Schedule 5―Second‑tier default benefitsSchedule 5―Second‑tier default benefits

# Schedule 5―Second‑tier default benefits ### 1. Interpretation (1) In this Schedule: authorised officer means a departmental officer authorised by the Secretary of the Department to make a determination under subclause 1A (2), (3) or (4) or to review a determination under subclause 1B(3). comparable has the meaning given by subclause 1A(6). Hospital Casemix Protocol Data has the meaning given by rule 4 of the Private Health Insurance (Health Insurance Business) Rules 2018. second‑tier eligible hospital means a hospital in the class set out in rule 7A of the Private Health Insurance (Health Insurance Business) Rules 2018. (2) In this Schedule, except in subclauses 1A(8) and (9), the Australian Capital Territory is taken to be part of New South Wales, and the Northern Territory is taken to be part of South Australia. ### 1A. Categorisation of private hospitals (1) If, as at 1 January 2019, a departmental officer authorised by the Secretary of the Department for the purpose has, in anticipation of the commencement of this provision, caused to be published on the Department’s website a list of all the hospitals for which a declaration is in force under subsection 121‑5(6) of the Act that places each hospital in a category set out in subclause (7), then each hospital is taken to be determined to be in that category. (2) If such a list has not been published, then as soon as practicable an authorised officer must determine which category of hospital from the categories set out in subclause (7) each private hospital for which a declaration is in force under subsection 121‑5(6) of the Act is to be placed in, and cause a list of the hospitals in each category to be published on the Department’s website. Note: If a patient is admitted to a hospital between 1 January 2019 and 31 August 2019 insurers may continue to work out the average charge on the basis of the provisions of this Schedule as in force immediately before the commencement of Schedule 4 to the Private Health Insurance (Reforms) Amendment Rules 2018. However, insurers must use the Department’s published list of hospitals under subclause (1) or (2) to determine in which category a hospital claiming second‑tier default benefits is placed. (3) If a private hospital is declared under subsection 121‑5(6) of the Act after 1 January 2019, an authorised officer must determine which category of hospital from the categories set out in subclause (7) that private hospital is to be placed in. (4) If a hospital has been placed in a category by a determination under this clause, an authorised officer may before 1 June of a particular year determine a different category of hospital from the categories set out in subclause (7) that the private hospital is to be placed in. (5) A list of the hospitals in each category as of 1 August of each year must be published on the Department’s website. (6) Private hospitals are comparable if they are placed in the same category by a determination made under subclause (1), (2), (3) or (4). (7) For the purposes of this clause, the categories are the following: (a) private hospitals that provide psychiatric care, including treatment of addictions, for at least 50% of the episodes of hospital treatment, and do not fall into category (g); (b) private hospitals that provide rehabilitation care for at least 50% of the episodes of hospital treatment, and do not fall into categories (a) or (g); (c) private hospitals that do not fall into categories (a), (b) or (g), with up to and including 50 licensed beds; (d) private hospitals that do not fall into categories (a), (b) or (g), with more than 50 licensed beds and up to and including 100 licensed beds; (e) private hospitals that do not fall into categories (a), (b) or (g), with more than 100 licensed beds, without an accident and emergency unit or a specialised cardiac care unit or an intensive care unit; (f) private hospitals that do not fall into categories (a), (b) or (g), with more than 100 licensed beds, with either (or any combination of) an accident and emergency unit or a specialised cardiac care unit or an intensive care unit; (g) private hospitals that provide episodes of hospital treatment only for periods of not more than 24 hours. (8) If State or Territory legislation in the State or Territory where the private hospital is located regulates the number of beds or patients that a private hospital is permitted—in subclause (7), a reference to licensed beds is a reference to the beds or patients that a private hospital is permitted, under State or Territory legislation in the State or Territory where the private hospital is located. (9) If State or Territory legislation in the State or Territory where the private hospital is located does not regulate the number of beds or patients that a private hospital is permitted—in subclause (7), a reference to licensed beds is a reference to the beds and bed equivalents the private hospital operates. (10) An authorised officer must calculate proportions for the purposes of paragraphs (7)(a) and (b): (a) if Hospital Casemix Protocol Data is available for the private hospital—using the most recent year of Hospital Casemix Protocol Data available to the Department for the private hospital; and (b) otherwise—on the basis of any relevant information available to the Department about the episodes of hospital treatment at the private hospital. ### 1B. Internal review of a categorisation determination (1) A private hospital subject to a determination made under subclause 1A(1), (2), (3) or (4) may request internal review of its categorisation by the determination. (2) An application for internal review under subclause (1) must be made in writing within 28 days after the day the determination is notified to the hospital. (3) If an application for internal review is made, an authorised officer (who must not be the authorised officer who made the original determination) must: (a) review the determination; and (b) either confirm the determination or make a fresh one within 28 days after the day on which the application was received by the Department. ### 2. Circumstances For rules 4 and 5 of Part 2 of these Rules, the circumstances for hospital treatment to which this Schedule applies are that the treatment is provided to a patient who is not a nursing‑home type patient and the treatment is provided at a second‑tier eligible hospital. Note: The definition of hospital treatment in section 121‑5 of the Act includes that the treatment is provided either at the hospital or provided or arranged with the direct involvement of a hospital. This Schedule sets out benefit requirements only for treatment provided at the relevant hospital ― see paragraph 121‑5(1)(c) of the Act. ### 3. Minimum benefit (1) Despite anything in Schedules 1, 2 or 3, but subject to subclause (2) of this clause, the minimum benefit for hospital treatment provided in the circumstances described in clause 2 of this Schedule is the amount worked out in accordance with this clause. (2) Where hospital treatment is provided in the circumstances described in clause 2 of this Schedule, but: (a) the minimum benefit worked out in accordance with this clause for the hospital treatment is below the amount determined in accordance with Schedules 1, 2 or 3 of these Rules; or (b) an amount for the hospital treatment cannot be worked out in accordance with this clause, the minimum benefit for that hospital treatment is the amount worked out in accordance with Schedules 1, 2 or 3 for that hospital treatment. (3) If a hospital ceases to be a second‑tier eligible hospital for the purposes of this Schedule, the minimum benefit in relation to an episode of hospital treatment for an insured person who was an admitted patient at the hospital or booked for hospital treatment at the hospital (as opposed to merely being on the hospital’s waiting list) before the day that the hospital ceased to be a second‑tier eligible hospital is the minimum benefit that would have applied if the hospital continued to be a second‑tier eligible hospital at the time the treatment was provided. (4) Subject to subclauses (2) and (8), the minimum benefit payable by an insurer for an episode of hospital treatment at a second‑tier eligible hospital for which the admission date was between 1 September of a particular year (the first year) and 31 August of the next year is an amount no less than 85% of the average charge for the equivalent episode of hospital treatment, under that insurer’s negotiated agreements as in force on 1 August of the first year, with all private hospitals: (a) that: (i) if the second‑tier eligible hospital is on the list published on the Department’s website under subclause 1A(5)—were comparable on 1 August of the first year with the second‑tier eligible hospital; and (ii) otherwise—are in the same category as the second‑tier eligible hospital in the list published on the Department’s website under subclause 1A(5) as at 1 August of the first year; and (b) that are in the same State as the second‑tier eligible hospital. Note: See clause 4 for a transitional arrangement for admissions to second‑tier eligible hospitals between 1 January 2019 and 31 August 2019. (5) The formula for calculating the average charge for the equivalent episode of hospital treatment by an insurer in each State is as follows:  Where: j = group of equivalent episodes of hospital treatment under the insurer's negotiated agreements; i = group of the insurer's negotiated agreements in force on 1 August of the first year with comparable private hospitals in the State; n= the number of the insurer's negotiated agreements in force on 1 August of the first year with comparable private hospitals in the State; Rji = charge for episode of hospital treatment type j in the negotiated agreement i Rj = average charge for episode of hospital treatment type j. (6) In subclause (4), each episode of hospital treatment must be identified using the patient classification system and payment structure in the majority of the relevant insurer's negotiated agreements in force on 1 August of the first year with all comparable private hospitals in the State in which the second‑tier eligible hospital is located. (7) In subclause (4), for the purpose of calculating the average charge for the equivalent episode of hospital treatment in a State: (a) the charge will include the sum of the amount payable by the insurer under that insurer's negotiated agreement and any excess or co‑payment amounts payable by members, in accordance with the insurer's rules; and Note: Policy holders’ financial obligations under such levels of cover will still apply. (b) must not include any charges: (i) referred to in the insurer's negotiated agreements for medical devices and human tissue products; and (ii) that are minimum benefits for medical devices and human tissue products as specified for the purpose of item 4 of the table in subsection 72‑1(2) of the Act, and (iii) referred to in the insurer's negotiated agreements for hospital treatment provided to nursing‑home type patients. (8) Subject to subclause (2), if an insurer has less than 5 negotiated agreements in force on 1 August of the first year with a particular category of comparable private hospitals in a State, then all of that insurer's negotiated agreements with all classes of private hospitals in that State are to be used to calculate the minimum benefit. ### 4. Transitional (1) If a patient is admitted to a second‑tier eligible hospital between 1 January 2019 and 31 August 2019: (a) an insurer may instead work out the average charge on the basis of the repealed provisions; and (b) if the insurer does so, comparable has the same meaning as in the repealed provisions. (2) For subclause (1), the repealed provisions are the provisions of this Schedule as in force immediately before the commencement of Schedule 4 to the Private Health Insurance (Reforms) Amendment Rules 2018. Note: For the purpose of determining which category the second‑tier eligible hospital to which the patient was admitted is placed in, an insurer must use the Department’s determination in respect of that hospital under subclause 1A(1), (2), (3) or (4).