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Frequently Asked Questions: Capital Sensitivity Arrangements for Diagnostic Imaging Equipment

Implementation arrangements

FAQs - MS Word format (Word 111 KB)
FAQs - Portable Document Format (PDF 481 KB)
Inner Regional Australia Exemption Application Form - MS Word Format (Word 195 KB)
Inner Regional Australia Exemption Application Form - Portable Document Format (PDF 40 KB)

General

1. What is the purpose of the measure?

The measure is about improving the quality of diagnostic imaging services by encouraging providers to upgrade and replace aged equipment as appropriate.

2. Does the capital sensitivity measure cover all diagnostic imaging modalities?

It covers all diagnostic imaging modalities (ultrasound, x-ray, OPG, mammography, fluoroscopy, nuclear medicine imaging, magnetic resonance imaging (MRI), computed tomography (CT) and angiography) providing services listed in the Diagnostic Imaging Services Table except Positron Emission Tomography (PET).

3. How is the capital sensitivity measure being implemented?

The measure is being implemented in two phases. This has allowed for initial arrangements from 1 July 2011 to 30 June 2012 and the ongoing arrangements from 1 July 2012.

4. What will apply from 1 July 2012?

Largely the capital sensitivity arrangements from 1 July 2012 are not significantly different. There are no changes to the effective life age for equipment, the arrangements for upgraded equipment and the remote location exemption related to outer regional, remote and very remote areas of Australia.

Minor changes have been made to the remote location exemptions for inner regional areas. Full details are provided below (or on pages 3 and 4 of the printable versions). The provision for extension to the grace period for practices intending to but unable to replace equipment by 30 September 2011 expires on 30 June 2012.

Importantly, practices will need to check their records and ensure that the age of each piece of ultrasound, diagnostic radiology, nuclear medicine imaging (excluding PET) and MRI equipment is current and accurately based on:

• the date (month and year) equipment was first installed for new equipment or equipment previously used in Australia; or
• the date of manufacture (month and year) of the oldest component for equipment previously used outside Australia; and
• whether the equipment has been upgraded – yes or no

The age of equipment and upgrade information must be provided to Department of Human Services for the purpose of the Location Specific Practice Number (LSPN) Register. Practices need to ensure that the LSPN Register is a true reflection of the age of the equipment providing Medicare eligible diagnostic imaging services.

• The age of CT and angiography equipment will need to be identified for the purpose of LSPN Register. The capital sensitivity arrangements for CT and angiography will not change from 1 July 2012. The provisions that currently apply to CT and angiography (i.e. a ten year effective life age and remote area exemptions based on ‘the 30km rule’) will remain. The five year extension for upgraded CT and angiography equipment is under consideration.
• The Medicare rebates and rules below relate to the age of equipment. All services listed in the Diagnostic Imaging Services Table of the Medicare Benefits Schedule (MBS), excluding PET services, will have two different rebates – K items (100% of the MBS Fee) and NK items (50% of the MBS Fee) for services provided on aged equipment. There are no changes from 1 July 2012 to the bolded limits in Table 1.

• Equipment equal to or less than the new effective life age will attract full (K) Medicare rebates.
• Equipment older than the new effective life age and less than the maximum extended life age will attract full (K) Medicare rebates if an additional reasonable investment has been 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. Further clarification on what constitutes an upgrade is detailed below under ‘Age of equipment and upgrades’.
• Aged equipment, which is equipment older than the new effective life age that has not been upgraded, and upgraded equipment that is older than the maximum extended life age, will attract the reduced (NK) rebates, irrespective of practice accreditation for the purposes of claiming Medicare benefits under the Diagnostic Imaging Accreditation Scheme.

5. What is happening to computed tomography and angiography?

The provisions that currently apply to CT and angiography (i.e. a ten year effective life age and remote area exemptions based on ‘the 30km rule’) will continue to apply. The five year extension for upgraded CT and angiography equipment is under consideration.

6. How do the capital sensitivity arrangements relate to accreditation arrangements?

All practices are required to be accredited under the Diagnostic Imaging Accreditation Scheme in order for Medicare benefits to be payable. However, the 50% reduced (NK) rebates will apply to aged equipment.

• Mammography equipment that is currently accredited under the Royal Australian and New Zealand College of Radiologists’ Mammography Quality Assurance Program automatically qualifies for the five-year extension period. For accredited mammography equipment, practices should indicate with a ‘Y’ on the age of equipment form that it has been upgraded.

7. Without an upgrade investment, what are the age limits for each modality?

The age limits for each type of equipment in each modality are:

• Ultrasound = 10 years
• OPG = 15 years
• Mammography = 10 years
• Fluoroscopy = 15 years
• X-ray = 15 years
• Angiography and computed tomography (as per earlier arrangements) = 10 years
• Nuclear medicine (excluding PET) = 10 years
• Magnetic resonance imaging = 10 years
• CT = 10 years
• Angiography = 10 years

Exemptions

8. Will there be any exemptions?

Outer regional, remote and very remote areas

This exemption has not changed. The exemption will automatically apply to practices located in outer regional, remote and very remote areas to enable providers to claim full (K) rebates for aged equipment. 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 Doctor Connect website.
• On the DoctorConnect website, these areas are classified as Remoteness Areas 3, 4 and 5.

Inner regional areas

If you were granted an exemption in this region under the initial arrangements and your circumstances have not changed, then your exemption is still valid and you do not need to
re-apply.

• LSPNs may apply for an exemption if they are located in RRMA 4 or 5 (small rural centres and other rural areas under the Rural, Remote and Metropolitan Areas Classification) of the ASGC remoteness area that relates to Inner Regional Australia. On the DoctorConnect website, this area is identified as Remoteness Area 2.
• Only LSPNs located in RRMA 4 or 5 of Inner Regional Australia and whose diagnostic imaging equipment exceeds the maximum extended life age by less than three years are eligible to apply for an exemption.
• Exemptions will be granted if the decision maker is satisfied that the equipment is operated on a rare and sporadic basis and provides crucial patient access to diagnostic imaging services.
• Eligible practices may apply for an exemption by filling out the application form for Inner Regional Australia Exemption and sending it to the Department of Health and Ageing. The application form for exemptions can be downloaded by clicking on this link: Inner Regional Australia Exemption - Application Form.
• Practices will be notified by the Department of 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.

9. Where do I forward a request for an exemption?

The Inner Regional Australia Exemption - Application Form - MS Word Version of Inner Regional Australia Exemption Application Form (Word 195 KB) or Portable Document Format Version of Inner Regional Australia Exemption Application Form (PDF 40 KB) must be forwarded to the Department of Health and Ageing at:

Capital Sensitivity
Primary Care, Diagnostics and Radiation Oncology Branch
Medical Benefits Division
Department of Health and Ageing
MDP 951
GPO Box 9848
CANBERRA ACT 2601
or email the Department of Health &Ageing.

10. If I am applying for an exemption(s), can I claim the full (K) rebates while my application is under consideration?

Yes, from the time you receive your notice from the Department that your application is valid and under consideration, you may claim the (K) items. (K) items may then be claimed until you receive notice about the final outcome of your application. The Department will notify you of its final decision within 28 days.

11. Can a decision by the Department of Health and Ageing not to grant a remote area exemption be appealed?

Yes. Applicants who are dissatisfied with decisions are able to make a request for review to the First Assistant Secretary of the Medical Benefits Division within 28 days of the date of receipt of the notification.

First Assistant Secretary
Medical Benefits Division
MDP 951
GPO Box 9848
CANBERRA ACT 2601
or email the Department of Health & Ageing.

The following examples constitute a ‘special circumstance’ that would allow an extension to the time for the reconsideration of an application by the Secretary:

• natural disaster, for example, floods or fire;
• failure in infrastructure that impacts upon an applicant’s capacity to submit their application within the given time frame, such as technological difficulties;
• adverse personal circumstance, such as sickness or personal loss.

12. I was granted a remote location exemption under the initial arrangements do I need to re-apply or is my exemption still valid?

If you were granted an exemption under the initial arrangements and your circumstances have not changed, then your exemption is still valid and you do not need to reapply.

Age of equipment and upgrades

13. What if practices cannot easily identify the age of a piece of equipment?

Practices in this situation should contact the relevant equipment supplier.

14. When determining the age of a piece of equipment, which component should practices have regard to?

While it is commonplace to replace components of a piece of diagnostic imaging equipment and for different components to have different ages, the age of the machine will be governed by:

• the date (month and year) equipment was first installed for new equipment or equipment previously used in Australia; or
• if the equipment was imported as used equipment - the date of manufacture (month and year) of the oldest component of the equipment.

15. What is the definition of upgrade for the purposes of claiming the five-year extension period?

Upgrade means an additional reasonable investment made by the service provider within the effective life age that improves the overall performance of an imaging system so that it is equivalent to new equipment supplied in Australia at the time of the upgrade. Table 2 provides guidance on what is and is not considered an upgrade for the purposes of claiming the five-year extension period.

Table 2: What constitutes an upgrade to fixed or mobile equipment?

Yes	No	Examples of Supplier Upgrade Pathways
X-Ray and Mammography Addition of a Digital Radiography (DR) panel or detector to replace existing film screen, CR or chemistry systems Addition of a Computer Radiography (CR) to analogue systems Entire system changes from analogue to digital using system components and/or new accessories	General service repairs / service support / warranties or point of sale agreements Hardware or software error corrections or updates, hardware enhancements, updates or parts thereof Individual system part purchases and/or component equivalent replacements such as, but not limited to: System generators, detectors, X-Ray Tubes, Cameras, Image Intensifiers, Receptors, Patient Table, Vertical Bucky Stand, Overhead Tube Suspension, Operator Console, Computer/Workstation and system associated accessories	Philips- EasyUpgrade DR Siemens – Ecoline Systems ( Factory Refurbished Systems) GE Goldseal GE Senobright/ CESM, Tomosynthesis, Premium View processing and Stereotaxy mammography upgrades GE Proteus XR/a upgrade to DR GE Mobile Optima XR200 amx upgrade to DR
MRI Core system and associated electronic interfaces and operating software / operating hardware Core acquisition hardware and software changes such as, but not limited to gradient coils set upgrade or substantial increase in the number of RF receiver channels of the system or substantial increase in number of multiple RF transmit channels	General service repairs / service support / warranties or point of sale agreements Hardware or Software error corrections or updates, hardware or software enhancements or corrections or parts thereof individual system part purchases and/or component equivalent replacements such as, but not limited to coils or workstations Addition of standalone clinical applications such as imaging sequence software, surface/receiver coils and associated software	Philips Technology Upgrade (PTU) Siemens Syngo Evolve Siemens DOT Upgrades Siemens Tim 4G & Tim upgrades Siemens RF channel upgrades Siemens - MR Eco Systems ( Factory Refurbished Systems ) GE Continuum RF channel or Chain upgrades including but not limited to 4, 8, 16, 32 & 64 GE Continuum coil architecture including but not limited to GEM Suite upgrades GE Continuum host computer & core application e.g. including but not limited to Propeller 3.0 or upgrades HP4000 to >HP8000 or later revisions GE Continuum host computer & core system platform upgrades including but not limited to versions 16 to >23 or later
Ultrasound Core system and associated electronic interfaces and operating software / operating hardware resulting in new functionalities and performances equivalent to that of present day factory released systems	General service repairs / service support / warranties or point of sale agreements Hardware or Software error corrections or updates, hardware or software enhancements or corrections or parts thereof individual system part purchases and/or component equivalent replacements such as, but not limited to probes Addition of new standalone clinical applications or software enhancements	Phillips Diamond Select GE Venue 40 Breakthrough Technology upgrades GE Logiq Breakthrough Technology upgrades GE Voluson Breakthrough Technology upgrades GE Vivid Breakthrough Technology upgrades
Nuclear Medicine Core system electronic interfaces and associated operating software / operating hardware Core acquisition hardware and software changes including but not limited to iterative reconstruction Detector system change including but not limited to new crystals	General service repairs / service support / warranties or point of sale agreements Hardware or Software error corrections or updates, hardware or software enhancements or corrections or parts thereof individual system part purchases and/or component equivalent replacements such as, but not limited to workstations, optional software packages & accessories Addition of new standalone clinical applications or software enhancements	Phillips Technology Upgrade Siemens - Syngo Evolve that includes hardware and software refresh Siemens – Ecoline Systems (Factory Refurbished Systems) GE Xeleris 3 hardware & software GE Infinia upgrade to Hawkeye 4 SPECT/CT GE Hawkeye 1 upgrade to Hawkeye 4 SPECT/CT

• Mammography equipment that is currently accredited under the Royal Australian and New Zealand College of Radiologists’ Mammography Quality Assurance Program automatically qualifies for the five-year extension period.

16. Are there any examples of what a vendor considers to be an upgrade for the different types of diagnostic imaging equipment?

Yes. Table 2 shows some examples of the various vendor upgrade pathways.

17. Will the Department of Health and Ageing or Medicare Australia be assessing individual claims for the five-year extension period for upgraded equipment?

No. Individual practices need to refer to their relevant documents, the definition of upgrade supplied and the upgrade explanatory table to make judgments about whether their equipment automatically qualifies for the five-year extension period.

18. Do practices claiming the five-year extension period for upgraded equipment need documentary evidence?

Yes. Practices claiming the maximum extended life age must keep documentary evidence of the additional investment(s) made for potential compliance purposes. In the same way that records are kept for tax purposes the onus on maintaining and storing documentary evidence of upgrades and new equipment rests with the individual service provider. Examples of documentation to substantiate upgrades and new equipment include:

• Suppliers technical brochure or quote detailing the upgrade option
• Service Installation Report
• Purchase Order to relevant manufacturer & invoice confirming relevant upgrade has been completed detailing the reasonable investment made to existing equipment

19. When does the five-year effective life extension period begin?

The five-year effective life extension period will commence at the end of the effective life age. For example, if an additional investment is made to upgrade an ultrasound unit at year five of a ten year effective life, the five year extension period will commence at the end of year ten, giving the equipment a maximum extended life of 15 years.

20. Will this measure affect the Extended Medicare Safety Net (EMSN) capping arrangements?

Yes, the capital sensitivity arrangements apply to the 22 capped obstetric and gynaecological items. The arrangements provide 22 mirror items with a 50% reduced Schedule Fee and EMSN cap.

21. How do I know which Remoteness Area my practice is located in?

A map locator is integrated into the Australian Government’s Doctor Connect website.

22. When do I need to provide information about the age of my equipment and upgrades?

Now. Practices need to ensure that their equipment details are current and accurate. Practices should provide their age of equipment information to Department of Human Services (Medicare) for the purpose of including capital sensitivity related information on the Diagnostic Imaging Register.

To update or renew the information about the age of equipment located at a particular LSPN, practices can complete the Location Specific Practice Form Amendment Form (PDF 172 KB) on the Medicare Australia web site.

Alternatively the form can be downloaded, completed and returned to Department of Human Services by reply paid mail or fax to:

Provider Eligibility and Accreditation Section
Department of Human Services
Reply Paid 1001
TUGGERANONG DC ACT 2901

(02) 6124 6219 (Fax)

If further assistance is required with matters related to your LSPN details, Department of Human Services can be contacted toll free on 1800 620 589 Monday to Friday, 07.30am to 5.00pm Western Standard Times or email lspn@medicare australia.gov.au

23. Where do I find information on the NK items

The list of NK items, with full item descriptions, will be available at MBS online.

24. Is there an email address for general enquiries about the measure?

Yes. Practices can forward their enquiries via email to the Department of Health &Ageing.