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Diagnostic Imaging

Capital Sensitivity for Diagnostic Imaging Equipment

There are no significant changes to the capital sensitivity arrangements from 1 July 2012.

Capital sensitivity rule for all diagnostic imaging equipment

Most diagnostic imaging services listed in the Diagnostic Imaging Services Table (DIST) of the Medicare Benefits Schedule (MBS) have two different schedule items. The two categories are schedule K items and schedule NK items. Schedule NK items have a fee approximately half the corresponding K item. Whether a service is a schedule K or a schedule NK service depends on the age of the equipment, whether the equipment has been upgraded or whether a location based exemption of the age requirements has been granted.

This is known as capital sensitivity and is intended to improve the quality of diagnostic imaging services by encouraging providers to upgrade or replace old equipment as appropriate.

What is the relevant age of my equipment?

Equipment that has not been upgraded (as defined in the DIST) is classified by the effective life age of the equipment. Equipment that has been upgraded is classified by the maximum extended life age of the equipment. An upgrade (as defined in the DIST) is an additional reasonable investment made by the service provider to improve the overall performance of the imaging system so that it is equivalent to new equipment supplied in Australia at the time of the upgrade.

Table 1: Effective life age and maximum extended life age

Modality	New effective life age	Maximum extended life age (including 5 year extension for upgrades)
Ultrasound	10 years	15 years
OPG	15 years	20 years
Mammography	10 years	15 years
Fluoroscopy	15 years	20 years
X-ray	15 years	20 years
Nuclear Medicine (excl. PET)	10 years	15 years
MRI	10 years	15 years
CT	10 years	Under consideration
Angiography	10 years	Under consideration

How do I calculate the age of my equipment?

If the equipment was installed new, age is calculated from the date that the equipment was first installed.

If the equipment was installed used, age is calculated from the date that the:

• equipment was first used in Australia (for equipment previously used in Australia); or
• equipment's oldest component was manufactured (for equipment previously used outside Australia).

What is the location based exemption?

If equipment that has not been upgraded is older than the applicable effective life age, or if equipment that has been upgraded is older than the maximum extended life age; practitioners may be eligible for an exemption depending on the practice location.
There are no location based exemptions for angiography services.

For computed tomography (CT) services, the service is eligible for K items is it is provided more than 30 kilometres by road from a hospital or free standing facility providing services under the direction of a diagnostic radiologist.

There are two types of exemption for the other diagnostic imaging modalities, 1) automatic exemptions based solely on the location of the practice; and 2) exemptions granted upon application to the Department based on a number of factors.

1) Automatic Exemptions
The exemption will automatically apply to practices located in outer regional, remote and very remote areas. Practices in these remoteness areas are exempt from the capital sensitivity arrangements and do not need to apply to the Department for a remote area exemption.

Practices can identify what ASGC Remoteness Area they fall under at the Department of Health and Ageing’s DoctorConnect website. On the DoctorConnect website, automatic exemptions apply to areas are classified as Remoteness Areas 3, 4 and 5.

2) Exemptions granted by the Department
Remoteness Area 2, as it is classified on DoctorConnect, is a broad category that covers what were previously classified as several Rural, Remote and Metropolitan Area (RRMA) classifications. DoctorConnect notes the previous RRMA classification as well as the Remoteness Area. Only practices in areas identified on DoctorConnect as Remoteness Area 2, with a previous RRMA classification of 4 or 5 can apply to the Department for an exemption.

To grant an exemption, the Department must be satisfied that:

• the diagnostic imaging equipment does not exceed the maximum extended life age by three years or more;
• the equipment is operated on a rare and sporadic basis; and
• the equipment provides crucial patient access to diagnostic imaging services.

Eligible practices may apply for an exemption by filling out the Inner Regional Australia Exemption Application Form and sending it to the Department of Health and Ageing.
Practices will be notified by the Department upon receipt of a valid application. A completed form provided by a practice that does not meet the circumstances to be eligible for an exemption is not a valid application.

Keeping the Location Specific Practice Number records up to date

Practices are required to keep the Department of Human Services’ Location Specific Practice Number (LSPN) records up to date including the age of each piece of ultrasound, diagnostic radiology, nuclear medicine imaging (excluding PET) and magnetic resonance imaging (MRI) equipment.

Practices must inform the Department of Human Services when equipment is upgraded (as defined in the DIST). Further information on what constitutes an upgrade can be found at the Frequently Asked Questions webpage. Upgraded equipment is eligible for the maximum extended life age if there is one for that modality. There is currently no maximum extended life age for CT and angiography equipment. To update your LSPN information, practices may access the relevant forms and contact details on the Medicare Australia website

Contact information

Frequently Asked Questions.

Further enquiries about the capital sensitivity arrangements can be directed to the Department of Health and Ageing and Medicare Australia Website

For other enquiries related to LSPN matters the Department of Human Services also operates a toll free number 1800 620 589 Monday to Friday, 07.30am to 5.00pm Western Standard Times or email Medicare Australia.

Frequently Asked Questions
Inner Regional Australia Exemption Application Form
View the full list of NK items with their K counterparts online.
View the full list of NK items with their K counterparts (PDF 24 KB)
View the full list of NK items with their K counterparts (Word 321 KB)