I. INTRODUCTION

13.1 A person injured in a transport accident is likely to require medical attention and if the injuries are serious, hospital treatment. To achieve prompt and effective rehabilitation, physiotherapy and other ancillary services may also be needed. The injured person may have to recuperate for a period in a convalescent hospital or nursing home. Some injured people, while capable of living in their own homes, will require home nursing services temporarily or permanently. The few who are too disabled to live within the community, even with generous support services, will need long-term institutional care.

13.2 Some of the problems associated with providing the necessary services to accident victims have been dealt with briefly in Chapters 9 and 10. This Chapter examines the ways in which medical hospital and related services can be provided to transport accident victims, without creating cost control problems. Before making recommendations, however, it is necessary to consider current arrangements for the provision of health services generally and the special arrangements which have applied to “compensable” third party claimants-that is, accident victims who have common law negligence claims. The recommendations in this Chapter attempt to integrate the Transport Accidents Scheme with the national health care system.

13.3 This Chapter is not intended to resolve all the difficulties of providing services to transport accident victims. For some years now, these services have been in a state of flux. Funding arrangements between the State and Commonwealth governments have changed frequently, as have internal State controls on the health care system. Because of the fluidity of these arrangements, the recommendations have been framed in general terms and some matters have been left to negotiations between the State and the Commonwealth.

II. A NECESSARY BALANCE

13.4 The prompt provision of high quality medical and related care after the occurrence of an injury in a transport accident is obviously an essential part of a comprehensive compensation scheme. Accordingly, we recommend that necessary and reasonable medical, hospital and related services should be provided to all people injured in transport accidents. It is important, however, to be aware of the potential for rapid cost escalation in the area of health services and of the danger this poses to the long term viability of the Scheme. The administration of the Scheme should ensure that so far as possible, costs are kept within reasonable limits and that the opportunities for unnecessary treatment by service providers are minimised. The means by which services are to be provided therefore require careful consideration.

A. The Experience in Other No-Fault Schemes

13.5 The rapid increase in medical and related costs in no-fault schemes, even over relatively short periods, has generated considerable concern. Table 13.1 shows the rate of medical cost increases in the New South Wales workers’ compensation system, the New Zealand accident compensation system and the limited no-fault scheme administered by the Victorian Motor Accidents Board, over the five year period 1977-1982. Victoria and New Zealand statistics confirm that this trend has continued in the more recent period. ¹ All figures in the table have been converted to New South Wales dollar values (as at 30 June 1984) to show more clearly the rapid increase in these costs above the general rate of inflation.

Table 13.1: Medical Costs: No-fault Compensation Schemes

Victoria, New South Wales and New Zealand 1977-1982

Scheme	Medical Costs ($ Million NSW 30/6/84 values)
	1977	1982	% Change
Victorian Motor Accidents Board	4.668 (a)	10.082 (a)	116.0
New Zealand Accident Compensation Corporation	1.263 (b)	2.304 (b)	82.4
NSW Workers Compensation Commission	36.972 (c)	52.359 (c)	41.6

(a) Actuary’s Report, appendix K, C3.

(b) Id., appendix E11, C1.

(c) Information supplied by Workers’ Compensation Commission, Actuary’s Report, appendix C4.

13.6 In its 1983 Annual Report, the New Zealand Accident Compensation Corporation expressed its deep concern

... at what appears to be a rapid escalation both in treatment fees and the number of treatments being provided ... Discussions are currently under way with a view to the establishment of some simple form of schedule of fees. If agreement in this area cannot be reached then the Corporation may have to consider other alternatives. ²

A submission from a doctor who practised for some time in New Zealand put forward some reasons for these cost increases. Fraudulent over servicing was, in his view, only one reason for the disproportionate rises.

The ACC meant relatively easy money for doctors, and those that felt no compunction to over service did very well... There was a natural desire by the doctors to want to treat ACC cases in the medical centre rather than the hosp ital as the latter attracted no fee .... The temptation to experiment on ACC cases was irresistible. When one could charge extra for little extras, the little extras became routine... There was a great temptation to become an ACC specialist. ³

13.7 The Victorian Motor Accidents Board Annual Report for the year ended 30 June, 1983 noted the “escalating costs associated with the treatment of motor accident cases” and the need to establish “some benchmark of ‘reasonable’ treatment costs per applicant”. ⁴ The Consulting Actuary noted that:

[t]he growth in hospital, medical and other costs has slowed in Victoria in the last four years. Victoria is establishing a system for listing the numbers of services of each type provided by each doctor. The total payments made each month by each doctor are monitored. In cases not conforming to normal patterns, the MAB can refer the matter to the Australian Medical Association, or can refuse payment. ⁵

B. The Experience of the General Health Care System

13.8 The problem of increasing health care costs has not been restricted to compensation systems but has aroused concern in the general health care system. In 1978, the then Commonwealth Minister for Health noted that:

[t]he costs of health care per head in Australia have risen from $104 in 1966/67 to $447 in 1976/77-that is, by more than four times in 10 years. Despite this very rapidly rising financial burden on the community there is no evidence available to show a decline in illness. ⁶

These and subsequent increases have been blamed upon a variety of factors including an over-supply of doctors leading to increased use of medical services, ⁷ private insurance and government funding initiatives, ⁸ and deliberate “medi-fraud”. ⁹

13.9 These concerns have led to efforts by governments and policy makers to contain expenditure on health care. For example, in unveiling its Medicare program in January 1983, the then Labor Opposition affirmed its commitment to cost containment.

Labor will seek to build into the health system restraints on medical fees and make conditional the use of public health facilities on the observance of fee restraint... Labor ... will seek through the insurance system to maintain computer monitoring profiles on all doctors; and support the further development of effective accreditation, peer review and hospital audit systems ... In cooperation with the States and the medical profession a Labor government will revise the present medical benefits schedule, adjusting charges in the light of technological developments and modifying relativities particularly where they provide incentives for inappropriate and costly alternative procedures. ¹⁰

C. Lessons for the Transport Accidents Scheme

13.10 The experience of both the compensation and general health systems strongly suggests that recommendations for health care services must be framed with the objective of cost control in mind. Since the general health care system has had to grapple with this problem there is no apparent justification for making recommendations inconsistent with the constraints or procedures imposed by that system. Yet the provision of health care services to compensable accident victims has developed separately from the system applied to other sick or disabled members of the community. In some cases this has led to services being unavailable to accident victims, as has occurred with accommodation in some private hospitals. ¹¹ In others, it has led to service providers charging fees well above those otherwise charged to patients requiring precisely the same services. ¹² In principle, this distinction cannot be justified. It can lead to vastly different treatment for compensation patients in comparison to other injured or ill people. This has implications both for costs and for the capacity of the system to meet patients needs. Before making specific recommendations, however, it is important to explain the differences in the provision of health care services for non-compensable members of the community and compensable motor accident victims.

III. EXISTING HEALTH CARE ARRANGEMENTS

A. The Community Generally

1. Medical Costs

13.11 On 1 February 1984, the new Medicare system was introduced. This followed an eight year period, from the commencement of Medibank in 1975, during which no less than five major changes in the health insurance and health care service provision had occurred. ¹³ Medicare reaffirmed the notion of a universal health care system. It is funded by a levy of 1 per cent on taxable income, up to an earnings ceiling of $70,000 per annum. There are exemptions from levy payments for low income earners and families. in relation to medical costs, Medicare covers 85 per cent of the scheduled fee, subject to the following.

• Where the 15 per cent difference between 85 per cent and the scheduled fee exceeds $10 per service, the patient contribution is limited to $10.
• Where the total patient contribution covering the gap between the Medicare contribution and the scheduled fee, exceeds $150 in any one year, Medicare will pay 100 per cent of the scheduled fee for any further services required.

13.12 It is not possible to buy “gap insurance” to cover the difference between the Medicare contribution and the scheduled fee or the fee actually charged. In September 1983, the then Minister for Health stated that

... “gap insurance” underpins the practice of fixing charges above the schedule fee... It is only doctors who would be financially better off if gap insurance were permitted. For all of these reasons the Government will not allow gap insurance to be offered. In this way doctors will be encouraged to limit their charge to a level around the schedule fee and this will be important in containing Australia’s overall health bill. ¹⁴

The gap, therefore, can be seen as a tool of cost containment.

13.13 Medicare is administered by a single authority, the Health Insurance Commission, which is also responsible for the government-run “private” health insurance fund Medibank Private. One advantage of a single authority was seen to be the savings in administration and other expenses which would flow from removing the right to offer basic health insurance from the 63 health funds ¹⁵ which had previously operated in the field. A single authority was also considered to be an effective means of monitoring and controlling medical costs. The Minister for Health put the argument as follows:

[t]he other major argument in favour of having a single public fund operate Medicare is the timely and accurate supply of data on doctors’ services in the detection of fraud and over servicing. The contribution of the present system whereby 63 different organisations supply that data means that the accumulation of doctors profiles is dependent upon the speed of the slowest fund. The Health Insurance Commission is currently the timeliest and most accurate fund in Australia ... While the overall responsibility for investigating fraud and over servicing will remain with the Health Department it is pertinent to note that the Health Insurance Commission has been among the most active of the private funds in pursuing suspected cases of fraud. ¹⁶

13.14 The compensable patient constitutes one of the few exceptions to coverage by Medicare. This Chapter later discusses arrangements for such patients in New South Wales, specifically in relation to third party compensable patients. However, the Minister for Health has indicated the Commonwealth’s willingness to examine the current position with State government and general insurance representatives, in order to

... simplify the administrative arrangements for these services at some future date. ¹⁷

2. Hospital Costs

13.15 In addition to covering medical costs, Medicare provides for free public hospital accommodation and treatment, by a hospital-appointed doctor. However, a person who wishes to be treated by a doctor of her or his own choice in a public hospital, or in a private hospital, must meet certain costs, either through private health insurance or direct payments to the hospital or the service provider.

Public Hospitals

13.16 A person who wishes to be treated by a doctor of his or her choice in a public hospital must pay a fee of $80 per day for shared ward accommodation. This is not covered by Medicare, and so the patient must meet the cost. Generally, patients making this choice to be classified as private patients are covered by private health insurance. Where a person elects to be treated as a private patient in a public hospital the attending doctor is able to charge separately for his or her services in hospital. Medicare benefits are payable for these services. However, a doctor who treats a public patient in a public hospital cannot charge the patient for these services. Out-patient treatment in public hospitals is also provided free of charge.

Private Hospitals

13.17 Private hospital charges are not covered by Medicare benefits. Doctors at private hospitals charge fees separately for their services. These fees are covered by Medicare, subject to the usual limitations.

13.18 Private hospitals are classified into three classes for the purpose of basic hospital insurance benefits and Commonwealth daily bed subsidies. These classifications are designed to reflect the varying cost structures and nature of services provided by these institutions.

Private hospitals are a very diverse range of institutions. At one extreme are the major surgical hospitals, mostly run by religious or charitable organisations which provide a level of care and services comparable with that in the major public hospitals. At the other extreme are bush nursing and other small hospitals, generally located in rural areas which, except for a few beds, provide a service similar to that of a nursing home. ¹⁸

Table 13.2 shows the financial consequences of the categorisation of hospitals in terms of daily benefits payable by the Commonwealth and insurance funds.

Table 13.2: Private Hospitals: Basic Contributions

Australia 1984

Category of Hospital	Commonwealth Subsidy	Basic Insurance Benefit
A	$40	$120
B	$30	$100
C	$20	$80

Source: Commonwealth Parliamentary Debates, House of Representatives, 6 September 1983, p.406.

From 1 July 1985, it is expected that the State government will take over the payment of the Commonwealth subsidy, subject to satisfactory financial arrangements being reached with the Commonwealth. ¹⁹ This change is designed to allow the State government more direct control over the operations of private hospitals.

13.19 Private hospitals are not obliged to limit their charges to the combined total of the Commonwealth subsidy and the health fund benefit. They are free to set their own charges, which can leave even insured patients with significant costs to meet, although some insurance tables provide greater benefits designed to meet additional costs, for example, in respect of a private room. Private hospitals may levy other charges which are not covered by Medicare or basic private insurance, such as theatre fees, outpatient theatre fees and labour ward fees. Some or all of these may be covered by the higher private insurance tables. There are also time limits in any one year for which higher table benefits will be payable. ²⁰

Commonwealth/State Financial Arrangements for Hospitals

13.20 The Commonwealth/State financial contributions to the hospital system have been in a state of flux for several years. Following a period during which Commonwealth contributions slowly decreased, ²¹ in September 1981 the then government discontinued the 50:50 cost sharing arrangement and replaced it with an untied but identifiable general revenue health grant. ²² The revenue to the New South Wales Hospital Fund ²³ in the 1983 financial year amounted to $1,418.2 million, of which 34.1 per cent came from the Commonwealth identified health grant. ²⁴ Total payments for subsidies and other assistance for public hospitals from the Fund in that same year were $1,100.3 million. ²⁵

13.21 With the introduction of Medicare in February 1984, funding arrangements again altered. One of the cornerstones of Medicare was the reintroduction of universal free in-patient and out-patient treatment for public patients at public hospitals. This involved loss of revenue to the State hospital system, as did other Government health care policies. ²⁶ Consequently, in addition to the identified health grants, the Medicare agreement included funding for

(a) revenue losses and additional costs resulting from the removal of in-patient and out-patient fees for eligible persons who elect to be treated free as hospital patients in recognised hospitals; and

(b) revenue losses resulting from a reduction in fees for private patients in recognised hospitals. ²⁷

Additional compensatory payments were also to be made when a State took over the payment of day bed subsidies of private hospitals. ²⁸ These were subject to the condition that the States provide specified services without charge to eligible patients. ²⁹

13.22 While it appears likely, in the short term at least, that current financial arrangements will continue, the longer term position is more uncertain. The Medicare Agreement creates a Commonwealth and State Standing Committee on Health Services. ³⁰ Its functions include reviewing

... the amounts of grants, the base of the determination of grants ... [and] the development modification and funding of health services in which the Commonwealth and the State are mutually interested. ³¹

There is also the possibility that a change in government will lead to significant policy changes.

3. Ancillary Services

13.23 In addition to medical and hospital care, a patient may require ancillary services to meet his or her health needs. These may include physiotherapy, occupational therapy, psychological counselling, dental or optical services, chiropractic services and a range of similar services. Ancillary care is not generally covered by Medicare. although where such services are provided as part of a hospitals out-patient facilities no fees are levied. It is in the area of ancillary care that private-insurance is expected to play an important role. Ancillary services have been excluded from Medicare because of the need to curtail costs and the Government’s desire to provide basic health cover at the lowest Cost. ³²

13.24 The ancillary cover which is provided by private funds varies considerably, as does the cost of different tables. All funds provide limits both on the amount refunded for each service and the total annual amount refunded for such service or range of services. Once a person exceeds these limits, he or she must pay for any extra services required.

13.25 Many ancillary services are provided by private practitioners, such as dentists, physiotherapists, chiropractors and optical service providers. Practitioners are generally free to set their own fees, although the professional associations often prepare standard fee schedules for the guidance of members. These schedules are usually some what higher than the refunds provided by ancillary insurance cover. Services also may be provided through rehabilitation centres, out-patient clinics at public and private hospitals and community health centres. Some kinds of services, such as occupational therapy, are likely to be provided through centres and clinics, rather than through private practitioners. Fees may or may not be charged for services provided through centres or clinics. For example, if physiotherapy or other services are provided through a public hospital out-patient clinic, fees are not levied. Dental services are available free from some hospitals in New South Wales to pensioners and low income earners who hold appropriate health concession cards. ³³

4. Convalescent Care

13.26 A patient requiring convalescent care usually goes to a nursing home. However, a patient requiring such care may remain in a public or private hospital where benefits available and fees levied may be considerably higher than if the patient were in a nursing home. Such people may be classified as “nursing home type patients”.

Nursing Home Type Patients

13.27 With the introduction of Medicare, the Commonwealth government altered the arrangements for patients who require extended care in a public or private hospital Where a person is hospitalised for a continuous period of more than 35 days, and is no longer in need of acute care ³⁴ or is not undergoing active rehabilitation, ³⁵ he or she will be reclassified as a nursing home type patient. The patient s doctor can issue a certificate stating that the patient continues to require acute hospital care under section 3B of the Health Insurance Act 1973 (Cth), and so avoid this reclassification. The reclassification has several consequences.

13.28 First a patient whether public or private, in a public hospital in New South Wales will be charged a non-insurable patient contribution This is calculated as two-thirds of the single age pension, plus 80 per cent of the supplementary rental allowance ($9.65 per day in August 1984), and is the same amount payable by patients in New South Wales State-run nursing homes. The contribution varies as the pension varies. Secondly, those patients who opt to be treated as private patients in public hospitals will, in addition, be charged the equivalent of the extensive care nursing benefit rate ($38.35 per day in August 1984). A privately insured patient can claim this amount from the health fund. ³⁶

13.29 The effect of this new classification on patients in private hospitals was explained by the Commonwealth Minister for Health.

The effect of these new arrangements will be that an injured patient in a private hospital who is classified as a nursing home type patient will be paid $80 per day less the patient contribution. The payment will be frozen at this level until such time as it is equal to the standard nursing home benefit plus patient contribution. Private hospitals will then be receiving the same amount as public hospitals for their long-stay patients. ³⁷

In addition to the amount paid by private insurance, the patient will have to pay a non-insurable contribution equivalent to 87.5 per cent of the single age pension ($12.40 per day in August 1984). ³⁸ This amount is greater than the general New South Wales patient contribution referred to in paragraph 13.28, which is payable in New South Wales public hospitals and State-run nursing homes. The decision to set the New South Wales required contribution rate at a lower level than that of the Commonwealth was made in an attempt to “minimise the financial burden placed on individuals”. ³⁹ The higher Commonwealth rate applies, however, to private hospital patients in New South Wales and to patients in other States.

Nursing Homes

13.30 In addition to long-stay patients in public hospitals, patients who require convalescent care or more long-term institutional care maybe accommodated in nursing homes. There are three general classes of nursing homes in New South Wales:

• non-government participating nursing homes;
• deficit-funded nursing homes;
• and State-run nursing homes.

Participating nursing homes are generally profit-making bodies, which operate under the National Health Act 1953 (Cth.). ⁴⁰ Approximately 66 per cent of all nursing home beds in New South Wales are in such homes. ⁴¹ Deficit-funded nursing homes are either charitable or local government run organisations operating under the Nursing Homes Assistance Act 1974 (Cth). ⁴² These do not receive direct patient benefits from the Commonwealth, but have their deficits met by the Commonwealth on a continuing basis. Almost 23 per cent of all nursing home beds in New South Wales are in this type of institution. ⁴³ State-run nursing homes are those operated by the New South Wales government and, until recently, ⁴⁴ were excluded from the ambit of most Commonwealth controls, though they received funding from the Commonwealth just over 11 per cent of all nursing home beds in New South Wales are in State-run nursing homes. ⁴⁵

13.31 To receive funding, all nursing homes must be approved by the Commonwealth, ⁴⁶ which controls the number of nursing home beds and their location. ⁴⁷ The admission of patients is also controlled by the Commonwealth, ⁴⁸ as is their classification as requiring either normal nursing care or extensive nursing care. ⁴⁹ A different benefit is payable for patients requiring extensive nursing care to take account of the extra costs in such a case. ⁵⁰ Any patient, whether requiring extensive or normal nursing, who is admitted to a nursing home must meet the appropriate non-insurable patient contribution. It is widely acknowledged that institutional care, even in a nursing home (as opposed to a hospital) is usually relatively expensive in comparison to home care. ⁵¹

5. Home Nursing Care

Non-Profit Services

13.32 A patient who is able to live at home may require home nursing services, either during a period of recuperation or on a long-term basis. The provision of home nursing services within New South Wales is fragmented. Some are provided throughout patient departments or other sections attached to public hospitals. Community health centres provide home nursing services, as do “independent” community home nursing services, which are funded from Commonwealth subsidies under the Home Nursing Subsidy Act 1956 (Cth.) and from local or State government sources.

13.33 Home nursing care is not covered by Medicare arrangements. Private ancillary health insurance cover may provide benefits for such services. However, in most cases services are provided free, though an optional nominal fee may be charged. Income from patients is negligible, the services relying to a great extent on the provision of government subsidies. The Home Nursing Subsidy Act 1956 (Cth) provides subsidies for the employment of nurses by non-profit organisations not controlled by a State government, except where control is exercised through a public hospital. ⁵² Where the service receives local government or State funding, the Commonwealth subsidy is limited to an equivalent contribution. ⁵³ In New South Wales, in the 1982 financial year, there were some 89 home nursing organisations funded under this Act. These organisations employed 444 nurses. ⁵⁴ Approximately $4.8 million was provided to meet these costs in the year ended 30 June 1984. ⁵⁵ In addition to funding some of these services with the Commonwealth, the State provides a large number of community nurses, either through hospitals or community health centres. The total number of community nurses funded by the State government in the year ended 30 June 1984 was 1,994, 345 of whom were jointly funded with the Commonwealth. ⁵⁶

13.34 Problems have been experienced with the existing funding arrangements, and the fact that some services provided by home nurses could be provided by health aides under the supervision of registered nurses. Unless all these services are provided by registered nurses, the Commonwealth subsidy has not been available. ⁵⁷ Following the general thrust of the 1982 McLeay Report, the Commonwealth Ministers for Health, Social Security and Veterans Affairs recently announced the establishment of the Home and Community Care Program. ⁵⁸ This program is designed to provide additional services on a more integrated basis for the community care of aged or disabled people. One aspect of this will be a review and, where necessary, the replacement of existing legislation. ⁵⁹ It is expected that the Home Nursing Subsidy Act will be part of this process. In addition, the State Health Department is placing increased emphasis on this form of service.

Private Services

13.35 A large number of private nursing agencies provide home nursing services. To some extent their fees are covered by private insurance for ancillary services. The costs of visits vary considerably, as does the range of services offered. Costs also vary with the level of skill of the service provider. A registered nurse costs more than an enrolled nurse’s aide, who in turn costs more than an “assistant”. The fees also vary with the time of the visits-evening and weekends being more expensive than day visits during the week.

Domiciliary Nursing Care Benefits

13.36 The Commonwealth currently provides for the payment of a domiciliary nursing care benefit of $3 per day. ⁶⁰ This applies where an approved person (generally a relative of the patient) ⁶¹ provides domiciliary nursing care and the patient would otherwise be eligible to be placed in a nursing home. ⁶² The benefit is meagre and, if the carer requires a holiday or relief from his or her role, the benefit is not payable for those days. A recently announced initiative of the Commonwealth Department of Social Security on respite care may go some way towards relieving the pressures on carers. The new scheme is designed to provide subsidised short-term accommodation in hostels, approved under the Aged or Disabled Persons Homes Act 1954 (Cth), to allow the carer to “have a break from the rigors of caring for elderly, frail or disabled people”. ⁶³

6. Institutional Care

13.37 We have discussed the provision of accommodation and care in nursing homes, (paragraphs 13.30-13.31). Institutional accommodation is also provided by various non-profit organisations whose funding is provided under either of the following Acts.

• Handicapped Persons Assistance Act 1974 (Cth.).
• Aged or Disabled Persons Homes Act 1954 (Cth.).

In addition, some organisations conduct institutions for the care of the aged or disabled for profit without government assistance.

Handicapped Persons Assistance Act 1974

13.38 Under this Act the Commonwealth can provide grants for the construction, maintenance or rental costs of approved projects ⁶⁴ undertaken by charitable or religious organisations, veterans’ organisations, local government bodies or other organisations approved by the Minister for Social Services. ⁶⁵ Approved projects can include the provision of accommodation for:

• people undertaking approved training, approved activity, therapy or sheltered employment; and
• people who need special accommodation because of a disability, to allow them to engage in other employment or an occupation. ⁶⁶

Grants can be made to assist in the payment of salaries of people employed by these organisations to provide services, such as training, therapy, sheltered employment, rehabilitation and recreation and to purchase equipment for these sources. ⁶⁷

Aged or Disabled Persons Homes Act 1954

13.39 While the majority of hostels covered by this Act service aged people, benefits are also payable for those who are permanently blind or permanently incapacitated for work. The Act provides both capital assistance and continuing benefits. The eligible organisations under this Act are similar to those eligible under the Handicapped Persons Assistance Act. ⁶⁸ Accommodation for which capital assistance may be provided can be self-contained units or cottages, motel-style hostel accommodation or nursing home accommodation. ⁶⁹ Subsidies are payable for construction and land acquisition, as well as for upgrading facilities. In addition, eligible organisations can apply for personal care subsidies. ⁷⁰ Currently, these are $10 per week for residents who require hostel accommodation and who have daily assistance available to them for more substantial household chores such as cleaning and laundry. An additional subsidy of $40 per week is payable for residents who require and have daily assistance in personal care. As noted in paragraph 13.36, subsidies for respite care are also available to approved facilities. ⁷¹ In addition to these subsidies, inmates are expected to pay a variable amount towards their accommodation and care, which is generally related to the rate of the invalid or aged pension.

B. The Compensable Accident Victim

13.40 Compensable accident victims are excluded from arrangements which apply to the rest of the community in relation to almost every aspect of health care. In practice, this usually means that the accident victim, or the insurer required to pay compensation, pays higher fees for the same services than a non-compensable person. The emergence of a separate system for compensable accident victims has precluded the application of cost containment mechanisms which have been built into the general health care system. This section examines briefly the arrangements for compensable accident victims injured in motor vehicle accidents. It does not deal with the rather different provisions applying to accident victims entitled to workers’ compensation.

1. Medical Costs

13.41 Compensable motor vehicle accident victims are excluded from Medicare medical arrangements by section 18 of the Health Insurance Act 1973 (Cth.). This provides that a person who

... has received, or established his right to receive, in respect of (an) injury, a payment by way of compensation or damages (including a payment in settlement of a claim ... ) under the law (of a State or Territory) ⁷²

is ineligible for a Commonwealth benefit to the extent that the compensation relates to medical expenses. Section 18 excludes not only a person who has received, or established, a right to receive compensation, but a person whose claim has yet to be determined. ⁷³ The health insurance funds also deny benefits in respect of expenses incurred as a result of compensable accidents. ⁷⁴

13.42 In New South Wales, the GIO is now the sole compulsory third party motor vehicle insurer. The GIO may pay fees to medical practitioners pending the finalisation of third party claims arising out of motor vehicle accidents where liability is regarded as clear, as is often the case where the injured plaintiff was a passenger in the vehicle, or a pedestrian.⁷⁵ Authority for this course of action is found in the Motor Vehicles (Third Party Insurance) Act, 1942, which authorises the GIO to pay a medical practitioner

... such amount as is reasonably appropriate to the treatment ... afforded, having regard to the reasonable necessity therefore and the customary charge made in the community for such treatment. ⁷⁶

In 1983 the GIO paid out almost $5.9 million in medical expenses, ⁷⁷ although this was not, of course, the total amount paid out in verdicts and settlements in respect of medical expenses.

13.43 In practice, medical practitioners treating compensable motor vehicle accident victims may render their accounts to the patient or to the GIO, as the third party insurer. No statutory schedule of fees exists and charges by practitioners vary considerably. Some charge fees according to the Medicare schedule; some rely on scales set by the Australian Medical Association; and others on scales prepared by their own associations. The GIO states that the “basis” for their assessment of reasonable medical costs is the Medicare schedule. ⁷⁸ However, the fees payable by the GIO are not necessarily limited to the scheduled fees, and there is no fixed procedure for determining what is regarded as reasonable in the circumstances. Whether or not the practitioner looks to the patient for payment of any amount not reimbursed by the GIO is a matter for the practitioner.

2. Hospital Costs

13.44 Medicare arrangements for treatment in hospitals exclude compensable cases. ⁷⁹ Compensable patients are also prevented from recovering public or private hospital costs under any private health insurance held by them, ⁸⁰ in so far as the hospital treatment relates to the compensable injury. The Medicare agreement specifically grants the State Minister power to

impose charges in such amounts as he determines in respect of care and treatment rendered by recognised hospitals to compensable patients. ⁸¹

Hospital charges for compensable patients are, therefore, in effect payable by the compulsory third party insurer.⁸² Table 13.3 shows the proportion of hospitalised motor vehicle accident cases in 1981 who were regarded as compensable, using the two common measures of “hospital separation” and “in-patient days”.

Table 13.3: Motor Vehicle Accidents: Hospital^(a), Separations ^(b) and In-patient Days ^(c)

New South Wales 1981

Motor Vehicle Accident Patients only	Public Hospitals (No.)	Private Hospitals (No.)	% of Total
SEPARATIONS
Third Party	7,109	866	39.0
Workers’ Compensation(d)	1,536	176	8.4
Other	10,610	136	52.6
TOTAL	19,255	1,178	100.0
IN-PATIENT DAYS
Third Party	78,969	5,235	44.1
Workers’ Compensation(d)	17,842	1,142	9.9
Other	87,130	812	46.0
TOTAL	183,941	7,189	100.0

(a) This does not include private or public nursing homes.

(b) “Hospital Separations” occur when patients are discharged, transferred to another institution or die.

(c) “In-patient days” are the number of days patients occupied hospital beds. Day of admission and day of discharge count as one day.

(d) This includes both journey injuries and course of employment injuries.

Source: Department of Health (New South Wales)

13.45 When Medicare was first introduced, accident cases were all admitted to hospitals as public patients, unless the accident victim opted to be treated as a private patient. ⁸³ This meant that doctors who treated the patients in hospital were unable to raise separate fees for their services until a patient exercised his or her option. Following opposition from the medical profession this procedure has been altered. A potentially compensable patient is now admitted as a private patient of the treating doctor nominated either by the hospital or the patient In addition, the patient must sign an election form as to whether she or he wishes to be treated as a private or public patient, should the claim for compensation not proceed. ⁸⁴

13.46 In relation to the payment of hospital costs of compensable patients, new administrative arrangements have been introduced since the release of the Working Paper. ⁸⁵ Prior to 1 July 1983, public hospitals forwarded accounts in respect of compensable patients to the GIO. Where liability was not in dispute, payments were made to individual hospitals on the basis of gazetted average costs for out-patient and in-patient services at those hospitals. ⁸⁶ These average costs, as provided for under the Motor Vehicles (Third Party Insurance) Act, 1942, vary considerably depending upon the range of services available at the hospital. For example, in August 1984, a modern full-scale hospital such as Mount Druitt had a gazetted daily in-patient bed-day cost of $322.54, while a lower intensity care provider such as the Gloucester Soldiers’ Memorial Nursing Home had a cost of $43.93 per day. ⁸⁷

13.47 These arrangements were administratively cumbersome and led to considerable delay in settlement of accounts. Following negotiations between the GIO and the Department of Health, agreement was reached whereby

... the GIO, in lieu of payment of individual accounts, will make quarterly lump sum payments in accordance with a formula developed specifically for this purpose. ⁸⁸

In addition, the new arrangements, which commenced on 1 July 1983, provided for a lump sum payment of all outstanding accounts up to that date to be made to the Department of Health. ⁸⁹ The agreed sum paid was $10 million. ⁹⁰ The formula used to assess the future lump sum payments was based on traffic accident statistics and the projected State average daily bed costs, with allowance made for the following factors:

• the proportion of accident victims who are compensable;
• the proportion of accident victims treated at public hospitals;
• the average length of stay in hospital;
• the average number of out-patient treatments; and
• the cost of out-patient treatment as a proportion of daily bed costs. ⁹¹

An adjustment was to be made at the end of the financial year to allow for the actual State average daily bed costs and the actual number of compensable victims. ⁹² The New South Wales Department of Health reported that almost $23.3 million ⁹³ had been paid under this formula in 1983 and 1984, in addition to the sum paid for outstanding claims up to 1 July 1983.

13.48 While these arrangements simplify the administrative procedures for payment, hospitals are still required to keep records of the numbers of patients and their possible compensable status and to notify the GIO of their admission. If the patient is accepted as one where the GIO maybe liable, nothing further occurs. If, however, the person is assessed by the GIO as non-compensable, the hospital is notified. The hospital then refers to the election form noted in paragraph 13.45 and classifies the patient as either public or private. ⁹⁴

13.49 Where a compensable patient is admitted to a private hospital, the hospital bills the GIO or the patient directly. Under the Motor Vehicles (Third Party Insurance) Act, 1942, fees are payable directly to the hospital in accordance with a scale prescribed by regulation. ⁹⁵ However, these regulations have not been updated and, in practice, the GIO pays fees according to the Workers’ Compensation Regulations which govern payments to private hospitals. ⁹⁶ The fee scales have not been updated since September 1982, ⁹⁷ and were strongly criticised in a submission from the Private Hospitals and Nursing Homes Association of Australia Ltd.

The amount is below the usual benefits payable to private hospitals for non-compensable patients, and has led to a minor role for the private sector. It is presently not financially viable for private hospitals to treat such persons. Reimbursement of private hospitals for compensable patients at the same rate as non-compensable patients would end the discrimination against the private sector. ⁹⁸

3. Other Services

Ancillary Care and Home Nursing

13.50 Compensable patients are treated differently from the rest of the community in relation to ancillary and nursing services.

• While out-patient services are generally provided free to the general community, the hospital records such services provided to compensable patients and these form part of the bulk arrangements for the payment of hospital costs by the GIO; ⁹⁹
• Private health insurance for ancillary services does not pay benefits in relation to the compensable injury. ¹⁰⁰
• When a compensable person requires home nursing care, non-profit home nursing organisations may charge a higher fee than the nominal fees usually charged to other community members. For example, because of its status as a “public hospital”, the fees of the Sydney Home Nursing Service for compensable patients are prescribed in the workers’ compensation and third party hospital fee schedule. ¹⁰¹ In August 1984 the fee per visit was approximately $15 in comparison to the nominal fee of $2 which is normally charged.
• The Commonwealth domiciliary nursing care benefit is not payable where a patient is eligible for compensation. ¹⁰²

Nursing Homes and Other Institutional Care

13.51 When a compensable patient is admitted to a nursing home, whether it’s a participating, deficit-funded or State institution, normal funding arrangements do not apply. In participating nursing homes, the normal Commonwealth nursing home benefit is not payable. ¹⁰³ However, it is possible for a patient to apply for a provisional benefit payment on condition that an undertaking is given that if compensation is later received he or she will reimburse the Commonwealth “whatever amount the Minister considers reasonable”. ¹⁰⁴ Charges levied on compensable patients in participating nursing homes are generally the combined value of the uninsurable patient contribution and the Commonwealth nursing home benefit. In those homes where the patient contribution required is higher than the normal uninsurable sum this is also payable.

13.52 In deficit-funded nursing homes, the usual fee fixed for patients does not apply to compensable patients. The fee applied to them is equivalent to the combined value of the Commonwealth nursing home benefit for New South Wales and the Commonwealth uninsurable patient contribution. ¹⁰⁵ In State-run nursing homes, no commonwealth nursing home benefit is payable for compensable patients. Fees are levied in line with the workers’ compensation and third party schedule of fees, ¹⁰⁶ which represent the daily average costs of the specific institutions.

13.53 Whether or not compensable cases are accommodated in the institutions, premises constructed under the Handicapped Persons Assistance Act and the Aged or Disabled Persons Homes Act are not excluded from the various benefits available for the construction or continuing costs of these places. In the case of hostel and personal care benefits and respite care benefits these are payable regardless of the compensable status of a resident so long as he or she is otherwise eligible.

IV. PROPOSALS

A. Introduction

13.54 This Chapter has outlined the arrangements for the provision of health care services to the community through the general health care system and the quite different arrangements which apply to compensable motor vehicle accident victims. There were undoubtedly good historical reasons for the emergence of separate systems, particularly the fact that arrangements for compensable cases developed at a time when there were serious gaps in the coverage available to members of the community generally. The introduction of the national health care system has made it impossible to justify the continuation of distinct systems for the provision of health care services to compensable and non-compensable accident victims.

13.55 In principle no distinction should be drawn between compensable and non-compensable accident victims so far as access to health services is concerned. All accident victims, in our view, should participate in the national health care system and should receive services on the same conditions. Similarly, the remuneration paid to service providers should be the same regardless of whether the patient has a claim to compensation under State law. The problem of determining a fair approach to the remuneration of service providers is difficult to resolve and indeed the answers may vary over time. Whatever solution is adopted, the national health care system should be applied generally. Any other view is likely to undercut the objectives of the national health care system and perpetuate confusion among patients and service providers.

13.56 The argument of principle can be reinforced by a number of practical considerations.

• If current practices are maintained, a separate system for compensable patients is likely to lead to a higher fee structure in such cases for medical hospital and related services. This will detract from the objective of cost control that should be pursued vigorously by the compensation system. Reference has already been made to the difficulties experienced by other schemes in this regard.
• The policy issues concerning the treatment of patients do not vary, as far as the health system is concerned, according to whether the patients happen to be compensable or non-compensable. There are obvious advantages of efficiency and economy if a single body undertakes the difficult and delicate task of resolving those policy issues. The Commonwealth and the State are clearly better equipped for this task, which includes negotiations with service providers, than is the Corporation responsible for the proposed Scheme.
• There are also obvious administrative advantages for the Health Commission, as the authority responsible for Medicare, to process claims for fees by medical practitioners and others providing services to transport accident victims. If the Corporation were to perform this role, separate payment procedures and cost control measures would be required. This would result in considerable duplication of effort, inefficiency and the risk of inconsistency in approach. The problems would be avoided if transport accident victims were treated in the same way as other disabled or sick members of the community.
• The provision of health care services through the national system would clear the path for moves towards a national compensation scheme. If a national compensation scheme is to develop in Australia, the provision of health services to accident victims will have to be integrated within the general health care system. Preservation of the current fragmented scheme would also preserve formidable barriers to the process of integration.

B. Medical and Hospital Funds

1. Provision of Services

13.57 The suggestion that medical and hospital costs should be removed from the scope of specific accident compensation schemes is by no means new. In a recent High Court case, for example, Justice Murphy commented on this question.

Early negligence law evolved when there was practically no social welfare, but in Australia it should now be developed consistently with the existence of a fairly comprehensive national medical and hospital scheme and social security benefits ... Medical and hospital costs, at least to the extent that they might be payable or recoverable under the national scheme, should not continue to be ahead of damages in personal injury claims. Alteration of the common law to allow for orders for those costs as they arise ... may be an advance on the present system which requires estimation at the trial of all these costs. In an efficient system, operating against the background of a National Health Scheme, they should not be claimable (either at common law or under statutory compensation schemes). ¹⁰⁷

In its submission, the Law Society of New South Wales accepted that there was a case for taking medical expenses out of the common law system.

The Society believes that the whole question of payment of medical expenses needs to be reassessed in the light of the decision of the Commonwealth Government to introduce Medicare. This proposal ... will be funded by all Australian taxpayers, including New South Wales motorists... There may well be a case for taking medical expenses out of the common law system altogether. ¹⁰⁸

These suggestions have not yet been taken up in any systematic way, although there have been attempts to move away from the award of a lump sum to cover future hospital and medical expenses. ¹⁰⁹ The Northern Territory has come the closest to integrating the compensation and health care system, with hospital costs being excluded from the no-fault scheme which has replaced the common law negligence action. ¹¹⁰

13.58 For the reasons already given, we recommend that transport accident victims should be entitled to receive hospital and medical services through the general health care system on the same basis as other sick and disabled members of the community. The consequences of this recommendation will be that transport accident victims will be entitled to:

• reimbursement or coverage of medical costs to the extent of 85 per cent of the schedule fee, except that where the patient contribution exceeds $150 in any year, reimbursement or coverage is increased to 100 per cent of the schedule fee; and
• free treatment as public patients in public hospitals.

We deal later with the financial implications of the recommendations to the health care and compensation systems (paragraphs 13.62-13.68).

13.59 A further consequence of the recommendation in paragraph 13.58 is that a transport accident victim who wishes to have a doctor of his or her choice, or who otherwise wishes to be treated as a private patient in either a public or private hospital, will be required to meet the cost unless he or she is privately insured. This, in turn, implies that health funds should be permitted to offer cover of this kind to accident victims and to adjust contributions to take account of the additional financial burden that will follow from the change to their rules.

13.60 It would be possible to implement the recommendation simply by making the costs of hospital and medical care non-compensable under the Scheme. This would appear, for example, to avoid the operation of section 18 of the Health Insurance Act 1973 (Cth) and to remove the legal barrier to transport accident victims claiming benefits under Medicare (see paragraph 13.41). However, unilateral action of this kind by the State would have important financial implications for the Commonwealth and the health funds. Moreover, it would be open to the Commonwealth to amend the Health Insurance Act 1973, or to make financial adjustments in grants to the State as a means of offsetting any financial disadvantages that might flow from the exclusion of medical and hospital expenses from the Scheme. Thus we recommend that the application of general health care arrangements to transport accident victims should be the subject of negotiations between the State and the Commonwealth. We would expect these negotiations to lead to agreement by the Commonwealth to extend Medicare arrangements to transport accident victims and to permit health funds to offer additional cover for hospital services required as a private patient following a transport accident.

13.61 Should the Commonwealth, contrary to our expectations, not be prepared to negotiate along the lines indicated, it will be necessary for the Scheme to make its own arrangements for the provision of medical and hospital services to transport accident victims and for payment to service providers. This approach would be feasible, as it is a variation on arrangements currently operating for compensable third party and workers’ compensation cases. However, it is far less satisfactory than the approach recommended.

2. The Cost

13.62 The proposal that medical and hospital services should be provided to transport accident victims through the national health scheme does not resolve the question of how those services are to be financed. It is possible for all patients to be treated under the system, yet for the funding for a particular category of patients to come from a separate source. There are three major funding options:

• financial integration within the existing health care system, so that the Scheme bears no portion of the cost of providing medical and hospital services to transport accident victims, the cost being borne by the Commonwealth, the State and the health insurance funds;
• the Commonwealth subsidises the Scheme by meeting a proportion of the cost of providing medical and hospital services to transport accident victims equivalent to the proportion of the cost it now meets for non-compensable patients; or
• the Scheme bears the whole cost of providing medical and hospital services to transport accident victims.

Financial Integration

13.63 If the treatment of accident victims is to be wholly integrated within the general health care system, the cost of treatment should be borne by the agencies responsible for meeting the cost of treating other sick and disabled people. This would involve the Commonwealth meeting the following costs of treating transport accident victims:

• payment of normal Medicare benefits for medical services;
• payment of normal reimbursement of State hospital costs for public and private patients; and
• payment of normal Commonwealth subsidy to private hospitals.

The State (rather than the Scheme) would meet

• the balance of hospital costs for public and private transport accident patients, after deduction of Commonwealth reimbursement and health fund contributions.

The health insurance funds would provide:

• payment of normal accommodation benefits for insured transport accident patients in public hospitals; and
• payment of appropriate benefits, depending on level of cover, for insured transport accident patients in private hospitals.

13.64 The effect of financial integration would be to shift the cost of treating transport accident victims from the Scheme to the general health care system, and specifically to the Commonwealth, the State and the health funds. In principle, we consider this to be the soundest approach, not because it produces savings for the Scheme, but because the financial arrangements for treating transport victims would be the same as for other sick and disabled members of the community. However, while this is the ideal solution it would be unrealistic to assume that there will be no barriers to its acceptance. The State, for example, would be required to forego revenue for its hospital system from an identifiable source (the motor vehicle accident compensation system) and to replace this by allocations from general revenue. Similarly, the Commonwealth would be required to find additional resources to meet the costs of an additional class of patients, presently excluded from Medicare, although we take the view that there are sound reasons for the Commonwealth being prepared to consider this course of action (paragraph 13.66).

Commonwealth Subsidy

13.65 The second approach differs from the first in that the Commonwealth would in effect, provide a subsidy to the proposed Scheme but the State would not. Thus the Corporation (like the GIO) would reimburse the State hospital system on a bulk basis in respect of the hospital services provided to compensable transport accident victims. ¹¹¹ However, the Commonwealth would provide a subsidy by meeting the costs of providing hospital and medical services to transport accident victims to the same extent as it meets treatment costs of other sick and disabled people.

13.66 In both the first and second options a justification for the Commonwealth providing support is that in this way it could foster the development of a no-fault scheme. Moreover, as pointed out in Chapter 17, the Commonwealth would receive some important financial advantages as the result of the introduction of the Scheme (paragraphs 17.54-17.57). The present Commonwealth Government has given no assurance about financial assistance, but it has indicated a willingness to negotiate with States which wish to introduce appropriate no-fault schemes. ¹¹² The consulting actuary has estimated that if the Commonwealth meets the cost of treating transport accident victims in the manner suggested the cost of the Scheme (on a “plateau” pay-as-you-go basis) could be reduced by about $24 per vehicle per annum. If either the first or second options were adopted, the Commonwealth would need to take steps to allow health funds to of fer coverage for hospital services required as the result of a transport accident.

Costs Borne by the Scheme

13.67 It is possible that the Commonwealth will be prepared to provide hospital and medical services to transport accident victims through Medicare, but not to meet any portion of the cost of doing so. In this case, the Corporation will be required to reimburse the Health Insurance Commission for benefits paid to or in respect of transport accident victims. If this is to be done, the Corporation should make the reimbursement on a bulk basis rattler than on a case by case basis in order to minimise administrative expenses.

Recommendations

13.68 We recommend that the cost implications of extending general health care arrangements to transport accident victims should be the subject of negotiations between the State and the Commonwealth. it would be appropriate for the Commonwealth to subsidise the Scheme to significant extent. The subsidy should take the form of the Commonwealth meeting part of the costs of providing hospital and medical services to transport accident victims, preferably to the same extent as it meets treatment costs of other sick and disabled people.

C. Ancillary Services and Home Nursing

13.69 Ancillary services, such as physiotherapy, occupational therapy, home nursing, chiropractic services and speech therapy may be essential to the treatment and rehabilitation of transport accident victims. As noted earlier, Medicare does not generally cover ancillary services, although the health funds offer limited coverage (paragraphs 13.23-13.25). The provision of and payment for these services requires a different approach from that proposed for medical and hospital services, since no single community scheme operates in the field. Of course, from the Scheme’s point of view, it would be ideal if Medicare were extended to ancillary services, since this would further the integration of the compensation and general health care systems.

13.70 It is clear that transport accident victims requiring ancillary services should have them provided. Where those services are available under Medicare they should be provided on the same basis as hospital and medical services (including arrangements negotiated with the Commonwealth for sharing of the cost). We recommend that, where ancillary services are not available through Medicare, the Corporation should arrange the provision of ancillary services and home nursing reasonably required by transport accident victims. As discussed earlier, the Corporation will need to exercise care to ensure that the cost of these services is kept within reasonable bounds. Consistent with the approach taken in other areas, we would favour the Corporation providing the services, at least in part, by bulk or sessional arrangements with existing government or non-profit service providers, such as hospital out-patient services, community health care centres or home nursing services. Where these facilities cannot provide the necessary services, the Corporation should be able to negotiate appropriate arrangements with private service providers. Such arrangements are likely to include a negotiated fee schedule or bulk billing procedure for transport accident victims, together with careful monitoring procedures to prevent over servicing or waste within the system.

D. Nursing Home and Institutional Care

13.71 We recommend in Chapter 10 that the Corporation should meet the reasonable costs of a disabled person required, because of the disability, to live in an institution subject to a deduction for board and lodging (paragraphs 10.50-10.52). The current arrangements for patients accommodated in nursing homes accept the concept of a fee for board and lodging in the form of the non-insurable patient contribution (paragraphs 13.28-13.31). In the case of nursing home accommodation it would be possible for the State and the Commonwealth to negotiate arrangements similar to those contemplated for the provision of hospital and medical services, since a national system is in place. For example, the Commonwealth maybe prepared to make its usual contributions towards nursing home accommodation where such accommodation is required by transport accident victims. If so, it would pay the appropriate benefit, which varies according to whether the patient requires ordinary or extensive nursing care, and the usual fees to deficit-funded nursing homes (paragraph 13.30). If the Commonwealth were not prepared to pay these benefits and fees in respect of transport accident victims, as is the case at present (paragraphs 13.51-13.52), the Corporation would reimburse the Commonwealth for benefits and contributions paid by it to nursing homes. The least satisfactory option would be for the Corporation to pay equivalent benefits or contributions directly to nursing homes accommodating transport accident victims. We recommend that the cost of providing nursing home accommodation to transport accident victims should be the subject of negotiations between the State and the Commonwealth. To the extent that the Commonwealth is prepared to meet the whole or a portion of the cost, savings would accrue to the system.

13.72 Reference has been made earlier to current arrangements for care in non-nursing home institutions (paragraphs 13.37-13.39, 13.53). The Scheme should provide accommodation in such institutions where necessary. Negotiations for cost-sharing with the Commonwealth should include non-nursing home institutional nursing care for transport accident victims.

V. SUMMARY

13.73 This Chapter proposes that all people injured in transport accidents should be entitled to necessary and reasonable medical, hospital and related services. The Chapter also notes the importance of cost control mechanisms, which operate in some areas of health care, such as the provision of medical services through Medicare.

13.74 The arrangements governing the provision of health services and the payment of service providers are still in a state of flux, despite the introduction of Medicare in 1984. The Chapter briefly outlines current arrangements in the areas of

• medical services;
• hospital services;
• ancillary services;
• home nursing care;
• nursing home care; and
• institutional care.

In some cases, particularly where medical and hospital services are required, the arrangements applied to members of the community do not apply to compensable third party patients-that is, patients who have or might have common law claims under the compulsory third party system. The separate systems may work initially to the disadvantage of compensable patients who are excluded from benefits available to the rest of, the community while they await settlement of their claim. A further consequence of the separate systems is that compensable cases may be charged higher fees than other members of the community for the same services. While these are ordinarily met by the third party insurers, this means that the compensation system does not have the benefit of cost control measures operating under the general health care system.

13.75 On principle and for administrative and cost containment reasons, transport accident victims should receive hospital and medical services through the general health care system on the same basis as other sick and disabled members of the community. This will require Commonwealth cooperation, for example, by extending Medicare arrangements to transport accident victims.

13.76 Apportioning the cost of providing such services assuming Commonwealth cooperation, raises separate issues. Ideally, there should be financial integration of the Transport Accidents Scheme and the general health care system. This would mean that the cost of treating such victims would be borne not by the Scheme. but by the Commonwealth, the State and the health funds in the same way as they meet the costs of treating other people requiring health care services. It is reasonable to expect the Commonwealth to share the costs of providing medical, hospital and related services to transport accident victims, in recognition of the other financial advantages which would accrue to it from the introduction of the Scheme. If the Commonwealth met the cost to the same extent as it meets hospital and medical costs of other people, the saving to the Scheme (on a “plateau” pay-as-you-go basis) is estimated at $24 per vehicle per annum.

1. Actuary’s Report, paras.6.1, 7.1.

2. Report of the Accident Compensation Corporation for the Year Ended 3l March 1983 (New Zealand), p.9. See also Actuary’s Report, paras.6.9-6.10.

3. Submission S58, p.2.

4. Motor Accidents Board, Tenth Report of the Motor Accidents Board Year Ended 30 June 1983. p.10. See also note 1 above. paras.7.8-7.12.

5. See note 1 above, para.7.12.

6. The Hon. R Hunt, Minister for Health, “Health Care Costs Control Programme-May 1978”, Ministerial Statement to the House of Representatives, pp.1-2.

7. R. McEwin and A. Gibson, “The Control of Growth in Health Services-Education, persuasion or coercion?”, paper based on a lecture delivered at the Australian and New Zealand Association for the Advancement of Science Congress, Auckland, New Zealand, 26 January 1979, pp.17-19; see also Dr. N. Blewett “Labor’s Health Plan-Summary of Arguments”, January 1983, p.7, para.3.

8. Id., Dr. N. Blewett, pp.1,2 and pp.6-7, para.2, see also note 6 above, pp.1-6.

9. See note 6 above, pp.6-7.

10. Australian Labor Party, “Medicare”, January 1983, pp.8-10.

11. Submission W86, pp.1-2.

12. See eg. the special schedule of fees chargeable to people eligible for compensation under either the Motor Vehicle (Third Party Insurance) Act 1942 or the Workers’ Compensation Act, 1926: Supplement to the Government Gazette of New South Wales, No.80, 22 May 1984, pp.2605-2611.

13. For a discussion of these changes see G Palmer, ‘Politics, Power and Health: From Medibank to Medicare”, (Sept-Oct 1983) New Doctor p.19.

14. Commonwealth Parliamentary Debates, House of Representatives, 6 September 1983, p.402: Dr. N. Blewett.

15. Id., pp.407-408.

16. Id., p.409.

17. Id., p.401.

18. Id., p.406.

19. Id., p.407. See also Department of Health, Annual Report Year ended June 1983 (New South Wales), p.9.

20. See eg. Medibank Private’s Top Hospital cover which is limited to 75 days, subject to rules about “nursing home patients”. After that period, benefits fall to Basic insurance level. The Hospital Contribution Fund and Medical Benefits Fund both have 60 day limits, again subject to rules about nursing home type patients.

21. Health Commission of New South Wales, Tenth Annual Report 1981/82, p.26.

22. See note 19, p.6.

23. The Hospital Fund is designed to cover subsidies and other assistance for public hospitals, recurrent costs of State and psychiatric hospitals, recurrent costs of community health services. acquisition of sites and buildings, erection of buildings and purchase of equipment: ibid.

24. Id., pp.6-7.

25. Ibid.

26. For example, the introduction of the status of “nursing home type patients” (paras.13.27-13.29) also led to a decrease in revenue to the State hospitals. The Medicare Agreement included this as one of the adjustment factors in assessing additional grants. See Agreement under sub-section 23F(1) of the Health Insurance Act 1973 (Cth) between the Commonwealth of Australia and the State of New South Wales in relation to the provision of hospital services and other health services (in this Chapter called the “Medicare Agreement 1984”), cl.4.6 (a)(iii). See also cll. 8.6, 9.6.

27. Medicare Agreement 1984, cl.4.1.

28. Id., part 10 and cl.4.6 (c)(ii). See also note 14 above, p.404.

29. Medicare Agreement 1984, part 6, esp. cll. 6.1-6.3.

30. Id., part 12.

31. Id., cl.12.5.

32. See note 14 above, p.403.

33. Department of Health, Medicare-New South Wales Information Manual (December 1982), section 5. This manual notes that there are 27 hospitals providing dental services in New South Wales including Westmead, Hornsby, Royal Newcastle and Royal North Shore.

34. Health Insurance Act 1973 (Cth.), s.3(1): “nursing home type patient”.

35. Department of Health (New South Wales), Circular No.84/18, issued 16 January 1984, para.3.3(b).

36. Ibid.

37. See note 14 above. p.407.

38. National Health Regulations, reg.29, and Nursing Homes Assistance Regulations. reg.5A. This rate commenced on 3 May 1984, under both Regulations.

39. See note 35 above, attachment V, “Suggested Letter to Long-stay Patients”.

40. National Health Act 195 3 (Cth.), parts V, VA.

41. Figures supplied by the Nursing Home Benefits and Services Branch, Department of Health (Commonwealth), as at 23 July 1984.

42. See especially definition of “eligible organization”, s.3(l).

43. See note 41 above.

44. See Health Legislation Amendment Act (No.2) 1983 (Cth), s.35(4).

45. See note 41 above.

46. Nursing Homes Assistance Act 1974 (Cth.). s.4: National Health Act 1953 (Cth.). s.40AA.

47. National Health Act 1953, ss.39A, 40AA(3D) and Nursing Homes Assistance Act 1974, ss.3A(7), 4(3D). When introducing the amending legislation, the Minister noted the importance of restricting the growth of nursing homes, and the need to ensure the provision of an appropriate balance between home care and institutional care: Commonwealth Parliamentary Debates, House of Representatives, 10 November 1983, pp.1558-1559.

48. National Health Act 1953 (Cth.), s.40AB; Nursing Homes Assistance Act 1974 (Cth.). s.4(6)(b).

49. National Health Act 195 3 (Cth.). s.40AF.

50. Id., ss.47, 49.

51. See eg. Department of Health, Relative Costs of Home Care and Nursing Home and Hospital Care in Australia. (Commonwealth, December 1979), Monograph Series No.10, see also the McLeay Report.

52. Home Nursing Subsidy Act 1956 (Cth.), s.5,

53. Id., s.6.

54. Department of Health, Annual Report of the Director-General of Health 1982-83 (Commonwealth). p.191, table 14.

55. Figure provided by Department of Health. Of this, $4.2 million went to joint State/Federal funded services.

56. Figures provided by the Department of Health (New South Wales) in letter dated 20 August 1984.

57. The McLeay Report, paras.7.53-7.62.

58. Joint Press Statement by the Ministers for Social Security, Health and Veterans Affairs: New Directions on Care for Aged and Disabled People. 21 August 1984.

59. Id., p.2.

60. National Health Act 195 3 (Cth.). part VB; see especially s.58GA.

61. Id., s.58E (3)(c).

62. Id., s.58E (3)(a).

63. Minister for Social Security, Senator D.J. Grimes, News Release, 11 April 1984.

64. Handicapped Persons Assistance Act 1974 (Cth.), parts II, III and IV.

65. Id., s.3: “eligible organisations”.

66. Id., s.6 (a), (b).

67. Id., parts V, VI.

68. Aged or Disabled Persons Homes Act 1954 (Cth.), s.2 and parts II, III.

69. Department of Social Security, Assessment Officer Handbook of Instructions, p.1.

70. Aged or Disabled Persons Homes Act 1954 (Cth.), parts II, III.

71. Id., s.10c.

72. Health Insurance Act 1973 (Cth.), s.18(i)(b).

73. Id., s.18(4),(5) and (6). A person yet to receive compensation may for provisional payment of Medicare benefits, but may be required to repay the benefits if the compensation claim is successful.

74. All funds have adopted rules to this effect in accordance with a circular issued by the Department of Health (Commonwealth) MB128/HB103, to registered organisations in July 1976.

75. Working Paper, para.11.25.

76. Motor Vehicles (Third Party Insurance) Act, 1942, s.25(l) (e).

77. Letter from Mr. D. Mockler, Manager, Third Party Claims Section, GIO, dated 23 July 1984.

78. Ibid.

79. Medicare Agreement, schedule A; see also cl.8.5.

80. Health Insurance Act 1973 (Cth.), s.35A (private hospitals). Private insurance to cover public hospital accommodation. where a person opts to be treated as a private patient, also does not apply: see Department of Health (Commonwealth) Circular No. MB128/HB103, to registered health insurance organisations, issued in July 1976.

81. Medicare Agreement, cl.9.6.

82. Motor Vehicle (Third Party Insurance) Act 1942, s.25(1)(a),(b) and (c). In relation to ambulance expenses. see s.25(1)(d).

83. See note 35 above, para.3.3(c).

84. Department of Health (New South Wales), Circular No.84/89, issued 9 March 1984.

85. Supplement to the Government Gazette of New South Wales, No.80, 22 May 1984, pp.2605-2611.

86. Motor Vehicles (Third Party Insurance) Act, 1942, s.25 (1)(a), (b).

87. See note 85 above, pp.2607-2609.

88. Department of Health (New South Wales), Circular No.83/130, issued 27 April 1983, p.1.

89. Department of Health (New South Wales), Circular No.83/223, issued 22 July 1983, p.1.

90. See note 77 above.

91. See note 88 above.

92. Id., p.2.

93. Figure obtained from the Finance Section. Department of Health (New South Wales).

94. See note 89 above, p.2.

95. Motor Vehicles (Third Party Insurance) Act, 1942, s.15 (1)(C)-, Motor Vehicles (Third Party insurance Regulations, reg.10.

96. Regulations are made under Workers’ Compensation Act, 1926, s.10(3) (a). See Workers’ Compensation Regulations, 1926, division IV, reg.2. The scale provides (in August 1984) for a daily bed rate of $125 and theatre fees of $80.

97. Government Gazette of New South Wales, No. 126, 17 September 1982, p.4385.

98. Submission W86, p.1.

98. See note 88 above.

99. Department of Health (Commonwealth), Circular No. MB128/HB103 provides that registered health insurance organisations can determine their own rules in relation to ancillary tables-see p.48. Consistent with the policy applicable to other forms of cover, ancillary benefits for compensable patients are usually excluded by each health funds own rules.

100. Government Gazette of New South Wales, No.80, 22 May 1984.

101. Id., p.2611.

102. National Health Act 1953 (Cth.), s.59.

103. Ibid.

104. Id., s.59(6).

105. Nursing Homes Assistance Regulations. The current fee is $313.25 per week for ordinary care compensable patients and $355.25 per week for extensive care patients (August 1984).

106. See note 100 above, p.2605.

107. Jaensch v. Coffey (1984) 58 ALJR 426, at pp.429-430, per Murphv J.

108. Submission W28, pp.31-32.

109. See paras.4.13-4.15.

110. Motor Accidents (Compensation) Act 1979 (NT), s.18.

111. Virtually 100 per cent of transport accident victims would be compensable under the proposed Scheme. Under the current scheme only about half of motor vehicle accident victims admitted to hospital are classified as compensable (paragraph 1.44).

112. Australian Financial Review, 22 August 1984, p.20.