On 29 May the Council of Australian Governments (COAG) agreed to several variations to the National Health Reform Agreement (NHRA) which will take effect on 1 July 2020. Compliance with the terms of the NHRA is of key importance to public health facilities that seek to access Medicare rebates for private health services provided within those facilities. The amendments include increased oversight and reporting of private service claims made in public hospitals. In February 2018, the COAG drafted heads of agreement on new public hospital funding arrangements for the period 2020/21 to 2024/25. Under those heads of agreement COAG negotiated a new Addendum to the NHRA which will take effect on 1 July 2020 (New Addendum). An external review of the New Addendum will be completed by December 2023.

Four key things to know about the New Addendum and claiming Medicare for private services in public hospitals

The New Addendum largely re-writes the former NHRA, with a number of new clauses and re-ordering of previously included clauses.

1. Amendment to the Medicare Principles

The New Addendum requires that 'eligible persons must be given the choice to receive public hospital services free of charge as public patients' and will no longer be linked to the kinds of services 'that are currently, or were historically provided by hospitals.' This amendment is likely to address previous concerns about what types of services were required to be provided, having regard to historical service provision at hospitals.

2. Information provided to patients

Two new clauses have been included into Schedule G (Business Rules). They require that any additional written material or verbal material about a choice to be treated privately will:

• Be appropriate, robust and best support the consumer to make an informed choice; and
• Refrain from directing the patient to a particular choice.

3. Data provision to private health insurers and certification documentation

The New Addendum includes two new sections into Schedule G (Business Rules). Hospitals will continue to provide data on privately insured patients treated in a public hospital to private health insurers, consistent with the agreed private patients claim form. Local Hospital Networks and the Australian Institute for Health and Welfare are required to work towards providing data on privately insured patients treated in a public hospital to insurers as required under the Private Health Insurance (Health Insurance Business) Rules (the Rules) made under the Private Health Insurance Act 2007 (Cth).

The Commonwealth has committed to consulting with the States on any changes to those Rules that impact on the practices of public hospitals. There is an acknowledgement that any changes to data provision requirements should avoid creating an undue additional administrative burden on public hospitals. Consistent with the Rules, private health insurers are not to request certification documentation from public hospitals beyond those prescribed in the National Private Patient Hospital Claim Form, or to delay or refuse payments of claims for eligible hospital treatments. Where there is insufficient or incorrect information, insurers should, in the first instance work with the public hospital to seek further information.

4. Increased oversight of private claims

An amendment in Schedule G (Business Rules) states that, as regulators of private health insurers, the Commonwealth will review compliance with the minimum standards set out in the New Addendum, the Rules and the Private Health Insurance Act 2007 (Cth) annually, report any relevant findings to the COAG Health Council, and will publish the review.

The New Addendum also provides that, from 1 July 2020, the Administrator should identify instances that should not have qualified for the payment of a Medicare, PBS or private health insurance payment, and refer these to the relevant Commonwealth officer to support compliance activities through mechanisms outside of the New Addendum. Data matching business rules will be determined by the Administrator in consultation with the Parties.

Finally, the external review to be completed by December 2023, will include a consideration of 'whether any unintended consequences such as cost-shifting, perverse incentives or other inefficiencies that impact on patient outcomes have arisen, and the capacity of Parties to adopt and deliver innovative models, as a result of financial and other arrangements' in the New Addendum.

Additional things to know about the New Addendum

Importantly, the changes are designed to benefit public health, as the New Addendum:

• Re-commits to eliminating differences in health status of those groups currently experiencing poor health outcomes relative to the wider community;
• Acknowledges the shared commitment of the Commonwealth and the States to work in partnership with Aboriginal and Torres Strait Islander communities in closing the gap through the COAG-agreed agenda;
• Acknowledges the responsibility for improving the mental health outcomes of Australians and preventing suicides is shared by all governments, and commits to working together informed by the Productivity Commission's final report into mental health, the National Suicide Prevention Adviser's final report and other inquires, including the Victorian Royal Commission into Mental Health Services;
• Prioritises prevention and helping people manage their health, including reforms in empowering people through health literacy; and
• Commits to driving best practice and performance using data and research.

In light of the increased oversight of claims for Medicare and private health insurance for services provided in public hospitals, it is an opportune time to review Medicare billing policies, procedures and training for staff to ensure that claims are made only in circumstances permitted by the New Addendum. Further, there is the opportunity for public health providers to get involved in the development of the data matching business rules with the Administrator, and any proposed amendments to the Rules by the Commonwealth.

If you have any questions about the New Addendum or would like to discuss the implications for your organisation, please don't hesitate to contact one of our specialist lawyers.

Background to the NHRA

The NHRA codifies the shared intention of the Commonwealth, State and Territory governments to work in partnership to improve health outcomes for all Australians and ensure the sustainability of the Australian health system. The first NHRA was signed in 2011 and introduced major changes in how public hospitals were to be funded by Commonwealth, State and Territory governments. The most significant change was the transition from block funding to a predominately ‘activity-based’ funding (ABF) model. In July 2017, some amendments to the NHRA were made in relation to public hospital funding from 1 July 2017 to 30 June 2020. Those amendments preserved the ABF model and focused on reducing unnecessary hospitalisations and improving patient safety and service quality.