Bills Digest no. 172 2008–09
Private Health Insurance (National
Joint Replacement Register Levy) Bill 2009
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date introduced: 28 May 2009
House: House of Representatives
Portfolio: Department of Health and Ageing
Commencement: Everything
other than sections 3-9: on Royal Assent
Sections 3-9: the later of 1 July 2009
or on Royal Assent
Links: The relevant links to the Bill, Explanatory Memorandum
and second reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills have been passed they can
be found at ComLaw, which is at http://www.comlaw.gov.au/.
The purpose
of the Private Health Insurance (National Joint Replacement Register Levy) Bill
2009 (the Bill) is to establish the National Joint Replacement Register Levy (the
levy) to fund the National Joint Replacement Registry (the Registry).[1]
The Australian Orthopaedic Association (AOA) established the
Registry in 1999 to improve the results of joint replacement surgery in
Australia through detailed information about joint replacement surgery. Another
aim of the Registry is to reduce the number of redo operations. The Registry
provides information about the types of joints available and surgical
techniques. It also includes information about factors known to influence the
outcome of joint replacement surgery such as the health concerns of the patient
and their overall health status, the type of joint replacement used and the way
the operation is conducted.
The Registry collects information on each joint replacement
surgery in Australia, except in instances where the patient does not consent.
The following details are collected; details of the patient, the reason for the
surgery, which joint was replaced and the side of the operation, type of joint
replacement and all the individual components used in the operation.
The Registry also records information if a joint replacement
is redone (known as a revision procedure). This procedure is recorded as it
relates to the first (or primary) operation. This enables the Registry to
determine how many of the initial primary procedures have been revised, the
reason why it was redone, how long after the original surgery the revision
occurred and which of the components (if any) was replaced.
As all hospitals which undertake joint surgery (around 300)
in Australia participate in the Registry, comprehensive information about joint
replacement surgery is collected. This allows for comparative analysis to be
undertaken about types of surgery done and the joints that are replaced. The
Registry does not recommend what is the best joint replacement for a particular
patient.
The Registry has been funded by the Australian Government
since its inception in 1999. Additional funding was granted in 2007 to expand
the role of the Registry to collect information on other types of joint
replacements such as shoulder, elbow, wrist, ankles and spinal disc.[2]
Although not expressly stated, it appears that the decision
to cost recover expenditure associated with the Registry is consistent with the
broader government agenda to cost recovery generally. Since its election, the
government has also sought to introduce cost-recovery arrangements for
consideration by the Pharmaceutical Benefits Advisory Committee (PBAC) for
products to be listed on the Pharmaceutical Benefits Scheme (PBS).[3]
This measure was introduced in the context of the 2009-10
Budget. The Budget papers note that Government has funded the Registry since
1998 and that it is considered ‘appropriate’ for ‘significant stakeholders in
this sector to meet the cost of the Registry’.[4]
In its submission to the Senate
inquiry, the Department of Health and Ageing (DoHA) noted that the Registry
effectively performs a post-marketing surveillance role which provides financial
benefit to manufacturers of joint replacement prostheses as well as providing
information about safety, quality and efficacy. The United Kingdom’s National
Joint Registry was provided in support of the proposal as it operates on a levy
which is applied to all joint replacement products. It also argued that the
levy was required to ensure stability of funding for the Registry.[5]
The Bill has been referred to the
Senate Standing Committee on Community Affairs (the Committee) for review. The
report is due on 16 June 2009. The Committee conducted two public hearings that
are discussed elsewhere in this Digest.
Although this measure has failed to generate significant
media commentary, the submissions to the Senate inquiry indicated a wide range
of views. Most stakeholders were opposed to the introduction of the levy. The
AOA did not have ‘specific comments’ on the proposal, but noted that the introduction
of the levy would have no impact ‘on the continued independence, integrity and
world-renowned quality of the NJRR’.[6] The Australian Health Insurers Association (AHIA) was in favour of the
proposal.
There were several recurring themes raised in the
submissions and public hearings. The perceived lack of consultation about
implementation and limited timeframes to respond to the inquiry were strongly
criticised. Other stakeholders focused on the inequity of the arrangements,
suggesting that the full cost of the levy should not be borne by the industry
but other stakeholders (or beneficiaries) who should also contribute.[7] Some considered it to be no more than a tax and another additional cost for the
industry to bear (especially for sponsors with products listed on the
Prostheses List, which is also subject to cost recovery arrangements).[8] It was suggested that this may result in low volume products being withdrawn
from the Australian market with significant implications for patient access.[9] There was also concern that this Registry would serve as a model for future
registries and that further consultation was required to ensure the best
possible approach.[10]
Another issue raised in the submissions was the
appropriateness of cost recovery arrangements for an outcome that could
essentially be considered a ‘public good’.[11] The information provided by the Registry ultimately offers significant benefits
to patients (and clinicians) as it provides information about safety, quality
and efficacy of joint replacement procedures. It also provides benefits to
government, taxpayers and insurers as it may reduce overall health expenditure.
Although there was much commentary about the imposition of
additional cost to the industry, only one submission considered the
appropriateness of the levy amount. Medtronic argued that 99% of the Registry
(around 9,000 items) attracted a benefit of less than $8,000, rather than the
$67,000 that was quoted in the Explanatory Memorandum.[12] Other submissions also suggested that the levy should be applied by volume
rather than listing, so companies with several low volume products on the
Registry are not penalised and do not ultimately withdraw products from the
Australian market.[13]
According to the Government,
the Bill will result in estimated budget savings of $5 million dollars over
four years.[14]
Clause 5 contains definitions of terms used in the
Bill.
Importantly, under subclause 5(2), a sponsor of a joint replacement prosthesis is defined as:
(a) a joint replacement prosthesis is currently listed in the
Private Health Insurance (Prostheses)
Rules as a result of an application made
by the person under subsection 72-10(2) of the Private Health Insurance Act 2007; or (b)
if a joint replacement prosthesis is currently listed in the Private Health Insurance (Prostheses) Rules in
accordance with section 12 of the Private Health Insurance (Transitional Provisions and Consequential Amendments) Act
2007—the person was, immediately
before the commencement of the Private
Health Insurance Act 2007, the sponsor of that prosthesis
for the purposes of the National Health Act 1953.
In addition, joint replacement prosthesis is defined
in subclause 5(1) as a prosthesis listed in the Private Health Insurance
(National Joint Replacement Register Levy) Rules (the Rules), and used in joint
replacement.
Clause 6 of the Bill provides for the imposition of
the levy.
Subclause 6(1) provides that the levy will be imposed
on each sponsor for joint replacement prostheses on days specified:
- in the Rules, and
- by the Minister, by legislative instrument,[15] as a supplementary levy,
during each financial year.
Subclauses 6(2) and (3) have the effect that the
levy and supplementary levy would not be imposed on more than four and two
occasions respectively in each financial year.
Under clause 7, the rate of the levy imposed on a
particular day will be specified in the Rules, while the supplementary levy rate
for a particular day will be determined by the Minister, also by legislative
instrument, both of which would apply on that specific day.
Subclause 7(2) provides that the rate of the levies
must be based on the number of joint replacement prostheses sponsored as
follows:
- the levy–the census day as specified in the Rules, and
- the supplementary levy–the census day as the Minister determines
by legislative instrument.
In addition, the rate of levies may differ depending on the
type of joint replacement prosthesis sponsored, ranging from $0 (for one or
more types of prostheses) to not more than $5000 (for sponsorship of any one
prosthesis).
Clause 8 empowers the Minister to make the Rules.
Clause 9 contains a standard regulation making power.
Please note that these proposed
amendments should be considered together with amendments proposed in relation
to the levy in the Private Health Insurance Legislation Amendment Bill 2009
(the PHI Bill).[16] The PHI Bill was introduced by the Government on 3 June 2009. According to the
Government, the amendments proposed in the PHI Bill are consequential to the
amendments proposed in this Bill, allowing for the administration of the levy.[17]
Concluding
comments
The joint replacement prostheses industry has expressed
significant concern about implementation of this measure, particularly in
relation to equity, stakeholder consultation, and access to low volume
products. This proposal also raises questions about the appropriateness of cost
recovery arrangements for government procurement process and processes (such as
Registries) that offer a ‘public good’. These questions have not been
sufficiently addressed in the Explanatory Memorandum and the submission to the
inquiry by DoHA.
Explanatory
Memorandum, Private Health Insurance (National Joint Replacement Register Levy)
Bill 2009, p. 1.
[2]. T Abbott
(Minister for Health and Ageing), National Joint Replacement Registry –
increased data collection, media release, Budget 2007-08, viewed 11 June
2009, http://www.health.gov.au/internet/budget/publishing.nsf/Content/4E7457965553B382CA2572D40029BDF6/$File/hfact48.pdf
[3]. See Rebecca de Boer, National
Health Amendment (Pharmaceutical and Other Benefits-Cost Recovery) Bill 2008,
Bills Digest, no. 125, 2007-2008, Parliamentary Library, Canberra, viewed 16
June 2009, http://www.aph.gov.au/library/pubs/bd/2007-08/08bd125.pdf; Rebecca de Boer, National
Health Amendment (Pharmaceutical and Other Benefits-Cost Recovery) Bill 2008
[No. 2], Bills Digest, no. 170, 2008-2009, Parliamentary Library, Canberra,
viewed 16 June 2009,
http://www.aph.gov.au/library/pubs/bd/2008-09/09bd170.pdf.
[4]. Australian
Government, Budget measures: budget paper no. 2:2009-10, Commonwealth of
Australia, Canberra, 2009, p. 298.
[5]. Department
of Health and Ageing (DoHA), Submission to the Senate Community Affairs Legislation
Committee, Inquiry into the Private Health Insurance (National Joint
Replacement Register Levy) Bill 2009, 9 June 2009, viewed 12 June 2009, http://www.aph.gov.au/Senate/committee/clac_ctte/private_hth_nat_joint_replace_reg_09/submissions/sub18.pdf
[6]. Australian
Orthopaedic Association (AOA), Submission to the Senate Community Affairs
Legislation Committee, Inquiry into the Private Health Insurance (National
Joint Replacement Register Levy) Bill 2009, 3 June 2009, viewed 12 June 2009, http://www.aph.gov.au/Senate/committee/clac_ctte/private_hth_nat_joint_replace_reg_09/submissions/sub01.pdf
[7]. This was a
dominant theme of the submissions. See, for example, submissions from Smith & Nephew, Medical Technology Australia Association (MTAA),
Advanced Surgical Therapies, Austofix, Global Orthopaedic Technology and
Medtronics.
[8]. See, for
example, submissions from St Jude Healthcare, Smith & Nephew, Stryker, MTAA, Advanced Surgical
Therapies and Zimmer.
[9]. See, for
example, submissions from Boston-Scientific, Medtronics, Global Orthopaedic
Technology, LifeHealthCare and Advanced Surgical Therapies.
[10]. See, for
example, submissions from Johnson & Johnson, Boston Scientific, Medtronics, MTAA.
[11]. See, for
examples, submissions from LifeHealthCare, St Jude Healthcare, Zimmer and Catholic Healthcare
Australia.
[12]. Medtronic, Submission
to the Private Health Insurance (National Joint Replacement Register Levy) Bill
2009, submitted 5 June 2009, viewed 12 June 2009, http://www.aph.gov.au/Senate/committee/clac_ctte/private_hth_nat_joint_replace_reg_09/submissions/sub13.pdf
[13]. See, for
example, Global Orthopaedic Technology, Submission to the Senate Community
Affairs Legislation Committee, Inquiry into the Private Health Insurance
(National Joint Replacement Register Levy) Bill 2009, 5 June 2009, viewed 12
June 2009, http://www.aph.gov.au/Senate/committee/clac_ctte/private_hth_nat_joint_replace_reg_09/submissions/sub12.pdf
[14]. Explanatory
Memorandum, p. 2.
[15]. Therefore,
it is subject to parliamentary scrutiny: see Legislative Instruments Act 2003
Part 5.
[16]. See Private
Health Insurance Legislation Amendment Bill 2009 items 4-10 and 14.
[17]. Explanatory
Memorandum, Private Health Insurance Legislation Amendment
Bill 2009, p. 2.
Sharon Scully and Rebecca de Boer
16 June 2009
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
This work is copyright. Except to the extent of uses permitted by the
Copyright Act 1968, no person may reproduce or transmit any part of this
work by any process without the prior written consent of the Parliamentary
Librarian. This requirement does not apply to members of the Parliament
of Australia acting in the course of their official duties.
This work has been prepared to support the work of the Australian Parliament
using information available at the time of production. The views expressed
do not reflect an official position of the Parliamentary Library, nor
do they constitute professional legal opinion.
Feedback is welcome and may be provided to: web.library@aph.gov.au.
Any concerns or complaints should be directed to the Parliamentary Librarian.
Parliamentary Library staff are available to discuss the contents of publications
with Senators and Members and their staff. To access this service, clients
may contact the author or the Library’s Central Entry Point for
referral.
|
