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Tuesday, 15 November 1983
Page: 2686


Mr CADMAN —On behalf of the Joint Committee of Public Accounts, I present the 212th report of the Committee, relating to Finance Minute on Report 203-Medical fraud and overservicing, and I ask leave of the House to make a short statement in connection with the report.

Leave granted.


Mr CADMAN —The 212th report of the Joint Parliamentary Committee of Public Accounts contains the Department of Finance minute on the Committee's earlier report No. 203-a progress report on medical fraud and overservicing. The Department of Finance minute is the formal mechanism used by the Government for responding to the Committee's recommendations. The Committee's progress report on medical fraud and overservicing was tabled in Parliament on 9 December 1982. It contained 45 re- commendations directed at streamlining and strengthening both administrative procedures and existing legislation. The report examined the effectiveness of existing legislation, procedures for dealing with abuse of the medical benefits system and discussion on other associated problems.

The 203rd report raised a number of fundamental issues of public administration which extended well beyond the specific area of medical fraud and overservicing. These included the overall performance of the Department of Health, the general relationship between central and State offices of departments, and the adequacy of the current legal system in coping with white collar crime. While the Committee notes the considerable progress made to combat fraud and overservicing , it believes that there are still significant areas where further improvements need to be made. For example, it appears that the Department of Health has more than doubled its positions dedicated to reducing medical fraud and overservicing from 94, as at June 1982, to 205, as at October 1983. However in the crucial area of staff devoted to development of the Department's fraud and overservicing detection system or FODS, there has been to date no increase in the number of people permanently filling positions, although the number of positions has increased from seven to 16. Similarly the Australian Federal Police has applied to the Public Service Board for an extra 50 positions to be dedicated to medical fraud and overservicing. This is in addition to a request for another 149 general positions in 1982-83 and 230 positions in 1983-84. The Committee will be monitoring the Board's consideration of these positions.

Furthermore, while the Attorney-General's Department has created an additional 12 positions to deal with medical fraud and overservicing-a move welcomed by the Committee-at present only three of these have been permanently filled; the rest are filled by personnel on an acting basis or on temporary transfer. The Committee considers that most senior officers in the Department of Health, the Australian Federal Police and the Attorney-General's Department now acknowledge the complexity and magnitude of the effort required to deal with medical fraud and overservicing in the Australian community. The Committee welcomes the establishment of the Surveillance and Investigation Division in the Department of Health, and a Central Co-ordinating Committee and State co-ordinating groups containing representatives of the Department of Health, the Attorney-General's Department, the Australian Federal Police and the Department of Veterans' Affairs.

It is clear that the development of the fraud and overservicing detection system, FODS, is of paramount importance to the success of efforts to combat medical fraud and overservicing. The Committee is not convinced that adequate resources are currently being devoted to this task. At present the Department of Health's 14 main FODS development activities may take up to 230 man months to complete.

The Committee noted with interest the National Prosecutor's Seminar conducted by the Attorney-General's Department in April 1983. The Committee believes it is necessary for such a seminar to be held regularly in order to update and share knowledge of prosecution information among relevant Commonwealth officers. The Committee has been informed that 37 medical practitioner disqualification actions were in progress as at 30 September 1983. A breakdown of the Central Co- ordinating Committee's case load as at September 1983 reveals: Firstly, a substantial overall increase in medifraud cases-502 in total; secondly, higher medifraud case loads in New South Wales and Victoria relative to other States; and thirdly, a considerable backlog of cases, 239 in all, listed more than 6 months ago, await action in the Department of Health.

I now turn to the Medicare national health scheme. It should be emphasised that the Committee cannot and does not question the adequacy of Government policies but is concerned with their administrative implementation. During discussions with the Minister for Health (Dr Blewett), the Committee was informed that the current departmental estimate of the cost of fraud and overservicing by doctors is in the vicinity of $120m per annum. It is noted that at least one professional medical society believes this estimate should be closer to $200m per annum. The Committee believes that resources in the Department of Health currently devoted to investigation and prevention of medical fraud and overservicing should not be diverted to aid the introduction of Medicare. Efforts to control and reduce medical fraud and overservicing are a necessary complement to the introduction and successful operation of the Medicare scheme.

The Committee is pleased to see legislation being introduced to implement many of its re- commendations. However, it notes with concern that the Department of Health has not made significant progess in implementing the new overservicing committee system referred to in the Finance minute. The Public Accounts Committee acknowledges that extensive new legislation may be required to implement a new overservicing committee system but believes such legislation will be vital to the containment of medical benefit costs under the Medicare scheme.

The Committee notes that latest official estimates suggest a markedly higher supply of doctors in the coming years. It remains concerned that, as mechanisms to control and reduce medical fraud become more effective, there will be an increase in the level of overservicing by medical practitioners. The Committee's inquiry into medical fraud and overservicing is continuing and I look forward to presenting the final report to Parliament next year. I commend this report to honourable members.