Bills Digest no. 114 2014–15
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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.
Amanda Biggs
Social Policy Section
9 June 2015
Contents
Purpose
of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key provisions
Date
introduced: 27 May 2015
House: House of
Representatives
Portfolio: Health
Commencement: The
day after 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 ComLaw
website.
The purpose of the Private Health Insurance (National
Joint Replacement Register Levy) Amendment Bill 2015 (the Bill) is to amend the
Private Health Insurance (National Joint Replacement Register Levy) Act 2009
(the Act) by changing the method used to set the rate of the National Joint
Replacement Register levy.[1]
This levy is paid by sponsors (usually manufacturers or distributors) of joint
replacement prostheses, to support the operation of the National Joint
Replacement Register (NJRR) which collects data on the implantation and
performance of joint replacement devices.
The NJRR was established in 1999 by the Australian
Orthopaedic Association (AOA) to record information on the implantation and
performance of joint replacement prostheses.[2]
Until the establishment of the NJRR outcomes of joint replacement surgery (arthroplasty)
and the performance of joint replacement prostheses in Australia were not
known. The success of arthroplasty registries in other countries, in particular
the Swedish Arthroplasty Registries, led the AOA to propose such a register for
Australia.[3]
The NJRR records data on a wide range of joint replacement
procedures, including hip, knee, elbow, shoulder, wrist and disc replacements. Details
recorded include complications from surgery, revision rates and other
performance outcomes of joint replacement prostheses.[4]
Information collected by the NJRR is used to identify the causes of any
problems associated with particular prostheses or surgical technique, allowing
patients and surgeons to remain informed.[5]
The most common joint replacement operations are hip and
knee replacements, with around 90,000 Australians undergoing these procedures
each year.[6]
While the overall success rate of these procedures remains high, some devices
have poorer outcomes which the NJRR has helped identify. For example, early problems
with the performance of the ASR hip replacement system were identified through
data collected by the NJRR first published in 2006 and in later reports.
Subsequently, the device which had been implanted in some 5,500 Australians was
recalled by the manufacturer in 2009 several months before its recall in other
jurisdictions.[7]
Nationally, over 300 hospitals, both public and private, submit
data to the NJRR.[8]
Since 2009 the NJRR has operated on a cost recovery basis funded
by the imposition of a levy on manufacturers and distributors (also known as sponsors)
of joint replacement prostheses that are listed in the Private Health Insurance
(Prostheses) Rules.[9]
Currently, the Act specifies that the NJRR levy is imposed
on each sponsor of joint replacement prostheses calculated on specified levy
days according to a formula specified in the Private Health Insurance (National
Joint Replacement Register Levy) Rules.[10]
Broadly, the formula uses a proportional calculation taking into account the
number of joint replacement prostheses that are listed by a particular sponsor
as a proportion of the total number of joint replacement prostheses which are offered
by all sponsors on the relevant census day for the financial year.[11]
The Act also requires that the total levy amount imposed on a sponsor during
any financial year for the same joint replacement prosthesis cannot exceed
$5,000 (paragraph 7(2)(d) of the Act).
This Bill proposes amendments to the Act to change the
method by which the levy is calculated. Instead of the levy being a
proportional calculation as occurs currently, the Bill would allow for the application
of a utilisation method. The Bill proposes to allow the Private Health
Insurance (National Joint Replacement Register Levy) Rules to specify that the
rate of the levy take into account the number of times the provision of a joint
replacement prosthesis is recorded on the NJRR during a particular period. These
amendments would align the imposition of the levy with the actual level of
activity recorded on the NJRR and better reflect the increasing administrative cost
of operating the NJRR.
The cost of operating the NJRR rose from $1.7 million to
$2.1 million in 2013–14.[12]
This is expected to rise further in future years reflecting an ongoing trend of
increased joint replacement activity. Since 2003, the number of hip replacement
procedures undertaken in Australia has increased by 39.2 per cent and the
number of knee replacement procedures by 63.2 per cent.[13]
The Explanatory Memorandum notes that consultation with
industry indicated its strong preference for a utilisation method for
calculating the NJRR levy.[14]
The measure was announced as part of the 2015–16 Budget.[15]
A number of minor amendments are also proposed in the Bill
which implement modern legislative drafting practice.[16]
Senate Standing Committee for the
Scrutiny of Bills
To date, the Senate Standing Committee for the Scrutiny of
Bills had not considered this Bill.
Parliamentary Joint Committee on
Human Rights
To date, the Parliamentary Joint Committee on Human Rights
had not considered this Bill.
The policy positions of non-government parties and
independents are not yet known.
The Government indicated that the proposed amendments were
developed following consultation with the prostheses device industry, which had
indicated a preference for a utilisation method to be applied when setting the
levy.[17]
Industry’s views on the specific amendments proposed in this Bill have yet to
emerge, but the Medical Technology Association of Australia (MTAA) representing
the medical devices sector, welcomed the changes to the levy when they were announced
in the Budget. In a media release at the time, the MTAA stated that ‘the
changes to the levy for the National Joint Replacement Registry that support
the small to medium businesses through a fairer basis to the levy and a more
equitable funding model, are also welcome’.[18]
Other stakeholder groups, such as consumer advocates have yet to state a
position on the Bill.
The Explanatory Memorandum explains that as the NJRR is a
cost recovered activity there are no financial implications for the
Commonwealth as a result of the amendments proposed in this Bill.[19]
According to figures released in the Budget, the total levy amount collected
will increase by $0.6 million over the forward estimates.[20]
Overall, the Government expects that levy amounts for the majority of sponsors
will be lower as a result of this Bill.[21]
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.[22]
Schedule 1—Amendments to the
Private Health Insurance (National Joint Replacement Register Levy) Act 2009
Item 6 proposes amendments to subsection 6(1) that
deal with the imposition of the national joint replacement register levy on a
specified levy day. The current text specifies that the levy is imposed on
‘each sponsor for joint replacement prostheses’. Item 6 proposes to
replace that text with ‘the recording on the register of the provision of a
joint replacement prosthesis’. This would impose a levy on any activity
recorded on the NJRR on the specified levy day.
Item 11 proposes to repeal subsection 7(2),
which specifies the methodology for the imposition of the joint replacement register
levy, and substitute it with a subsection specifying a new methodology. The
replacement subsection 7(2) allows for the rate of the levy to be set under
the Private Health Insurance (National Joint Replacement Register Levy) Rules
and a determination made under proposed section 8A. Three approaches to
setting the levy are to be allowed, the first two of which are broadly in line
with current provisions. Paragraph 7(2)(a) allows for different
rates of levy or methods for the setting of the levy to be specified for
different classes of joint replacement prostheses; paragraph 7(2)(b)
allows for a levy rate of zero for a class of prostheses to be set; and paragraph
7(2)(c) allows for a rate of levy or methodology for calculating the levy,
to take into account the number of times recordings were made on the NJRR for
the provision of a joint replacement prosthesis over a particular period, which
is a deviation from the current provisions.
Finally, proposed subsection 7(3) specifies
that the maximum levy for a joint replacement prosthesis must not exceed $5,000
in a financial year, in line with current provisions in the Act.
Item 12 proposes to insert new section 7A
specifying who is to pay the NJRR levy, as the reference to the sponsor being
liable is removed by proposed subsection 6(1). Proposed section
7A specifies that the NJRR levy is payable by the sponsor of the joint
replacement prosthesis.
Item 13 proposes to insert new section 8A to
allow the Minister for Health to make determinations by legislative instrument.
Proposed section 8A specifies that the Minister may make a
determination by legislative instrument to specify a supplementary NJRR levy
day and a NJRR rate or method for calculating a rate. This aligns with proposed
subsection 7(2) which allows a determination to specify the levy or rate
of levy and clarifies the Minister’s role.
The remaining items propose mostly minor drafting amendments
or consequential amendments as a result of the major amendments.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Private Health Insurance
(National Joint Replacement Register Levy) Act 2009, accessed 29 May
2015.
[2]. The
NJRR was established with funding from the Commonwealth Government. Australian
Orthopaedic Association National Joint Replacement Registry (AOA NJRR), ‘Background’ AOA NJRR
website, accessed 28 May 2015.
[3]. Ibid.
[4]. Ibid.
A revision is when any subsequent surgical intervention is required. The
revision rate is the number of revisions that are undertaken over a specified period.
[5]. Ibid.
[6]. AOA
NJRR, ‘Patient
information’, AOA NJRR website, accessed 28 May 2015.
[7]. SE
Graves, ‘What
is happening with hip replacement?’, Medical
Journal of Australia, 194(12), 2011, p. 620, accessed 28 May 2015.
[8]. AOA
NJRR, ‘Hospital participation’, AOA NJRR website,
accessed 28 May 2015.
[9]. The
purpose of the Private
Health Insurance (Prostheses) Rules is to list the kinds of prostheses for
which a benefit is payable.
[10]. Private Health Insurance
(National Joint Replacement Register Levy) Rules 2011, accessed
1 June 2015. Section 6 of the Act specifies a maximum of four levy
days and two supplementary levy days per financial year.
[11]. The
actual denominator and numerator amounts specified in the Rules vary to account
for the operating cost of the NJRR in a given year. In 2013–14, costs for the
NJRR rose to $2,612,000 per year, so the formula amounts were amended to allow
cost recovery of this higher amount. See Explanatory Statement, Private
Health Insurance (National Joint Replacement Register Levy) Amendment Rules
2014 (No. 1), accessed 1 June 2015.
[12]. Ibid.
[13]. Ibid.
[14]. Explanatory
Memorandum, Private
Health Insurance (National Joint Replacement Register Levy) Amendment Bill 2015,
p. 2, accessed 28 May 2015.
[15]. Australian
Government, Budget
measures: budget paper no. 2: 2015–16, p. 107, accessed 28 May
2015.
[16]. Explanatory
Memorandum, op. cit., p. 2.
[17]. Ibid.
[18]. Medical
Technology Association of Australia (MTAA), MTAA
concerned that Budget 2015 lacks primary investment in healthcare,
media release, 14 May 2015, accessed 2 June 2015.
[19]. Explanatory
Memorandum, op. cit., p. 2.
[20]. Budget
measures: budget paper no. 2: 2015–16, op. cit., p. 107.
[21]. Explanatory
Memorandum, op. cit., p. 5.
[22]. The
Statement of Compatibility with Human Rights can be found at page 3 of the
Explanatory Memorandum to the Bill.
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