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Community Affairs Legislation Committee—Health Legislation Amendment (Medicare Compliance and Other Measures) Bill 2021 [Provisions]—Report, dated March 2022


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March 2022

The Senate

Community Affairs Legislation Committee

Health Legislation Amendment (Medicare Compliance and Other Measures) Bill 2021 [Provisions]

© Commonwealth of Australia 2022

ISBN 978-1-76093-395-1

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 4.0 International License.

The details of this licence are available on the Creative Commons website: https://creativecommons.org/licenses/by-nc-nd/4.0/.

Printed by the Senate Printing Unit, Parliament House Canberra.

iii

Members

Chair Senator Wendy Askew LP, TAS

Deputy Chair Senator Janet Rice AG, VIC

Members Senator Nita Green ALP, QLD

Senator Andrew McLachlan CSC LP, SA

Senator Helen Polley ALP, TAS

Senator Dean Smith LP, WA

Substitute Members Senator Karen Grogan ALP, SA

(for Senator Green on 29 March 2022)

Secretariat Pothida Youhorn, Committee Secretary Christopher Dyer, Senior Research Officer Claire Holden, Administrative Officer

PO Box 6100 Parliament House Canberra ACT 2600 Phone: 02 6277 3515 Fax: 02 6277 5829 E-mail: community.affairs.sen@aph.gov.au Internet: www.aph.gov.au/senate_ca

v

Contents

Members ............................................................................................................................................. iii

Chapter 1—Introduction .................................................................................................................... 1

Purpose of the bill ................................................................................................................................ 1

Report structure ................................................................................................................................... 1

Background ........................................................................................................................................... 1

Responding to ‘inappropriate practice’ ................................................................................. 2

Key provisions ...................................................................................................................................... 4

Part 1 - Professional Services Review scheme ...................................................................... 4

Part 2 - Review of certain debt recovery decisions .............................................................. 5

Part 3 - Miscellaneous debt recovery amendments ............................................................. 5

Part 4 - False or misleading information ............................................................................... 6

Financial implications of the bill ........................................................................................................ 6

Consideration by other committees .................................................................................................. 6

Senate Standing Committee for the Scrutiny of Bills ........................................................... 7

Parliamentary Joint Committee on Human Rights .............................................................. 7

Conduct of the inquiry ........................................................................................................................ 7

Chapter 2—Key Issues ....................................................................................................................... 9

Support for the bill ............................................................................................................................... 9

Balancing expanded powers with enhanced protections ............................................................. 10

Department of Health’s review of written agreements ..................................................... 11

Protections for smaller practices ...................................................................................................... 12

Privacy considerations ...................................................................................................................... 12

Threshold for referral to the PSR .................................................................................................... 13

Parallel review processes .................................................................................................................. 13

Broader concerns about Medicare compliance .............................................................................. 14

Medicare complexity and compliance burdens .................................................................. 14

Adequacy of support to achieve compliance ...................................................................... 15

Committee View ................................................................................................................................. 15

Appendix 1—Submissions .............................................................................................................. 17

1

Chapter 1 Introduction

1.1 The Health Legislation Amendment (Medicare Compliance and Other Measures) Bill 2021 (bill) was introduced to the House of Representatives on 21 October 2021.1 On 2 December 2021, the Senate referred the provisions of the bill to the Community Affairs Legislation Committee (committee) for inquiry and report by 21 April 2022.2

Purpose of the bill 1.2 The bill seeks to support the integrity of payments under the Medicare Benefits Schedule (MBS), the Pharmaceutical Benefits Scheme (PBS) and the Child Dental Benefits Schedule (CDBS).3

1.3 The bill is intended to strengthen the compliance powers of the

Professional Services Review (PSR) and improve the PSR's ability to address inappropriate practice by bodies corporate and non-practitioners.4 The bill also proposes to ‘update and align’ legislative provisions dealing with compliance

and debt recovery across the Health Insurance Act 1973 (HIA), Dental Benefits Act 2008 (DBA) and National Health Act 1953 (NHA). 5

Report structure 1.4 This report contains two chapters:

 Chapter 1 outlines the purpose of the bill and its key provisions, and discusses various administrative details relating to the inquiry.  Chapter 2 examines the key issues raised by inquiry participants and provides the committee’s view and recommendation.

Background 1.5 The MBS, PBS and CDBS are programs that form part of Australia’s Medicare system.6 Medicare provides eligible people access to essential health services.7

1 House of Representatives, Votes and Proceedings, No. 148, 21 October 2021, p. 2250.

2 Journals of the Senate, No. 133, 2 December 2021, p. 4424.

3 Explanatory Memorandum to the Health Legislation Amendment (Medicare Compliance and

Other Measures) Bill 2021 (explanatory memorandum), p. 1.

4 The Hon. Alan Tudge MP, Minister for Education and Youth, House of Representatives Hansard,

21 October 2021, p. 9796.

5 Explanatory memorandum, pp. 1-2.

6 Human Services (Medicare) Act 1973, s 41G

7 Services Australia, Annual Report 2020-21, p. 45.

2

The MBS provides ‘essential health services, such as seeing a doctor, getting medicines, mental health services and other medical services’.8 In 2020-2021, Services Australia provided $27.7 billion in benefits under the MBS.9

1.6 The PBS subsidises access to medicines and provides a safety net for those who require a large number of prescription medicines in a calendar year. Services Australia provided $13.7 billion in PBS benefits in 2020-2021.10

1.7 The CDBS provides families, teenagers and approved care organisations with financial support for basic dental services, capped at $1000 per eligible child over two consecutive calendar years. In 2020-2021, Services Australia provided $316.0 million in CDBS benefits.11

1.8 In 2020-2021, the total cost of the MBS, PBS and CDBS was $41.7 billion. This is expected to increase to around $44.0 billion in 2021-2022.12

Responding to ‘inappropriate practice’ 1.9 In view of the significant level of investment in Medicare programs, the government uses a range of compliance measures to assist healthcare providers to meet their obligations.13 According to the Department of Health

(the department):

…compliance activities focused on early intervention and prevention. This assists health providers in receiving correct entitlements and, through support and education initiatives, meeting their obligations and responsibilities.14

1.10 The explanatory memorandum states that ‘[w]hile most health practitioners claim benefits appropriately, a few do not. Some claims do not meet legislative requirements, are fraudulent or relate to inappropriate practice.‘15

1.11 A practitioner engages in ‘inappropriate practice’ if they knowingly, recklessly, or negligently cause or permit a practitioner employed or otherwise engaged by them to engage in conduct that constitutes inappropriate practice by the practitioner under the HIA. 16 Practitioners engage in inappropriate practice if

8 Services Australia, Annual Report 2020-21, p. 45.

9 Services Australia, Annual Report 2020-21, p. 45.

10 Services Australia, Annual Report 2020-21, pp. 49-50.

11 Services Australia, Annual Report 2020-21, pp. 56.

12 The Hon. Alan Tudge MP, Minister for Education and Youth, House of Representatives Hansard,

21 October 2021, p. 9796.

13 Explanatory memorandum, p. 1.

14 Department of Health, Annual Report 2020-21, p. 94.

15 Explanatory memorandum, p. 1.

16 PSR, Submission 2¸ [p. 3.]; Health Insurance Act 1973, s. 82; PSR, What is ‘inappropriate practice’?,

www.psr.gov.au/about-the-psr-scheme/what-is-inappropriate-practice

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they provide or initiate health services that the practitioner’s peers could reasonably conclude was unacceptable to the general body of their profession.17

1.12 Practitioners, non-practitioners and corporations may also engage in inappropriate practice if they cause or permit another person to engage in inappropriate practice.18

1.13 The Chief Executive Medicare (CEM) may refer concerns about possible inappropriate practice to the PSR for consideration by the Director of the PSR (Director).19

The Professional Services Review 1.14 The PSR serves two basic purposes:

(a) protect patients and the community in general from the risks associated with inappropriate practice; and (b) protect the Commonwealth from having to meet the cost of services provided as a result of inappropriate practice.20

1.15 A referral to the PSR in response to concerns about inappropriate practice may result in no further action; a written agreement between the Director and the person under review; or referral to a committee of professional peers for further consideration.21

1.16 Compared to referring a matter for review, written agreements provide a faster path to resolution when the person under review accepts there has been inappropriate practice and is willing to agree to specified actions. A further benefit is that written agreements are confidential, and therefore incentivise cooperation.22

1.17 The making of written agreements is supported by an independent body under the HIA (the Determining Authority), which ensures written agreements are fair and reasonable before they can come into force.23

17 PSR, Submission 2¸ [p. 3.]

18 Professional Services Review, Submission 2, [p. 3]; Health Insurance Act 1973, s. 82(2).

19 Explanatory memorandum, p. 4; Professional Services Review, Submission 2, [p. 3].

20 Health Insurance Act 1973, s. 79A.

21 Explanatory memorandum, p. 4.

22 The Hon. Alan Tudge MP, Minister for Education and Youth, House of Representatives Hansard,

21 October 2021, pp. 9796-9797. However, it is noted that the bill would allow the Director to publish information about a person who has not performed the actions necessary to give effect to a written agreement; see bill, Schedule 1, Part 1, Items 15-17; explanatory memorandum, pp. 8-9.

23 Professional Services Review, Submission 2, [p. 4.].

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1.18 During the period 2020-2021, the PSR finalised 105 matters, comprising 90 written agreements, 9 final determinations and 6 instances where the Director decided to take no further action.24 The PSR issued repayment orders totalling more than $24.6 million.25

Key provisions 1.19 The bill contains a single schedule, which is divided into four parts:

 Part 1 amends the PSR scheme.  Part 2 amends provisions dealing with applications to the Administrative Appeals Tribunal (AAT) in relation to garnishee notices.  Part 3 clarifies debt recovery arrangements following passage of the

Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Act 2018  Part 4 brings the NHA and DBA into alignment with the HIA by changing references to ‘false and misleading statements’ to read ‘false and misleading

information’.

Part 1 - Professional Services Review scheme 1.20 A significant limitation of the PSR scheme is that the Director is currently only permitted to enter into a written agreement with a person under review if that person is a practitioner. The bill would amend the HIA to enable the Director

to make written agreements with any person under review, including corporations and non-practitioners.26

1.21 Currently, provisions about sanctions for a failure to produce documents or attend a hearing also only apply where the person under review is a practitioner.27

1.22 Part 1 of the schedule amends the PSR scheme to address these and other related issues.28

1.23 Item 6 enables corporate entities and other non-practitioner persons under review to enter into a written agreement with the Director.29

1.24 Items 8 and 10 of the bill broaden the range of actions that may be included in a written agreement.30 Items 15-17 enable the director, subject to appropriate

24 Professional Services Review, Annual Report 2021-21, p. 13.

25 Professional Services Review, Annual Report 2021-21, p. 13.

26 Explanatory memorandum, pp. 5-6; PSR, Submission 2, [p. 3].

27 Explanatory memorandum, p. 4.

28 Explanatory memorandum, p. 4.

29 Explanatory memorandum, p. 6.

30 Explanatory memorandum, pp. 6-7.

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notice and safeguards, to publish information about a person who has not performed the actions necessary to give effect to a written agreement.31

1.25 The bill makes further amendments to provide procedures, powers and enforcement mechanisms for non-practitioners and bodies corporate, and to clarify when provisions should only apply to practitioners. Significant changes include:

 Item 28, which sets out the rights of bodies corporate under review at hearings.  Item 32, which establishes the process in the event a body corporate fails to appear, give evidence or answer a question.  Item 34, which makes it an offence for a person under review, who is not a

practitioner, to fail to appear, give evidence or answer a question.32  Item 41, which increases the penalty for failing to produce documents from 20 to 30 penalty units, adds civil penalty provisions, and provides a

streamlined process to enable the Federal Court of Australia to order a body corporate to produce documents.33

Part 2 - Review of certain debt recovery decisions 1.26 Part 2 amends and aligns provisions under the DBA, HIA and NHA that deal with applications for review in the AAT in relation to garnishee notices.

1.27 According to the explanatory memorandum, these amendments are ‘are intended to prevent a debtor from lodging multiple applications for review in the AAT, where multiple garnishee notices are required to recover a single debt.’34

Part 3 - Miscellaneous debt recovery amendments 1.28 The amendments in Part 3 of the bill seek to ensure consistency between the HIA, DBA and NHA in the application of set off, garnishee and financial information gathering powers for the purpose of debt recovery.35 These

powers were introduced by the Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Act 2018.36

31 Explanatory memorandum, pp. 8-9.

32 A practitioner may be disqualified from claiming or receiving Medicare benefits due to their

failure to appear, give evidence or answer a question under HIA, s. 105.

33 Explanatory memorandum, pp. 14-15. For offences committed on or after 1 July 2020, one penalty

unit is $222. The value of a penalty unit is prescribed by the Crimes Act 1914 and the Notice of Indexation of the Penalty Unit Amount, 14 May 2020.

34 Explanatory memorandum, p. 19.

35 Explanatory memorandum, p. 22.

36 Explanatory memorandum, pp. 21-22.

6

1.29 The bill seeks to resolve the following areas of inconsistency arising after the passage of the 2018 amendments:

 the application of debt recovery provisions;  clarifying that interest on Commonwealth debt is recoverable;  use of financial information powers;  recovery from estates; and  clarifying that administrative penalties under the Shared Debt Recovery

Scheme apply if the total debt exceeds $2500.37

Part 4 - False or misleading information 1.30 The Health Insurance Amendment (Compliance Administration) Act 2020 amended the HIA to clarify that an amount can be recovered if a Medicare benefit or payment is paid due to the provision of false or misleading information.

Previously, the HIA referred to false or misleading ‘statements’.38

1.31 These amendments removed the requirement to identify a false or misleading ‘statement’ resulting in improper payment of a MBS benefit. This had become a barrier to recovering improper payments due to the increasing use of electronic claiming mechanisms, which generally do not provide a specific statement or declaration that the claim is in accordance with the HIA.39

1.32 The DBA and NHA continue to refer to false or misleading ‘statements’. Part 4 of the bill aligns the DBA and NHA with the HIA to ‘ensure post-payment compliance activities for dental or pharmaceutical benefits are similarly not constrained by the type of claiming mechanism (manual or electronic) which is used’. 40

Financial implications of the bill 1.33 The explanatory memorandum states that ‘there is no financial impact from this bill’.41

37 The Hon. Alan Tudge MP, Minister for Education and Youth, House of Representatives Hansard,

21 October 2021, p. 9798.

38 Explanatory memorandum, p. 30.

39 Explanatory memorandum, p. 30. In 2020-2021, 99.5% of all MBS claims were processed digitally,

with around 80% of health practices exclusively using digital methods to lodge claims, see Services Australia, Annual Report 2020-21, p. 45.

40 Explanatory memorandum, p. 30.

41 Explanatory memorandum, p. 3.

7

Consideration by other committees

Senate Standing Committee for the Scrutiny of Bills 1.34 The Senate Standing Committee for the Scrutiny of Bills (scrutiny of bills committee) reported its concerns regarding the reversal of the evidential burden of proof in Schedule 1, item 34 of the bill (proposed section 105AA).

1.35 The scrutiny of bills committee noted that proposed subsections 105AA(1) and 105AA(4) would create strict liability offences for individual persons and body corporates that fail to appear, give evidence or answer questions at a hearing. The bill provides offence specific defences under proposed subsection 105AA(2) (for individuals) and 105AA(5) (for bodies corporate). To avail themselves of these defences, a defendant must raise evidence about the matters covered by subsections 105AA(2) and 105AA(5).

1.36 The scrutiny of bills committee questioned why the bill placed an evidential burden for establishing these defences on individuals and body corporates as defendants when it is ordinarily the duty of the prosecution to prove all elements of an offence.42

1.37 In response, the Minister has explained that placing the evidential burden on defendants to raise these defences is appropriate as the defences rely on ‘matters peculiarly within the knowledge of the defendant’ and that these matters would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish.43 The scrutiny of bills committee has requested the Minister to provide this information as an addendum to the explanatory memorandum.44

Parliamentary Joint Committee on Human Rights 1.38 The Parliamentary Joint Committee on Human Rights made no comment on the bill’s engagement with human rights 'based on an assessment of the bill and relevant information provided in the statement of compatibility

accompanying the bill'.45

42 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 17 of 2021, 24 November 2021,

pp. 25-26.

43 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 2 of 2022, 18 March 2022,

pp. 83-84.

44 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 2 of 2022, 18 March 2022,

pp. 85-86.

45 Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, Report 13 of 2021,

10 November 2021, p. 32.

8

Conduct of the inquiry 1.39 In accordance with usual practice, the inquiry was advertised on the committee’s webpage. The committee called for submissions by 4 February 2022 and wrote to a range of stakeholders inviting them to make

submissions.

1.40 The committee received 9 submissions, listed at Appendix 1. The committee thanks submitters for their contributions to this inquiry.

9

Chapter 2 Key Issues

2.1 Submissions to this inquiry were broadly supportive of the changes proposed to be made by the Health Legislation Amendment (Medicare Compliance and Other Measures) Bill 2021 (bill).

2.2 Some submitters raised broader concerns about enhanced Medicare compliance measures, the support available to practitioners to assist them in achieving compliance and ensuring the powers of the

Professional Services Review (PSR) operate with appropriate safeguards and are directed towards deliberate non-compliance.

2.3 This chapter explores these issues.

Support for the bill 2.4 As outlined in Chapter 1, the bill is intended to strengthen the compliance powers of the PSR and its ability to address inappropriate practice by bodies corporate in an environment ‘where non−practitioner entities are increasingly

influencing the provision of health care services’.1

2.5 The provisions of the bill would ensure that all persons under review, including corporate entities, who acknowledge inappropriate practice are able to enter into written agreements with the Director.2 This amendment responds to stakeholder feedback that ‘PSR reviews would proceed more effectively and efficiently if all persons under review had the same opportunity to negotiate agreements with the Director.’3

2.6 The bill also introduces new sanctions and increases maximum penalties for bodies corporate and non-practitioners.4

2.7 Several submitters have welcomed these proposed changes, recognising the need to ‘reinforce the existing powers of the PSR’5 and broaden compliance

1 Explanatory Memorandum to the Health Legislation Amendment (Medicare Compliance and

Other Measures) Bill 2021 (explanatory memorandum), p. 4; The Hon. Alan Tudge MP, Minister for Education and Youth, House of Representatives Hansard, 21 October 2021, p. 9796; Department of Health, Submission 8, p. 4.

2 Department of Health, Submission 8, pp. 4-5.

3 Explanatory memorandum, p. 6.

4 Department of Health, Submission 8, 4-5.

5 Australian and New Zealand Association of Oral & Maxillofacial Surgeons (ANZAOMS),

Submission 4, [p. 2].

10

accountability to third-party non-practitioners.6 Submitters have also raised some concerns about Medicare compliance and the PSR. These issues are explored below.

Balancing expanded powers with enhanced protections 2.8 Several submitters expressed reservations about the power of the PSR and raised the need for further protections for persons under review, especially individual practitioners and smaller bodies corporate. For example, the

Medical Defence Association of South Australia (MIGA) referred to ‘perceptions of “coercion” and “unfairness” that can exist in the healthcare profession around the PSR process.7 The Royal Australasian College of Surgeons (RACS) described the PSR as a ‘heavy instrument’ that leads ‘doctors [to] “fight vigorously” to defend their reputation’.8

2.9 MIGA submitted that there should be no requirement for a person under review to acknowledge inappropriate practice as a pre-condition for negotiating a written agreement. In support of this position, MIGA noted that inappropriate practice ‘goes beyond Medicare claiming patterns, to cover broader concepts of what is unacceptable to peers or the broader profession’, and that healthcare providers may be willing to agree that a repayment should be made, even though they are unwilling to accept there has been inappropriate practice.9 Similar concerns were raised by RACS.10

2.10 The Department of Health (department) submitted that:

…the amendments are not intended to be punitive but rather aim to encourage co-operation with the PSR process, in order to enable the provision of information and evidence to enable the PSR to undertake its functions.11

2.11 The department has also stated its view that ‘the Bill does not burden compliant practitioners but does increase the flexibility and strength of the Government’s compliance activities.’12

2.12 Submitters have suggested consideration be given to further protections for persons under review, including:

6 Royal Australian & New Zealand College of Psychiatrists (RANZCP), Submission 6, p. 3; MIGA,

Submission 1, p. 1.

7 MIGA, Submission 1, p. 4.

8 RACS, Submission 9, p. 2.

9 MIGA, Submission 1, pp. 5-6.

10 RACS, Submission 9, pp. 2-3.

11 Department of Health, Submission 8, p. 5.

12 Department of Health, Submission 8, p. 8.

11

 removing restrictions on the scope of legal representation before a PSR committee;13  ensuring written communications are less confrontational and more constructive;14  development of guidelines for recovery of funds from deceased estates;

and15  including ‘reasonable excuse’ provisions as a defence for strict liability offences.16

Department of Health’s review of written agreements 2.13 Several submitters referred to a review by the department of written agreements made under section 92 of the Health Insurance Act 1973 (HIA). Although the review does not appear to be included in the department’s list of

public consultation processes,17 the Australian Medical Association has said that:

The review will undertake an assessment of how section 92 of the Act is operationalised by the PSR to ensure PURs [persons under review] are treated fairly and have access to clear, transparent and comprehensive information about how the PSR Director’s review process and section 92 agreement negotiation phase operates.18

2.14 MIGA noted in its submission that it has recommended several changes to the process for making written agreements in the course of this review. These include more clearly defining the criteria for making and ratifying written agreements; removing the requirement for the person under review to acknowledge inappropriate practice; procedural improvements; and, improved communication about the reasons for decisions about the content of written agreements.19

2.15 The Royal Australian College of General Practitioners (RACGP) has suggested ‘the outcomes of the review must be considered in the assessment of amendments to the bill.’20

13 MIGA, Submission 1, p. 5.

14 RANZCP, Submission 6, p. 3.

15 MIGA, Submission 1, p. 4.

16 MIGA, Submission 1, pp. 3-4.

17 See https://consultations.health.gov.au/consultation_finder/ (accessed 8 February 2022).

18 Australian Medical Association, Review of section 92 of the Health Insurance Act 1973:

Professional Services Review, 25 November 2021, https://www.ama.com.au/gpnn/issue-21-number-46/articles/review-section-92-health-insurance-act-1973-professional-services (accessed 8 February 2022).

19 MIGA, Submission 1, p. 4.

20 RACGP, Submission 3, [p. 1].

12

Protections for smaller practices 2.16 The RACGP has suggested there is a need to develop approaches that recognise the differing capacity of bodies corporate to respond to issues of potential inappropriate practice referred to the PSR. In particular, the RACGP

has referred to the ‘risk of an increased compliance burden on smaller practices, particularly in rural areas, with less capacity to continue providing high-quality care to patients while under investigation.’21

2.17 The department indicated that safeguards, such as extending medical exemptions from attending hearings, have been included to recognise the needs of small corporate entities, including sole practitioners using an incorporated structure.22 It also acknowledged the potential impact of the amendments on smaller businesses while emphasising that:

…condign sanctions for non-compliance are necessary if persons under review are to be encouraged to co-operate and engage with the PSR process so that inappropriate practice may be reviewed fairly and efficiently.23

Privacy considerations 2.18 The RACGP has indicated that it does not support the proposal to publish information about a person who has not performed the actions necessary to give effect to a written agreement, stating that to do so would be ‘an

unreasonable breach of privacy’.24

2.19 According to the explanatory memorandum, the proposed amendments would only permit such publication if the Chief Executive Medicare (CEM) is of the opinion that the person under review has not taken the actions necessary to give effect to a written agreement. This, along with the reasons for that opinion, must be communicated in writing to the Director, and would ‘generally only occur following a series of procedural fairness steps to ensure that the person is aware of their obligations.’25 The Director’s power to publish the name of the person under review and details of the inappropriate practice is discretionary.26

2.20 The explanatory memorandum also notes that the Director is already able to publish such information where action is being taken in court for the purpose

21 RACGP, Submission 3, [p. 2]

22 Department of Health, Submission 8, p. 5.

23 Department of Health, Submission 8, p. 6.

24 RACGP, Submission 3, [p. 2].

25 Explanatory memorandum, p. 8.

26 Explanatory memorandum, p. 8.

13

of enforcing a written agreement or where a final determination under section 106TA has come into effect.27

2.21 RACS also raised concerns about potential conflict between existing obligations under the Privacy Act 1988 and new powers for the PSR to compel the production of documents.28

2.22 Referring to stakeholder concerns about new penalties for failing to produce documents and powers for the Director to seek court orders to compel production, the department explained that:

…the provision of this information is critical to the PSR’s functions… The PSR would be unable to undertake reviews if information were not provided, and the existing sanctions are not always appropriate for corporate entities.29

Threshold for referral to the PSR 2.23 Items 3 and 4 of the bill would amend provisions of the HIA that enable the CEM to request the Director PSR to review the provision of healthcare services by a person. MIGA suggested that the CEM should be required to satisfy a

‘reasonable belief’ threshold on the basis that this will ensure ’proper investigation and careful consideration of a person’s Medicare claiming before making a PSR referral’.30

2.24 The department has submitted that these functions are not part of the CEM’s role in this process:

In making the referral, the CEM is not required to objectively determine that a particular person provided the services and/or engaged in inappropriate practice. The CEM does not have any compulsory powers which would enable them to make such determinations…It has never been part of the PSR scheme for the CEM to have made any findings prior to referring a person’s provision of services to the Director...31

2.25 Submissions to this inquiry also indicated that different health sectors may experience different levels of compliance activity that does not appear to be proportionate to the underlying level of inappropriate practice in that sector. 32

Parallel review processes 2.26 The explanatory memorandum notes that ‘[w]hen a body corporate is reviewed, individual practitioners may or may not also be subject to review’.33

27 Explanatory memorandum, p. 15.

28 RACS, Submission 9, p. 3.

29 Department of Health, Submission 8, pp. 6-7.

30 MIGA, Submission 1, p. 3.

31 Department of Health, Submission 8, p. 5.

32 Operation Redress, Submission 7, pp. 2-3, Dr Margaret Faux, Submission 5, pp. 4-5.

14

Submitters have sought clarity about how separate review processes interact, and the role and obligations of persons who are participating in these reviews.

2.27 For example, the RACGP has suggested ‘clarifying the role and obligations of individual practitioners during an investigation with dual lines of inquiry (individuals and corporates) to avoid confusion and concerns regarding culpability.’34 MIGA has suggested the inclusion of a provision to clearly state that any acknowledgement of inappropriate practice by a person under review will not prejudice the position of an associated person, should they become a person under review.35

2.28 The explanatory memorandum provides the following response to these concerns:

…each referral to the PSR is separate. It is important to note that a body corporate’s acknowledgment of inappropriate practice will not prejudice the position of any individual practitioners it employs or otherwise engages. In addition, individual practitioners will not be named in agreements with bodies corporate or other persons who employ or otherwise engage practitioners…36

Broader concerns about Medicare compliance 2.29 In addition to the issues discussed above, submitters raised general concerns about Medicare compliance. These include concerns about:

 the overall complexity of Medicare billing and resulting compliance burdens for practitioners; and  the adequacy of support provided by the department to assist health care service providers to achieve compliance.

Medicare complexity and compliance burdens 2.30 Submitters have expressed concern that achieving compliance with Medicare rules is complex, and that practitioners may struggle to correctly apply these rules, despite their best efforts and intentions.37 The RACGP submitted that

‘increased Medicare compliance activities and the fear of being audited is distracting GPs from their primary focus of delivering high-quality patient-centred care.’38

33 Explanatory memorandum, p. 6.

34 RACGP, Submission 3, [p. 2].

35 MIGA, Submission 1, p. 3.

36 Explanatory memorandum, p. 6.

37 MIGA, Submission 1, p 2; Dr Margaret Faux, Submission 5, p. 4-5.

38 RACGP, Submission 3, [p. 1].

15

2.31 The PSR has also referred to this issue in its submission, saying that allowing non-practitioners and bodies corporate to enter into written agreements would benefit the person under review ‘whose focus may be diverted from the appropriate provision of services’.39

2.32 The department has indicated that the bill does not expand the scope of existing compliance powers.40 Instead, the bill:

strengthens the Government’s ability to undertake its existing compliance enforcement responsibilities and give the PSR greater flexibility to manage corporate entities41

Adequacy of support to achieve compliance 2.33 Submitters raised concerns about the adequacy of education and other support available to health service providers to assist them in meeting their obligations.42 For example, MIGA has indicated that it ‘does not see the

Medicare compliance process as being focused sufficiently on education’.43

2.34 Referring to items in the bill that propose to increase sanctions for non-compliance, the RACGP suggested that:

…the increase in sanctions and broader debt-collecting powers suggest a focus on cost recovery and punitive approaches to compliance, rather than an educative focus that supports practitioners to bill correctly.44

2.35 The department has observed that the vast majority of practitioners claim benefits appropriately and correctly, and that it therefore:

…provides a responsive and proportionate approach to its compliance activities. Most of these activities centre on fostering voluntary compliance through a strong focus on education, engagement with professional colleges and other peak bodies, and letters targeted to practitioners with unusual or unexpected patterns in claiming payments or requesting diagnostic services.45

Committee View 2.36 The Medicare Benefits Schedule, the Pharmaceutical Benefits Scheme and the Child Dental Benefits Schedule provide a range of essential health services to eligible people in Australia. These significant government programs delivered

$41.7 billion in benefits in 2020-21.

39 PSR, Submission 2, [p. 4].

40 Department of Health, Submission 8, p. 7.

41 Department of Health, Submission 8, p. 7.

42 RACGP, Submission 3, [p. 3]; MIGA, Submission 1, p. 2; Dr Margaret Faux, Submission 5, pp. 1-2.

43 MIGA, Submission 1, p. 2.

44 RACGP, Submission 3, [p. 2].

45 Department of Health, Submission 8, p. 3.

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2.37 There is a legitimate role for government in ensuring the integrity of these payments and the bill serves an important purpose in improving the capacity of the Government to respond to inappropriate practice and ensure that Medicare programs continue to operate for the benefit of the Australian community.

2.38 The committee acknowledges that submitters to this inquiry were generally supportive of the purpose of the bill; however, raised some broader issues about the complexity of the Medicare system, compliance burdens for practitioners and the adequacy of support to achieve compliance.

2.39 The committee notes that the bill is part of an ongoing process to improve compliance and integrity measures, including in response to continuing changes in the delivery of healthcare services. Submitters to this inquiry have put forward a range of suggested measures that may improve processes and safeguards for persons under review.

2.40 The committee encourages the Government to continue stakeholder engagement and consultation processes to improve the operation of the PSR, which performs an essential role in ensuring the ongoing sustainability of Medicare.

Recommendation 1

2.41 The committee recommends that the bill be passed.

Senator Wendy Askew Chair

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Appendix 1 Submissions

Submissions 1 MIGA

2 Professional Services Review 3 Royal Australian College of General Practitioners 4 Australian and New Zealand Association of Oral and Maxillofacial Surgeons 5 Dr Margaret Faux

 2 Attachments

6 The Royal Australian and New Zealand College of Psychiatrists 7 Operation Redress 8 Department of Health 9 Royal Australasian College of Surgeons