Diagnostic imaging equipment is allocated life ages for Medicare benefits purposes. This is known as ‘capital sensitivity’ which is intended to encourage practices to regularly upgrade and replace, as appropriate, their equipment to help to ensure that patients have access to high quality diagnostic imaging services. Positron Emission Tomography (PET) equipment is excluded from the capital sensitivity arrangements.
Up until 30 April 2020, lower benefits were payable for equipment that exceeded the applicable life ages. From 1 May 2020, all the lower benefit items (the NK items) will be deleted from the Medicare Benefits Schedule (MBS). This will mean that Medicare benefits will no longer be payable for diagnostic imaging services rendered on equipment that has exceeded its effective life age or maximum extended life age unless the practice has an exemption.
There are two existing exemption categories, and one new category effective from 1 May 2020:
- practices located in outer regional, remote and very remote areas are automatically exempt from the capital sensitivity provisions
- for practices located in inner regional areas that are also classified as Rural Zone 4 or 5 under the Rural Regional and Remote Area (RRMA) classification system of 1991, the regulations provide that an exemption may be granted, on application, where the equipment:
- is operated on a rare and sporadic basis; and
- provides crucial patient access to diagnostic imaging services
- from 1 May 2020, practices, in any location, will be able to apply for Medicare benefits to continue to be paid on equipment that will reach its effective life age or maximum extended life age if, due to circumstances beyond the control of the practice, the practice will be unable to replace or upgrade the equipment before it has reached its effective life age or maximum effective life age.
The introduction of the new exemption from 1 May 2020 does not affect the practices that are already exempt under category 1 or 2. Practices already exempt under category 1 or 2 will continue to be exempt. New practices established in outer regional, remote and very remote areas on or after 1 May 2020 will continue to be automatically exempt under category 1 and practices located in inner regional areas that are also RRMA 4 or 5 are still able to apply for an exemption under category 2.
Age of equipment
The effective life ages for new equipment and the maximum extended life age for upgraded equipment are shown in the table below.
|Maximum extended life
(including extension for upgrades)
|Ultrasound||5005-55855||10 years||15 years|
|Computed Tomography (CT)||56001-57363||10 years||15 years|
|X-ray||57529-57723||15 years||20 years|
|Orthopantomogram (OPG)||57911-57968||15 years||20 years|
|Mammography||59301-59319||10 years||15 years|
|Fluoroscopy||60501-61110||15 years||20 years|
|Nuclear Medicine (excluding PET)||61651-61729||10 years||15 years|
|Magnetic Resonance Imaging (MRI)||63013-63523||10 years||20 years|
|Angiography||59903-60078||10 years||15 years|
If the equipment was installed new, the age is calculated from the date the equipment was first installed.
If the equipment was installed used, age is calculated from the date the:
- equipment was first used in Australia (for equipment previously used in Australia); or
- equipment's oldest component was manufactured (for equipment previously used outside Australia).
An equipment upgrade is an additional reasonable investment made by the service provider to improve the overall performance of the imaging system so the services provided are equivalent to new equipment supplied in Australia at the time of the upgrade.
Practices claiming the maximum extended life age must keep documentary evidence of the additional investment(s) made for potential compliance purposes. In the same way that records are kept for tax purposes the onus on maintaining and storing documentary evidence of upgrades and new equipment rests with the individual service provider.
Examples of documentation to substantiate upgrades and new equipment include:
- suppliers’ technical brochures or quotes;
- service installation reports;
- purchase orders; or
- invoices confirming that the relevant upgrade(s) have been completed.
Services Australia should be informed of any changes that should be recorded on the Location Specific Provider Number (LSPN) record within 28 days of the change occurring. Practices need to ensure that their equipment details are current and accurate. Practices can access and complete the form to update their LSPN record at Services Australia.
How to apply for an exemption
1. Automatic location-based exemptions
This exemption will automatically apply to practices located in Remoteness Area (RA) categories of outer regional (RA3), remote (RA4) and very remote (RA5). Practices in these RAs are exempt from the capital sensitivity measure and do not need to apply to the Department for a remote area exemption. New practices in these areas will need to indicate that they have an automatic exemption.
Practices can identify which RA they fall under at the Department of Health’s DoctorConnect website.
2. Inner regional location exemptions granted by the Department of Health
Practices located in inner regional area (RA2) that were previously classified under the Rural, Remote and Metropolitan Area (RRMA) classification system as, RRMA4 or RRMA5, may apply to the Department of Health for an exemption.
To grant an exemption for inner regional locations, the Department must be satisfied that:
- the diagnostic imaging equipment does not exceed the maximum extended life age by three years or more;
- the equipment is operated on a rare and sporadic basis; and
- the equipment provides crucial patient access to diagnostic imaging services.
Eligible practices may apply for an exemption by filling out the application form below.
- Inner Regional Australia Exemption Application Form (PDF 90 KB)
- Inner Regional Australia Exemption Application Form (Word 82 KB)
Practices can identify which RRMA they fall under at the Department of Health’s DoctorConnect website.
3. Exemptions where equipment is unable to replaced or upgraded before it reaches its effective life age or maximum effective life age
Practices in any location will be able to apply in writing to the Department of Health to allow Medicare benefits to continue to be paid on equipment that will reach its effective life age or maximum extended life age where:
- the equipment has not yet reached its effective life age or maximum effective life age; and
- due to circumstances beyond the control of the practice, the practice will be unable to replace or upgrade the equipment before it has reached its effective life age or maximum effective life age.
Circumstances where the Department may consider an exemption under this new provision include unforeseen delays to building works or unforeseen delays in equipment deliveries.
Practices may apply for an exemption by filling out the application form below.
- Unforeseen Equipment Replacement Upgrade Delay Application Form (PDF 356 KB)
- Unforeseen Equipment Replacement Upgrade Delay Application Form (Word 73 KB)
Practices will be notified by the Department of Health after receiving a valid application for an exemption. The Department will make a decision within 28 days and during this period, the practice may continue to claim MBS items.
Appeals process where a decision is taken not to grant an exemption
Unsuccessful applicants for an exemption may apply for a reconsideration of the decision. The must be done within 28 days of being notified of the decision not to grant an exemption.
Applications for a reconsideration must be made in writing to firstname.lastname@example.org setting out the grounds for appealing the decision.
Practices will continue to have access to Medicare benefits from the date they first applied for the exemption.
Where the original decision not to grant the exemption is upheld, practices can apply to the Administrative Appeals Tribunal (AAT). The application must be made within 28 days of the reconsideration decision. Medicare benefits will continue to be paid until the AAT makes its decision.
Keeping the Location Specific Practice Number records up to date
Practices are required to keep Services Australia LSPN records up to date including the age of each piece of equipment. To update LSPN information, practices may access the relevant forms and contact details at the Services Australia website and practices must inform Services Australia when equipment is upgraded.
For general enquiries about capital sensitivity, email the Department of Health at email@example.com.
For assistance with LSPN details, contact Services Australia toll free on 1800 620 589 Monday to Friday, 7.30am to 5.00pm Western Standard Times.