PHI Reforms

Second Wave of Reforms – announced October 2020

The second wave of reforms were announced by the Australian Government in October which included:

  • A new set of reforms to private health insurance removing barriers to in-home care, providing greater transparency on costs and increasing the age limitation on policy coverage of dependents (from 25 to 31 yrs), are three of the proposed reforms the Government has committed to in this budget.
  • $5.7 Billion to be provided to mental health care funding doubling the number of better access services currently provided.

Fact sheets on changes to private health insurance legislation

Day Hospitals Australia provides the following fact sheets to assist day hospitals in understanding changes to private health insurance legislation.

Different parts of the changes take effect on 1 January 2019 and 1 April 2019, and will be fully implemented by 1 April 2020. Details of the implementation times are set out in the fact sheets.
Day hospitals may use these resources to educate staff and other relevant persons such as medical practitioners practising at the day hospitals about the changes.

All fact sheets contain references to resources published by the Commonwealth Department of Health in relation to each topic.

The following fact sheets have been prepared for Day Hospitals Australia by Health Legal:

  • Second Tier Default Benefits
  • Gold/Silver/Bronze/Basic tiers of private health insurance covering hospital treatment
  • Standardisation of clinical categories under private health insurance tiers
  • Changed powers of the Private Health Insurance Ombudsman
  • Changes to Prostheses Benefits for Medical Devices
Second Tier Default Benefits
  • Click here for the Second Tier Default Benefits Fact Sheet
  • Quick summary: The application process for day hospitals to be eligible to receive second tier default benefits has changed, with the process now administered by the Department of Health. Day Hospitals should review whether they were approved to receive Second Tier Default Benefits as at 31 December 2018. If this is the case, they will continue to be eligible to receive them until that approval expires. If the eligibility expiry date occurs 12 months or less before the expiry of the hospital’s accreditation through the National Safety and Quality Health Service Standards, the hospital remains eligible for Second Tier Default Benefits until 60 calendar days after the day on which the then-current accreditation expires.
  • Hospital staff should make provisions (eg by diarising dates as appropriate) for re-application to be submitted at the appropriate time to avoid losing eligibility. If day hospitals have not previously been eligible, and they meet eligibility criteria, they may apply to the Minister following the set process.
Gold/Silver/Bronze/Basic tiers of private health insurance covering hospital treatment
  • Click here for the Gold / Silver / Bronze / Basics PHI Tiers Fact Sheet 
  • Quick summary: Private health insurance products covering hospital treatment (with or without general treatment) must fall into one of the four tiers of Basic, Bronze, Silver and Gold. This requires covering set clinical categories including specific types of treatment and related planned or unplanned treatment (see more detailed fact sheet on this below), and including the tier designation in the name of the policy. While compliance is not required until 1 April 2020, any policy that has the tier designation in the name on or after 1 April 2019 must cover the required clinical categories already.
  • Day hospitals should familiarise themselves with, and educate relevant staff and medical practitioners practising at the facilities, about the new framework around tiers of private health insurance covering hospital treatment. They should be familiar with the categories of clinical treatment that the day hospital provides, and whether such categories are included or excluded, and any requirements around restricted or unrestricted coverage, under each of the four tiers.
Standardisation of clinical categories under private health insurance tiers
  • Click here for the PHI Clinical Categories Fact Sheet
  • Quick summary: This fact sheet supplements the fact sheet relating to the framework for private health insurance tiers as above. Each tier of private health insurance covering hospital treatment must cover set clinical categories. For each clinical category, a descriptive scope and a list of Medicare Benefit Schedule (MBS) Items that must be covered is prescribed. In addition, further treatment in the categories of common treatments or support treatments as within the scope of a clinical categories must be covered. In addition, associated treatment for complications, and associated unplanned treatment, must be covered.
Changed powers of the Private Health Insurance Ombudsman
  • Click here for the PHI Ombudsman Fact Sheet 
  • Quick summary: The Private Health Insurance Ombudsman (PHIO) has the role of protecting the interests of consumers in relation to private health insurance. To this end, the PHIO has broad powers to seek relevant information and records (including personal information) in relation to a complaint or an own-motion investigation by the Ombudsman. This also includes the power to compel a party to participate in mediation. The Ombudsman Act 1976 (Cth) (Ombudsman Act) has been amended to provide for additional powers for the Ombudsman in investigating private health insurance funds, but these new powers to not directly apply to day hospitals.
  • However, following the PHIO’s investigation of a private health insurance fund in accordance with the amended powers, day hospitals may receive a written recommendation to take a specific action, and must comply with such a request. This is in addition to the requirement for ongoing compliance with requests for information from the PHIO in accordance with the Ombudsman Act.
Changes to Prostheses Benefits for Medical Devices 
  • Click here for the Prostheses Benefits for Medial Devices Fact Sheet 
  • Quick summary: Minimum benefits for medical devices included in the Prostheses List have decreased in 2018 and 2019 in accordance with an agreement between the Medical Technology Association of Australia and the Commonwealth Department of Health, which has resulted in significantly decreased benefit outlays for prostheses by private health insurers. Further decreases are expected for 2020. Also, as of 2019, updates to the Prostheses List will be provided three times per year rather than two times.


This information has been created as part of Day Hospitals Australia’s strategic Communication Strategy in educating members and non-members on the PHI Reforms and therefore, permission is given to share the contents (in their current form) acknowledging Day Hospitals Australia and Health Legal as the authors.