Hospital Circulars Main Index < Hospital Circulars 2005 Index <

Hospital Circular 22 /2005

Date Issued: 21 December 2005

Distribution: Public Hospitals

Attention: Public Hospitals, Extended Care Centres, Metropolitan Health Services, and Regional Offices

Subject: Public Hospital fees – Changes

New Prosthesis Arrangements

The Commonwealth introduced legislative amendments on 10 March 2005 necessary for the implementation of new prostheses arrangements.

The amendments require registered health funds, to offer a “no gap” and “gap” permitted range of prostheses in relation to every admitted hospital procedure on the Medicare Benefits Schedule (MBS) for which they provide cover.

At least one clinically appropriate no-gap prosthesis for each MBS admitted hospital procedure would be listed on a new Prostheses List.

Under the new legislation, if the product has only a Minimum Benefit Level then a gap payment is not required (no gap prosthesis) and the health fund will cover the full cost. In these circumstances the health fund member (if covered) will not incur any out of pocket costs for that prosthesis.

If a listed product has a Minimum Benefit Level and a Maximum Benefit Level then a gap payment may be required (gap prosthesis). The health fund will cover the cost of the gap prosthesis to at least the minimum benefit level and the health fund member will be responsible for any outstanding amount up to, but not exceeding, the difference between the maximum and the minimum.

The new prostheses arrangements implemented on 31 October 2005 include the new Prostheses List, which itemises the benefits payable against all no-gap and gap products.

Prostheses fees to be charged by Public Hospitals

The Commonwealth does not regulate prostheses fees charged by Victorian public hospitals, these fees are set by the State. The State has adopted the Minimum Benefit Levels set out in the Commonwealth’s Prostheses List as the fees and charges by Victoria’s public hospitals.

Agreement with Private Health Funds

Discussions at a national level have been taking place between the States, Commonwealth & Private Health Funds (PHF) to agree reimbursement by PHF to public hospitals.

Agreement has been reached where PHF will from 1 January 2006 reimburse the Minimum Benefit Levels set out in the Commonwealth’s Prostheses List with the exception of 2 categories of prostheses, Ophthalmic and Cardio-thoracic.

Discounts of 20% on Ophthalmic and 7.5 % on Cardio-thoracic to the Minimum Benefit Levels will apply. However, where hospitals are unable to procure these prostheses items at the agreed discount levels, the hospital can provide a supplier invoice to the relevant health fund and will be reimbursed up to the Minimum Benefit Levels set out in the Commonwealth’s Prostheses List.

It was agreed that these discounts would be reviewed with the release of the next Prostheses List in August 2006 and adjusted where appropriate with the subsequent Prostheses List in 2007. Whilst States have agreed to absorb the cost of procurement and handling (ie:direct cost) and invoice retrieval, this will be included as part of the review process.

Informed financial consent

There are a small number of prostheses which are either not on the Commonwealth’s Prostheses List, or a benefit amount has not been determined. In these circumstances hospitals will need to ensure procedures are in place whereby informed financial consent is obtained from the patient in advance of their procedure where a gap payment may result.

Hospitals will need to ensure that they are aware of any updates to the prostheses list. This should occur by reference to the Commonwealth Department of Health and Ageing Circulars issued by the Private Health Industry Branch, which can be found on their web site at http://www.health.gov.au/privatehealth/providers/circulars.htm

Information regarding the new prostheses arrangements can also be found on the DHS web site at http://www.health.vic.gov.au/feesman/fees2.htm#3_5.

Shane Solomon
Executive Director
Metropolitan Health and Aged Care Services