I refer to your memorandum dated 7th November, 1950, outlining a medical benefits scheme which it is desired to introduce. You desire to know whether such a scheme can be implemented within the confines of section 6 of the National Health Service Act 1948–1949.

(2)  My short answer is that, in my view, section 6 would be sufficient authority for implementing such a scheme.

(3)  In view of the importance of this matter, I propose to repeat for purposes of record the portions of your memorandum which set out the scheme and to furnish any necessary comments thereon. But before doing this, it will assist if I refer briefly to section 6 of the Act.

(4)  The material provisions of section 6 are as follows:

6.(1.) The regulations may make provision—

(a)  for or in relation to the establishment, maintenance, conduct and operation of a scheme for the provision of sickness benefits or medical services by way of payments by the Commonwealth in respect of professional services rendered by medical practitioners;

(b)  in relation to any arrangements made by the Minister under sub-section (4.) of this section; and

(c)  in relation to matters incidental to a scheme established, or arrangements made, under this section.

(2.) Without prejudice to the generality of the last preceding sub-section, a scheme established under this section may—

(a)  define the circumstances in which persons shall, or shall not, be entitled to benefits or services under the scheme;

(b)  provide for participation in the scheme by medical practitioners in respect of particular classes of professional services; and

(c)  provide that the maximum fees to be charged or received by medical practitioners participating in the scheme in respect of professional services to which the scheme applies shall be the fees fixed by, or assessed under, the regulations as in force from time to time.

(3.) …

(4.) Where an arrangement exists between a medical practitioner and a society, body or person under which professional services are rendered by that medical practitioner (whether or not a scheme established under this section applies in relation to those professional services), the Minister may make arrangements for the provision by the Commonwealth of sickness benefits or medical services, in respect of those professional services, in lieu of the benefits or services under the scheme.

(5.) Where arrangements made by the Minister under the last preceding sub-section are in operation in relation to any professional services, a scheme established under this section shall not apply in relation to those services.

(6.) Nothing in the section authorises any form of civil conscription.

(5)  Some doubt exists as to whether the use of the word ‘rendered’ in section 6(1)(a) prevents payments under the scheme being made in advance. I am inclined to the view that the section should be liberally construed, and ‘rendered’ interpreted as ‘to be rendered’; however, it is possible a court would construe the word narrowly, although it is unlikely that the point will ever come before a court. The question will not arise in respect of services rendered by medical practitioners on a fee-for-service basis if, as I understand, the scheme will provide for reimbursement of a part of a fee paid, after it has been paid. The question could arise in respect of capitation payments, but would be avoided if subsidy payments are made by the Commonwealth in arrear instead of in advance.

(6)  A further point is this connexion is that, in the case of many members of organisations, no services are actually rendered during some periods in respect of which capitation payments are made. The medical practitioner does, however, hold himself ready and willing to give medical attention if called upon, and I think this may be regarded as a sufficient rendering of a medical service by him for purposes of the section. In any case, I understand that, in future, agreements between friendly societies and doctors are all likely to be on a fee-for-service basis only, so that the question may, perhaps, be academic.

(7)  The essential elements of the scheme as described in your memorandum, and my comments thereon, are as follows:

A.  Payments by Commonwealth.

1.  To be made, subject to certain conditions, to voluntary organisations in respect of prescribed medical services rendered to members of the organisations by registered medical practitioners.

Comment: Section 6(1)(a) is, in my view, clear authority for the making of regulations providing for these payments. I see no objection to the payments being limited to voluntary organisations as the selection of recipients of benefits within the general class specified in section 6(1)(a) is undoubtedly a matter for the Executive.

2.  As an alternative to 1. above, where an arrangement exists between registered medical practitioners and the voluntary organisation concerned to provide certain medical services in consideration of capitation fees paid periodically to the practitioner on account of each member, the Commonwealth, subject to certain conditions, to pay a stipulated percentage of the capitation fee to the voluntary organisation.

Comment: Subject to my remarks in paragraphs 5 and 6, I think section 6(1)(a) would authorize regulations for this purpose. Alternatively, the Minister could under section 6(4) make an arrangement with the voluntary organisation to pay a stipulated percentage of the fee to the organization. Section 6(1)(b) and (c) would authorize the making of regulations in relation to the arrangement and incidental matters. The effect of section 6(5) in relation to any such arrangements should not be overlooked.

3.  As an alternative to both or either of 1. and 2. above, where any person for any reason declines or is unable to join a voluntary organisation, then when that person pays a registered medical practitioner a fee for medical services rendered, the Commonwealth to pay to the person a fixed amount in respect to the medical service or services received, according to a prescribed table of payments.

Comment: This would, I think, be clearly within section 6(1)(a).

B.  Conditions attaching to Payments.

1.  A fixed payment in respect of a particular service will be set out in a schedule of payments (referred to as a Table of Subsidies) and the voluntary organisation must agree to pay an amount not less than the Commonwealth payment for every service incurred in the list for which a claim is made.

2.  The voluntary organisation must hold receipts covering the total combined Commonwealth – voluntary organisation payment respecting any service or services for which a claim on the Commonwealth is made. (The voluntary organisation may have this receipt from either the member or the practitioner according to whatever private arrangements are made by the voluntary organisations.)

3.  In the case of a person not being a member of a voluntary organisation that person will have to produce a receipt concerning the service or services rendered before the claim will be paid.

Comment on 1, 2 and 3: The matters dealt with in these paragraphs would be incidental to any scheme or arrangement and regulations in relation thereto would be authorised by section 6(1)(c).

C.  The Attributes required of a Voluntary Organisation for the purposes of the Scheme.

1.  There will be no element of compulsion by the Commonwealth in respect of the membership of organisations.

2.  (a) Its funds, raised and used in connexion with the provision of medical benefits for medical services rendered, must be kept separate and apart from any other funds the organisation may administer.

(b)  The funds mentioned in (a) must be used solely for providing the type of benefit (i.e. towards the payment of fees on account of medical services rendered) for which the Commonwealth payment is made available.

(c)  The voluntary organisation may ‘mingle’ the payments received from the Commonwealth with funds raised from its members in respect to the services mentioned in (b) in the one fund.

3.  The voluntary organisation must be non-profit making in the sense that it shall not distribute any surplus to any persons other than by way of benefits to its members in accordance with the purposes for which the contributions were collected.

4.  (a) Administrative expenses connected with the voluntary organisations medical services scheme must be paid out of a separate fund to that into which the Commonwealth payment is paid and any amounts collected from members in respect of administrative expenses and charges must be distinguished from funds collected for the purpose of paying benefits.

(b)  The total management costs of the organisation in respect of the operation of the medical expenses scheme shall not exceed a stipulated percentage of the total amount of all the members contributions paid in respect of medical services benefits.

Comment: In my view, paragraphs 2 to 4 relate to matters which are all incidental to a scheme or arrangement and, in consequence, regulations with respect thereto would come within the incidental regulation-making power conferred by section 6(1)(c).

[Vol. 39, p. 394]