Insurance (Prostheses) Rules as
a result of an application made by the person under
subsection 72-10(2) of the Private Health Insurance Act
2007; or (b) if a joint replacement prosthesis is
currently listed in the Private Health Insurance (Prostheses)
Rules in accordance with section 12 of the Private Health
Insurance (Transitional Provisions and Consequential
Amendments) Act 2007—the person was, immediately
before the commencement of the Private Health Insurance
Act 2007, the sponsor of that prosthesis for the
purposes of the National Health Act 1953.
In addition, joint replacement prosthesis is defined in
subclause 5(1) as a prosthesis listed in the
Private Health Insurance (National Joint Replacement Register Levy)
Rules (the Rules), and used in joint replacement.
Clause 6 of the Bill provides for the
imposition of the levy.
Subclause 6(1) provides that the levy will be
imposed on each sponsor for joint replacement prostheses on days
specified:
- in the Rules, and
- by the Minister, by legislative instrument,[15] as a supplementary levy,
during each financial year.
Subclauses 6(2) and (3) have
the effect that the levy and supplementary levy would not be
imposed on more than four and two occasions respectively in each
financial year.
Under clause 7, the rate of the levy imposed on
a particular day will be specified in the Rules, while the
supplementary levy rate for a particular day will be determined by
the Minister, also by legislative instrument, both of which would
apply on that specific day.
Subclause 7(2) provides that the rate of the
levies must be based on the number of joint replacement prostheses
sponsored as follows:
- the levy–the census day as specified in the Rules,
and
- the supplementary levy–the census day as the Minister
determines by legislative instrument.
In addition, the rate of levies may differ depending on
the type of joint replacement prosthesis sponsored, ranging from $0
(for one or more types of prostheses) to not more than $5000 (for
sponsorship of any one prosthesis).
Clause 8 empowers the Minister to make the
Rules.
Clause 9 contains a standard regulation making
power.
Please note that these proposed amendments should be considered
together with amendments proposed in relation to the levy in the
Private Health Insurance Legislation Amendment Bill 2009 (the PHI
Bill).[16] The PHI
Bill was introduced by the Government on 3 June 2009. According to
the Government, the amendments proposed in the PHI Bill are
consequential to the amendments proposed in this Bill, allowing for
the administration of the levy.[17]
Concluding comments
The joint replacement prostheses industry has expressed
significant concern about implementation of this measure,
particularly in relation to equity, stakeholder consultation, and
access to low volume products. This proposal also raises questions
about the appropriateness of cost recovery arrangements for
government procurement process and processes (such as Registries)
that offer a ‘public good’. These questions have not
been sufficiently addressed in the Explanatory Memorandum and the
submission to the inquiry by DoHA.
Explanatory
Memorandum, Private Health Insurance (National Joint Replacement
Register Levy) Bill 2009, p. 1.
[2].
T Abbott (Minister for Health and
Ageing), National Joint Replacement Registry – increased
data collection, media release, Budget 2007-08, viewed 11 June
2009,
http://www.health.gov.au/internet/budget/publishing.nsf/Content/4E7457965553B382CA2572D40029BDF6/$File/hfact48.pdf
[3].
See Rebecca de Boer, National
Health Amendment (Pharmaceutical and Other Benefits-Cost Recovery)
Bill 2008, Bills Digest, no. 125, 2007-2008, Parliamentary
Library, Canberra, viewed 16 June 2009, http://www.aph.gov.au/library/pubs/bd/2007-08/08bd125.pdf;
Rebecca de Boer, National Health Amendment (Pharmaceutical and
Other Benefits-Cost Recovery) Bill 2008 [No. 2], Bills Digest,
no. 170, 2008-2009, Parliamentary Library, Canberra, viewed 16 June
2009,
http://www.aph.gov.au/library/pubs/bd/2008-09/09bd170.pdf.
[4].
Australian Government, Budget
measures: budget paper no. 2:2009-10, Commonwealth of
Australia, Canberra, 2009, p. 298.
[5].
Department of Health and Ageing
(DoHA), Submission to the Senate Community Affairs Legislation
Committee, Inquiry into the Private Health Insurance (National
Joint Replacement Register Levy) Bill 2009, 9 June 2009, viewed 12
June 2009,
http://www.aph.gov.au/Senate/committee/clac_ctte/private_hth_nat_joint_replace_reg_09/submissions/sub18.pdf
[6].
Australian Orthopaedic Association
(AOA), Submission to the Senate Community Affairs Legislation
Committee, Inquiry into the Private Health Insurance (National
Joint Replacement Register Levy) Bill 2009, 3 June 2009, viewed 12
June 2009,
http://www.aph.gov.au/Senate/committee/clac_ctte/private_hth_nat_joint_replace_reg_09/submissions/sub01.pdf
[7].
This was a dominant theme of the
submissions. See, for example,
submissions from Smith & Nephew, Medical Technology
Australia Association (MTAA), Advanced Surgical Therapies,
Austofix, Global Orthopaedic Technology and Medtronics.
[8].
See, for example,
submissions from St Jude Healthcare, Smith & Nephew,
Stryker, MTAA, Advanced Surgical Therapies and Zimmer.
[9].
See, for example, submissions from
Boston-Scientific, Medtronics, Global Orthopaedic Technology,
LifeHealthCare and Advanced Surgical Therapies.
[10].
See, for example,
submissions from Johnson & Johnson, Boston Scientific,
Medtronics, MTAA.
[11].
See, for examples,
submissions from LifeHealthCare, St Jude Healthcare, Zimmer and
Catholic Healthcare Australia.
[12].
Medtronic, Submission to the Private Health
Insurance (National Joint Replacement Register Levy) Bill
2009, submitted 5 June 2009, viewed 12 June 2009,
http://www.aph.gov.au/Senate/committee/clac_ctte/private_hth_nat_joint_replace_reg_09/submissions/sub13.pdf
[13].
See, for example, Global Orthopaedic Technology,
Submission to the Senate Community Affairs Legislation Committee,
Inquiry into the Private Health Insurance (National Joint
Replacement Register Levy) Bill 2009, 5 June 2009, viewed 12 June
2009,
http://www.aph.gov.au/Senate/committee/clac_ctte/private_hth_nat_joint_replace_reg_09/submissions/sub12.pdf
[14].
Explanatory Memorandum, p. 2.
[15].
Therefore, it is subject to parliamentary
scrutiny: see Legislative Instruments Act
2003
Part 5.
[16].
See
Private Health Insurance Legislation Amendment Bill 2009
items 4-10 and 14.
[17].
Explanatory Memorandum, Private Health Insurance Legislation
Amendment
Bill 2009, p. 2.
Sharon Scully and Rebecca de Boer
16 June 2009
Bills Digest Service
Parliamentary Library
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