What are second-tier default benefits?
Generally, insurers must pay second-tier default benefits for hospital treatment if:
- they do not have a negotiated agreement with the hospital and
- the hospital is second-tier default benefits eligible.
Second-tier default benefits are higher than what would otherwise be payable if the hospital was not eligible.
Which hospitals can apply?
To apply to be eligible, a hospital must:
- be a private hospital
- be accredited
- not bill patients for the minimum benefit their insurer will pay
- ensure patients can give informed financial consent
- agree to give Hospital Casemix Protocol Data to health insurers with every claim for second-tier default benefits.
New hospitals can submit a second-tier application at the same time they apply to be declared a hospital. We will not consider the application until the hospital is declared.
How to apply
Private hospitals can apply at any time.
Read the Second-tier Default Benefits Guidelines first. The guidelines tell you what to include in your application and explain the process in detail.
To apply:
- complete the application form
- send the completed form and attachments to our second-tier default benefits team
- pay the $985 application fee when you receive our invoice.
If your accreditation is first edition, you must provide a sample informed financial consent (IFC) document and procedures as part of your application.
We will tell you the outcome within 60 days of receiving a complete application and fee payment.
If you are reapplying, make sure you apply and pay the fee at least 60 days before your current eligibility expires.
When eligibility expires
Second-tier eligibility expires 60 days after a hospital’s accreditation expires.
Benefit rates
The second-tier default benefit for hospital treatment is at least 85% of the average charge for the equivalent treatment, under that insurer’s negotiated agreements for comparable private hospitals.
Comparable private hospitals are those in the same state and in the same second-tier hospital category. Each health insurer must work out second-tier default benefit rates for each category in each state and territory.
Annual review of private hospital categorisation
We are legislated to publish a list of private hospitals current as of 1 August under Schedule 5 of the Private Health Insurance (Benefit Requirements) Rules 2011.
To make sure each hospital is in its correct category, we review these details and consult with the sector. This year's consultation closed on 28 June 2024. We thank all the hospitals that have responded.
View the annual private hospital category list – 1 August 2024.
This list only categorises private hospitals. It does not mean all the hospitals in the list are second-tier eligible. To check which hospitals are eligible, see the Commonwealth declared hospitals list on the hospitals page (scroll down to the bottom).
Cost recovery
We recover the costs of assessing these applications. Find out more in our Cost Recovery Implementation Statement.
Legislation
- Sections 121-8A to 121-8D in the Private Health Insurance Act 2007
- Schedule 5 of the Private Health Insurance (Benefit Requirements) Rules 2011
- Part 2A of the Private Health Insurance (Health Insurance Business) Rules 2018.
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