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

KEY STRATEGIC DIRECTIONS FOR 2004-05


Affordability of Private Health Care


The Private Health Insurance Incentives Amendment Act 2005 received Royal Assent on 22 February 2005 and increased the Private Health Insurance Rebate from 30 per cent to 35 per cent for people aged 65 to 69 years, and to 40 per cent for people aged 70 years and over. The change applies to both new and existing members of private health insurance funds. The Department worked closely with the Health Insurance Commission (HIC), the Australian Taxation Office (ATO) and health funds to manage the implementation of the new higher rebates to ensure that the higher rebates were available from 1 April 2005.

In 2004-05, the Department commissioned a consumer survey to measure the extent to which Informed Financial Consent (IFC) was being obtained from health fund members being treated in hospital as private patients. IFC is closely linked to the development of no gap and known gap health insurance and occurs when patients are clear about which doctors will be involved in their care and are given accurate estimates of the overall medical and hospital costs and gaps. The report was released by the Minister on 25 July 2005.

The Department and the HIC also worked closely together during 2004-05 to progress the introduction of an electronic system to encourage IFC and simplified billing. The HIC’s simplified Electronic Claim Lodgement and Information Processing System will enable medical practitioners to send a claim directly to the HIC rather than via the health fund. This will simplify claiming, payment and eligibility checking processes, to the benefit of consumers, health service providers and health funds.

During 2004-05, the Department continued to consult with industry on the proposed changes to private health insurance. The Government decided to defer the introduction of changes to the reinsurance arrangements in private health insurance to July 2006 to allow further time to consider the shape of the proposed reforms.

Access to Private Health Services


Private outreach services has been one of the most important developments for the health insurance and private hospitals sectors in recent years. Treatment provided through an outreach service, commonly known as ‘Hospital in the Home’, is a direct substitute for the treatment that would have been provided for the patient in a hospital or day facility. Private hospitals wishing to deliver services on an outreach basis must go through a rigorous application and assessment process to ensure appropriate qualitycontrols are in place. The Department continued to work with the Private Sector Outreach Services Working Party to assess 16 new and 23 renewed applications to provide outreach services.

Consumer Understanding and Awareness


In 2004-05, the Department continued to ensure that private health insurance products meet the needs of consumers and that consumers have access to useful information and are aware of what is included in their private health insurance product.

In October 2004, the Department commissioned research to determine consumers’ needs in relation to private health insurance information and their attitude toward information that is currently available. The findings of this work indicated existing brochures were valuable, but that consumer access to this material could be improved. In 2004-05, the Department, with the private health care sector, the PHIO and the PHIAC commenced work developing initiatives to improve consumer access to information about private health insurance.

One such publication is the first State of Health Funds report, released by the PHIO in February 2005. The report provides comparative ratings and statistical information for all health insurers in Australia on a range of indicators and issues including membership retention and growth, fund finances and administrative expenses, as well as general information about hospital and extras covers. The aim of the report is to provide more useful comparative information on funds and their products.

High Quality Private Health Services


A comprehensive regulatory framework exists under the National Health Act 1953 to protect the interests of people who take out health insurance and ensure the viability of the health funds. The Department regulates the operations of the private health insurance funds consistent with this Act.

The Australian Council for Safety and Quality in Health Care recognises the importance of linkages with the private health sector and has discussed ways to work together and support safety and quality with representatives of the sector. In late 2004, the Department requested contributions to the Review of Future Governance Arrangements for Safety and Quality in Health Care in written correspondence with private health sector organisations. Private health sector bodies provided written submissions to the Review and participated in a national workshop and consultation meetings. See Outcome 9 for further discussion on the Review.

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Improving Ongoing Industry Relationships


The Department works with the PHIAC and the PHIO on improving relationships with industry. The Department also works with private health insurance stakeholders that include representatives of the health funds, health care service providers, suppliers and consumer groups. One major initiative during 2004-05 that was the focus of activities to improve ongoing industry relationships was the development of the National Health Amendment (Prostheses) Act 2005 which was passed on 9 March 2005 and supports the new prostheses arrangements. The Act is a culmination of extensive stakeholder consultation throughout 2004-05. The new arrangements were developed in agreement with key peak bodies, including the Australian Private Hospitals Association, the Australian Health Insurance Association, the Medical Industry Association of Australia, Catholic Health Australia, the Australian Medical Association, and the Consumers Health Forum.

The reforms to prostheses arrangements mean that private health insurance funds will be required to provide a no gap range of prostheses (i.e. provided at no charge to patients). Several stakeholder groups incorporating administrative, industry and clinical advised the Minister on policy issues arising from the new arrangements and on the technical structure of prosthesis listings and benefits. The new arrangements for the listing and setting of benefit levels for prostheses are scheduled to begin in October 2005, following the expected release in August of the first schedule developed under the new arrangements.

Appropriate Private Health Products


During 2004-05, the Department provided input to the House of Representatives Standing Committee on Health and Ageing Inquiry intohealth funding as it related to private health insurance issues. Key factors addressed included contracting, patient election, gaps and Informed Financial Consent, the impact on consumers of complexity of product choice, portability, limited cover for episodes of care, reinsurance, billing arrangements and nursing home type patients.

The Health Legislation Amendment (Podiatric Surgery and Other Matters) Act 2004 received Royal Assent on 13 July 2004 and took effect on 13 January 2005. The Department must now ensure that health funds are able to pay benefits for hospital accommodation and nursing care associated with surgical procedures performed by Australian Government accredited podiatrists. To be accredited, a podiatrist must meet certain criteria specified in Ministerial guidelines. As at 30 June 2005, there were 14 accredited podiatrists. These new arrangements mean that health funds now have the opportunity to offer benefits for these services.

The portability provisions under the National Health Act 1953 allow consumers to transfer from one fund to another without having to re-serve waiting periods, unless they transfer to a higher level of cover. During early 2005, the Department met with industry stakeholders to develop options to ensure that there are no barriers to consumers transferring freely between funds following concerns being raised about the use of benefit limitation periods by some health funds.

The meeting followed unsuccessful attempts by the industry to develop an agreed response to stakeholder concerns about the benefit limitation periods. These concerns arose from a decision by a health fund to impose a benefit limitation period that the stakeholders regarded as discriminatory and had the potential to undermine portability arrangements for private health insurance. The Department is developing advice for the Minister. it is expeced that an announcement about revised portability arrangements will be made in late 2005.

From 1 July 2004, health funds no longer need to submit product rule changes for approval. The Department has implemented industry monitoring arrangements. The activities of the industry are analysed by the Department to ensure that funds support community rating and that they do not discriminate against consumers. The process involves the Department assessing industry activities against performance indicators detailed in regulations. These indicators enable the Department to undertake long term monitoring of industry trends that may impact on consumer take-up or utilisation of private health insurance and private health care services.


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-8
If you would like to know more or give us your comments contact: annrep@health.gov.au