D EVELOPMENT OF M EDICARE AND INTEREST IN HTA

2.2.1 Managerial challenges in Australia’s health care system

Australia has been on the forefront of using HTA for several decades. For example, it was among the first countries that requested an economic assessment of pharmaceuticals to inform their decision-making procedure. Furthermore, Australia is the only country where all decisions about additions to the medical specialist benefits are guided by assessments that include economic evaluations.

Australia’s early interest in HTA might be traced back to the origins of Australian health care.

Australia’s health system has its historical origins in the United Kingdom. A defining moment was the formation of the NHS in the UK, because Australia decided not to follow the UK in creating a NHS.

Instead, Medicare came into development. Fact remains, however, that the principles of Medicare are the same as the principles that underlie the British NHS, i.e. equitable access of all citizens to government funded health care. An explanation is that between 1950 and 1960 the development of the health care system was more or less left to medical professionals, and they did not want a NHS style of social health because they did not want to be financed by capitated payments and fixed budgets. Even in the earliest stages of the development of Australia’s Medicare system, practitioners were financed on a fee-for-service

basis, whereby services may be offered by private or public providers. The open-ended nature of the funding system combined with the two-tier poses major policy challenges and tight regulation.

Table 2-1 Covered

In-hospital care

Out-of-hospital services:

• consultation fees for doctors, including specialists

• tests and examinations by doctors needed to treat illnesses, including X-rays and pathology tests

• eye tests performed by optometrists

• most surgical and other therapeutic procedures performed by doctors

• some surgical procedures performed by approved dentists

• specified items under the Cleft Lip and Palate Scheme

• specified items for allied health services as part of the Enhanced Primary Care (EPC) program Not covered

• private patient hospital costs (for example, theatre fees or accommodation)

• dental examinations and treatment (except specified items introduced for allied health services as part of the Enhanced Primary Care (EPC) program)

• ambulance services

• home nursing

• physiotherapy, occupational therapy, speech therapy, eye therapy, chiropractic services, podiatry or psychology

• acupuncture (unless part of a doctor's consultation)

• glasses and contact lenses

• hearing aids and other appliances

• the cost of prostheses

• medicines (except for the subsidy on medicines covered by the Pharmaceutical Benefits Scheme)

• medical and hospital costs incurred overseas

• medical costs for which someone else is responsible (for example a compensation insurer, an employer, a government or government authority)

• medical services which are not clinically necessary

• surgery solely for cosmetic reasons

• examinations for life insurance, superannuation or membership of a friendly society

A relevant characteristic of the Australian health care system is that the State and the Government share responsibilities for health care funding. Medicare is a national program for which the commonwealth is responsible, but on the other hand States are responsible for providing services in public hospitals.

Viewed differently, we could also say that both the State and the Commonwealth are in part responsible for costs that they cannot control. This obviously put pressure on the State to make sure that the public providers work efficiently, and on the Commonwealth to make sure that in Medicare no resources are wasted. The hospital sector is where most problems occur, because of the difference in funding between public and private hospitals for public patients, and because of changing rates of patients with private insurers, which means that costs shares in public sector and health insurers may change.

HTA in Australia was a response to the inherently open-ended nature of the funding system. Whilst in the Netherlands the open-ended system applied to medicines, in Australia it also concerned the hospital sector, where the majority of health care costs are located. Against that background it is not surprising that Australia was the first to implement HTA programs. In Australia, HTA is mainly performed at the federal level, because in the end the Minister of Health decides what services are covered or not by Australia’s national reimbursement schemes (i.e., the MBS and the PBS). To support decisions about funding for new and in some cases existing medical procedures through these benefits schemes, formalized HTA arrangements exist (Mitchell, 2002). It has been a legislative requirement since 1987 that all decisions for listing on the PBS be considered for comparative effectiveness. Cost-effectiveness analysis has been a requirement since 1991, and is conducted by the sponsor of the application. The Pharmaceutical Benefit Advisory Committee (PBAC) appraises the clinical and economic evidence and advises the minister of health about the funding decision. The Medical Services Advisory Committee (MSAC) was established (administratively, not legislation) in 1998 with a similar purpose and mode of operation as the PBAC but with the aim of supporting decisions for listing of medical services under Medicare benefits arrangements.

2.2.2 The Medical Services Advisory Committee (MSAC)

The Australian Government Minister for Health and Family Services established MSAC (originally as the Medicare Services Advisory Committee) to strengthen arrangements for assessing new technologies and procedures before they are considered for reimbursement under the MBS (Medical Services Advisory Committee, 2000a). MSAC was installed in April 1998, after the 1997-98 Budget announced a measure aimed at ensuring that new and existing medical procedures attracting Medicare benefits are supported by scientific evidence as being safe, clinically effective and cost-effective. A key element of the measure is the establishment of a new body, the MSAC, to advise the Minister for Health and Ageing on the strength of evidence on new medical technologies and procedures in terms of their safety, effectiveness and cost-effectiveness, and under what circumstances funding under the MBS should be supported.

Like the PBAC, MSAC evaluates new health technologies and procedures for which funding is sought under the MBS. The procedures for this are described in detail in Section 2.3. Summarized briefly, it does this by assessing safety, effectiveness and cost-effectiveness, while taking into account other issues such as access and equity. MSAC adopts an evidence-based approach to its assessments, based on reviews of the scientific literature and other information sources, including clinical expertise. A difference with PBAC is that evaluation of a new procedure is not a formal requirement of listing. The first stage of the assessment usually involves consideration within the Department of Health and Ageing of an application’s eligibility for assessment by MSAC. If an application is considered eligible for review, MSAC utilizes independent contractors to conduct the majority of the assessment.³ This involves the development of an

3 The MSAC contracted the following organizations to provide research related services to the MSAC: Adelaide Health Technology Assessment; The Australian Safety and Efficacy Register of New Interventional; Procedures Ð Surgical (ASERNIP-S); The Medical Technology Assessment Group (M-TAG); The Monash Institute of Health

evaluation protocol and assessing the available evidence on the safety, clinical effectiveness and cost-effectiveness of the technology or procedure. MSAC provides input in the assessment process and ensures that the contractors’ assessment is clinically relevant. After the evidence is reviewed, MSAC formulates recommendations to the Minister. MSAC recommendations generally fall into one of three categories:

- The evidence is strong and supports public funding;

- The evidence does not support public funding; or

- The evidence is inconclusive but suggests that the procedure could be safer, more effective, and more cost-effective than comparable procedures that attract public funding. In these circumstances, MSAC may recommend interim funding to enable data collection and further evaluation of the procedure.

The Department makes a submission to the Minister for Health and Ageing that combines MSAC’s final assessment report and recommendations with policy advice from the Department. The Minister considers this information and makes a decision to endorse or reject the MSAC recommendations. If the minister decides that Medicare will fund a new medical service, a consultative committee draws on MSAC’s findings to determine funding levels. The specific nature of the medical services determines which committee evaluates budgetary requirements. Relevant committees include the Medicare Benefits Consultative Committee (MBCC), the Consultative Committee on Diagnostic Imaging, and the Pathology Services Table Committee. The MBCC is an informal consultative forum established by agreement between the Minister for Health and Ageing and the Australian Medical Association to facilitate discussion on reviews of the General Medical Services Table (GMST) of the MBS. The major function of the consultative process is to review particular (groups of) services within the schedule, including consideration of new items and appropriate fee levels, to ensure that the schedule reflects and encourages appropriate clinical practice. Following approval by the Minister of an MSAC recommendation for public funding of a new procedure, an appropriate MBS listing for the service will be negotiated through the MBCC process.