Equipment, Medicare and diagnostic imaging

About capital sensitivity and guaranteeing quality diagnostic imaging services.

Page last updated: 08 April 2022

Background

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.

From 1 May 2020, all the lower benefit items (the NK items) were removed from the Medicare Benefits Schedule (MBS). This meant Medicare benefits were no longer payable for diagnostic imaging services rendered on equipment that had exceeded its effective life age or maximum extended life age unless the practice had an exemption.

Effective from 1 May 2020 there are 3 exemption categories:

  1. practices located in outer regional, remote and very remote areas using Australian Statistical Geographical Classification - Remoteness Area (ASGC-RA) are automatically exempt from the capital sensitivity provisions i.e. ASGC-RA 3 to 5 areas
  2. practices located in inner regional areas (ASGC-RA 2) that are also classified as Rural Zone 4 or 5 under the Rural, Remote and Metropolitan Area (RRMA) classification system of 1991, may be granted an exemption, on application, where the equipment:
    • is operated on a rare and sporadic basis; and
    • provides crucial patient access to diagnostic imaging services
  3. practices in any location may be granted a three-month exemption where they have demonstrated that they have been unable to replace or upgrade the equipment before it has reached its effective life age or maximum extended life age due to circumstances beyond the control of the practice.

From 1 May 2022, two capital sensitivity exemptions, 1 and 2 above, will cease and only exemption 3, will remain. This will mean that, from 1 May 2022, only diagnostic imaging services performed on equipment within its effective life age or maximum extended life age will attract a Medicare rebate, irrespective of where the equipment is located.

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.

Modality MBS Items Effective
Life Age
Maximum extended life
(including extension for upgrades)
Ultrasound 55028-55895 10 years 15 years
Computed Tomography (CT) 56001-57362 10 years 15 years
Other Diagnostic Radiology (X-ray) 57506-57945

58100-59103

59700-59763

15 years 20 years
Orthopantomogram (OPG) 57960-57969 15 years 20 years
Mammography 59300-59318 10 years 15 years
Fluoroscopy 60500-60509
61109
15 years 20 years
Nuclear Medicine (excluding PET) 61310-61505
61650
10 years 15 years
Magnetic Resonance Imaging (MRI) 63001-63547 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 Please note that exemptions in this category will cease on 1 May 2022
  2. This exemption automatically applies to practices located in areas that are: outer regional (ASGC-RA 3), remote (ASGC-RA 4) and very remote (ASGC-RA 5). Practices in these areas are exempt from the capital sensitivity requirements and do not need to apply to the Department for a remote area exemption. New practices in these areas will need to indicate to Services Australia that they have an automatic exemption.

    Practices can identify their ASGC-RA classification at the Department of Health’s DoctorConnect website.

  3. Inner regional location exemptions granted by the Department of Health Please note that exemptions in this category will cease on 1 May 2022
  4. Practices located in an inner regional area (ASGC-RA 2) that are classified under the Rural, Remote and Metropolitan Area (RRMA) classification system as RRMA 4 or RRMA 5 may apply to the Department of Health for an exemption

    To grant this exemption, the Department must be satisfied that:

    • the diagnostic imaging equipment does not exceed the maximum extended life age by 3 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 151 KB)
    Inner regional Australia exemption application form (Word 74 KB)

    Practices can identify which RRMA they fall under at the Department of Health’s DoctorConnect website.

  5. Exemptions where equipment is unable to be replaced or upgraded before it reaches its effective life age or maximum extended life age, due to circumstances beyond the control of the practice

Practices in any location can apply in writing to the Department of Health seeking 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 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 1075 KB)
Unforeseen equipment replacement upgrade delay application form (Word 88 KB)

The Department of Health will notify practices of its receipt of a valid application for an exemption. The Department will then 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 cap.sens@health.gov.au 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.

Contact Information

For general enquiries about capital sensitivity, email the Department of Health at cap.sens@health.gov.au

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.