Private health insurance reforms: Second Tier administrative reforms

Private hospitals will benefit from simplified administration and improved transparency and consistency of second tier default benefit arrangements

Page last updated: 16 July 2018

Private health insurance reforms: Second Tier administrative reforms (PDF 98 KB)

  • The Government will make a number of administrative improvements to the second tier default benefit1 arrangements to streamline processes and reduce the administrative burden on both private hospitals and health insurers.
  • From 1 January 2019, private hospitals will be able to apply directly to the Department of Health for recognition that they are eligible for second tier default benefits. This will replace the existing industry-based second tier advisory committee. The length of a private hospital’s second tier eligibility approval will also be increased to align with the hospital’s independent hospital accreditation cycle.
  • The Department of Health will also work with the Australian Commission on Safety and Quality in Health Care, the Australian Institute of Health and Welfare and the private health insurance and private hospital sectors to further streamline second tier administrative arrangements.

Why is this important?

  • The current second tier arrangements are complex and administratively demanding for both private hospitals and health insurers.

Who will benefit?

  • Private hospitals and health insurers will benefit from a reduced administrative burden associated with the second tier arrangements.
  • Private hospitals will also have confidence that hospitals are grouped consistently for the purpose of calculating and paying second tier benefits.

What impact will this change have on private health insurance?

This change will improve the administrative efficiency of the second tier process without compromising the protection it provides to consumers attending out-of-contract hospitals.

1 The second tier default benefit is the benefit paid by a health fund for hospital treatment provided by an eligible private hospital which does not have a negotiated agreement with the fund.