All private health insurers were required to be compliant with the Private Health Insurance Act 2007 (the Act) by 1 July 2008. The Department reviewed all 38 health insurers fund rules to ensure they were compliant with the Act. This was a collaborative effort between the Department, insurers and the Private Health Insurance Administration Council; as a result all private health insurers were re-registered in time. The new legislation required assessment of insurers and their products and allows the private health sector to evolve in line with contemporary clinical practice and consumer expectations.
The Department also worked closely with State and Territory Governments and private hospitals to ensure that consumers had continued access through private health insurance to the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme, by declaring a total of 1,308 facilities (768 public hospitals and 540 private hospitals) under the Private Health Insurance (Transitional Provisions and Consequential Amendments) Act 2007.
The Department worked throughout the year with the private health insurance industry, health care providers, public sector service providers and consumer groups to encourage private health insurers to expand their products to cover a broader range of health services provided outside the hospital setting. The aim is to prevent illness and hospitalisation, where possible, and reduce private health insurance costs, while also providing consumers with greater choice in clinically appropriate treatment settings.Examples are programs that prevent and manage chronic disease and treatments that can be safely provided in patients’ homes, which could include chemotherapy and dialysis.
The majority of health insurers have been responsive in expanding their products to cover preventative programs. Expansion of products to cover other broader health cover services has occurred more slowly, due in part to the need for insurers and service providers to form new commercial arrangements. In order to monitor the uptake of broader health cover products into the future, the Department commenced the development of data collection arrangements with health insurers and health care providers.
A major achievement for the Department was the finalisation of the Private Health Insurance (Accreditation) Rules 2008, through extensive consultation with private health insurers and health care providers. The rules set requirements for treatment covered by private health insurance, to ensure that consumers receive safe, high quality treatment.
The rules reflect existing standards for providers in the public health sector. Other providers, such as complementary therapists, for whom standards are not currently set by Medicare or regulated by a centralised body are required, under the rules, to be a member of a national, professional association that: assesses a provider’s qualifications; administers a continuing professional development scheme; and enforces a code of conduct and disciplinary procedure for members. These requirements are consistent with the ongoing work of the Australian Commission on Safety and Quality in Health Care.
During 2007–08, the Department continued the private health insurance communication campaign that began in 2006–07, to increase consumer awareness about the introduction of private health insurance reforms. The campaign included television, radio and internet advertising. Post-campaign evaluation indicated that community awareness of private health insurance reforms was significantly enhanced as a result of the campaign (14 per cent awareness prior to the campaign, 53 per cent following). The Department also provided funding to the Consumers’ Health Forum to facilitate consumer consultation on private health insurance reforms.
Other activities included informing 107,317 new migrants and 181,899 uninsured people approaching 31 years of age about private health insurance Lifetime Health Cover, via a direct mail-out conducted by Medicare Australia from 2 June 2008; and arranging for the accompanying Lifetime Health Cover brochure to be translated into 19 community languages. This was subsequently distributed to Migrant Resource Centres around Australia; and made available online at <www.health.gov.au>, <www.medicareaustralia.gov.au> and at <www.privatehealth.gov.au>.
The Department provided ongoing support to the Private Health Insurance Ombudsman for the maintenance of the abovementioned <www.privatehealth.gov.au> website, which provides standard information to allow consumers to compare private health insurance policies. The Private Patients’ Hospital Charter was also translated into 19 community languages to help consumers understand their rights and responsibilities as a private patient and what they can expect from their doctor(s), hospital and health insurer. The charter is available on the Department’s website at <www.health.gov.au>.
Informed financial consent encourages openness between doctors and their patients about fees for medical care and procedures, so the patient is aware ahead of time of the medical fee they have to pay, as well as what they can expect to recoup from any private health insurance.
During 2007–08, the Department worked with a range of stakeholders to promote informed financial consent in advance of treatment for private patients. For example, the Department worked with the Consumers’ Health Forum which facilitated a National Consumer and Stakeholder Forum on 22-23 May 2008 on this issue amonst others. A consumer survey commissioned by the Department, conducted from July to August 2007 to measure the rate of informed financial consent, found that the proportion of consumers facing a surprise ‘gap’ (out-of-pocket expense) as part of an episode of hospital treatment has not changed significantly since 2006. The Department will explore a range of options in 2008–09 to achieve a sustained improvement in the rate of informed financial consent for privately insured medical and hospital services.
The Department also continued to work closely with the Australian Medical Association to increase the incidence of informed financial consent obtained by medical specialists with limited patient contact. The outcomes of this work included an online informed financial consent training package for anaesthetists, workshops for practice managers around Australia, and the establishment of an Australian Diagnostic Imaging Association informed financial consent website (accessible at <www.adiaifc.com.au>).
The Department undertook an independent review of prostheses arrangements in accordance with the National Health Amendment (Prostheses) Act 2005 during the year. Tabled in Parliament on 15 October 2007, the review found that while the overarching prostheses arrangements that were introduced in 2005 worked well, there were a number of ways in which the arrangements might be further improved.
The Department has continued with work to refine clinical groups of prostheses to ensure that similar benefits are payable for like products with similar clinical outcomes. This included developing clinical groups for over 5,000 products that did not previously fit into established groups. The Department will continue this work until all prostheses listed are appropriately grouped.
The Department worked with industry to develop two Prostheses Lists which took effect in December 2007 and July 2008, and were cost recovered under arrangements introduced on 1 April 2007. Prostheses lists are legislative lists of more than 9,000 prosthetic devices for which private health insurers are required to pay minimum benefits. The July 2008 Prostheses List contains 9,571 prostheses, an increase from 9,436 for the December 2007 Prostheses List.
In addition, the Department managed a funding agreement with the Australian Orthopaedic Association for the National Joint Replacement Registry, which collects data on hip and knee replacements, and provides the best available evidence about the effectiveness of prostheses in the Australian clinical setting. This year saw the expansion of the registry to include data for joint replacement prostheses such as ankle, shoulder, wrist and spinal disc replacement.
During 2007–08, the Department worked closely with the Private Health Insurance Administration Council to monitor the implementation and impact of the new risk equalisation arrangements introduced on 1 April 2007.
The new risk equalisation arrangements are designed to provide greater support for community rating. The arrangements will do this by allowing insurers to better spread their risk by widening the ages for which contributions to the age based pool are made (down from 65 years to 55 years with different percentages allocated to each age grouping); and through the introduction of a High Cost Claims Pool with funds pooling benefits for members greater than $50,000 in a year.
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