The Prostheses List reforms

What is changing?

Building on the previous reform activities, the Government has agreed to maintain the Prostheses List (PL), with some improvements.

We will implement reforms in conjunction with the Independent Health and Aged Care Pricing Authority (IHACPA) – formerly 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

• Clarifying the scope of the PL by defining which prostheses are eligible for inclusion on the PL and removing ineligible items.
• Regrouping the items on the PL 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 (PLAC).
• 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 4 year period, commencing in 2022. The reforms are expected to be implemented by 2025. A review of these reforms will be conducted in 2024.

Expected outcomes of the reforms

• For Insurers
  
  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.
• For Hospitals
  
  Hospitals will continue to have assurance that any prostheses on the PL will be eligible for reimbursement through the PL 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 PL arrangements.
  
  Medical device companies will also benefit from streamlined application and assessment pathways.
• For Clinicians
  
  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.

Stakeholder consultations

We are committed to consult internal and external stakeholders at all stages of the reforms.

Previous Consultations (now closed)

Consultation Paper No. 4(b) – Exposure Drafts for Legislative Amendments to Private Health Insurance Acts to support the PL reforms (targeted/closed)

In November 2022, we asked key stakeholders for feedback on the first set of legislation changes in 3 bills, the:

• Private Health Insurance Amendment (Medical Device and Human Tissue Product List and Cost Recovery) Bill 2022
• Private Health Insurance (Prostheses Application and Listing Fees) Amendment (Cost Recovery) Bill 2022
• Private Health Insurance (National Joint Replacement Register Levy) Amendment (Consequential Amendments) Bill 2022

These 3 bills were subsequently introduced into the House of Representatives on 1 December 2022.

Consultation Paper No. 4(a) – Legislation Amendments (targeted/closed)

The proposed amendments to PL legislation will support the PL reforms. From 15 September 2022, we consulted with key stakeholders through a series of 3 webinars. The main topics covered were the:

• change of name
• definitions
• listing criteria
• new and amended requirements for the application process
• provision for removal of devices
• new activity-based cost recovery arrangements
• new compliance powers
• new data sharing provisions

The input from these webinars helped us finalise the drafting of the first set of amendment bills. They will also help us with any further changes to legislation. 

For more information see the Prostheses List Reform Consultation Paper 4(a) and 4(b) – Stakeholder feedback report

Bundling arrangements for General Use Items on the Prostheses List (closed)

IHACPA invites feedback on the approach to its advice on bundling arrangements for General Use Items on the Prostheses List. 

The purpose of IHACPA’s advice is to support the private health sector in establishing alternative arrangements for the payment of benefits for these items once they are removed from the Prostheses List on 1 July 2023.

The public consultation is closed.

Consultation Paper 3(b) – Pathways for Applications to the Prostheses list (closed)

Published 16 September 2022 – The proposed new listing pathways have been developed following significant consultation with stakeholders through a series of workshops and feedback received in response to Consultation Paper 3. Analysis of stakeholder responses.

Regrouping of the Prostheses List (closed)

Regrouping of the PL is being undertaken in 5 tranches with the Department delivering a series of documents to interested stakeholders, followed by an information webinar. Stakeholders wishing to submit feedback have 4 weeks after the relevant webinar to do so.

For details email our reform contact.

Prostheses List Compliance Strategy (closed)

Published 14 September 2022 – The Protheses List Compliance Strategy identifies the principles which govern the Department’s compliance and enforcement functions.

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. 

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. 

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. 

Stakeholders’ submissions report – Paper No1 – Prostheses List purpose, definitions and scope. 

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. 

Progress of the reforms

Modernising the Prostheses List committee process

On 17 January 2023, the Minister for Health and Aged Care, the Hon Mark Butler MP announced new committee arrangements for the Prostheses List (PL). The new Medical Devices and Human Tissue Advisory Committee (MDHTAC) will modernise the existing committee process for PL applications. These arrangements will come into effect on 1 July 2023.

This announcement follows an extensive review of the PL governance arrangements:

• In 2021, we asked Ernst and Young (EY) to do a review of the Prostheses List Advisory Committee (PLAC) and associated sub-committees.
• In 2022, we asked Adelaide Health Technology Assessment (AHTA) to give a range of options for a reformed Prostheses List pre-listing assessment framework and governance structure.

EY and AHTA reports provide important context to reform the PL governance structure and arrangements. They also touch on the reforms to the PL listing pathways.

We used the findings from both reports to inform further consultation with stakeholders. The reports and feedback formed the basis for the Pre-Listing Assessment Framework and Governance Structure.

Transitioning the Prostheses List applications to a new online platform

Applications for the Prostheses List (PL) will be moving to the Health Products Portal (HPP) from 11 September 2023.

The current online application platform Prostheses List Management System (PLMS) will be closed from 14 May 2023 (Table 1).

To enable the transition, we will bypass the March 2024 PL Update. This means sponsors will not be able to submit applications between 14 May 2023 and 10 September 2023. Sponsors will be able to submit applications using the HPP from 11 September 2023 (Figure 1).

There will be no impact to the 2023 PL update (March, July, and November).

We will continue to use PLMS to assess applications received before 14 May 2023, and until all data is migrated, tested, and accepted in the HPP.

The PL Reform measures will be implemented into HPP, to improve the PL from the policy, process, and technology perspectives.

Figure 1. Timeline for transition into Health Products Portal

To support sponsors through the transition process, we are running information webinars to:

1. Give an overview of the timing and impact of bypassing the March 2024 PL Update.
2. Provide information on the process to transition applications to the HPP.
3. Address questions and concerns.

Webinar recordings

The first webinar was held on 24 Jan and repeated on 31 Jan 2023. The webinar recording provides an overview of the Changes to the Prostheses List timeframes (2023/24) 

Memorandum of Understanding (MOU) with the Medical Technology Association of Australia (MTAA)

A Memorandum of Understanding (MoU) is currently in place with the Medical Technology Association of Australia (MTAA) to set out the final policy parameters for the PL Reforms.

Reducing the gap between the public and private sectors

In December 2021, after extensive consultation with the PL sector, IHACPA published the Methodology for Determining the Benchmark Price for Prostheses in Australian Public Hospitals outlining the process IHACPA would use in determining the benchmark price for prostheses in the public sector. 

In April 2022, IHACPA 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: IHACPA's benchmark report refers to 'Attachment A'. We cannot make Attachment A public, because it contains commercial-in-confidence information.

Schedule of PL benefit reductions

• Items on the 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)
• There will be no PL benefit reduction on the 4^th year of the reforms (1 July 2025-30 June 2026)
• This element does not relate to the Cardiac Implantable Electronic Devices (CIED) category, which is to be deferred by one year and receive the final benefit reduction of 20 per cent on 1 July 2025.

For more information about CIEDs refer to the MOU or email our review contact.

Advice on the Prostheses List adjusted benefit amounts to come into effect from 1 July 2022

We have published a collection of documents to support stakeholders that will need to update their systems and prepare other changes. Please note Information is correct at the time of publishing. However, final list might contain amendments.

1. Prostheses List adjusted benefit amounts for the July 2022 PL update by grouping
2. Prostheses List adjusted benefit amounts from 1 July 2022 to 1 July 2023 – Including the benefit reduction for General Use Items scheduled for March 2023

The new PL benefits are the result of applying the public benchmarking work by IHACPA.

We will give sponsors the draft PL in June 2022, February 2023 and June 2023, as per standard practice for the regular PL updates.

The standard drafts will contain new and amended listings and the adjusted benefit amounts effective from 1 July 2022.

Removal of general use items from the PL

A consequence of the work undertaken to clarify the Purpose Definitions and Scope of the PL is that a group of nearly 500 general use and consumable products, have been identified for removal from the PL because they either do not meet the current criteria for listing or because they will not meet the new definition or listing criteria. 

We have sought clinical advice from the Clinical Implementation Reference Group (CIRG) on the general use items identified for removal. The CIRG confirmed that these products 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 by doctors under a different funding agreement.

We are now in position to provide stakeholders the full list of General Use items to be removed on 1 July 2023.

Applications for comparable general use products (that do not meet the listing requirements) will not be accepted nor added to the PL from now on.

Alternative funding agreement for General Use items removed from the PL

The Australian Government position is there will be no additional out-of-pocket for consumers. The Department provided the following documents to private hospitals and insurers to help facilitate negotiation of alternative funding agreements:

• 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. 

Information about Bundling Arrangements for General Use Items 

We have received a report from the Independent Health and Aged Care Pricing Authority (IHACPA) detailing advice on bundling arrangements for General Use Items currently listed on the Prostheses List (PL). 

  

The bundled benefits for the General Use Items are defined using their expected March 2023 PL Scheduled benefit. These benefits will be the final PL benefits in place before the items are removed from the PL on 1 July 2023. The purpose of this advice is to support the private health sector in establishing alternative arrangements for the payment of benefits for General Use Items following their removal from the PL.   

  

The consultation paper and a full summary of stakeholder submissions made in response to the consultation paper will be made available. A summary of stakeholder submissions is included in the report. 

A webinar to discuss the report will be held by IHACPA on 25 January 2023 (12 pm – 1 pm AEDT). Advice on how to register for the webinar can be found at the IHACPA registration page.

New funding arrangement for Bundling of General Use Items

The Australian Government has committed to a new funding arrangement for the general use items scheduled to be removed from the PL on 1 July 2023 will be mandated through changes to the Private Health Insurance Act (Benefit Requirements) Rules 2011. This will clearly define the benefits insurers will pay to reimburse private hospitals for privately insured Australians. 

The Department will consult Stakeholders to help develop the implementation details of this new arrangement early in 2023.

Post-listing reviews

One of the objectives of the PL reform is to ensure we review products regularly to address post-listing issues as required.

We have developed a working Post-listing review framework which outlines processes for commencing, conducting and applying results of post-listing reviews. It also discusses governance arrangements, liaison with other areas of the Department, and the roles of advisory committees, stakeholders and experts.

The purpose of the Post-listing Review Framework is to:

• improve post listing processes
• carry out utilisation reviews and post-listing reviews that incorporate Health Technology Assessment (HTA)
• support other post-listing activities.

Please send us any feedback on the working Post-listing Review Framework.

Products identified for initial (pilot) review

On 12 May 2022, the Prostheses List Advisory Committee (PLAC) supported a trial of the following post-listing reviews on the following device types:

• Surgical guides and biomodels
• Spinal cord stimulators
• Metal-backed patellae
• Urogynaecological mesh devices.

We are conducting reviews on all these products according to the working Framework, and will inform its development on this page.

Current reviews underway

Surgical guides and biomodels

An initial review of the utilization data of Surgical guides and biomodels has indicated that the use of these devices is growing. Data shows that total benefit amounts have increased from $1.9 million in 2016-17 to $17.2 million in 2020-21.

Surgical guides and biomodels are non-implantable, single use devices used in planning and decision making both pre and intra-operatively. Those that are on the PL are for use in craniomaxillofacial surgery. At the moment there is not enough data or evidence to decide if they are essential for the implant of a device or if some prostheses could be implanted without them.

We have progressed the review of these products to a full post market review with HTA.

We have developed the following terms of reference for this review:

Stage 1

1. Analyse the role in clinical practice of surgical guides and biomodels currently listed on the Prostheses List (PL), including future trends in clinical use.
2. Review the evidence base for the use of surgical guides and biomodels currently listed on the PL, with a focus on comparative clinical effectiveness and their clinical benefits.
3. Consider the current utilisation of surgical guides and biomodels listed on the PL.
4. Based on the findings of Terms of Reference 1, 2 and 3, advise if surgical guides and biomodels meet the eligibility criteria for listing on the PL. Findings regarding eligibility may differ between products and clinical circumstances.

Stage 2

1. Subject to the findings of Terms of Reference 4, review the cost-effectiveness of surgical guides and biomodels currently listed on the PL.

In September 2022 the Department engaged an external Consultant to undertake Stage 1 of this review.

The Consultant will undertake the following activities as part of this review:

• Analysis of background documents, literature review and guidance documents
• Input from clinical experts sourced in consultation with the Australia and New Zealand Association of Oral and Maxillofacial Surgeons (ANZAOMS)
• Engagement with sponsors and stakeholders to seek evidence in support of the research questions.

Metal-back patellae

This is an internal review that is being conducted by the Department of Health and Aged Care based on concerns regarding the high revision rates of metal-backed patellae compared with the other types of patellae, supported by the Australian Orthopaedic Association National Joint Replacement Registry (AOANJRR) data. This review considers comparative clinical effectiveness and cost effectiveness.

We invited the sponsors of these devices to provide:

• an explanation for the higher PL benefit compared to all polyethylene patellae, and
• any evidence that might contradict the AOANJRR data suggesting inferior performance of metal backed patellae in comparison to all polyethylene patellae.

Sponsor responses closed on 1 September 2022.

We have commenced an assessment of this additional information. When available, the department will share the review findings and recommendations with sponsors.

To stay informed of the progress of this and other Post-Listing reviews, visit this page or email our review contact.

Compliance and assurance

We are establishing a compliance and assurance function to maintain the integrity of the PL.

Our first step was to develop the Prostheses List Compliance Strategy. This strategy identifies the principles which govern our compliance and enforcement functions and priorities. It also explains what actions qualify as ‘non-compliant’, and the steps we may take where there are concerns about non-compliant actions. 

The strategy is applicable to all PL stakeholders, including:

• health professionals
• private hospitals
• private health insurers
• clinicians
• sponsors
• manufacturers.

Stakeholders will benefit from a transparent approach to compliance and enforcement actions in a consistent and ongoing way.

We have finalised the Compliance Strategy, based on stakeholder feedback on the draft Compliance Strategy, which was open for consultation in September/October 2022.

If you would like more information or want to flag with us any cases of concern, please email our compliance contact.

More information

For more information about the policy development work undertaken since 2007 which forms the base for the current reform and the PL reviews since its establishment in 1985, refer to the document historical background of the 2021-2025 Prostheses list reform.

Reform updates will be made available on this webpage and through PHI Circulars. The Budget Fact Sheet is also available online.

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