BILLS DIGEST NO. 2, 2019–20              15 July 2019

Military Rehabilitation and Compensation Amendment (Single Treatment Pathway) Bill 2019

Michael Klapdor
Social Policy Section  

Date introduced: 4 July 2019

House:  House of Representatives

Portfolio: Veterans' Affairs

Commencement: Royal Assent

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at July 2019.

History of the Bill

A Bill by the same name, the Military Rehabilitation and Compensation Amendment (Single Treatment Pathway) Bill 2019 (the first Bill), was introduced to the House of Representatives on 14 February 2019.[1] The Bill was not debated and lapsed when the 45th Parliament was dissolved on 11 April 2019.

The Military Rehabilitation and Compensation Amendment (Single Treatment Pathway) Bill 2019 (the Bill), was introduced to the House of Representatives on 4 July 2019. The provisions of the Bill are identical to the first Bill with the exception of the commencement date. The first Bill’s proposed commencement was 1 July 2019. The Bill’s commencement date is the day of Royal Assent.

A Bills Digest was prepared in respect of the first Bill.[2] This Bills Digest replicates much of the material in the earlier one.

Purpose of the Bill

The purpose of the Bill is to amend the Military Rehabilitation and Compensation Act 2004 (the MRCA), the Veterans’ Entitlements Act 1986 (the VEA) and the Income Tax Assessment Act 1997 to replace the two existing medical treatment pathways with a single treatment pathway. The single treatment pathway will be aligned with that in the VEA and the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (the DRCA). Under the proposed amendments, medical treatment under the MRCA will be accessed and provided through a Department of Veterans’ Affairs (DVA) Health Card.

The measure was announced in the 2018–19 Mid-Year Economic and Fiscal Outlook as part of the Australian Veterans’ Wellbeing Package and is expected to cost $0.1 million over three years from 2019–20.[3]

Background

There are three main Acts that provide for support and compensation for veterans and their dependants:

•        the VEA, which primarily provides benefits and entitlements for those who undertook wartime service, operational service, peacekeeping service and hazardous military service before 1 July 2004, and/or peacetime military service from 7 December 1972 up to 30 June 1994[4]

•        the DRCA, which provides coverage for illness, injury or death arising from military service undertaken from 3 January 1949 to 30 June 2004; and for certain periods of operational service between 7 April 1994 and 30 June 2004[5] and

•        the MRCA, which provides coverage for illness, injury or death arising from military service undertaken from 1 July 2004.[6]

Some VEA benefits, such as income support payments, are not tied to periods of service but rather the type of service (for example, whether it involved service during wartime in an area where there was danger from hostile enemy forces). Other benefits, such as compensation payments and benefits, are tied to periods of service—eligibility under one or more of the three statutes will be determined by the period of service and the timing of the event giving rise to compensation (such as an injury or death).

Health treatment

Members of the veteran community can be entitled to health services and treatments at DVA’s expense under the three Acts described above. Eligibility for certain treatments can depend upon the type and date of a person’s military service (or their family member’s service), whether a health condition or disease has been linked with the person’s service and whether liability has been accepted under one of the Acts.

In most cases, access to treatment is provided via a DVA Health Card. The type of card determines what treatments an individual is eligible for.

The DVA Gold Card provides access to the full range of medical, hospital, pharmaceutical, dental and allied health services in Australia funded by DVA.[7] Medical services are subject to the requirements of the Medicare Benefit Schedule and prior approval from DVA may be necessary for some treatments.[8] A patient contribution is required for pharmaceutical services and for nursing home care. The Gold Card also provides for the costs of transport to access treatment and medical services. Some recipients may be eligible for a small fortnightly payment to assist with the costs of medicines, the Veterans Supplement.

The Gold Card provides access to health treatments and care for any condition—regardless of whether that condition is related to a person’s service. Those in receipt of a veterans’ Disability Pension at the special rate (totally and permanently incapacitated) receive a Gold Card marked ‘Totally and Permanently Incapacitated’.[9] Other eligible holders would receive a card marked ‘All Conditions’ signifying that the card can be used for medical treatment for any conditions.

The other health cards issued by DVA are the DVA Health Card—Specific Conditions (White Card), the DVA Health Card—Pharmaceuticals Only (Orange Card) and the Commonwealth Seniors Health Card.

The White Card provides access to health treatments and care at DVA’s expense for disabilities and conditions accepted as war or service related. ADF members and former members can also access treatments for some specific conditions whether they are service related or not (known as non-liability health care), including: cancer (malignant neoplasm), pulmonary tuberculosis and any mental health condition.[10]

The Orange Card is issued to certain Commonwealth and allied veterans and mariners and provides access to subsidised medicines under the Repatriation Pharmaceutical Benefits Scheme (RPBS).[11]

The Commonwealth Seniors Health Card is available to those over pension age who do not receive an income support pension from DVA or a payment from Centrelink and who meet an income test.[12] It provides access to subsidised medicines under the Pharmaceutical Benefits Scheme.

Treatment under the MRCA

Treatment under the MRCA is defined as:

 treatment provided, or action taken, with a view to:

a)       restoring a person to physical or mental health or maintaining a person in physical or mental health; or

b)       alleviating a person’s suffering; or

c)       ensuring a person’s social well-being.[13]

Treatments include:

a)       providing accommodation in a hospital or other institution, or providing medical procedures, nursing care, social or domestic assistance or transport; and

b)       supplying, renewing, maintaining and repairing artificial replacements, medical aids and other aids and appliances; and

c)       providing diagnostic and counselling services.[14]

Treatment pathways in the MRCA

The MRCA offers two different health treatment pathways for former ADF members: compensation for the cost of reasonable medical treatment (known as Treatment Pathway 1) and the Health Card system described in the previous section (known as Treatment Pathway 2). Treatment Pathway 1 is intended as the pathway for short-term conditions while Treatment Pathway 2 is intended for those with a permanent condition which may require treatment in the future.[15]

DVA must make an assessment as to which treatment pathway is appropriate unless a person is entitled to a Gold Card (in which case they are granted a Gold Card). Eligibility for a Gold Card is determined primarily by an individual’s war or defence service (or their deceased partner’s/parent’s service in the case of dependants) or by a service-related impairment that qualifies the person for a certain rate of Disability Pension.[16]

Generally, a person whose treatment needs are assessed as short-term or who is in the acute phase of treatment will be allocated to Treatment Pathway 1 and provided with a Treatment Authority letter.[17] This letter sets out a specified authority for treatment of the conditions for which liability is accepted—that is, the treatments that are approved and the costs of which will be reimbursed by DVA. The principles guiding the approval of medical treatments are that the treatment:

•       be necessary to improve any conditions for which liability has been accepted

•       do no harm

•       be of reasonable cost in the context of the Medical Benefits Schedule (MBS), the Pharmaceutical Benefits Scheme (PBS) and the Repatriation Medical Fee Schedule

•       be clinically effective (considering the available evidence) and

•       be accepted clinical practice.[18]

Some specific treatments—including hospitalisation, surgery, most dental work and non-core allied health treatments—will require prior approval before admission or the procedures commence.[19]

Treatment Pathway 2 is intended for chronic and permanent conditions. Gold Cards are issued where a person has 60 or more impairment points (as assessed under the MRCA) or where they become eligible for the Special Rate Disability Pension.[20] In other cases, individuals are issued with a DVA White Card. Treatment Pathway 2 is governed by three legislative instruments made under section 286 of the MRCA:

•       MRCA Treatment Principles (No. MRCC 53/2013)

•       MRCA Pharmaceutical Benefits Scheme (No. MRCC 44/2013)

•       MRCA Private Patient Principles 2004.

Preference for Treatment Pathway 2

DVA’s policy guide states: ‘Delegates should note that it is Departmental Policy to issue a Repatriation Health Card [a DVA Health Card], rather than provide treatment via Treatment Pathway 1, wherever practical’.[21]

The 2011 Review of Military Compensation Arrangements had found there were a number of advantages to Treatment Pathway 2 compared to Pathway 1:

•       Pathway 2’s treatment principles provide automatic approval for most medical treatment required because of a service injury or disease while under Pathway 1, a person must obtain prior approval on each occasion they require treatment—this requires a delegate of the Military Rehabilitation and Compensation Commission (MRCC) to make a decision about a requested mode of treatment.[22]

•       Treatments provided via the DVA health card system are governed by DVA’s schedule of fees (which are aligned with the Medicare Benefits Schedule) and represent better value for money than charges by medical and allied health providers in workers’ compensation schemes. The system is also streamlined with electronic invoicing which is more efficient than providers sending invoices to DVA, MRCC delegates having to assess the invoice and manually enter the payment details.[23] The MRCA Private Patient Principles used by Pathway 2 also provide for automatic prior approval for hospital admissions within a contracted fee schedule.

•       DVA Health Card holders can access medicines through the Repatriation Pharmaceutical Benefit Scheme (RPBS) which includes all items on the general Pharmaceutical Benefits Scheme and some additional items. Requests for medicines outside the RPBS are individually assessed by qualified DVA pharmacists. The report found that under Treatment Pathway 1, ‘requests are frequently received for over-the-counter medicines, such as vitamin supplements, that may or may not be of therapeutic benefit. It can be complex for a delegate to investigate and decide on these requests’.[24]

•       Rehabilitation aids and appliances need to be individually assessed and approved by delegates under Pathway 1 while Pathway 2 provides access to the Rehabilitation Appliances Program which includes a schedule of equipment that can be provided and includes contractual arrangements for professional assessments and provision of aids.[25]

•       Similarly, Pathway 2 provides access to DVA’s Community Nursing Program while Pathway 1 requires individual arrangements to be made for nursing services, which can be more expensive.[26]

Review of Military Compensation’s findings

The 2011 Review of Military Compensation considered whether there should only be one pathway. It suggested that Pathway 1 could be abolished if delegates were reluctant to move people onto Treatment Pathway 2, and that it would remove the complexity of having two pathways. However, the Review acknowledged that a reimbursement model was often used in covering medical expenses incurred from the period between the onset of the condition/the person’s claim and the issuing of a DVA Health Card.

The Review suggested that there was insufficient data to determine the question of a single pathway at the time, and recommended that the question should be reviewed again in three years.[27] The Review stated that costs ‘should be manageable in the intervening period through assessment of needs and management of the transfer to Treatment Pathway 2’.[28]

In its response to the Review, the then Labor Government accepted the recommendation to review the issue in three years after more data was gathered to determine the implications of a single treatment pathway.[29]

No further review of the treatment pathways has been published to date and it is unclear if any such review was undertaken.

Committee consideration

Senate Standing Committee for the Selection of Bills

In its second report of 2019, the Senate Selection of Bills Committee deferred consideration of the Bill to its next meeting.[30]

Senate Standing Committee for the Scrutiny of Bills

At the time of writing, the Senate Scrutiny of Bills Committee had not considered the Bill. The Committee had no comments on the first Bill.[31]

Policy position of non-government parties/independents

At the time of writing the non-government parties and independents had not stated a position on the Bill nor did they state a position on the first Bill.

Position of major interest groups

At the time of writing, none of the major ex-service organisations appear to have commented directly on the Bill or the first Bill.

In 2012, the Australian Peacekeeper and Peacemaker Veterans’ Association (APPVA) responded to the Australian Government response to the Review of Military Compensation Arrangements. The APPVA rejected the Government’s response to the recommendation regarding a further review of the single treatment pathway option:

We insist that both Treatment pathways remain as treatment cards do not allow for extra treatment required for some veterans.

In other words there exists a cap or treatment schedule within the VEA, which has in some instances become arduous to a veteran who requires high-end treatment.

The Provisions within MRCA Chapter 6 (Treatment for Injuries and Diseases) must be retained to allow such flexibility of treatment options to the veteran.[32]

Financial implications

According to the Explanatory Memorandum, the amendments proposed in the Bill will cost $91,000 over the forward estimates.[33] The first Bill’s financial impact was estimated at $69,000.[34]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[35]

Parliamentary Joint Committee on Human Rights

At the time of writing, the Parliamentary Joint Committee on Human Rights had not considered the Bill. The Committee considered the first Bill and found that it did not raise any human rights concerns.[36]

Key issues and provisions

The Bill will simplify the current provision of health treatments under the MRCA so that all clients will access treatment via a DVA Health Card rather than through two different ‘pathways’: one where a DVA Health Card is issued and used to access treatments at DVA’s expense, and one where treatment costs are reimbursed. The proposed single pathway model will be easier for DVA to administer and will also reduce the requirement for some veterans to meet the upfront costs of certain treatments before being reimbursed by DVA.

Under the proposed single pathway model, reimbursement of treatments obtained prior to a claim determination being made will still be available, where the MRCC considers that it was reasonable for the person to obtain the treatment.

Numbers affected

According to a statement by the DVA Secretary, Liz Cosson, around 4,000 veterans will have access to a White Card as a result of the Bill’s amendments:

The changes to legislation administered by DVA are not designed to remove any entitlements, or lower the benefits for clients, but to simplify treatment arrangements. Importantly, it provides veterans with an easier way to gain access to treatment which is not compromised by their ability to afford treatment.[37]

Provision for treatments outside the principles

As noted above, the APPVA raised concerns in 2012 around the proposed single treatment pathway and whether it would prevent some veterans accessing high-end treatments not provided for under the DVA Health Card model.[38]

The Bill includes provisions which will allow for the payment of compensation for health treatments in special circumstances. One of these provisions allows for compensation to be paid where the MRCC is satisfied that special circumstances exist in relation to the person and the treatment obtained.[39] The Explanatory Memorandum states that this is intended to cover those with ‘complex-high needs who may require treatment outside of the MRCA Treatment Principles’.[40]

Key provisions

Military Rehabilitation and Compensation Act 2004

Item 1 amends section 269 of the MRCA to substitute a new simplified outline of Chapter 6—Treatment for injuries and diseases. The new simplified outline has removed references to compensation for the cost of treatment (reimbursement) currently provided for in Part 2 of the Chapter.

Item 2 repeals Part 2 of Chapter 6 which is the section providing for the payment of compensation for the cost of treatment—known as Treatment Pathway 1.

Item 16 inserts new Division 1A of Part 4 of Chapter 6 which will provide for the payment of compensation of treatment in special circumstances. Special circumstances include treatments reasonably obtained before the MRCC has made a determination that the person is entitled to the treatment (new section 288A); treatments obtained prior to a person’s death, where the death is considered service-related and the MRCC has accepted liability (new section 288B); and where the MRCC is satisfied that special circumstances exist in relation to the person and the treatment obtained (new section 288C). In all cases, a claim for compensation in respect of the person must have been made under section 319 of the MRCA. The Explanatory Memorandum states that new section 288C is intended to cover a small number of individuals ‘with complex-high needs who may require treatment outside of the MRCA Treatment Principles’.[41]

New section 288D provides that compensation is not payable under proposed sections 288A, 288B and 288C where the Commonwealth is liable to pay compensation in respect of the treatment under a section in another chapter of the Act. New section 288E provides that no compensation is payable for the cost of treatment obtained for an aggravated injury or disease if, at the time of the treatment, the aggravation or material contribution had ceased.

New section 288F provides for the MRCC to determine the amount of compensation payable under proposed sections 288A, 288B and 288C—the amount must be reasonable for the cost of the treatment and must not be more than the amount actually incurred in obtaining the treatment (and disregarding any increases in the cost of a particular treatment after that treatment has been obtained).

Item 20 amends section 318 to remove references to the two treatment pathways. Section 318 is a simplified outline to Part 1 of Chapter 7 which provides for claims to be made under MRCA. The simplified outline currently refers to the MRCC deciding, under section 327, whether a person should be paid compensation under Part 2 of Chapter 6 (Treatment Pathway 1) or whether the person should be provided with treatment under Part 3 of Chapter 6.

Item 23 repeals section 327. Section 327 sets out the current assessment and determination process for the two treatment pathways. By repealing this section, all future treatments provided to those with an accepted MRCA claim would be through the DVA Health Card (Treatment Pathway 2) model provided for under Part 3 of Chapter 6 of the Act.

Item 30 contains transitional provisions and provides that claims for compensation under current subsection 271(2) (relating to treatments provided prior to a person’s service death) or section 273 (relating to treatments provided prior to a determination being made) which had been made but not determined before commencement of the amendments in this Bill, are to be taken as claims for compensation under new sections 288B or 288A, respectively. The transitional provisions also provide for all existing Treatment Pathway 1 clients to be considered Treatment Pathway 2 clients from the commencement date of the amendments in the Bill.

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[1].              Parliament of Australia, ‘Military Rehabilitation and Compensation Amendment (Single Treatment Pathway) Bill 2019 homepage’, Australian Parliament website.

[2].              M Klapdor, Military Rehabilitation and Compensation Amendment (Single Treatment Pathway) Bill 2019, Bills digest, 75, 2018–19, Parliamentary Library, Canberra, 2 April 2019.

[3].              J Frydenberg (Treasurer) and M Cormann (Minister for Finance and the Public Service), Mid-year economic and fiscal outlook—2018-19, p. 236

[4].              Department of Veterans’ Affairs (DVA), ‘Veterans’ Entitlements Act (VEA)’, DVA website, n.d.

[5].              DVA, ‘Overview of the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (DRCA)’, Factsheet MCS01, DVA, last updated 4 July 2018.

[6].              DVA, ‘Military Rehabilitation and Compensation Act (MRCA)’, DVA website, n.d.

[7].              DVA, ‘Using the DVA Health Card – All Conditions (Gold) or DVA Health Card Totally and Permanently Incapacitated (Gold)’, Factsheet HSV60, DVA, Canberra, last updated 18 May 2018.

[8].              Ibid.

[9].              Disability Pension is paid at different rates based on the level of impairment, and, for some recipients, by their work capacity. See DVA, ‘Overview of disability pensions and allowances’, Factsheet DP01, DVA, Canberra, last updated 18 June 2019.

[10].              DVA, ‘Veterans’ health cards’, DVA website.

[11].              Ibid.

[12].              Ibid.

[13].              Subsection 13(1), Military Rehabilitation and Compensation Act 2004.

[14].              Subsection 13(2), Military Rehabilitation and Compensation Act 2004.

[15].              DVA, Review of Military Compensation Arrangements, report to the Minister for Veterans’ Affairs, volume 2: detailed analysis, DVA, Canberra, February 2011, p. 183.

[16].              DVA, ‘Eligibility for the DVA Health Card All Conditions (Gold) or Totally and Permanently Incapacitated (Gold)’, Factsheet HSV59, DVA, Canberra, last updated 8 January 2019.

[17].              DVA, ‘8.2.1 Moving a person between treatment pathways’, Military Compensation MRCA Manuals and Resources Library: Policy Manual, DVA website, n.d.

[18].              DVA, ‘8.3.1 Reasonable reimbursement’, Military Compensation MRCA Manuals and Resources Library: Policy Manual, DVA website, n.d.

[19].              Ibid.

[20].              The Special Rate Disability Pension is an alternative compensation payment that can be paid instead of incapacity payments under the Military Rehabilitation and Compensation Act 2004. It can be paid to those whose capacity for work has been severely restricted because of conditions due to military service on or after 1 July 2004 and who meet other conditions. See, DVA, ‘Factsheet MRC09 – Special Rate Disability Pension’, Factsheet, DVA, last updated 8 January 2019.

[21].              DVA, ‘Chapter 8: Treatment for injuries and diseases: 8.1 Overview’, Military Compensation MRCA Manuals and Resources Library: Policy Manual, DVA website, n.d.

[22].              DVA, Review of Military Compensation Arrangements, op. cit., p. 185.

[23].              Ibid., p. 186.

[24].              Ibid.

[25].              Ibid.

[26].              Ibid.

[27].              DVA, Review of Military Compensation Arrangements, report to the Minister for Veterans’ Affairs, volume 1: overview, DVA, Canberra, February 2011, p. 50.

[28].              Ibid., p. 187.

[29].              Australian Government, Government response to the Review of Military Compensation Arrangements, May 2012.

[30].              Senate Standing Committee for the Selection of Bills, Report, 2, 2019, The Senate, Canberra, 4 July 2019, [p. 5].

[31].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 2, 2019, The Senate, Canberra, 28 March 2019, p. 76.

[32].              Australian Peacekeeper and Peacemaker Veterans’ Association (APPVA), Reply to: The Government Response to the Military Rehabilitation & Compensation Arrangements Review, dated May 2012, Annex A, p. A-20.

[33].              Explanatory Memorandum, Military Rehabilitation and Compensation Amendment (Single Treatment Pathway) Bill 2019, p. i.

[34].              Explanatory Memorandum [first Bill], Military Rehabilitation and Compensation Amendment (Single Treatment Pathway) Bill 2019, p. i.

[35].              Explanatory Memorandum, Military Rehabilitation and Compensation Amendment (Single Treatment Pathway) Bill 2019, pp. ii–iii.

[36].              Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, 2, 2019, The Senate, 2 April 2019, p. 169.

[37].              L Cosson, ‘Statement from Liz Cosson AM CSC – Secretary – Department of Veterans’ Affairs – Military Rehabilitation & Compensation Amendment (Single Treatment Pathway) Bill 2019’, VeteransSA website, 8 March 2019.

[38].              APPVA, op. cit., p. A-20.

[39].              Proposed section 288C inserted by item 16.

[40].              Explanatory Memorandum, Military Rehabilitation and Compensation Amendment (Single Treatment Pathway) Bill 2019, p. 5.

[41].              Ibid., p. 5.