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Wednesday, 17 November 2010
Page: 2688


Ms ROXON (Minister for Health and Ageing) (9:07 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 two components of the Increased Medicare Compliance Audits initiative, which was announced in the 2008-09 budget.

The bill is a reintroduction of a largely identical bill introduced in the 42nd Parliament. This version incorporates parliamentary amendments which were agreed to, or moved, by the government during parliamentary debate on the bill. Minor changes were made to the text of three of the amendments to ensure that they are effective. None of those minor changes is intended to change the effect of the amendments as agreed to.

Compliance audits are conducted to ensure that taxpayers’ money is spent appropriately. Expenditure on the Medicare Benefits scheme was over $15 billion in 2009-10 and has grown by more than $1 billion per annum over the last three years. On average, 20 per cent of practitioners contacted by Medicare Australia do not respond to, or refuse to cooperate with, a request to substantiate a Medicare benefit paid for a service. When this occurs, Medicare Australia does not have any authority to require a practitioner to comply with the request. This means that there is no way to confirm that the Medicare benefit is correct. This legislation is intended to address that deficiency.

In developing this bill, it was necessary to balance the public interest in ensuring the integrity of public revenue expended on Medicare services with the privacy concerns. An extensive consultation was undertaken, including release of an exposure draft and privacy impact assessment. Issues raised by key stakeholders including the Australian Medical Association, other practitioner organisations and the Consumer’s Health Forum are addressed in the bill.

The Senate Community Affairs Legislation Committee inquiry into Medicare compliance audits recommended that patient clinical records are only accessed where necessary. The bill now provides that documents containing clinical details do not have to be produced unless necessary. In addition, practitioners may choose to provide these documents to a medical practitioner employed by Medicare Australia rather than an administrative auditor.

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 the custody, control or possession of the documents, to substantiate a Medicare benefit paid for a service. Before a notice to produce documents can be issued the CEO must fulfil several conditions:

  • Firstly, the CEO must have a reasonable concern that the Medicare benefit paid for a service may exceed the amount that should have been paid. This means that Medicare Australia cannot conduct random compliance audits under the provisions in this bill. A reasonable concern may relate to a particular practitioner or group of practitioners, or a particular service or group of services.

The CEO cannot develop a reasonable concern in relation to the clinical relevance of a service. The compliance audits conducted by Medicare Australia under the provisions in this bill will seek to confirm that the factual elements of a service 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. The elements of each service are outlined in the Medicare Benefits Schedule.

  • Secondly, the CEO must take advice from a medical practitioner employed by Medicare Australia on the kinds of documents a practitioner may need to provide to substantiate the Medicare benefit.
  • Thirdly, the CEO must take reasonable steps to consult with a relevant professional body about the types of documents required to substantiate a Medicare benefit before commencing a compliance audit. The minister will, by legislative instrument, declare bodies to be relevant professional bodies for this purpose.
  • Finally, the CEO must give the person a reasonable opportunity to respond to a written request to voluntarily provide documents. This means that a notice can only be issued if a person has refused or ignored a written request to voluntarily provide documents to substantiate a Medicare benefit.

These conditions must be met before the CEO can issue a notice requiring a person to produce documents.

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 explain the reason for the concern, identify the service that needs to be substantiated, and indicate the kind of information that the person may provide to substantiate the service.

Medicare Australia is also working with the Australian Medical Association and other stakeholders to develop guidelines outlining the kinds of information that practitioners may use to substantiate particular services or groups of services. These guidelines will emphasise that clinical information should only be provided if it is absolutely necessary to substantiate the service.

The bill provides protection for practitioners by placing limits on how the information and documents that are produced in response to a notice can be used. This information can only be used for the compliance audit and for proceedings relating to false and misleading statements under the Health Insurance Act 1973 and the Criminal Code. It cannot be used as the basis for a referral to Professional Services Review or for any other criminal and civil proceedings.

The bill requires the CEO to notify practitioners of the outcome of an audit. Practitioners must be given 28 days in which to seek internal review of the decision before a debt notice is issued. At the time the person seeks the review, they may provide the CEO with additional information to substantiate the amount paid for the service.

At present, if an amount paid for the service cannot be substantiated, the practitioner is required to repay the amount. This will continue to occur. However, this bill introduces a financial penalty for certain practitioners who cannot substantiate the amount paid for a service. This penalty is intended to encourage greater compliance with the requirements of the Medicare Benefits Schedule.

The financial penalty will only apply to debts that exceed $2,500. This threshold reflects the point at which Medicare Australia data indicates that mistaken claims may become routine or reflective of poor administration or decision making. If this threshold had been applied to audits conducted in 2009-10, 60 per cent of practitioners who made incorrect claims would not have received a financial penalty.

The bill provides for a regulation making power to enable the threshold amount to be increased. This will enable adjustments to occur to ensure that practitioners are not disadvantaged by incremental increases in the value of the Medicare benefit amount paid for services. The regulations cannot be used to decrease the threshold amount.

A base penalty amount of 20 per cent will be applied to all debts over $2,500. The base penalty amount can be reduced or increased according to circumstances described in the legislation. The reductions are intended to encourage greater voluntary compliance.

If a practitioner tells Medicare Australia that an incorrect amount has been paid for a service:

  • prior to being contacted by the CEO, the penalty is reduced by 100 per cent;
  • before a notice to produce documents is issued, the penalty is reduced by 50 per cent;
  • after a notice to produce documents has been issued but before completion of the audit, the penalty is reduced by 25 per cent.

On the other hand, if a practitioner:

  • does not respond to a notice, the full amount of the services identified in the notice become repayable and the penalty is increased by 25 per cent; or
  • has been unable to substantiate an amount paid for other services in the previous 24 months, and the total they repaid was more than $30,000, the penalty for the current amount is increased by 50 per cent.

These increases in the base penalty rate are intended to promote greater compliance with the legislation and to discourage recidivism.

The provisions in this bill do not commence until the day after the bill receives royal assent. The bill is not retrospective and will only apply to Medicare services that are provided after the commencement of this bill.

I commend this important bill to the House.

Debate (on motion by Mr Andrews) adjourned.