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Annual Report - Outcome Summary
Outcome Performance ReportMajor AchievementsOutcome SummaryPerformance IndicatorsFinancial Resources Summary


Long Term Financial Stability in Health Programs

In 2004-05, the Department implemented the Government election commitment to reduce the costs of the PBS. Under this decision, the price for new generic brand medicines already listed on the PBS will be reduced by 12.5 per cent. This price reduction will also flow to other medicines under reference pricing. The first price reductions from this decision came into effect on 1 August 2005.

Also assisting the future sustainability of the PBS, legislation passed by the Parliament to increase the PBS patient co-payments was implemented on 1 January 2005. Apart from indexation, patient contributions have not increased since 1996-97 and have not kept pace with the rising costs of the PBS. The increase in co-payments restored the balance between Government and patient payments.

Figure 2.1: Outcome 2 expressed as a percentage of total Health and Ageing Portfolio expenses ($36,681m) 2004-05

Figure 2.1: Outcome 2 expressed as a percentage of total Health and Ageing Portfolio expenses ($36,681m) 2004-05
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NOTES: Departmental expenses includes revenue from other sources. ‘Access to Medicare Other’ includes Outcome 2 departmental expenses. ‘Other Outcomes’ includes capital ($5.7m). Source: The Department of Health and Ageing.

Improved Access to Services

On 1 July 2004, the Department introduced 11 allied health items and three dental care items onto the MBS, to provide rebates for access to private care. The rebates are payable for people with chronic conditions and complex care needs being managed as part of an Enhanced Primary Care multi-disciplinary care plan. These new allied health items include services such as physiotherapy and podiatry, when identified on an individual patient care plan.

In January 2005, the Department introduced additional items to improve access to general practitioner (GP) services. These items include a rebate equivalent to 100 per cent of the Medicare Schedule fee for GP services, higher rebates for after hours GP services, a new item for pap smears provided by practice nurses on behalf of doctors in rural and remote areas and inclusion of after hours services in the bulk billing incentives for rural and remote areas.

The Department introduced new, and amended existing items on 1 November 2004 and on 1 May 2005 in several specialties to better reflect clinical practice needs. These changes include:
  • the referred patient assessment and management plan item which allows referral of patients by consultant psychiatrists for management in a general practice setting. This enables psychiatrists to see patients with complex needs quicker. Uptake of telepsychiatry items in rural areas, though not as high as initially expected, is gradually improving;
  • a new item to cover the testing of low vision patients by optometrists which has improved access to primary care, particularly for elderly patients in rural areas who cannot visit urban low vision clinics; and
  • a new item for the planning and management of the antenatal stage of a pregnancy which assists women using private obstetric services. 76,825 women benefited from this item during 2004-05.
In 2004-05, the Department approved the consumables necessary for new generation insulin pumps. These pumps were subsidised through the National Diabetes Services Scheme from 1 September 2004. This initiative will benefit 4,000 Australians with diabetes, including children and pregnant women. The new consumables are superior to earlier versions, with a lower incidence of blockage, kinkage and the resultant risk of diabetic ketoacidosis.

During 2004-05, the Department introduced 23 new medicines onto the PBS, to treat diseases such as high cholesterol, rheumatoid arthritis, parkinsons disease and lung cancer.

The Pharmaceutical Benefits Advisory Committee (PBAC) completed its review of the use and cost-effectiveness of PBS subsidised lipid lowering therapy in July 2004. Lipid lowering drugs are prescribed for patients with, or at risk of developing, coronary heart disease. The PBAC recommendations and the implications for qualifying criteria for PBS subsidised therapy are yet to be considered in a whole-of-government context.

2004-05 was the final year of the Third Community Pharmacy Agreement. The Agreement provided funding for the Enhanced Rural and Remote Pharmacy Package to improve access to quality pharmacy services for people in rural and remote areas. The package provided financial incentives for existing rural and remote pharmacies to remain open, and to encourage new pharmacies to establish in rural and remote areas.

In 2004-05, over 700 rural communities, including more than 70 remote communities serviced by Aboriginal Health Services (AHS), have benefited from these measures. During 2004-05, 34 rural pharmacies commenced or continued operation through attracting new pharmacists, and 78 AHSs received professional pharmacy support for their medication management, storage and supply activities. Also in 2004-05 the Department commenced negotiations for the Fourth Community Pharmacy Agreement. Through this Agreement the Department is aiming to ensure on-going, timely and affordable access to medicines for all Australians.

Integrated Health Care Programs

Increasing attention is being given to multidisciplinary care in managing health problems. The Department’s effort in supporting this multi-disciplinary approach to health care has already resulted in improved integration of health services and health outcomes for patients. Uptake of better clinical practice items such as MBS case conferencing, though not as high as initially expected is also improving. Case conferences for consultant physicians make it easier for professional groups to work together to improve health outcomes for patients.

Effective management of medications is essential to obtain the health benefits and to avoid adverse effects from medication misuse. This is particularly important for elderly people and those who take multiple medications. The Third Community Pharmacy Agreement funded the pharmacy component of two separate medication management initiatives over five years. A sister program for GPs encourages referral of high need patients for Medication Management Reviews.

During 2004-05, the Department continued to support the Home Medication Management Review program. This program provides funding for accredited pharmacists to visit patients in their homes in order to review their medications and assess how they are being used. The program aims to reduce the risk of medication misadventure and optimise the benefits from proper use of medicines. Unwanted or out of date medicines are disposed of responsibly as part of these reviews by pharmacists. From program implementation until June 2005, doctors and accredited pharmacists have completed 75,855 medication reviews, of these 28,312 were completed in 2004-05.

The Residential Medication Management Review program provides funding for accredited pharmacists to conduct medication management reviews in nursing homes. Nearly 90 per cent of residents in Australian Government funded nursing homes are receiving this pharmacy service. During 2004-05, the Department initiated a project to revise these arrangements and promote greater collaboration between doctors and pharmacists. A new Medicare item was introduced in November 2004 to encourage doctors to visit nursing home residents and to work closely with the pharmacists conducting these reviews.

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Implementation of New Medical Indemnity Arrangements

The Department consulted widely with medical indemnity insurers and the Australian Medical Association, to develop legislation for two new medical indemnity schemes, the Premium Support Scheme (PSS) and the Run-off Cover Scheme (ROCS). These commenced on 1 July 2004.

The PSS replaced the Medical Indemnity Subsidy Scheme and provides benefits to a significantly wider group of doctors. Under the PSS, with effect from 1 January 2004, the Government contributes 80 per cent of the amount by which eligible doctors’ gross medical indemnity costs exceed 7.5 per cent of their gross private medical income. ROCS covers the cost of medical indemnity claims notified from 1 July 2004 against eligible doctors who have left the private medical workforce or have retired from all medical practice.

The Department has continued to work with medical indemnity insurers, the Australian Medical Association and the Health Insurance Commission on the operational and administrative aspects of the new arrangements. This culminated in the passing of the Medical Indemnity Legislation Amendment Act 2005 on 21 March 2005, which refined and improved the operational and administrative aspects of some medical indemnity schemes.

During 2004-05 the Department provided assistance to the independent review of competitive neutrality in the medical indemnity insurance market. The Government responded to this review by introducing the Medical Indemnity Legislation Amendment (Competitive Neutrality) Bill 2005 and the Medical Indemnity (Competitive Advantage Payment) Bill 2005 on 16 June 2005. Under this legislation, medical indemnity insurance groups that benefited from the Incurred But Not Reported (IBNR) indemnity scheme will make a series of payments to the Government to address the competitive advantage arising from that support. In addition, doctors who had a liability under the United Medical Protection Support Payment arrangements will now pay less.

Improved Transparency of the Pharmaceutical Benefits Scheme Listing Process

In implementing the review of the post- Pharmaceutical Benefits Advisory Committee (PBAC) processes and the pharmaceutical provisions of the Australia-United States Free Trade Agreement (AUSFTA), the Department is delivering substantial improvements in the process and transparency of the PBS. This will benefit patients, clinicians and the pharmaceutical industry by improving their understanding of decisions about the listing of new medicines on the PBS.

The Minister for Health and Ageing appointed a joint PBAC-Medicines Australia working group to advise him on the implementation of the pharmaceutical provisions of the AUSFTA. Following a period of public consultation and consideration of the advice provided, the Minister released a statement in February 2005, setting out how Australia will implement its pharmaceutical commitments under the AUSFTA. In March 2005, an independent review process was established for applicants where the PBAC has declined to recommend the listing of a drug on the PBS. No requests for review were received during 2004-05.

The statement also detailed an approach which will now apply to the transparency of information. From July 2005, information about recommendations made by the PBAC will be available in the form of a public summary document. This information will include clinical, economic and utilisation data and will enable stakeholders to understand both the submission put to the PBAC and the PBAC’s recommendation in relation to that submission. Public Summary Documents are available on the Department’s website.

To strengthen relations between the Department and the pharmaceutical industry and provide a greater level of interaction and understanding, an Industry Liaison Officer pilot program has been initiated by the Department. Under this trial initiative, 18 pharmaceutical manufacturers have been assigned a designated liaison officer within the Department to assist in managing the PBS relations with that company. In addition, implementation of the recommendation from the post-PBAC review to no longer require Therapeutic Goods Administration laboratory testing as a requirement for PBS listing, will ensure a more efficient listing process.

Improved Access and Affordability of Medical Services for Patients through the Medicare System

In 2004-05, the Department implemented several initiatives to improve the way in which chronic and complex care needs are managed through the Medicare Benefits Schedule. These developments include:
  • a new initiative extending Medicare rebates to certain allied health and dental care services for patients with chronic conditions and complex care needs was introduced on 1 July 2004. For the first time, the services of Aboriginal health workers, audiologists, chiropractors, chiropodists, diabetes educators, dieticians, mental health workers, occupational therapists, osteopaths, physiotherapists, podiatrists, psychologists and speech pathologists are eligible for a rebate under Medicare. Patients whose care is being managed under a multidisciplinary care plan are eligible for a rebate for up to five allied health, and three dental care services, where their dental condition is worsening their chronic condition; and
  • new items that extend health assessments and medication reviews to aged care residents were also introduced on 1 July 2004 and 1 November 2004 respectively. They enable GPs to undertake Comprehensive Medical Assessments and Residential Medication Management Reviews for residents of aged care homes. Together with funding for Aged Care GP Panels, these new items have improved access to primary medical care for residents of aged care homes.
In response to the Red Tape Taskforce Review, the Department worked with the medical profession during 2004-05 to design ways to reduce the red tape burden on general practice. One of the key outcomes of this joint partnership was the introduction of new EPC Chronic Disease Management Medicare items. These new items commenced on 1 July 2005 and aim to increase access to health care planning for those with chronic conditions while retaining a focus on patients with multidisciplinary care needs.

The new items are easier for GPs to use, provide greater flexibility, include more scope for practice nurses to assist in care planning and retain access to Medicare Allied Health and Dental Services for those with chronic and complex care needs. During 2004-05, the Department implemented measures designed to improve the access and affordability of general practice services through Medicare, for example:
  • from 1 September 2004, the Government extended eligibility for the higher bulk billing incentive payment to areas of low doctor to population ratio and with lower than average bulk billing rates. This complemented existing bulk billing incentives which have played a significant part in increasing bulk billing rates for children under 16 years and Commonwealth concession card holders; and
  • from 1 January 2005, the Government increased the Medicare rebate for GP outof- hospital consultations from 85 per cent to 100 per cent of the Medicare schedule fee, providing an increased payment to doctors who bulk bill and an increased rebate to patients not bulk billed. As part of the Round the Clock Medicare initiative, the Government increased Medicare rebates by $10 for GP consultations provided during after-hours periods. The Government also introduced measures to provide access to higher Medicare rebates and the higher bulk billing incentive payment for doctors providing afterhours services in certain circumstances.
During 2004-05, the Home Medicine Review program that is administered by the Department was reviewed. The evaluation found that the program continues to address important community needs, and is widely regarded as an effective way of promoting better use of medicines.

A new MBS item was introduced on 1 January 2005 for pap smears taken by a practice nurse on behalf of a GP. The Medicare rebate is available to women in rural and remote areas. This rebate adds to the MBS items for practice nurse immunisation and wound management services introduced in February 2004. Practice nurses improve access to medical services by freeing up GPs to concentrate on other, more complex clinical matters.

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Provision of Free Public Hospital Services through the Australian Health Care Agreements

During 2004-05, the Department continued to administer the 2003-08 Australian Health Care Agreements (AHCAs). In signing the agreements, State and Territory governments committed to providing equitable access to free public hospital services on the basis of clinical need for all eligible patients, as well as matching the Australian Government’s annual cumulative rates of growth in hospital funding. All States and Territories qualified for the full amount of funding in 2004-05.

The Department worked collaboratively with the States and Territories during 2004-05 to develop a new standardised system for reporting recurrent health expenditure. The new system was agreed between the Australian Government and each State and Territory before 30 June 2005 as required by clause 36 of the 2003-08 AHCAs. Over time, this system will allow State and Territory investment in public hospital services to be directly compared between jurisdictions, and comparative time-series within particular jurisdictions to be generated.

In June 2005, the Department published The State of our Public Hospitals report. The report provides a picture of our public hospitals in 2003-04 and shows how services have changed since 1998-99. As well as promoting greater State and Territory accountability for the funds they receive through the AHCAs, the report aims to:
  • stimulate improvement in service performance and health outcomes;
  • facilitate best practice service delivery; and
  • increase community understanding of the performance of the public hospital sector, including areas of variation between States and Territories.

Increased Rehabilitation and Stepdown Care Services through the Pathways Home Program

In 2004-05, the Department worked to implement the national Pathways Home program, worth $253 million over five years, to assist States and Territories to increase their efforts in the provision of ‘step-down’ and rehabilitation care services. During 2004-05, $86.5 million was spent on projects to provide the community with greater access to care during the difficult period of transition from the hospital to the home. For example, $500,000 has been spent in South Australia to purchase transitional rehabilitation equipment such as lifters, walker frames and equipment aides to assist people to return home after a hospital episode.

Health Reform Agenda

In 2004-05, the Department collaborated with State and Territory health departments to identify and address areas for health system reform. Health Ministers have continued their commitment to the health reform agenda through a broad program of work designed to reform current practices in the health system. The goal is to improve the health and wellbeing of all Australians by providing optimal health care and health outcomes regardless of jurisdictional boundaries.

Specifically, the Department worked closely with State and Territory governments to improve the quality of pharmaceutical care at the time of admission, and on discharge, from a public hospital, in order to reduce the chance of adverse drug reactions and re-admission into hospital and assist in the continuity of care. The Department has also collaborated with State and Territory governments on cancer care reform and issues surrounding mental health as well as working on child health and wellbeing issues with the Community and Disability Services Ministers Conference. The Department and the peak bodies representing the pathology industry concluded negotiations for the third Pathology Agreement. This agreement was signed on 20 September 2004 and provides a partnership for government and the pathology industry to manage Medicare Benefits expenditure on pathology services.

One highlight of 2004-05 was the Improving Indigenous Health Remote Area Renal Services Project. This project aims to enhance the quality of life of people living with renal disease, their families and carers and where possible, prevent or delay the onset of renal disease.

Australia’s health system was a key agenda item for discussion at the June 2005 Council of Australian Governments (COAG) meeting. COAG agreed that while Australia has one of the best health systems in the world, there is room for improvement, particularly in areas where governments’ responsibilities intersect. COAG identified a number of areas where improvements could be achieved. The Department of the Prime Minister and Cabinet is responsible for managing this work and they are working closely with the Department. COAG has asked for a report in December 2005.

Separate to the Health Reform Agenda, the Department provided input to the Health Taskforce that was announced by the Prime Minister on 22 October 2004. The Taskforce was established to advise the Australian Government on options to improve the delivery of Australian health services and reported to the Prime Minister in early 2005.

Additional Medicare Eligible Magnetic Resonance Imaging units

In 2004-05, the Australian Government decided to improve access to Magnetic Resonance Imaging (MRI) services in rural and metropolitan areas. To facilitate this, the Department undertook a process to select providers in rural and metropolitan areas with an undersupply of Medicare funded MRI services and hospitals with a relevant caseload and high number of private in-patient separations. Through this process another 21 applicants were selected to provide services.

Some regional areas will have close access to Medicare funded MRI services for the first time. A number of hospitals which have demonstrated a particular clinical need will also have access to Medicare eligible MRI services. Of the 21 successful applicants, 10 were operational and claiming Medicare benefits as at 30 June 2005. The remainder will become operational by February 2006. Each new provider has agreed to provide services at no out-of-pocket cost for pensioners and concession cardholders. Of the 21 providers, 15 will provide services at no out-of-pocket cost to any patient.

Figure 2.1: Outcome 2 expressed as a percentage of total Health and Ageing Portfolio expenses ($36,681m) 2004-05
Portfolio expense Amount Percentage
Other Outcomes $11,937m 32.5%
Access to Medicare Other $824m 2.2%
Access to Medicare AHCAs $7,855m 21.4%
Access to Medicare PBS $6,001m 16.4%
Access to Medicare MBS $10,063m 27.4

Return to Figure 2.1

Produced by the Portfolio Strategies Division, Australian Government Department of Health and Ageing.
URL: http://www.health.gov.au/internet/annrpt/publishing.nsf/Content/outcome-summary-2
If you would like to know more or give us your comments contact: annrep@health.gov.au