Bills Digest No.
19, 2021–22
PDF version [367 KB]
Melanie Conn
Social Policy Section
30
September 2021
Contents
Summary of key terms
Purpose of the Bill
Background
Committee consideration
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on Human
Rights
Key issues and provisions
Date introduced: 26
August 2021
House: House of
Representatives
Portfolio: Health
Commencement: Sections 1 to 3 commence on Royal Assent.
Schedule 1 commences on the earlier of Proclamation or six months after
Royal Assent. Schedule 2 commences the day after Royal Assent.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at September 2021.
Summary of key terms
Bonded Medical Program – a statutory scheme established under Part VD of the Health Insurance Act 1973 that requires bonded participants to complete a return of service obligation (three years within an 18 year period) in a prescribed location in return for a Commonwealth Supported Place in a medical course at an Australian university. The program commenced on 1 January 2020 and is only open to Australian citizens and permanent residents.
Bonded Medical Places (BMP) Scheme – now closed to new entrants, the BMP Scheme provided students with a Commonwealth Supported Place in a medical course at an Australian university in return for a commitment to work in an area of workforce shortage for one to six years (depending on when the person joined the scheme).
Medical Rural Bonded Scholarship (MRBS) Scheme – closed to new entrants after the 2015 academic year, the MRBS Scheme provided up to 100 Commonwealth-supported places with an attached scholarship each year to commencing Australian medical students. Recipients signed a contract requiring them to work as a doctor in a rural or remote area for six years once they attained fellowship.
Bonded participant – refers to a person participating in the Bonded Medical Program, including those who have voluntarily opted into the Program after previously participating in one of the legacy schemes.
Legacy scheme participant – refers to a person who is a participant in either the BMP Scheme or the MRBS Scheme.
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Purpose
of the Bill
The purpose of the Health Insurance Amendment (Enhancing
the Bonded Medical Program and Other Measures) Bill 2021 (the Bill) is to amend
the Health
Insurance Act 1973 (the Act) to enhance administration of the Bonded
Medical Program established under Part VD of the Act (Schedule 1 of the Bill)
and of Medical Rural Bonded Scholarship (MRBS) contracts under section 19ABA
of the Act (Schedule 2 of the Bill).
In particular, the amendments:
- clarify the circumstances under which a person ceases to be a
bonded participant under the Bonded Medical Program, including rectifying the
unintended consequence where a deceased person could breach the Program’s
conditions and incur a debt to the Commonwealth
-
create a mechanism for a person to apply to the Secretary of the
Department of Health for an exceptional circumstances determination, under
which consequences from breaching the Program’s conditions may be waived
-
allow participants in legacy schemes to apply for an extended
compliance determination that would provide additional time to complete their
return of service obligation if opting into the Bonded Medical Program
-
reduce the administrative penalty that applies if a person does
not provide requested documentation from $10,000 to $1,000
-
introduce additional flexibility for handling breaches of MRBS
contracts that can involve Medicare benefits not being payable as a
consequence.
The amendments provide greater capacity for case-by-case
consideration of circumstances and appropriate consequences than the current
provisions allow.
As the Explanatory Memorandum states:
Since the [Bonded Medical] Program commenced on 1 January
2020, it has become evident that some of its elements have not achieved the
intended aims, particularly in relation to the flexibility needed to administer
the Program and to meet the needs of a modern rural workforce.[1]
The changes are broadly favourable to participants in the
Bonded Medical Program and related legacy schemes.
Background
Bonded Medical Program
The Bonded Medical Program commenced on 1 January 2020
following the passage of the Health Insurance Amendment
(Bonded Medical Programs Reform) Act 2019. The Program provides
students with a Commonwealth
Supported Place in a medical course at an Australian university in return
for a commitment to work in eligible regional, rural and remote areas for three
years within an 18 year period after completing their course. This commitment
is referred to as a Return of Service Obligation (RoSO). It appears that
universities are required to allocate 28.5 per cent of all commencing
Commonwealth places for higher education courses in medicine to Bonded Medical
Program students.[2]
Prior to the commencement of the Bonded Medical Program
there were two legacy contract‑based schemes – the Medical Rural Bonded
Scholarship (MRBS) Scheme and the Bonded Medical Places (BMP) Scheme. Both
schemes are now closed to new entrants. Legacy scheme participants can choose
to opt-in to the Bonded Medical Program. The Department of Health has published
fact sheets outlining the different RoSO, reporting requirements and withdrawal
arrangements under the new Program for existing participants in the legacy BMP
Scheme and MRBS
Scheme.[3]
The decision to reform bonded medical programs was part of
the Government’s Stronger
Rural Health Strategy, announced in the 2018–19 Budget.[4]
There does not appear to be any recent data available
identifying the number of people participating in the Bonded Medical Program.
Potentially complicating the availability of current data,
errors by the Department of Health in 2020 resulted in most participants of the
MRBS and BMP Schemes that sought to opt-in being incorrectly bonded under the
new Program. In March 2021, the Department emailed more than 2,000 affected
individuals advising them of the issues and offering them a choice to opt-in to
the new Program or to remain in their legacy scheme. The Department has since
been working with affected individuals to understand and manage their personal
circumstances, on a no‑disadvantage basis.[5]
Committee consideration
At the time of writing, the Bill had not been referred to
any committees.
Senate Standing Committee for
the Selection of Bills
On 2 September 2021, the Senate Selection of Bills
Committee deferred consideration of the Bill to its next meeting.[6]
Senate Standing Committee for
the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills
had no comment on the Bill.[7]
Policy position of
non-government parties/independents
At the time of writing, non-government parties and independents
have not commented on the Bill.
Position of major interest
groups
The Australian Medical Students’ Association welcomed the
Bill’s increased flexibility for Bonded Medical Program participants, but
described it as ‘a bandaid on a broken program’.[8]
The Association is calling for broader reform, arguing:
Over the past 20 years the Bonded Medical Program (BMP) has
failed to address workforce maldistribution. There is no evidence that doctors
stay rural after their Return of Services Obligation (RoSO), or even complete
their RoSO. We’re calling on doctors and medical students to call their MPs and
Senators requesting an urgent review of the BMP. A senate inquiry should be a
powerful avenue for this review, so that we can start building a more effective
rural training pathway that services Australia’s rural communities.[9]
At the time of writing, no further commentary on the Bill
from relevant stakeholders was identified.
Financial implications
The Explanatory Memorandum states there are no financial
implications arising from the Bill.[10]
By creating greater flexibility with regard to
administration of breaches, the Bill may reduce the extent to which bonded
participants may be liable for a debt to the Commonwealth.
Statement of Compatibility with
Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act.
The Government considers that the Bill is compatible
noting that the limitations placed on voluntary participants of the Bonded
Medical Program are considered reasonable, necessary and proportionate to the
objectives of the Program and benefits to the participant and the Australian
public.[11]
Parliamentary Joint Committee on
Human Rights
The Parliamentary Joint Committee on Human Rights had no
comment on the Bill.[12]
Key issues and provisions
Exceptional circumstances
determination
The Act imposes consequences if a participant breaches
certain conditions of the Bonded Medical Program as set out in subsection
124ZG(1). Section 124ZH requires the repayment of education costs (plus
interest) and section 124ZJ provides that Medicare benefits are not payable for
services rendered by, or on behalf of, the medical practitioner for six years
from the day of the breach (the Medicare benefits ban). While this does not
prevent a medical practitioner from treating patients, it effectively means
that any patient the practitioner treats will not receive a rebate from the government
for the service which is a strong discouragement to use the practitioner’s
services.
Section 124ZQ of the Act similarly imposes consequences
for a bonded participant who withdraws from the Bonded Medical Program after
the census date of their second year of studying medicine at an Australian
university. Requirements to repay education expenses apply to all participants,
while former MRBS participants who have opted-in to the Bonded Medical Program
are also subject to a six-year Medicare benefits ban.
Sections 124ZH, 124ZJ and 124ZQ do not include any
discretion for the penalties not to apply.
Item 3 inserts proposed section 124ZEA which
provides that exceptional circumstances may apply with respect to the
requirements for a participant in the program to complete their medical course
or complete their RoSO within the eighteen-year period, or that lead to their
withdrawal from the program.
It allows a current or former bonded participant (or their
legal representative if the person is deceased or lacks capacity to make an
application) to apply to the Secretary of the Department of Health (the
Secretary) for a determination that exceptional circumstances apply.[13] There is
provision for the Bonded
Medical Program rules to specify what information and accompanying
documents are required for written applications seeking an exceptional
circumstances determination.[14]
The Secretary has the ability to determine that
exceptional circumstances apply in relation to an applicant, having regard to
any matters specified in the Bonded Medical Program rules.[15] In determining that
exceptional circumstances apply, the Secretary must provide a written notice to
the applicant that links the exceptional circumstances to the relevant
provision of the Act. Specifically, the notice must indicate the Secretary’s
satisfaction that:
- the
exceptional circumstances will prevent the affected person from complying with
the condition mentioned in paragraph 124ZG(1)(a) or (c)[16]
or
- the
affected person breached a condition mentioned in paragraph 124ZG(1)(a) or (c)
as a result of the exceptional circumstances or
- the
affected person withdrew from the Bonded Medical Program under section 124ZP as
a result of the exceptional circumstances.[17]
Items 4, 5, 6, 9, 13, 14 and 15 of the Bill amend
sections 124ZH (Breach of condition of Bonded Medical Program–repayment of
education costs), 124ZJ (Breach of condition of Bonded Medical Program–Medicare
benefits not payable) and 124ZQ (Consequences of withdrawal) to provide that,
if an exceptional circumstances determination is made under subsection
124ZEA(3) and the written notice of the determination states that the Secretary
is satisfied that the breach of specified conditions or the withdrawal was as a
result of the exceptional circumstances, then the section (including its
penalties) does not apply. Item 2 amends section 124ZE to allow a person
to cease to be a Bonded participant following the making of an exceptional
circumstances determination. Together, these items provide a mechanism to allow
a person to exit the Program without being penalised.
Extended compliance
determination for legacy scheme participants
Item 17 of the Bill inserts proposed section
124ZUA (Extended compliance determination for certain BMP and MRBS
participants). This provides a mechanism for participants in the legacy
schemes, who wish to opt-in to the Bonded Medical Program, to seek a
determination from the Secretary that their return of service obligation be
extended by up to six years, if they do become a bonded participant under the
Program.
The rationale for this is outlined in the Explanatory
Memorandum:
Section 124ZUA recognises that, if some legacy scheme
participants were to become bonded participants, they may not have sufficient
time to complete the RoSO within the timeframe allowed under paragraph
124ZF(2)(a) of the HI Act, that is ‘within 18 years of the day on which a
bonded participant completes their course of study in medicine at an Australian
university’.[18]
In the absence of such a mechanism, some legacy scheme
participants may be unable to opt-in to the Bonded Medical Program even if they
wished to.
Proposed section 124ZUA provides for:
- the
requirements for those wishing to apply for a determination to be set out in
the Bonded Medical Program rules[19]
- application
requirements[20]
- Of
note, proposed paragraph 124ZUA(2)(b) requires the application to be
made before the person advises the Department that they voluntarily wish to opt
into the Program (per subsection 124ZU(2)). Item 16 amends section 124ZU
to insert proposed subsection 124ZU(4) requiring a person not to advise
the Department they wish to opt in until they have received a decision on their
application for an extended compliance period and exhausted any rights of
review and appeal. Together, these provisions ensure that the person is aware
of the amount of time they will have to complete the RoSO if they become a
bonded participant under the Program.
- the
matters the Secretary is required to be satisfied of in making a determination,
including requirements specified in the Bonded Medical Program rules[21]
- the
requirement to provide written notice of the determination including details of
the extended compliance period[22]
and
- the
requirement for written notice of a refusal to make the determination,
including reasons for the decision and information on how to apply for review
of the decision.[23]
Proposed section 124ZUB provides for the Secretary
to request further information needed to make a decision on the application and
for the application to be considered to have been withdrawn if the requested
information is not provided within the specified period.
Items 18 and 19 insert new paragraphs
124ZV(2)(d) and 124ZW(2)(d) relating to BMP scheme participants and MRBS
participants respectively who have opted-in to the Bonded Medical Program, to
give effect to the extended RoSO period as specified in any extended compliance
determination.
Reduced administrative penalty
Section 124ZK provides for a bonded participant to be
liable for an administrative penalty of $10,000 if they breach the requirements
in paragraphs 124ZG(1)(d) and (e) to give information or documents to the
Department in accordance with the Bonded Medical Program rules or in response
to a request from the Secretary. This administrative penalty is considered to
be a debt due to the Commonwealth and may be recovered by the Commonwealth in a
court of competent jurisdiction.[24]
Item 10 of the Bill amends subsection 124ZK(2) to
reduce this administrative penalty to $1,000.
The Explanatory Memorandum states that this amendment is
to ensure that the penalty when participants fail to give information or
documents within prescribed timeframes is ‘appropriate and proportionate in the
circumstances’.[25]
Amendments relating to MBRS
contracts
Schedule 2 of the Bill contains amendments relating to
MRBS contracts. Specifically, it introduces additional flexibility for handling
breaches of MRBS contracts that may involve Medicare benefits not being payable
as a consequence.
The Explanatory Memorandum justifies these changes on the
basis that ‘in many circumstances, the nature of the breach does not warrant
the Medicare ban’ and that ‘[c]ircumstances exist where an MRBS participant can
unknowingly breach their contract.’[26]
The Schedule provides for different arrangements depending on whether the
breach occurs before or after the commencement of the Schedule. Potentially,
the additional flexibility could be used in the case of MRBS participants who
wished to opt-in to the Bonded Medical Program but were incorrectly bonded by
the Department of Health, resulting in unintended breaches.
Section 19ABA of the Act provides that Medicare benefits
are not payable for services rendered by, or on behalf of, a medical
practitioner who has breached a contract with the Commonwealth under which they
agreed to work in a rural or remote area.
Item 1 inserts proposed subsection
19ABA(5) to restrict application of section 19ABA to MRBS contracts only
when the breach occurs before the commencement of the subsection.
Item 2 inserts proposed section 19ABB allowing
the Minister to waive any amount owing to the Commonwealth as a result of a Medicare
benefit being paid that should not have been because of subsection 19ABA(1).
Proposed section 19ABC sets out the
arrangements to apply when a person with an MRBS contract breaches a provision
requiring them to work in a rural or remote area after the commencement
of the section. It provides that the Minister may determine that a Medicare
benefit is not payable. That is, rather than the restriction on Medicare
benefits being triggered automatically, per section 19ABA, this consequence
will only occur where the Minister makes a determination.
Proposed section 19ABD provides for a person
affected by a ministerial determination under proposed subsection 19ABC(1)
to request reconsideration of the decision and subsequent to the outcome of
that reconsideration, to apply to the Administrative Appeals Tribunal for
review of the reconsidered decision.
[1]. Explanatory
Memorandum, Health Insurance Amendment (Enhancing the Bonded Medical
Program and Other Measures) Bill 2021, p. 1.
[2]. Australian
Government, Funding
Agreement between the Commonwealth of Australia as represented by the Minister
for Education and the University of Melbourne regarding funding under the
Higher Education Support Act 2003 in respect of the 2021, 2022 and 2023 grant
years, Department of Education, Skills and Training website, n.d., pp.
8–9. Note: This text is taken from the agreement with the University of
Melbourne. Similar clauses are found in funding agreements with other
universities, although some agreements for the period 2018–2020 include
provisions commencing from 1 January 2020.
[3]. Department
of Health (DoH), Bonded
Medical Program – Bonded Participant obligations, factsheet, DoH, n.d.;
DoH, Bonded
Medical Program - Bonded Participant obligations. Medical Rural Bonded
Scholarship (MRBS) Scheme participants, factsheet, DoH, n.d.
[4]. Australian
Government, Budget
measures: budget paper no. 2: 2018–19, 2018, p. 106.
[5]. DoH,
‘Bonded
Medical Program frequently asked questions – July 2021’, DoH website,
July 2021.
[6]. Senate
Standing Committee for the Selection of Bills, Report,
11, 2021, The Senate, Canberra, 2 September 2021.
[7]. Senate
Standing Committee for the Scrutiny of Bills, Scrutiny
digest, 14, 2021, 1 September 2021, p. 13.
[8]. Australian
Medical Students’ Association (AMSA), ‘The
Issue’, The BMP Project website, n.d.
[9]. Ibid.
[10]. Explanatory
Memorandum, op. cit., p. 2.
[11]. The
Statement of Compatibility with Human Rights can be found at pages 3–4 of the
Explanatory Memorandum to the Bill.
[12]. Parliamentary
Joint Committee on Human Rights, Human
rights scrutiny report, 11, 2021, 16 September 2021, p. 60.
[13]. Health Insurance
Act 1973 (Cth) (HIA), proposed subsection 124ZEA(1).
[14]. HIA,
proposed subsection 124ZEA(2). The Minister may make the Bonded Medical Program rules, by legislative
instrument, under subsection 124ZT(1) of the Act. See Health Insurance
(Bonded Medical Program) Rule 2020.
[15]. HIA,
proposed subsections 124ZEA(3) and (4).
[16]. Paragraph 124ZG(1)(a) requires the bonded participant to
complete their course of study in medicine at an Australian university, within
the period prescribed in the Bonded Medical Program rules. Paragraph
124ZG(1)(c) requires the bonded participant to complete their RoSO of three
years within 18 years of completing their course of study in medicine at an
Australian university.
[17]. HIA,
proposed paragraph 124ZEA(5)(b).
[18]. Explanatory
Memorandum, op. cit., p. 12.
[19]. HIA,
proposed subsection 124ZUA(1).
[20]. HIA,
proposed subsection 124ZUA(2).
[21]. HIA,
proposed subsection 124ZUA(3).
[22]. HIA,
proposed subsections 124ZUA(4) and (5).
[23]. HIA,
proposed subsection 124ZUA(6).
[24]. HIA,
subsection 124ZK(4).
[25]. Explanatory
Memorandum, op. cit., p. 10.
[26]. Ibid.,
p. 16.
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