The Prostheses List reforms
The Government committed $22 million in the 2021-22 Federal Budget to improve the prostheses list and its arrangements. The Prostheses List Reform Taskforce, working with insurers, hospitals, manufacturers and clinicians, will ensure the list will be more efficient, transparent and current.
What is changing?
In the 2021-22 Federal Budget, the Government committed $22 million over four years to improve the Prostheses List and its arrangements.
Building on the previous reform activities, the Government has agreed to maintain the Prostheses List, with some improvements.
The Prostheses List (PL) will continue to be the way in which hospitals, insurers and device companies know what benefits are payable for listed prostheses. Over time, Prostheses List benefits will better align with the price paid in the public hospital system.
The Department of Health will implement reforms in conjunction with the Independent Hospital Pricing Authority (IHPA) to reduce the cost of medical devices used in the private health sector and streamline access to new medical devices.
Other key features of the reforms include:
- Clarifying the scope of the Prostheses List by defining which prostheses are eligible for inclusion on the Prostheses List and removing ineligible items.
- Regrouping the items on the Prostheses List to better align devices with similar intended use or health outcomes.
- Streamlining the listing of new devices and reviewing the functions of the Prostheses List Advisory Committee.
- Improving the post-listing activities, including reviews and compliance activities.
- Updating the existing cost recovery arrangements.
These reforms will be implemented by the Department in a staged manner over a four-year period, commencing in 2022. The reforms are expected to be implemented by 2025. A review of these reforms will be conducted in 2024.
The Prostheses List Reform Taskforce (PLRT) is currently conducting research, planning and consultation work for all the key features of the reform.
Expected outcomes of the reforms
By better aligning the cost of prostheses to the public system, private health insurers will benefit from reduced expenditure on prostheses. This downward pressure may then be able to be passed on to privately insured patients through reduced private health insurance premiums.
Hospitals will continue to have assurance that any prostheses on the Prostheses List will be eligible for reimbursement through the Prostheses List arrangements.
For Medical Device Companies
Medical device companies, commonly referred to as sponsors, will continue to have certainty around which products are eligible for reimbursement through the Prostheses List arrangements.
Medical device companies will also benefit from streamlined application and assessment pathways.
Clinicians will continue to choose the most appropriate prostheses for their patients.
For Privately Insured Patients
Privately insured patients will benefit from reduced private health insurance premiums.
Privately insured patients receiving a prosthesis will continue to have clarity around which prostheses are covered by their private health insurance premiums.
The Department is committed to consult internal and external stakeholders at all stages of the reforms.
Regrouping of the Prostheses List (open)
Regrouping of the PL is being undertaken in five tranches with the Department delivering a series of documents to interested stakeholders, followed by an information webinar. Stakeholders wishing to submit feedback have four weeks after the relevant webinar to do so.
- Tranche 1: Cardiac and Cardiothoracic (including Cardiac Implantable Electronic Devices (CIEDs)) and Ophthalmic- Webinar held 20 January 2022
- Tranche 2: Hips and Knees – Webinar held 24 February 2022
- Tranche 3: Vascular, Urogenital and ENT (Ear Nose Throat) – TBC
- Tranche 4: Upper limb, Ankle & Foot, Neurosurgical and Spinal – TBC
- Tranche 5: Plastic and Reconstructive, Skeletal Reconstruction, Plates and Screws and General Surgical – TBC
For details contact us on prosthesesreform [at] health.gov.au
Consultation Paper 3 – A modernised fit-for-purpose listing process (closed)
Published 11 February 2022 – Consultation Paper 3 – A modernised fit-for-purpose listing process concerned the application process for the PL. It proposed a contemporary fit-for-purpose process which allows for applications of differing complexity to be dealt with via different pathways. The Department is currently analysing the submissions received.
Consultation Paper 2(a) – Modernisation of Part B of the Prostheses List (closed)
Published 11 February 2022, Consultation Paper 2(a) – Modernisation of Part B of the Prostheses List concerned amendments to Part B of the PL. It presented the current structure of Part B and put forward ideas to improve this section in line with the changes that will apply to the rest of the Prostheses List. The Department is currently analysing the submissions received.
Consultation Paper No 1 – PL Purpose, Definitions and Scope (closed)
Published in August 2021, Consultation Paper No 1 – PL Purpose, Definitions and Scope canvassed views on proposed implementation of improvements to the Prostheses List.
A stakeholder webinar was hosted on 8 September 2021 from which a Frequently Asked Questions (FAQ) document was produced.
Options for reforms and improvements to the Prostheses List (Closed)
Published in December 2020. The aim of the paper Options for reforms and improvements to the Prostheses List was to inform Government considerations around the direction and implementation of options for the Prostheses List reform.
In line with the result of the consultation it was decided to progress the reforms based on the second option proposed to stakeholders: “To consolidate and redesign the prostheses list with extensive changes to pre- and post-listing assessment and benefit setting processes, with administration of benefit setting supported by the Department.”
Progress of the reforms
Memorandum of Understanding with the Medical Technology Association of Australia
On 14 March 2022, the Minister for Health and Aged Care signed a Memorandum of Understanding (MoU) with the Medical Technology Association of Australia (MTAA) to set out the final policy parameters for the Prostheses List Reforms.
Reducing the gap between the public and private sectors
The overall objective of the current PL reforms is to reduce the cost of medical devices used in the private health sector which will improve the value of private health insurance for Australians. To do so, it was first necessary to establish a benchmark price for prostheses in the public health sector. This task was undertaken by the Independent Hospital Pricing Authority (IHPA).
In December 2021, after extensive consultation with the PL sector, IHPA published the Methodology for Determining the Benchmark Price for Prostheses in Australian Public Hospitals outlining the process IHPA would use in determining the benchmark price for prostheses in the public sector.
In April 2022, IHPA presented the final report Benchmark Price for Prostheses in Australian Public Hospitals 2020-21. This information is being used by the Department to calculate the gap between the public sector weighted average price and the PL benefits before the new reference price is established and PL benefits are reduced.
Note: IHPA's benchmark report refers to 'Attachment A'. We cannot make Attachment A public, because it contains commercial confidential information.
Update March 2022 – Removal of General Use Items
Schedule of PL benefit reductions
- Items on the Prostheses List (PL) will have their benefit levels reference priced by establishing the gap between the prices paid in public hospital system and the PL.
- The sequential reduction will take place as follows:
- 1 July 2022 a 40% reduction of the gap
- 1 July 2023 a 20% of the gap
- 1 July 2024 a final 20% of the gap.
- Devices with a current gap of less than 7% above the weighted public price will not be reduced.
- Devices with a current gap of more than 7% above the weighted public price will be reduced by the described 40%/20%/20% considering a 7% “floor” for all products.
- General use items gap will be reduced by 60% on 1 July 2022 and 40% on 1 March 2023, before being removed from the PL on 1 July 2023 with the introduction of bundling arrangements (more information is provided below).
Fourth year PL benefit reductions
- No reductions to Prostheses List benefits are intended to occur in year 4 of the reforms, between 1 July 2025 and 30 June 2026, effectively providing a 20 percent private adjustment factor on the initial gap between the Weighted Average Price and the Prostheses List benefit.
- This element does not relate to the CIED category, which is to be deferred by one year and receive the final benefit reduction of 20 per cent on 1 July 2025.
Cardiac Implantable Electronic Devices (CIEDs)
- To ensure continued access for patients the commencement of the benefit reduction for CIEDs will be deferred by one year to 1 July 2023, to allow up to 18 months for the Medical Services Advisory Committee (MSAC) deliberations on the value of the technical support services.
- Based on this postponement, the first 40% reduction of the gap will be applied on 1 July 2023, the second 20% will be on 1 July 2024 and the third 20% reduction will be implemented on 1 July 2025.
- Sponsors of CIEDs have committed to engage with MSAC and provide MSAC with company service level and expenditure data relevant to the MSAC process.
Advice on the Prostheses List adjusted benefit amounts to come into effect 1 July 2022
On 12 May 2022, we published the Advice on the prostheses list adjusted benefit amounts.
The new benefits are the result of applying the public benchmarking work by the Independent Hospital Pricing Authority (IHPA).
This preliminary list will support stakeholders to update their systems and prepare other changes.
We will give sponsors the draft Prostheses List in June, as per practice for the regular PL updates.
That draft will contain new and amended listings and the adjusted benefit amounts effective from 1 July 2022.
Redefined scope and definitions of the Prostheses List
An important structural reform to the PL has been to propose an improved definition for items that qualify to be listed and provide greater clarity and certainty to insurers, the medical technology industry and private hospitals.
A consequence of clarifying the definition is that a group of nearly 500 general use and consumable products, such as skin glues, have been identified for removal from the PL because they either do not meet the current criteria for listing on the PL or because they will not meet the new definition or listing criteria.
The Australian Government position is there will be no additional out-of-pocket for consumers. The Department has requested that Insurers and private hospitals work together on an alternative funding agreement and to facilitate negotiations, the following documents have been provided to all parties:
- A briefing paper was provided to hospitals and insurers with an overview of expenditure on General Miscellaneous Items in 2018-19.
- A dataset with information relating to General Miscellaneous Items by Individual Principal MBS Items is available.
- A dataset of all items on the PL by private hospital type and individual principal MBS items.
This work builds on the Review of the General Miscellaneous Category of the Prostheses List report which was finalised in 2020.
Update March 2022 – Removal of General Use Items
We have sought clinical advice from the Clinical Implementation Reference Group (CIRG) on the general use items identified for removal. The CIRG confirmed that over 400 of the identified items could be removed from the PL with no clinical implications or adverse outcomes to patients, as long as the products are still available for use under different funding arrangements agreed upon between insurers and private hospitals.
We are now in position to provide stakeholders the full list of items to be removed.
The PL benefits for these general use items* will receive reductions to the difference between the weighted public price and the PL benefit, as follows:
- 60% on 1 July 2022
- the remaining 40% of the difference on 1 March 2023
- before being removed from the PL on 1 July 2023 when bundling arrangements are implemented.
*this includes the eight topical skin adhesives which were intended for removal from the PL on 1 March 2022.
Before 1 July 2023, the Independent Hospital Pricing Authority (IHPA) will develop advice on appropriate bundling arrangements for the identified general use items, which will be provided to insurers and private hospitals to facilitate the negotiation of new funding arrangements of these products.
Applications for comparable general use products (that do not meet the listing requirements) will not being accepted nor added to the PL from now on.
Clinical Implementation Reference Group (CIRG)
The Department has established CIRG to provide advice and support the effective implementation of clinical changes to the Prostheses List resulting from the Prostheses List Reforms. More information about the group, including outcome notes of their meetings, can be accessed from the CIRG committee page.
Prostheses List Reform Taskforce
The Prostheses List Reform Taskforce was officially established on 1 July 2021. The taskforce is responsible for implementing the reforms over the next four years.
For more information about the policy development work undertaken since 2007 which forms the base for the current reform and the Prostheses List reviews since its establishment in 1985, refer to the document historical background of the 2021-2025 Prostheses list reform.
If you would like to be added to our mailing list, please contact us at prosthesesreform [at] health.gov.au.