Commonwealth of Australia Explanatory Memoranda

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HEALTH LEGISLATION AMENDMENT (MEDICARE) BILL 2003

2002-2003

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




HOUSE OF REPRESENTATIVES

HEALTH LEGISLATION AMENDMENT (MEDICARE) BILL 2003

EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Health and Ageing,
the Hon Tony Abbott, MP)

HEALTH LEGISLATION AMENDMENT (MEDICARE) BILL 2003

OUTLINE

The measures in the Health Legislation Amendment (Medicare) Bill 2003 make medical services more affordable. The Bill does this by introducing three new safety-nets to cover 80% of the out-of-pocket costs incurred for out-of-hospital Medicare services above a specified threshold in a calendar year:

• The concessional safety-net – for concessional persons, with a threshold of $500 per family;
• The FTB(A) safety-net – for families in receipt of Family Tax Benefit (A), with a threshold of $500; and
• The extended general safety-net – for other families and individuals, with a threshold of $1000.

FINANCIAL IMPACT STATEMENT

The measures in the Bill, as proposed by these amendments, will have a total cost over 2003-04 and the following three years of $266.4 million.

Note: This includes payments to patients and administrative costs.

NOTES ON CLAUSES

Clause 1
Clause 1 provides for the short title of the Act to be cited as the Health Legislation Amendment (Medicare) Act 2003.

Clause 2
This clause provides that the amendments commence on Royal Assent.

Clause 3
Clause 3 specifies that the Act referred to in Schedule 1 is amended by the amendments set out in the Schedule.

Schedule 1 – Extended safety-net

Schedule 1 amends the Health Insurance Act 1973 (the Act) to establish three new safety-nets for expenses incurred in a calendar year for out-of-hospital Medicare services.

The new safety-nets will apply to concessional individuals and families in receipt of Family Tax Benefit (A) when their cumulative out-of-pocket costs for out-of-hospital medical services listed on the Medicare Benefits Schedule have exceeded $500 in a calendar year. Under the safety-net arrangements, benefits covering 80% of the out-of-pocket costs for subsequent services will be paid to families and individuals who have concessional beneficiary status (the concessional safety-net) or are registered members of a family in receipt of Family Tax Benefit (A) (the FTB(A) safety-net).

Schedule 1 also introduces a new extended general safety-net for families and individuals who are not concessional beneficiaries or Family Tax Benefit (A) recipients. This safety-net applies when their cumulative out-of-pocket costs for out-of-hospital medical services listed on the Medicare Benefits Schedule have exceeded $1000 in a calendar year. Under the safety-net arrangements, benefits covering 80% of the out-of-pocket costs for subsequent services will be paid to these families (the extended general safety-net).

Items 1 to 29 make amendments to Part II of the Act, which provides for the payment of Medicare benefits.

Item 30 provides for the date of application of the extended general safety-net.

Item 1: Subsection 8(1A)
Item 1 inserts a definition for concessional person in section 8 of the Act. This definition is based on the definition for concessional beneficiary for the purposes of the Pharmaceutical Benefits Scheme, as set out in Part VII of the National Health Act 1953. This will mean that those people who are eligible for concessions under the Pharmaceutical Benefits Scheme will also be eligible for the new concessional safety-net.

A person, who, at any time in a calendar year, becomes a concessional beneficiary under the Pharmaceutical Benefits Scheme, will also become eligible for additional benefits under the Medicare concessional safety-net for that year.

Item 2: Subsection 8(1A)
Item 2 provides for the threshold amount for the concessional safety-net. The threshold amount will be set at $500 and will be indexed annually under section 10A.

Item 3: Subsection 8(1A)
Item 3 provides for the threshold amount for the extended general safety-net. The threshold amount will be set at $1000 and will be indexed annually under section 10A.

Item 4: Subsection 8(1A)
Item 4 defines a Family Tax Benefit (A) (FTB(A)) family for the purpose of the Medicare FTB(A) safety-net as a family in receipt of family tax benefit under sections 23 or 24 of the A New Tax System (Family Assistance)(Administration) Act 1999.

Item 5: Subsection 8(1A)
Item 5 provides for the threshold amount for the FTB(A) safety-net. The threshold amount will be set at $500 and will be indexed annually under section 10A.

Item 6: Subsection 8(1A)
Item 6 makes a minor amendment to the definition of patient contribution in subsection 8(1A) to exclude payments made in respect of a safety-net from the patient contribution.

Item 7: Subsection 8(1A)
Item 7 adds a note for the reader pointing out that the safety-net amount is indexed under section 10A.

Item 8: Section 9
The effect of item 8 is to recognise that the calculation of Medicare benefits for the purposes of the new safety-nets will be in accordance with the relevant safety-net provisions.

Items 9, 10, 11, 12, 13 and 14: Section 10AB
Items 9 to 14 make minor consequential amendments to include references in section 10AB to the safety-nets established in new sections 10ACA and 10ADA (being introduced by items 17 and 20 respectively).

Item 15: After subsection 10AC(2)
It will be possible for a family to qualify for the existing safety-net in section 10AC and/or the new safety-nets to be established under new section 10ACA. There is no requirement to qualify for one safety-net before the other. Item 15 amends the existing safety-net for families in section 10AC to deal with the scenario where a family qualifies for any of the new safety-nets before the existing safety-net.

Item 15 inserts new subsection 10AC(2A) to provide for the calculation of the patient contribution for the existing safety-net to include the relevant gap after a payment is made under one of the new extended safety-nets. This amount is the amount that the patient is actually out-of-pocket after receipt of a benefit paid in accordance with one of the new safety-nets, up to the amount of the gap between the rebate and the schedule fee.

Item 16: Paragraph 10AC(6)(a)
Item 16 amends paragraph 10AC(6)(a) to include a reference to take account of the new subsection 20(2A) proposed by item 26.

Item 17: After subsection 10AC

10ACA Extended safety-net – families
Item 17 inserts new section 10ACA to establish the new safety-nets for families, collectively referred to as the extended safety-net. New subsection 10ACA(1) establishes some new definitions for the purposes of the extended safety-net for families, including relevant services, being out-of-hospital medical services attracting a Medicare benefit. In-hospital services are not covered.

New subsection 10ACA(2) provides that where a family qualifies for a new safety-net, Medicare benefits will be increased by 80% of the out-of-pocket expense for the claim.

New subsection 10ACA(3) defines an out-of-pocket expense for the purposes of the extended safety-net.

New subsection 10ACA(4) sets out the circumstances which must apply for the extended safety-net to be accessed. These include that the:
• service was rendered to the claimant or a member of a registered family unit;
• expense was incurred in the calendar year;
• claimant has paid at least 20% of the out-of-pocket cost;
• Health Insurance Commission has accepted the claim; and
• concessional safety-net, the FTB(A) safety-net or the extended general safety-net applies to the claim.

New subsection 10ACA(5) provides that a safety-net will apply to a claim when that claim and all relevant prior claims exceed the applicable safety-net amount.

New subsection 10ACA(6) defines a relevant prior claim.

New subsection 10ACA(7) deals with how a benefit under a safety-net will be calculated when a portion of a claim enables a person to be eligible for a safety-net. Benefits under a safety-net will only be payable on the portion of the claim by which the patient’s out-of-pocket expenses exceed the applicable safety-net threshold.

New subsection 10ACA(8) provides that a safety-net benefit becomes payable only after a family becomes registered. However, expenses incurred by the family before registration will be taken into account in calculating whether the family is eligible for safety-net benefits in that calendar year.

New subsection 10ACA(9) provides that a person who is paid a Medicare benefit by means of a pay doctor via claimant cheque is deemed to have paid that portion of the medical expense as represented by the amount of the pay doctor via claimant cheque.

New subsection 10ACA(10) provides that the question of when the medical expenses are incurred is determined under the regulations.

Item 18: After subsection 10AD(3)
This item adds an identical provision to the existing safety-net for individuals in section 10AD to the provision added to 10AC by item 15.

Item 19: Paragraph 10AD(4)(a)
Item 19 amends paragraph 10AD(4)(a) to include a reference to take account of the new subsection 20(2A) proposed by item 26.

Item 20: After section 10AD

10ADA Extended safety-net - individuals
This item inserts a new section 10ADA into the Act. New section 10ADA is the equivalent of the new section 10ACA introduced by item 17, except that it applies to individuals.

Items 21 and 22: Section 10AE
Items 21 and 22 make minor consequential amendments to include references in section 10AE to the extended safety-net established in new section 10ACA (being introduced by item 17).

Item 23: Subsection 10A(1)
Item 23 inserts a new paragraph 10A(1)(d). This amendment provides for the indexation of the concessional safety-net amount, the FTB(A) safety-net amount and the extended general safety-net amount to be indexed on a calender year basis in the same way as the existing safety-net. The first indexation for these safety-net amounts is set to occur in January 2005.

Item 24: Subsection 10A(2)
Item 24 provides for the indexation day and the reference quarter for the concessional safety-net amount, the FTB(A) safety-net amount and the extended general safety-net amount by their inclusion in the CPI Indexation table in subsection 10A(2).

Item 25: Subsection 20(1A)
Item 25 amends subsection 20(1A) by including a reference to new subsection 20(2A) being introduced by Item 26.

Item 26: After subsection 20(2)
Item 26 inserts new subsection 20(2A). New subsection 20(2A) will provide that where a claim for a safety-net benefit is only partly paid, the benefit for the unpaid part of the account can only be paid by means of a cheque drawn in favour of the doctor, and that the claimant may also be paid part of the benefit if the full benefit is not paid to the doctor.

Items 27, 28 and 29
Items 27, 28 and 29 amend paragraphs 20(3)(a), 20(4)(a) and 20(4)(b) respectively, to include references to new subsection 20(2A), inserted by Item 26.

Item 30: Application
Subitem 30(1) provides that the Minister must, within six months of Royal Assent publish a notice specifying the date of commencement of the new extended safety-net, which must itself be within six months of Royal Assent. This will enable the Minister to set the commencement date for an earlier time if the systems required to administer the extended safety-net are in place earlier than expected.

Subitem 30(2) specifies that if the Minister does not publish a notice, the new extended safety-net commencement day is taken to commence on the day after the end of the six months of the date of Royal Assent.

Subitem 30(3) specifies these amendments apply to expenses incurred after the commencement date for the extended safety-net. Expenses incurred before the commencement date may be taken into account in determining whether a safety-net applies, ie in calculating whether the applicable safety-net out-of-pocket amount ($500 or $1000) has been reached.

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