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Thursday, 17 September 2009
Page: 9883


Mr BOWEN (Minister for Financial Services, Superannuation and Corporate Law and Minister for Human Services) (9:01 AM) —I move:

That this bill be now read a second time.

This bill will amend the Health Insurance Act 1973 to give effect to the increased Medicare compliance audits initiative which was announced in the 2008-09 budget.

Expenditure on the Medicare scheme was over $14 billion in 2008-09 and has grown by more than $1 billion per annum over the last two years. Compliance audits are conducted to ensure that taxpayers’ money is spent appropriately. At present, many practitioners voluntarily cooperate with Medicare Australia during a compliance audit. However, on average 20 per cent of practitioners either do not respond to or refuse to cooperate with a request for documents. When this occurs Medicare Australia does not have the authority to require the production of relevant documents, and cannot confirm that the Medicare payment is correct. This legislation is intended to address that deficiency.

The government has worked closely with stakeholders, including the Office of the Privacy Commissioner, the Australian Medical Association, key medical colleges and the Consumers Health Forum to balance the public interest in ensuring the integrity of public revenue expended on Medicare services with the privacy concerns.

Key stakeholders were consulted and given the opportunity to comment during 2008 and in the first half of 2009. This process included the release of an exposure draft and privacy impact assessment, as well as referral of the compliance audits initiative to the Senate Community Affairs Legislation Committee.

The report of the Senate Community Affairs Legislation Committee inquiry into Medicare compliance audits recommended that regulations to ensure that patient clinical records are only required to be accessed where necessary during a compliance audit should be developed. The government has accepted the substance of the recommendation. However given the concerns expressed during the hearing it is more appropriate to address this in the primary legislation. Therefore the bill will provide for significant involvement by medical practitioners employed by Medicare Australia in the compliance audit process.

In response to the stakeholder feedback and Senate committee recommendations, the government has amended the bill to include significant involvement by medical practitioners employed by Medicare Australia in the compliance audit process. This will mean that Medicare Australia will have employees who are medical practitioners involved in every compliance audit.

This bill will enable the Chief Executive Officer (CEO) of Medicare Australia to give a notice requiring the production of documents to a practitioner, or another person who has custody, control or possession of the documents, to substantiate whether a Medicare benefit paid in respect of a service should have been paid. However before a notice to produce documents can be given to a person the CEO must fulfil several conditions:

  • Firstly, the CEO must have a reasonable concern that the Medicare benefit paid in respect of a service may exceed the amount that should have been paid. This means that Medicare Australia cannot conduct random compliance audits. A reasonable concern may be related to a particular practitioner, a group of practitioners or a particular service or groups of services. For example, the use of a particular Medicare item may have grown so significantly or unexpectedly that the CEO can have a reasonable concern about the provision of any service associated with that item number. The CEO may also have a concern about a professional service if it has been provided by a person who is a particular type of practitioner and the CEO has a concern about that specific group of practitioners.

The compliance audits conducted by Medicare Australia under the provisions in this bill will be limited to seeking to confirm whether a Medicare benefit paid in respect of a service exceeded the amount that should have been paid.

This means that the audit will seek to establish that the elements of a particular service, which are outlined in the Medicare Benefits Schedule and are relevant to the accuracy of the payment, were performed. For example, if a Medicare benefit is only payable for a service when a specific test is undertaken, Medicare Australia will ask the practitioner to produce documents that demonstrate that the test was performed.

Medicare Australia’s compliance audits will not review matters relating to clinical decision making, the clinical relevance of the service provided to the patient or professional conduct. This means that the elements of a service which are not factual but rely on the clinical judgement of a practitioner will not be reviewed during a compliance audit. For example, one element which must be completed in order for a Medicare benefit to be paid for some Medicare services is the requirement for practitioners to undertake an exhaustive patient history. However the judgment about what constitutes an ‘exhaustive history’ is clinical rather than a matter of fact. Therefore this element of the service would not be in scope during a compliance audit.

  • Secondly, the CEO must take advice from a medical practitioner employed by Medicare Australia on potential sensitivities associated with the kinds of documents a practitioner may need to provide to substantiate the service.
  • Thirdly, the CEO must give the person a reasonable opportunity to voluntarily respond to an audit request. This means that practitioners who choose to voluntarily tell Medicare Australia that they have received a benefit that exceeds the amount they should have been paid will still benefit from discounts on any financial penalty that may apply.

Only when these three conditions are met can the CEO serve a notice requiring a person to produce documents to substantiate a Medicare benefit paid in respect of a service.

The bill does not introduce any record-keeping requirements. It will be up to the person who receives the notice to decide what documents they have available to substantiate the service.

The notice to produce documents must include a statement that documents containing clinical details do not have to be produced unless these are necessary to substantiate the service. However the bill includes a provision that a person does not have to produce documents containing clinical details to anyone who is not a medical practitioner employed by Medicare Australia. This means that practitioners can choose to supply documents containing clinical details to other medical practitioners employed by Medicare Australia rather than an administrative officer. As a result the practitioner who provided the Medicare service will decide whether documents containing clinical details need to be provided to Medicare Australia, and if so, who will receive those documents.

Medicare Australia is also working with relevant stakeholders, including the Australian Medical Association, to develop guidelines for practitioners setting out the kinds of information that will substantiate particular services or groups of services. These guidelines will be publicly available and will emphasise that clinical information is not to be provided unless it is absolutely necessary to substantiate the service.

The provisions in this bill do not commence until 1 January 2010 in order to allow for the development and publication of these guidelines.

The bill provides protection for practitioners by providing that the documents and information about particular services provided in response to a notice cannot be used as the basis for a referral to Professional Services Review or for most criminal and civil proceedings. This means that information relating to identified services produced in response to a notice to produce documents will not be able to be used in any other proceedings, except for those relating to false and misleading statements under the Health Insurance Act 1973.

The bill ensures that practitioners will be notified of the outcome of an audit in which they were involved. Where a practitioner is found to owe a debt to the Commonwealth, the bill also introduces a requirement that they be given 28 days in which to seek internal review of the decision before a debt notice is issued.

At present, where the amount paid in respect of the service cannot be substantiated, the practitioner is required to repay the amount. This will continue to occur. In addition, this bill provides that a practitioner who cannot substantiate the amount paid in respect of a service may also be liable for a financial administrative penalty. The financial penalty is intended to encourage practitioners to itemise Medicare services correctly.

A base penalty amount of 20 per cent will be applied to debts in excess of $2,500 or a higher amount if specified in regulations. An analysis of Medicare Australia data indicates that this threshold reflects the point at which mistaken claims may become routine, or reflective of poor administration or decision making. In 2008-09, only 22 per cent of practitioners who were found to have made incorrect claims were asked to make repayments of more than $2,500.

The $2,500 threshold amount may be increased by regulations. This provides for future adjustments of the threshold to ensure that practitioners are not disadvantaged by incremental increases in the value of the Medicare benefit amount paid in respect of services.

The bill allows the base penalty amount of 20 per cent to be reduced or increased according to individual circumstances described in the legislation. This encourages self-disclosure and promotes voluntary compliance whilst discouraging recidivism. If a practitioner:

  • tells Medicare Australia that an incorrect amount has been paid in respect of the service prior to being contacted by the CEO, there is a 100 per cent reduction in the penalty;
  • tells Medicare Australia that an incorrect amount has been paid in respect of the service before a notice to produce documents is issued, the penalty is reduced by 50 per cent;
  • tells Medicare Australia that an incorrect amount has been paid in respect of the service after a notice to produce documents has been issued but before completion of the audit, the penalty is reduced by 25 per cent;
  • does not respond to a notice to produce documents, the full amount of the services identified in the notice becomes repayable and the penalty is increased by 25 per cent;
  • has been unable to substantiate an amount paid in respect of other services in the previous 24 months and the total they repaid was more than $30,000, the penalty in respect of the current amount which is being recovered is increased by 50 per cent.

The bill is not retrospective and will only apply to Medicare services provided after the commencement of the legislation on 1 January 2010.

This bill forms part of the government’s commitment to responsible economic management and prudent fiscal responsibility. I commend the bill to the House.

Debate (on motion by Dr Southcott) adjourned.