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Focus: Health December 2000

In this issue: Lorien Beazley asks whether insurance companies should be able to change the terms of your cover based on genetic tests. Meanwhile, the ACCC's latest report says consumers still aren't getting enough information on health insurance.

Gattaca insurance

In brief: Genetic testing won't be part of the life insurance application process for the next two years. But the debate's just hotting up. By Lorien Beazley.

You may have seen the movie 'Gattaca' where Uma Thurman's character takes a strand of her potential boyfriend's hair to the genetic testing booth (conveniently located near the cloakroom of a popular night club). Within a few short minutes, she's advised that Mr Uma is a good catch: great genes, good fatherhood material and ... a good insurance risk. In the movie, the details of Mr Uma's genetic information are common knowledge to his family, his employer and his insurance company.

Back in Australia in 2000, life insurance companies have agreed to delay (for two years) requiring Mr Uma to undergo genetic testing as part of the insurance application process. The agreement was authorised by the Australian Competition and Consumer Commission on 22 November 2000

What can they ask?

Under the agreement the life insurance companies, in addition to not requiring applicants for life insurance to undergo genetic testing, won't induce applicants to undergo genetic testing by offering discounts based on favourable test results.

But the agreement won't stop insurance companies from continuing to ask applicants for the results of any genetic tests they've had. Insurance companies aren't entitled to reduce prices because of favourable results. But they may vary terms and conditions, or not grant a policy at all, if the results show an insurance risk.

Isn't this discrimination?

The law has long recognised that, to protect them from fraud, insurance companies need any relevant health information an applicant has. Companies are entitled to know as much as possible about the risk they're insuring. But should this extend to people with unfavourable genetic dispositions but no symptoms?

Depending on the circumstances of the case, issues of genetic discrimination would usually fall within the jurisdiction of the Federal Disability Discrimination Act. Under the Act, it's not unlawful for insurance companies to discriminate because of a disability by refusing cover (or imposing special terms or conditions) if the discrimination is based on:

  • reasonable actuarial or statistical data on which it's reasonable to rely; or
  • in the absence of any actuarial data, the discrimination is reasonable having regard to any other relevant factors.

So, if someone has a genetic condition that's linked to a particular illness, disease or death, insurers can treat that person differently. Insurers can deny cover or charge higher premiums - provided they can produce data.

This is only one aspect of the maze of issues surrounding genetic testing and insurance. The issue won't go away simply because of a two year 'time out' by life insurance companies.

Senator Stott Despoja introduced a Federal Bill, The Genetic Privacy and Non-discrimination Bill, to address these issues in March 1998. It's heavily based on US legislation designed to ensure an individual's genetic information can't be used against them, nor disclosed without their permission. The bill has been adjourned for debate several times and its status is unclear.

It provides for the protection of genetic privacy; collection, storage, analysis and disclosure of DNA samples; and people's rights and responsibilities over genetic information. It prohibits discrimination on the basis of genetic information. It allows insurance companies to request, require or use genetic information that's already available, but doesn't allow them to vary insurance cover or discriminate because of the information.

The issue of genetic testing and insurance will be hotly debated over the next year. The debate will be fuelled by a joint inquiry into human genetic testing by the Australian Law Reform Commission and the National Health and Medical Research Council, announced by the Federal Government on 9 August 2000.

Lorien Beazley, a Senior Associate with AAR, has a Bachelor of Science from the University of Queensland majoring in chemistry and biochemistry.

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NSW Government unveils PFI proposals

Allens hosted a lunch attended by Craig Knowles, the NSW Minister for Health, on 6 November 2000. The Minister spoke to guests including industry figures and partners Ian McGill, Adam Thatcher, Mark Stubbings, Peter James and Noel Hemmings, foreshadowing an important announcement.

This came at the end of November 2000, in the shape of the green paper Working with Government: Private Financing of Infrastructure and Certain Government Services in NSW.

Health will be one of the areas most affected by this new policy. Under the PFI model, healthcare facilities can be funded by private organisations, but unlike BOOT (build, own, operate, transfer) projects, the public sector is responsible for providing clinical services. 

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New Queensland Regulation on clinical and related wastes

In brief: If you deal with clinical waste in Queensland, you'll need a waste management plan that complies with the new Regulation. You'll also have keep records under an expanded waste tracking scheme. Ian Hodgetts explains the new requirements.

Hospitals and other facilities generating or treating waste will need to comply with detailed requirements introduced by Part 5 of the Environmental Protection (Waste Management) Regulation 2000.

The Regulation covers:

  • clinical waste (with potential to cause disease); and
  • related waste that contains, or is contaminated with, chemicals, cytotoxic drugs, human body parts, pharmaceutical products or radioactive substances.
Waste tracking system

The Regulation requires generators, transporters and receivers of waste to keep detailed records as part of a waste tracking system. The system aims to prevent inappropriate waste disposal; it currently applies to generators of waste that's transported out of Queensland. From 1 July 2001, it'll also apply to generators of waste being transported within Queensland.

Generators will be required to record specific information (found in Schedule 2) and give it to the transporter and the EPA. They must keep a record of the information for at least 5 years.

Waste management plan

Hospitals and other facilities generating waste must have a waste management plan that's reviewed every 5 years. The plan must have regard to the waste management hierarchy and principles in the Environmental Protection (Waste Management) Policy.

The hierarchy sets out practices that should be used in order of preference:

  1. waste avoidance
  2. waste re-use
  3. waste recycling
  4. energy recovery from waste
  5. waste disposal

The plan must also comply with strict requirements in Section 44 of the Regulation. The person operating the facility must also consider a number of requirements, policies and procedures set out in Section 45.

Specific requirements

Day-to-day management will also be affected by a number of obligations, including:

  • waste must be segregated into clinical, related and general waste;
  • waste containers complying with Schedule 4 must be provided;
  • transportation, storage, treatment and disposal of waste must be carried out by someone holding an environmental authority;
  • hypodermic needles and sharps must be disposed of in containers complying with Australian Standards;
  • waste must be stored in an area generally not accessible to animals or people;
  • clinical waste must be treated or removed for treatment within 7 days after it's generated;
  • waste must be treated and disposal of in accordance with Schedule 5; and
  • waste chutes must not be used to move clinical wastes.

Organisations affected by the regulations will need to pay close attention to the detailed requirements.

Ian Hodgetts is an Environment & Planning Partner with AAR

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Drugs online = drugs on tap?

In brief: Did you know you can buy the contraceptive pill online and you don't even need a prescription? Well you could, by simply visiting www.crowded.org, until the ACCC stepped in. Lorien Beazley reports.

David 'Zero Population Growth' Hughes, trading as Crowded Planet, was selling the pill to Australians via his website (www.crowded.org) until 9 November 2000. Hughes has been temporarily banned from selling the drug by the Federal Court, following proceedings started by the Australian Competition and Consumer Commission.

Hughes was also ordered to publish a notice saying Crowded Planet wouldn't supply oral contraceptives to consumers in Australia. He also had to publish a correction of claims his operations were endorsed by the ACCC.

Why was the ACCC concerned?
  • It's illegal in Australia to supply the pill without a prescription, let alone offer them in this way on a website.
  • The site made a number of dubious claims, including: that the pill had 'nil side effects'; that forgetting to take one pill would not affect protection; and that it was cheaper to purchase the pill online. In fact the Crowded Planet pill was over 4 times more expensive than pills bought from pharmacies.

Australia's regulatory regime

It's illegal for most people to possess, prescribe, dispense and administer drugs. Drugs are categorised into nine schedules, drawn up by the National Drugs and Poisons Scheduling Committee. Schedule 4 drugs include the pill, antibiotics, anti-depressants and tranquillisers. They're either poisons that are restricted to medical, dental or veterinary prescription, or they're intended for therapeutic use, but more testing of their safety or efficacy is needed.

  1. Only medical practitioners, dentists and veterinary surgeons may prescribe Schedule 4 or 8 drugs.
  2. To dispense and supply Schedule 4 and 8 drugs and supply Schedule 2 and 3 poisons, a person must:
  3. be a qualified pharmacist (appropriate University qualification);
  4. view the prescription form (unless it's an emergency and a medical practitioner sanctions their actions, in which case other provisions apply);
  5. talk to the patient to ensure the drug is safe and appropriate for them (eg a medication causing drowsiness may not be suitable for a truck driver); and
  6. check the patient isn't taking any other medication that could react with the drug.
The ACCC's role

The ACCC monitors health promotion and advertising, watching for danger signs such as:

  • emotive language;
  • use of words such as 'nil', 'only', 'ever' and 'guaranteed'; and
  • ads that are misleading or deceptive because of what they don't say.

The ACCC will also step in where a consumer may be mislead about the price of a product, for example where a website gives false price information or doesn't give the total cost. (The price quoted should include all extras, such as any delivery charges).

In all cases, a website must give all relevant information. The court will revisit the Crowded Planet case next February.

For more information about the National Drugs and Poisons Scheduling Committee, visit the Therapeutics Goods Administration website at http://www.tga.health.gov.au/ndpsc/index.htm

Lorien Beazley, a Senior Associate with AAR, has a Bachelor of Science from the University of Queensland majoring in chemistry and biochemistry.

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ACCC warns funds in Senate report

In brief: The ACCC's latest report to the Senate warns health funds to give consumers more accurate information. It also says new contracting arrangements are making no gap or known gap cover a reality. David McLeish(view CV) reports.

According to the report, consumers are still missing out on information, both about the price of health services and about insurance products. Both the ACCC and the Ombudsman reported complaints over misleading and inadequate information during the recent rush to buy cover before the Government's Lifetime Cover deadline.

The report, tabled in the Senate on 8 November 2000, looked at issues including consumer concerns over private health care and anti-competitive practices. It covered the period 1 January to 30 June 2000.

ACCC action

The ACCC is willing to pursue health funds for what it considers to be misleading advertising, as two recent examples show.

  • The ACCC began proceedings against Medibank Private over two advertising campaigns it says were misleading and deceptive. In the first campaign, the ACCC alleges Medibank Private advertised 'no rate increase in 2000' for products which in fact saw a rate increase on 1 July 2000. In the second, Medibank Private offered to waive waiting periods for consumers who switched from another fund. But the ACCC says it failed to adequately disclosed that only certain waiting periods would be waived.
  • An HBA television advert about the need for private health cover was potentially misleading as it ignored comprehensive benefits provided through a statutory transport accident scheme. The ACCC acted and HBA, following court enforceable undertakings, revised its ad.
Health funds warned not to act unconscionably

Health funds and private hospitals have been using Hospital Purchaser Provider Agreements (HPPAs) during the five years since the Government revised the National Health Act. The aim of this contracting process was that a competitive market would be more efficient, allowing the funds to offer their members 'no gap' policies for hospital accommodation, with little or no increase in premiums. The ACCC Report found that the contracting between health funds and hospitals via HPPAs is effectively ensuring that fund members have no gaps or known gaps in hospital accommodation services.

But, according to the report, there have been problems with the contracting process. Some private hospital operators are concerned that health funds may be using anti-competitive practices. The report found that many of these problems reflect the competitive nature of the contracting process and don't raise any trade practices issues.

However the ACCC warned that health funds still need to be careful not to act unconscionably in their dealings with private hospitals. The ACCC considers this a serious issue and is investigating one case involving a health fund and a small private hospital. The ACCC has already used its broad powers under Section 155 of the Trade Practices Act to demand information and documents and to take testimony.

Health funds and private hospitals were finalising a code of practice for HPPA negotiations as we went to press. The ACCC hopes it will solve the hospitals' concerns over the HPPA process. But there were problems during negotiations over some health funds' insistence on a clause that indirectly endorses a unilateral contract variation clause in HPPAs. (A clause that would allow the fund to change the terms of a contract without consulting the hospital.)

David McLeish is an Infrastructure Partner with AAR.

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New employee entitlement laws tested

In brief: Employers face tough penalties, but are employees really protected? asks David Noakes.

New amendments to the Corporations Law go as far as imprisoning company directors who don't protect employee benefits adequately.

The new laws were introduced following the 1998 Waterfront dispute and public concern over shelf companies allegedly created to make dismissing employees easier. They prohibit agreements or transactions intended to prevent employees recovering their entitlements (or reduce the amount they can recover). A breach of the new provision may result in a penalty of $100,000 or 10 years jail, or both.

But do the new laws go far enough? The problem is that they require the court to determine the employee's intention. It has to decide whether they intended to deliberately avoid paying employee entitlements, or whether their conduct was reasonable in the circumstances.

For more, see David Noakes' article in Focus on Employment December 2000.

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