Second-tier default benefits

Page last updated: 16 September 2020

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Accreditation Certificates

As per the announcement from the Australian Commission on Safety and Quality in Health Care (ACSQHC) the accreditation status of health services organisations will be maintained during the response phase of the COVID-19 pandemic. 
If the hospital has not undergone an accreditation assessment at the time of its second-tier application, it must supply the information requested within the application form to support the accreditation status:

  • Most recent accreditation certificate to the National Safety and Quality Health Service (NSQHS) Standards.
  • If that accreditation is first edition, the hospital must also provide Informed Financial Consent (IFC) and procedures.

Further information and exceptions to these arrangements.

What are second-tier default benefits?

Second-tier default benefits provide patients that are treated in an eligible hospital which does not have a negotiated agreement with the patient’s insurer, access to higher benefits than those that would otherwise be payable.

Second-tier default benefits are an amount no less than 85% of the average charge for the equivalent episode of hospital treatment. (Under an insurer’s negotiated agreements in force on 1 August of a given year with all comparable private hospitals in the same state as the hospital in which treatment occurs.) Comparable hospitals are those hospitals in the same second-tier hospital category with negotiated rates for equivalent episodes of care.

To facilitate calculation of second-tier default benefits by insurers, the Department categorises all declared private hospitals into the following categories:

  1. private hospitals that provide psychiatric care, including treatment of addictions, for at least 50% of the episodes of hospital treatment, and do not fall into category (g);
  2. private hospitals that provide rehabilitation care for at least 50% of the episodes of hospital treatment, and do not fall into categories (a) or (g);
  3. private hospitals that do not fall into categories (a), (b) or (g), with up to and including 50 licensed beds;
  4. private hospitals that do not fall into categories (a), (b) or (g), with more than 50 licensed beds and up to and including 100 licensed beds;
  5. private hospitals that do not fall into categories (a), (b) or (g), with more than 100 licensed beds, without an accident and emergency unit or a specialised cardiac care unit or an intensive care unit;
  6. private hospitals that do not fall into categories (a), (b) or (g), with more than 100 licensed beds, with either (or any combination of) an accident and emergency unit or a specialised cardiac care unit or an intensive care unit;
  7. private hospitals that provide episodes of hospital treatment only for periods of not more than 24 hours.

    To check a hospital’s current second-tier eligibility status/category, please refer to the Commonwealth declared list with second-tier on the Department's Hospital web page.

How to apply for second-tier default benefits eligibility

It is recommended that the second-tier benefits guidelines are read carefully before submission of applications.

Applying for second-tier default benefits eligibility is optional for private hospitals. To apply:

  • complete the application form for each hospital seeking second-tier eligibility;
  • submit the completed form and all required attachments to phisecondtier@health.gov.au; and
  • pay an application fee of $895 (GST not applicable).

An invoice will be issued after receipt and inspection of documentation. Applications may be submitted at any time during the year. Hospitals reapplying for second-tier eligibility should submit an application and have paid the application fee invoice at least 60 days prior to their second-tier eligibility expiry date to ensure second-tier default benefits do not lapse during assessment.

The Department will assess applications against the following assessment criteria:

  • be a private hospital;
  • be accredited;
  • not bill patients directly for the minimum benefit payable by the patient’s insurer;
  • make provision for informed financial consent; and
  • submit Hospital Casemix Protocol Data to health insurers electronically with every claim for second-tier default benefits.

For new hospitals, the application form can be submitted at the same time as the hospital declaration form. However, the Department will not consider the application until the hospital is declared.

Hospitals will be notified of the outcome of their application within 60 calendar days of the Department receiving a complete application, including any additional requirements and payment of the application fee. Providing the assessment criteria is met, they will be awarded second-tier default benefits eligibility effective from the day of approval until 60 calendar days after the day that the hospital’s accreditation expires.

Additional information and resources

Second-tier defaults benefit Guidelines (PDF 878 KB)
Second-tier default benefit Guidelines (Word 219 KB)

Second-tier application form (PDF 349 KB)
Second-tier application form (Word 141 KB)

Second-tier Legislation

Annual Hospital Categorisation Review Consultation

Cost recovery

Contact

Questions about second-tier default benefits should be emailed to phisecondtier@health.gov.au.