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Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018

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2016-2017-2018

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

HEALTH LEGISLATION AMENDMENT (IMPROVED MEDICARE COMPLIANCE AND OTHER MEASURES) BILL 2018

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Health, the Hon Greg Hunt MP)





HEALTH LEGISLATION AMENDMENT (IMPROVED MEDICARE COMPLIANCE AND OTHER MEASURES) BILL 2018

 

OUTLINE

The Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018 amends the Health Insurance Act 1973 (Health Insurance Act), the Dental Benefits Act 2008 (Dental Benefits Act), and the National Health Act 1953 (National Health Act).

The Bill aims to support the integrity of the Medicare Benefits Schedule (MBS), the Pharmaceutical Benefits Scheme (PBS) and Child Dental Benefits Schedule (CDBS), through improvements to the recovery arrangements for Medicare debts owed to the Commonwealth. These improvements will:

·        strengthen debt recovery powers , including compulsory setoffs and garnishee processes. When this legislation was announced in the 2017-18 Budget, only 20 per cent of Medicare debts raised were being recovered. While the debt recovery rate is now around 40 per cent, stronger powers are needed so that the Government can recover more of the funds that have been overpaid due to incorrect claiming, inappropriate practice and fraud;

·        standardise administrative arrangements across the three Acts covering the MBS, PBS and CDBS, so that doctors, pharmacists and dentists face the same requirements to retain and produce documents supporting their claims, and the same penalties if they do not;

·        from 1 July 2019, introduce fairer approaches to address corporate billing reflecting the reality that large practices, corporations and hospitals increasingly undertake billing on behalf of individual practitioners and should share responsibility if that billing is incorrect.

While the majority of practitioners claim MBS, PBS and dental benefits appropriately, some practitioners do not. Some practitioners claim incorrectly, others are found after investigations to be fraudulent or are found by the Professional Services Review (PSR) to have engaged in inappropriate practice and are required to repay overpayments to the Commonwealth.

However, only some practitioners who have a Medicare debt currently agree to enter into arrangements to repay the debt. Practitioners that refuse to agree to a repayment arrangement are currently still able to claim benefits through Medicare and receive significant continuing payments directly from the Commonwealth.

In such cases, the Bill will allow future bulk-billed claims to be setoff to recover the debt. For those practitioners who do not bulk-bill, the amendments will allow garnisheeing of other funds owed to them. This will remove any incentive to reduce bulk-billed services.

The Bill will standardise administrative arrangements, namely, in record-keeping requirements for practitioners, in the information which practitioners are required to produce, and in the compulsory administrative penalties on debts between different professional groups.

The Bill also introduces from 1 July 2019 a Shared Debt Recovery Scheme in the Health Insurance Act that where contractual or other arrangements exist between a practitioner and an employer or corporate entity, both may be held responsible for the repayment of the debt.  The percentage of the debt to be recovered from each party will be set out in a legislative instrument, and may be varied by the Chief Executive Medicare if evidence is produced that a different percentage should apply.

The savings gained through the improved recovery of debt will mean that more money can be reinvested in new services under the MBS and new listings on the PBS, ensuring greater access to affordable medicines for the Australian community and ensuring that Medicare continues to provide more support to Australian patients.

Financial Impact Statement

The measures in the Bill will implement the 2017 Budget measure “Guaranteeing Medicare - Medical Benefits Schedule - Improved Compliance” will achieve savings of $103.8m over four years. 

 



Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018

                                                      

This Bill is compatible with human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Bill

The Bill amends three acts, namely the Health Insurance Act 1973 (the Health Insurance Act), the Dental Benefits Act 2008 (the Dental Benefits Act), and the National Health Act 1953 (the National Health Act). The Bill will implement measures which will support the integrity of the MBS, the PBS and the CDBS through improvements to the recovery arrangements for Medicare debts owed to the Commonwealth. These improvements will:

·        strengthen debt recovery by allowing compulsory set-offs of future Medicare Benefits Schedule (MBS) payments made to practitioners on behalf of patients (bulk-billing);

·        introduce garnishee arrangements for practitioners who do not bulk-bill;

·        standardise administrative arrangements across the three Acts covering Medicare;

·        introduce fairer approaches to address corporate billing practices that impact on claiming by practitioners.

Human Rights Implications

Right to Health

This Bill engages Article 12(1) of the International Covenant on Economic, Social and Cultural Rights (ICESCR). Article 12(1) of ICESCR promotes the right of all individuals to enjoy the highest standard of physical and mental health.

The Bill assists with the progressive realisation by all appropriate means of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health because the savings to the Government gained through the improved recovery of debt will mean that more money can be reinvested in new services under the MBS and new listings on the Pharmaceutical Benefits Scheme, ensuring greater access to affordable medicines for the Australian community. This Bill will help ensure that Medicare provides more support to Australian patients than ever before.

Right to Privacy

The Bill engages the right to privacy, as it provides for the production, disclosure and collection of personal information, including health and financial information.

This Bill provides amendments which will give the Chief Executive Medicare or, in the case of the National Health Act, the Secretary of the Department of Health, the power to obtain information or documents from a person that are relevant to the person’s financial situation. The Bill also provides for the Chief Executive Medicare to obtain information or documents from a person about another person (the debtor ) about the debtor’s financial situation or location of the debtor.

Section 32C of the Dental Benefits Act and section 129AAD of the Health Insurance Act provide that in certain circumstances, the Chief Executive Medicare may give a notice to a person to produce documents or information in order to ascertain whether an amount paid, purportedly by way of benefit of payment under the Act, in respect of certain services, should have been paid. Documents or information produced in response to a notice may contain personal information, including health information, about either the person or a third person, such as the person’s patient where the person is a practitioner.

The Bill amends sections 32C of the Dental Benefits Act and section 129AAD of the Health Insurance Act to provide that a person is authorised to produce documents containing health information about an individual and that this must be done in accordance with the Privacy Act 1988 .   

These amended sections engage the protection against arbitrary or unlawful interference with privacy. Article 17 of the International Covenant on Civil and Political Rights (ICCPR) prohibits arbitrary or unlawful interference with an individual’s privacy, family, home or correspondence, and protects a person’s honour and reputation from unlawful attacks. This right to privacy can be limited, however, to achieve a legitimate objective where the limitations are lawful and not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the circumstances. The United Nations Human Rights Committee has interpreted the requirement of ‘reasonableness’ as implying that any interference with privacy must be proportionate to a legitimate end and be necessary in the circumstances.

The Bill pursues the legitimate objective of increasing Medicare compliance by seeking the recovery of amounts that should not have been paid under the three Acts. The Bill pursues this objective by establishing a debt-recovery scheme and, as part of that, decisions are made in respect of debts by the Chief Executive Medicare and, in the case of the National Health Act, the Secretary of the Department of Health.

To the extent that these sections limit the right to privacy, these limitations are provided by law. Information provided under the Bill is used for the purposes of assessing whether a debt exists, against whom the debt exists and the amount of the debt, and not for other purposes. There are also restrictions on the persons to whom the personal information may be disclosed. 

These restrictions on the use of information ensure that the power is only used for the purposes of debt recovery and that any limitation on the right to privacy is lawful and not arbitrary and that the powers are not susceptible to abuse. These provisions are necessary, reasonable and proportionate to the objectives of the Bill, namely increasing Medicare compliance by recovering amounts that should not have been paid under the three Acts.

Civil Penalties

The Bill’s amendment to the National Health Act creates civil penalties for some contraventions of that Act by setting out civil penalty provisions. The Bill provides that those civil penalty provisions are provided by the Regulatory Powers Act (Standard Provisions) Act 2014 (the Regulatory Powers Act) instead of by the National Health Act itself.

Triggering the civil penalty provisions of the Regulatory Powers Act could engage the criminal process rights under Article 14 of the ICCPR if the imposition of civil penalties is classified as ‘criminal’ under international human rights law. Determining whether the penalties could be considered to be criminal under international human rights law requires consideration of the classification of the penalty provisions under Australian domestic law, the nature and purpose of the penalties, and the severity of the penalties.

The penalty provisions proposed by the Bill for the National Health Act expressly classify the penalties as civil penalties. These provisions create solely pecuniary penalties in the form of a debt payable to the Commonwealth. The purpose of these penalties is to encourage compliance with the Act. The civil penalty provisions do not impose criminal liability, and do not lead to the creation of a criminal record. The penalties only apply to the regulatory regime of the National Health Act, rather than to the public in general. Further, the imposition of the civil penalties is not dependent on a finding of guilt. These factors all suggest that the civil penalties imposed by the National Health Act are civil rather than criminal in nature.

These civil penalties are not sufficiently severe that they could be considered to be criminal penalties for the purposes of Australia’s human rights obligations. Accordingly, the criminal process rights provided for by Article 14 of the ICCPR are not engaged by the amendments relating to civil penalty orders and the application of the Regulatory Powers Act.

Criminal Offences

Careful consideration has been given to the need for criminal offences, and the conduct that should be subject to a criminal offence. Criminal offences can be used to promote compliance with regulatory schemes. The Bill includes criminal offences relating to:

·            the failure to comply with a notice to produce a referral; and

·            the failure to comply with a garnishee notice.

Criminal penalties have been included for failure to comply with these types of notices to deter non-compliance with the new debt-recovery scheme and to thereby ensure more money is reinvested in new services under the MBS so that Medicare can provide more support to Australian patients than ever before. The Chief Executive Medicare must have access to all available information and documents in making decisions relating to debts owed to the Commonwealth under the Health Insurance Act. The penalty for the failure to comply with a notice to produce a referral is a strict liability offence and is discussed further below. The criminal penalties for a failure to comply with a garnishee notice are relatively minor, with a penalty of 20 penalty units, and do not include imprisonment. 

Strict Liability Offence

This Bill engages the right to the presumption of innocence in Article 14(2) of the ICCPR by introducing a strict liability offence for a failure to comply with a notice to produce a referral under new subsection 20BB(4). Article 14(2) of the ICCPR provides that a person charged with a criminal offence has a right ‘to be presumed innocent until proven guilty according to law’. Strict liability offences engage article 14(2) because, where strict liability is applied to an offence, the requirement for the prosecution to prove fault is removed. Strict liability provisions will not violate the presumption of innocence so long as they are reasonable in the circumstances and maintain rights of defence.

 The offence in new section 20BB, including a strict liability component, is not inconsistent with the presumption of innocence because the offence and its strict liability component are reasonable, necessary and proportionate in the pursuit of a legitimate objective. The offence and its strict liability component contribute to the legitimate objectives of the Bill - namely, to improve the recovery arrangements for Medicare debts owed to the Commonwealth and, in turn, to ensure that Medicare can provide support to more Australians than ever before. The offence will provide an effective enforcement mechanism to ensure that the Chief Executive Medicare has all available information and documents in making decisions relating to debts owed to the Commonwealth under the Health Insurance Act.

This has been cast as a strict liability offence because it would be difficult to obtain proof of intent to fail to comply with a direction. The penalty here does not include imprisonment and the penalty does not exceed 5 penalty units.

Section 6.1 of the Criminal Code provides that a defence of mistake of fact is available under section 9.2 of the Code where a law creates a strict liability offence. Section 9.2 of the Criminal Code allows a defence of honest and reasonable mistake of fact to be raised for strict liability offences. Under this defence, a defendant must turn his or her mind to the existence of the facts and be under a mistaken, but reasonable, belief about those facts. This defence would be applicable to the strict liability offence in section 20BB in the Bill. It is also a defence if the person has a reasonable excuse (subsection 20BB(5)).

For these reasons, the strict liability offence in section 20BB is not inconsistent with the presumption of innocence and is reasonable, necessary and proportionate in pursuit of a legitimate objective.

Conclusion

To the extent that the Bill may limit human rights, those limitations are reasonable, proportionate and reasonable to achieving Medicare compliance and therefore, ultimately, greater and improved healthcare for Australians.

 

 

The Hon Greg Hunt MP, the Minister for Health



HEALTH LEGISLATION AMENDMENT (IMPROVED MEDICARE COMPLIANCE) BILL 2018

 

 

Clause 1 - Short Title

Clause 1 provides for the short title of the Act to be the Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Act 2018 .

 

Clause 2 - Commencement

This clause sets out when the Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018 commences.

 

Sections 1 to 3 commence on the day the Act receives Royal Assent.

 

Schedule 1 commences 1 July 2019.

 

Schedules 2-5 commence 1 July 2018.

 

Clause 3 - Schedules

This clause provides that legislation that is specified in a Schedule to the Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item has effect according to its terms. This is a technical provision which gives operational effect to the amendments contained in the Schedules.

 



 

SCHEDULE 1 — SHARED DEBT DETERMINATION AMENDMENTS

Schedule 1 amends the Health Insurance Act by inserting provisions in Part VII of the Health Insurance Act that provide for the making of a shared debt determination. Schedule 1 also makes consequential amendments to Part VII of the Health Insurance Act that will facilitate the making and enforcement of a shared debt determination.

The scheme will have a delayed commencement date of 1 July 2019 to allow for further consultation on the administrative aspects of the scheme.

Background

Since the Health Insurance Act was first introduced, there have been significant changes in the nature and structure of health practice, from solo medical practice to larger group medical practices and corporate practices.  In addition, hospital-employed doctors have become to claim Medicare benefits.

 As a result of these changes there has been a tendency for the Medicare billing function to be centralised, or delegated to other people working in these organisations.

There is concern that practitioners have as part of employment or other organisational arrangements, given up control of their billing and that some employers may in some circumstances influence billing to maximise the Medicare benefits paid, even if that involves incorrect billing.

The current legislation places all of the liability for Medicare claiming against an individual practitioner, except in cases where another party has engaged in fraud.

The Shared Debt Recovery Scheme (SDRS) acknowledges that if there is an employment or other contractual arrangement between an organisation and a practitioner, both the practitioner (known as the primary debtor in the Bill) and the employer (known as the secondary debtor in the Bill) can be responsible for the repayment of the compliance debt.

It is intended that there will be a prescribed amount for the debt apportionment, set in a legislative instrument. Where a contractual arrangement is identified as being in place, this will trigger the debt apportionments.  The Bill allows both the primary and secondary debtor to make an application to have the split debt ratio varied if they have evidence of a contractual arrangement which clearly varies from the split ratio imposed in the regulations. It is intended that both parties would have the opportunity to provide information or documents and to have the decisions reviewed.

A shared debt determination can only be made in relation to an amount that would otherwise have been recoverable as a debt due to the Commonwealth under subsection 129AC(1) of the Health Insurance Act. The effect of subsection 129AC(1) of the Health Insurance Act is that where, as the result of the making of a false or misleading statement, an amount paid, purportedly by way of benefit or payment under the Health Insurance Act, exceeds the amount, if any, that should have been paid, the amount is recoverable as a debt due to the Commonwealth from the person by or on behalf of whom the statement was made, or from the estate of that person. An amount is recoverable as a debt due to the Commonwealth under subsection 129AC(1) of the Health Insurance Act regardless of whether the amount in question was paid to the person and regardless of whether any person has been convicted of an offence in relation to the making of the statement.

The intention of the provisions in this Schedule is to encourage a person who engages or employs a practitioner to render a professional service and who submits claims under the Health Insurance Act to ensure that all amounts claimed correspond with the service rendered . The provisions in Schedule 1 will not directly affect any patient nor any person who incurs expenses on behalf of a patient.

Item 1

This item amends subsection 129AAD(2) of the Health Insurance Act by inserting the words ‘or whether a determination under subsection 129ACA(2) should be made’ after ‘should have been have been paid’.

Subsection 129AAD(2) of the Health Insurance Act enables the Chief Executive Medicare (who is referred to in the Health Insurance Act as the CEO ) to require a person who rendered a professional service in respect of which an amount has been paid (or on whose behalf such a professional service was rendered) or any other person (except a person who comes within the scope of subsection 129AAD(7)) to do any or all of the things mentioned in subsection 129AAD(5) (for example, producing relevant documents). ‘Professional service’ has the meaning given by subsection 3(1) of the Health Insurance Act.

This amendment will enable the Chief Executive Medicare to require a person to produce one or more documents if the Chief Executive Medicare believes on reasonable grounds that the relevant person has possession of documents which are relevant to ascertaining whether a shared debt determination should be made.

Item 2

This item clarifies subsection 129AAD(2) of the Health Insurance Act by adding the words ‘of this section’.

Item 3

This item repeals subsection 129AAD(3) of the Health Insurance Act and substitutes the repealed subsection with a new subsection which provides that the Chief Executive Medicare may only give a person a notice under subsection 129AAD(2) if the Chief Executive Medicare has given the person a reasonable opportunity to respond to a written request and if the documents or information are relevant to either or both of the following:

·          ascertaining whether the amount paid, purportedly by way of benefit or payment under the Health Insurance Act, in respect of the professional service, should have been paid; or

·          whether the Chief Executive Medicare should make a shared debt determination under new subsection 129ACA(2) in relation to the amount paid, or purportedly paid by way of benefit or payment under the Health Insurance Act, in respect of the service.

This amendment will have the effect of broadening subsection 129AAD(3) by enabling the Chief Executive Medicare to request a person to produce a document or give information, such as an employment contract or other agreement, which will assist the Chief Executive Medicare in determining whether or not to make a shared debt determination.

Item 4

This item amends subsection 129AAD(5) of the Health Insurance Act by omitting the reference to ‘the purpose’ and substituting that reference with ‘a purpose’. 

Item 5

This item amends the note in subsection 129AAD(5) of the Health Insurance Act by omitting the reference to ‘section 129AC’ and substituting that reference with ‘sections 129AC and 129ACA’ to reflect that failure to comply with a notice under section 129ACA can also lead to recovery action.  

Item 6

This item inserts new paragraphs (ba), (bb) and (bc) after paragraph 129AAD(8)(b) of the Health Insurance Act. These new paragraphs provide that the content of a notice given under amended section 129AAD must also:

·          specify the circumstances in which a determination may be made under subsection 129ACA(2) in relation to an amount; and

·          contain a statement that the person may provide a written response to the Chief Executive Medicare stating whether the person considers a determination should or should not be made under subsection 129ACA(2) and the reasons for this position and, also, what percentage the person considers should be determined for the purposes of paragraph 129ACA(3)(b); and

·          any other matter or statement prescribed by the Minister under paragraph 129ACA(9)(d). 

These amendments to the content of a notice given under section 129AAD of the Health Insurance Act will inform the recipient of the notice at an early stage of an investigation that it is possible that a shared debt determination will be made.

Item 7

This item makes consequential amendments to subparagraph 129AADA(2)(b)(ii) of the Health Insurance Act by inserting ‘or 129ACA(5)’ after the reference to ‘subsection 129AAI(4)’.

Item 8

This item makes consequential amendments to subsection 129AADA(3) of the Health Insurance Act by inserting ‘or 129ACB(1)’ after the reference to ‘subsection 129AAJ(1)’.

Item 9

This item makes consequential amendments to subsection 129AADA(3) of the Health Insurance Act by inserting ‘129ACB(6)’ after the reference to ‘subsection 129AAJ(5)’.

Item 10

This item amends the note in subsection 129AAG(1) of the Health Insurance Act by omitting the reference to ‘section 129AC’ and substituting that reference with ‘sections 129AC and 129ACA’ to clarify that failure to substantiate the amount may lead to recovery action under section 129ACA.

Item 11

This item inserts new subsection 129AAI(1A) after subsection 129AAI(1) of the Health Insurance Act.

Subsection 129AAI(1) of the Health Insurance Act requires the Chief Executive Medicare to give written notice of the matters specified by that subsection to a person or an estate if an amount is recoverable under subsections 129AC(1), (1A), (1C) or (1E) of the Health Insurance Act as a debt to the Commonwealth. New subsection 129AAI(1A) provides that subsection 129AAI(1) does not apply if new subsection 129ACA(1) applies to that amount.

Item 12

This item inserts the words ‘(other than a decision mentioned in subsection 129AAI(1A))’ after the reference to ‘subsection 129AAI(1)’ in subsection 129AAJ(1) of the Health Insurance Act.

Section 129AAJ of the Health Insurance Act provides for internal review of a decision to claim an amount as a debt. The effect of this amendment is that a person who is the subject of a shared debt determination cannot also seek review of the decision under section 129AAJ. This is because such a person (and the related person) would have the right to apply in writing to the Chief Executive Medicare for a review of the decision relating to the shared debt determination under new section 129ACB of the Health Insurance Act. 

Item 13

This item inserts new subsection 129AC(1AA) after subsection 129AC(1) of the Health Insurance Act. New subsection 129AC(1AA) provides that subsection 129AC(1) does not apply to an amount if subsection 129ACA(1) applies to the amount. This amendment will prevent the same amount being recoverable more than once.

Item 14

This item inserts new sections 129ACA and 129ACB after section 129AC of the Health Insurance Act. 

New section 129ACA provides for the making of a shared debt determination. An effect of making a shared debt determination is that an amount, or part of an amount, which would have been recoverable under subsection 129AC(1) can be claimed (or claimed in part) from a ‘secondary debtor’ (or from the estate of that person) instead of, or in addition to, the ‘primary debtor’ (or from the estate of that person).

The secondary debtor will, in most circumstances, be the person who employs or engages the person (the primary debtor) who rendered a professional service under the Health Insurance Act (or on whose behalf such a professional service was rendered) for which an amount was paid and which would have been recoverable solely from the primary debtor under subsection 129AC(1). A secondary debtor may also be a person in a class of persons prescribed by the Minister, by legislative instrument (new paragraph 129ACA(9)(a)) or a person not in a class of persons prescribed by the Minister, by legislative instrument (new paragraph 129ACA(9)(b)).

The amount in question is referred to as the recoverable amount and is recoverable whether or not the amount was paid to the primary or secondary debtor and any person has been convicted of an offence in relation to the making of the statement (new subsection 129ACA(6)).

Before making a shared debt determination, the Chief Executive Medicare must give the primary debtor and the other person the CEO is considering specifying in the determination, notice that the Chief Executive Medicare is considering making a determination in relation to the recoverable amount and a copy of any relevant document produced to the Chief Executive Medicare (new subsection 129ACA(7)). The primary and/or secondary debtor may respond to the notice within 14 days, indicating the reasons, whether or not the person believes that a determination should be made and the percentage that the person considers should be determined (new subsection 129ACA(8)).

A written determination can only be made if the Chief Executive Medicare has issued a notice in relation to the recoverable amount to the primary debtor and the secondary debtor and the Chief Executive Medicare reasonably believes the determination should be made having regard to the matters set out in new paragraph 129ACA(2)(c). These matters are: (i) whether the relationship between the secondary debtor and the primary debtor was such that the secondary debtor could have controlled or influenced the circumstances leading to the false or misleading statement to which the debt relates, (ii) whether the secondary debtor directly or indirectly obtained a financial benefit from the making of the false or misleading statement, and (iii) other circumstances which indicate that it would be fair and reasonable for the determination to be made.

The determination must be given to the primary debtor (or their estate) and secondary debtor (or their estate) and give notice of the matters listed in new subsection 129ACA(3), including the reasons for the decision (paragraph (d)). In accordance with section 25D of the Acts Interpretation Act 1901 , the notice giving the reasons shall also set out the findings on material questions of fact and refer to the evidence or other material on which those findings were based.

The determination must also include the amount (referred to as the shared amount ) equal to a percentage of the recoverable amount that is recoverable from the secondary debtor, or from the estate of that person (paragraph (b) of subsection 120ACA(3)). Subsection 129ACA(4) provides that the percentage determined by the Chief Executive Medicare for the purposes of paragraph 129ACA(3)(b) must be that percentage prescribed by the Minister (see paragraph 129ACA(9)(c)), unless the Chief Executive Medicare reasonably believes in all the circumstances that it is fair and reasonable that a different percentage be determined.

The Chief Executive Medicare must not serve a notice on a person (or estate) claiming a shared amount or remaining amount as a debt until 28 days after a determination is given to the person under subsection 129ACA(2) (see subsection 129ACA(5)). 

Under new subsection 129ACA(10) of the Health Insurance Act, where the professional service was rendered, or purportedly rendered, in or at a hospital mentioned in subsection 120ACA(11), then a copy of a shared debt determination or a notice that such a determination might be made may be given to the head (however described) of the Health Department (within the meaning of the National Health Reform Act 2011 ) of the State or Territory. This is because States and Territories have a direct interest in whether the Commonwealth is undertaking compliance action in respect of a person whom is employed or engaged by them.

That definition of Health Department provides the following:

Health Department , of a State or Territory, means a Department of State that:

(a)     deals with matters relating to health; and

(b)    is administered by the State/Territory Health Minister of the State or Territory.

New section 129ACB provides for a review of decisions relating to shared debt determinations.

New subsection 129ACB(1) provides that the primary or secondary debtor can make an application of internal review to the Chief Executive Medicare to review a decision to make a determination under subsection 129ACA(2) to claim a recoverable amount as a debt. Such an application must be made within 28 days after the person (or estate) is notified of the decision under subsection 129ACA(7) (see subsection 120ACB(2)).

Subsection 129ACB(3) provides that, if the Chief Executive Medicare receives an application under subsection 129ACB(1) from a person or estate, the Chief Executive Medicare must provide written notice of the application and a copy of that application to each person or estate mentioned in that subsection 129ACB(1). The other person or estate may make a written submission to the Chief Executive Medicare within the period specified in the notice within 28 days of the notice being given which outlines whether the decision should be confirmed, varied or revoked and the person’s reasons for that position (see subsection 129ACB(4)).

Subsection 129ACB(5) provides that the Chief Executive Medicare, on receiving the application and any other written submissions must review the decision and either confirm, vary or revoke the decision. The review decision made by the Chief Executive Medicare is called the reconsidered decision (see subsection 129ACB(6)).

New subsection 129ACB(7) provides that the primary or secondary debtor can apply to the Administrative Appeals Tribunal for review of a reconsidered decision made by the Chief Executive Medicare under subsection 129ACB(6). Subsection 129ACB(8) clarifies that an application for review of a reconsidered decision under subsection 129ACB(7) may only be made if a garnishee notice is given under subsection 129AEG(1) in relation to the debt to which the reconsidered decision relates.  

Subsection 129ACB(9) provides that, despite paragraph 29(1)(d) of the Administrative Appeals Tribunal Act 1975 (which requires that an application to the Administrative Appeals Tribunal for a review of certain decisions must be lodged within the prescribed time),  that an application to the Administrative Appeals Tribunal must be made within 28 days after the garnishee notice is given. This provision is intended to make it clear that where a garnishee notice is given in relation to a decision to claim an amount as a debt, the time period for seeking review of a reconsidered decision in the Administrative Appeals Tribunal commences from the date the garnishee notice was given, not the date the person received notice of a decision to claim an amount as a debt under subsection 129ACA(1). New section 129ACB is in similar terms to amended section 129AAJ of the Health Insurance Act.

Internal review is a relatively quick and inexpensive way to re-examine a decision, while the availability of external merits review in addition to internal review is an important accountability measure for administrative decisions made under Commonwealth legislation.

Item 15

This item amends subsection 129AEA(1) by inserting the short form ‘(the CEO )’ after the reference to ‘Chief Executive Medicare’.

Item 16

This item amends subsection 129AEA(2)(e) and (3)(e) to omit ‘Chief Executive Medicare’ and substitute ‘CEO’.

Item 17

This item inserts new subsection 129AEA(4) in the Health Insurance Act.

Section 129AEA sets out when a person is liable for an administrative penalty in respect of a professional service. The effect of new subsection 129AEA(4) is that a person is liable for an administrative penalty in respect of a professional service if:

·          the Chief Executive Medicare has made a shared debt determination under new subsection 129ACA(2) in relation to a recoverable amount;

·          the Chief Executive Medicare has served a notice on the person (as mentioned in subsection 129ACA(5)) claiming that recoverable amount as a debt due to the Commonwealth; and

·          the total amount claimed in the notice is more than $2,500 or, if a higher amount is prescribed by the regulations - that higher amount.

Item 18

This item removes the reference to subsection (4) in subsection 129AEB(2) of the Health Insurance Act and inserts a reference to subsection (4) and (5).

This consequential amendment is necessary because item 22 inserts new subsection 129AEB(5).

Item 19

This item adds new paragraph (d) at the end of subsection 129AEB(2) of the Health Insurance Act. The effect of subsection 129AEB(1) of the Health Insurance Act is that the amount of the administrative penalty in respect of a professional service is worked out in accordance with that section. The effect of the amendment to subsection 129AEB(2) of the Health Insurance Act is that the amount (which is referred to as the base penalty amount ) of the administrative penalty is 20 per cent of the recoverable amount referred to in new paragraph 129AEA(4)(a) of the Health Insurance Act where that new paragraph is applicable.

Item 20

This item makes a consequential amendment to subsection 129AEB(3) of the Health Insurance Act by inserting a reference to ‘or 129ACA(3)’ after references to subsection 129AAI(1) wherever they occur in the table.

Item 21

This item makes a consequential amendment to subsection 129AEB(4) of the Health Insurance Act by inserting a reference to ‘or subsection 129ACA(7)’ after references to section 129AAD wherever they occur in that subsection.

Item 22

This item inserts new subsection (5) after subsection 129AEB(4) of the Health Insurance Act.

The effect of new paragraph 129AEB(5)(a) is that where an administrative penalty applies in respect of a professional service for which a shared debt determination has been made, the amount is to be worked out by applying subsections (3) and (4) in relation to the primary debtor, and not the secondary debtor. New paragraph 129AEB(5)(b) has the effect that the base penalty amount should be apportioned between the primary debtor and secondary debtor in the same way as the recoverable amount in respect of the professional service was apportioned in the shared debt determination.

Item 23

This item inserts a reference to section 129ACA in subsection 129AEC(1) of the Health Insurance Act.

Section 129AEC requires the Chief Executive Medicare to give a person who is liable for an administrative penalty written notice of various matters. The effect of this amendment is that such a notice may also deal with a debt due to the Commonwealth under new section 129ACA of the Health Insurance Act.

Item 24

This item inserts a reference to new subsection 129ACA(5) after subsection 129AAI(4) in new subsections 129AECA(1), (2) (3) and (4).

New section 129AECA of the Health Insurance Act (which is inserted by Schedule 3) will enable the Chief Executive Medicare to also obtain information relating to a debt which is the subject of a shared debt determination.

Item 25

This item inserts new paragraph (aa) after paragraph 129AEF(1)(a) of the Health Insurance Act.

New section 129AEF (which is inserted by Schedule 3) provides that recoverable amounts may be set off in the circumstances provided for by that section. This amendment ensures that amounts subject to a shared debt determination where any rights of review under section 129ACB have been exhausted or expired may also be set off against the whole or part of an amount payable to the person or estate under the Health Insurance Act.

Item 26

This item makes a consequential amendment by inserting a reference to paragraph 129AEF(1)(aa) after paragraph 129AEF(1)(a) in subsection 129AEG(1) of the Health Insurance Act.

Item 27

This item provides that the amendments made by Schedule 1 only apply to an amount paid, purportedly by way of benefit or payment under the Health Insurance Act, if the amount is paid on or after 1 July 2018 and no request or notice has been given in relation to the amount under subsections 129AAD(2), 129AAD(3) or 129AAI(1) before the commencement of this item.

Item 28

This item provides that written requests made under subsection 129AAD(3) of the Health Insurance Act before the commencement of this item continue to have effect on and after the commencement of this item as if the repeal and substitution of subsection 129AAD(3) had not happened.



 

SCHEDULE 2 — AMENDMENTS TO THE PROFESSIONAL SERVICES REVIEW

This schedule provides for amendments to Part VAA of the Health Insurance Act. Part VAA of the Health Insurance Act contains the PSR Scheme.

Schedule 2 commences 1 July 2018. 

Background

The Professional Services Review (PSR) is a separate statutory agency within the Health Portfolio.  Part VAA of the Health Insurance Act establishes the agency, sets out its role, powers and processes, including its key role of conducting peer review. 

The PSR protects patients and the community from the risks associated with inappropriate practice, and protects the Commonwealth from having to meet the cost of medical services provided as a result of inappropriate practice.  Inappropriate practice is conduct by a medical practitioner in connection with rendering or initiating services that a practitioner’s peers could reasonably conclude was unacceptable to the general body of their profession.

PSR is responsible for reviewing and examining possible inappropriate practice by practitioners when they provide Medicare services or prescribe Government subsidised medicines under the PBS.  PSR examines suspected cases of inappropriate practice which have been referred by delegates of the Chief Executive Medicare.  PSR cannot initiate its own reviews of a practitioner.

The PSR process is comprised of the following three stages:

·            consideration by the Director of PSR and either a decision to refer the practitioner to a PSR Committee or, if the practitioner is willing to acknowledge inappropriate practice, the practitioner may negotiate an agreement, which can include repaying the cost of Medicare benefits paid in relation to the inappropriate practice;

·            where agreement cannot be reached, a peer review process by a PSR Committee, comprised of the practitioner’s peers, to determine whether, and to what extent, the practitioner engaged in inappropriate practice; and

·            where a PSR Committee finds inappropriate practice, imposition of an appropriate sanction by the Determining Authority, which can include a reprimand, counselling, full or partial disqualification from billing Medicare, repayment of Medicare benefits and/or suspension from prescribing under the PBS.

The PSR currently is able to review officers of organisations based on their influence over their employees’ billing practices. Practitioners are increasingly employed as contractors. These amendments clarify that the jurisdiction of the PSR extends to officers of organisations that engage Medicare practitioners as contractors.

Items 1, 2, 3 and 5

These items amend the Health Insurance Act by inserting the words ‘or otherwise engaged’ following the words ‘employed’ across a number of sections. The amendments are intended to widen the scope of these provisions to extend beyond circumstances where there was a formal employment relationship in place between the person under review and the person who provided the service.

Item 1 amends paragraphs 81(2)(b) and (c) of the Health Insurance Act. The effect of these amendments is to enable the Chief Executive Medicare to request the Director of the Professional Services Review to review the provision of services by persons acting for or under the instruction or control of a person under review, regardless of whether there was a formal employment arrangement in place between the person under the review and the person rendering the service. This includes circumstances where the person under review is a corporate entity.

Item 2 amends paragraphs 82(2)(a) and (b) of the Health Insurance Act. The effect of these amendments is to provide that a person engages in inappropriate practice in circumstances where a person acting for or under their instruction or control (and irrespectively of whether there was a formal employment arraignment in place) was knowingly, recklessly or negligently permitted to engage in conduct that constitutes inappropriate practice as defined in subsections 82(1) or (1A) of the Health Insurance Act.

Item 3 amends paragraphs 89B(1)(b) and (c) of the Health Insurance Act. Item 5 amends paragraphs 105A(1)(b) and (c) of the Health Insurance Act. The effect of these amendments is to amend the definition of ‘relevant documents’ in each of these sections to include clinical or practice records of services rendered, or initiated by, a practitioner acting for or under the instruction or control of a person under review, whether or not a formal employment relationship existed. This would in turn enable the Director and the Committee (as that term is defined in s 81 of the Health Insurance Act), respectively, to require the production of these documents for the purposes of undertaking a review or an investigation.

Item 4

This item amends paragraph 104(5)(c) of the Health Insurance Act by removing the references to ‘condition indicate’ and substituting those references with ‘examination indicate’.

Subsection 104(5) enables a Committee to require a practitioner to undergo a medical examination in circumstances where a person under review has notified a Committee that they have a medical condition that would prevent them from being able to give evidence at a hearing.

This item clarifies that the results of the medical examination that was performed pursuant to paragraph 104(5)(b) of the Health Insurance Act may indicate that the person has a medical condition which would prevent them from giving evidence or answering questions.

Item 6  

Item 6 amends section 106B of the Health Insurance Act by omitting the sentence ‘(other than the person under review)’.

Section 106B empowers a Committee to summon a person, other than a person under review, to give evidence at a hearing. A failure to appear in response to a summons under section 106B can give rise to a penalty of 20 penalty units. There is currently no applicable sanction for a person under review who is not a medical practitioner who fails to appear at a hearing in response to a summons issued under section 106B of the Health Insurance Act.

This amendment has the effect that a summons (and the subsequent penalty specified in subsection 106D(1)) may apply to persons under review, including where these persons are non-practitioners.

Item 7

This item amends subsection 106M(3) of the Health Insurance act to correct a typographical error and to correctly refer to subsection 106M(1) instead of subsection 106M(2) of the Health Insurance Act.

Item 8

This item repeals paragraphs 106U(1)(ca) and (cb) of the Health Insurance Act and replaces those repealed paragraphs with new paragraphs to include references to an ‘associated person’, a new defined term under subsection 106U(5).

These amendments enable the Determining Authority to order the repayment of Medicare or dental benefits paid for services rendered or initiated by a person under review or an associated person. The amendments are intended to broaden the scope of those Medicare and dental benefits for which repayment may be ordered.

Item 9

This item inserts a new definition in subsection 106U(5) of the Health Insurance Act of ‘associated person’. This term will be used in new paragraphs 106U(1)(ca) and (cb) to describe benefits that may be within the scope of a Determining Authority’s final determination.

This new definition of ‘associated person’ is broadly drafted to include employees, persons otherwise engaged by a person under review, and an employee or a person otherwise engaged by a body corporate of which the person under review is an officer.

Item 10

This item amends subsection 106XA(1) of the Health Insurance Act by removing the reference to ‘person under review’ and substituting that reference with ‘practitioner’.

Section 106XA empowers a Committee to provide a report to the Director when it has formed the view that there is a significant threat to the life or health of a patient. Currently the section restricts the Committee to providing such a report only in respect of the person under review.

This amendment has the effect of enabling the Committee to provide a report to the Director with regards to any medical practitioner they formed the required opinion about. The amendment is aimed at ensuring Committees have the appropriate tools they need to ensure patient safety and protect the public from the risks associated with inappropriate practice.

Item 11

This item amends subsection 106XA(2) of the Health Insurance Act by removing references to ‘under review’ .

Subsection 106XA(2) requires the Director, upon receipt of a report from a Committee under subsection 106XA(1) to refer the report to the appropriate regulatory body.

This amendment makes consequential amendments required to give effect to the change to subsection 106XA(1) that would allow the Committee to provide reports to the Director about medical practitioners other than the practitioner under review.

Item 12

This item amends subsection 106XA(3) of the Health Insurance Act by omitting references to ‘a person under review’ and substituting those references with ‘a person who renders professional services’.

Subsection 106XA(3) currently requires the Director, if they form an opinion there is a significant threat to the life or health of a patient, to refer that matter to the appropriate regulatory body.

This amendment has the effect of enabling the Director to make a referral with regards to any practitioner they formed the required opinion about. This amendment is aimed at ensuring Director has the appropriate tools they need to ensure patient safety and protect the public from the risks associated with inappropriate practice.

Items 13, 14 and 15

These items include consequential amendments required to give effect to the change to subsection 106XA(3) in item 12 that would allow the Director to refer practitioners other than the person under review to the appropriate regulatory body.

Item 16

This item amends subsection 106XB(1) of the Health Insurance Act by removing the reference to ‘under review’. Section 106XB empowers a Committee to provide a report to the Director when they have formed the view there has been non-compliance by a person under review with professional standards. Currently the section restricts the Committee to only providing such a report in respect of the person under review.

This item will have the effect of enabling the Committee to provide a report to the Director with regards to any person they formed the required opinion about. This amendment is aimed at ensuring Committees have the appropriate tools they need to protect the public from the risks associated with inappropriate practice.

Item 17

This item amends paragraph 106XB(2)(a) of the Health Insurance Act by omitting the reference in that paragraph to ‘under review’.

Subsection 106XB(2)(a) requires the Director, if they form an opinion there non-compliance by the person under review with professional standards, to refer that matter to the appropriate regulatory body.

This amendment has the effect of enabling the Director to make a referral with regards to any person they formed the required opinion about. This amendment is aimed at ensuring Director has the appropriate tools they need to protect the public from the risks associated with inappropriate practice.

Item 18

This item amends subsection 106ZPM(1) by inserting the words ‘or otherwise engaged’ after ‘employed’ wherever the word ‘employed’ occurs in the subsection.

Subsection 106ZPM(1) provides that where there has been non-compliance with a requirement to produce documents or provide information under the Act, medical and dental benefits are no longer payable in respect of certain persons.

This item has the effect of broadening the application of the provision so that it is not limited to applying to persons employed by persons under review, but it also applies to persons ‘otherwise engaged’ by persons under review. This is intended to ensure that the restriction on payments of medical and dental benefits in subsection 106ZPM(1) is not limited to only applying in circumstances where a formal employment relationship is in place.

SCHEDULE 3 — AMENDMENT OF THE HEALTH INSURANCE ACT 1973

Schedule 3 amends the Health Insurance Act by inserting provisions that make amendments to the Act in relation to record-keeping requirements, administrative penalties and new debt-recovery arrangements.

Schedule 3 commences on 1 July 2018.

Background

The Health Insurance Act allows patients to claim for professional services, such as for consultations with general practitioners, described in the MBS.

A health practitioner can bulk bill a patient - this means that the patient (or claimant) has assigned their right to a Medicare benefit to the health practitioner.  The health practitioner can claim the Medicare benefit directly from the Government for that service if they agree not to charge the patient a fee. 

Most MBS claims are processed electronically, however the integrity of the system relies on practitioners making correct claims, and on post-payment compliance activities. 

The Department of Health on behalf of the Chief Executive Medicare conducts post payment compliance activities to identify incorrect claiming and recover debts. 

Record keeping requirements

The Bill introduces a number of amendments to streamline and make more consistent the record keeping requirements for practitioners under the Health Insurance Act.    

The Bill introduces a uniform two-year record keeping rule and introduces consistent requirements for record keeping across the different professions.   

The Bill extends from the current 18 months to two years the requirement for specialists and consultant physicians to keep copies of referrals.  The Bill also extends the requirement to keep copies of pathology and diagnostic imaging requests from 18 months to two years.

Under this Bill, allied health practitioners will face the same rules as specialists and consultant physicians and be required to keep copies of referral documents for two years, and to produce them if requested.  

The Bill also introduces a requirement that where a document is prepared, and it is specifically mentioned in the item descriptor, then the practitioner is required to keep it for a period of two years.  Documents which will need to be retained include Chronic Disease Management Plans and Health Assessments.  This requirement will mean that patients can be confident that their practitioner keeps copies of these documents if the patient would like access to them at a later date. 

These uniform two year periods provide greater certainty for practitioners as they align with the notice to produce requirements set out in section 129AAD(4) of the Health Insurance Act.  Under 129AAD(4), the Chief Executive Medicare may issue a Notice to Produce requesting documents for the previous two years.  Introducing greater consistency across the Health Insurance Act will provide greater certainty for practitioners on what documents may be requested by the Chief Executive Medicare. 

These changes to record keeping requirements do not impose any additional regulatory burden as practitioners are already required to make and keep records, and are required to keep them longer that the two year period stipulated in this schedule, under relevant state and territory law. 

Summary of changes to record keeping requirements

Current Law

New Law

Specialists and consultant physicians are required to keep copies of referrals for 18 months

Specialists and consultant physicians are required to keep copies of referrals for two years

Pathologists and radiologists are required to keep copies of referrals for 18 months

Pathologists and radiologists are required to keep copies of referrals for two years

There is no requirement for allied health practitioners to keep copies of referrals

Allied health practitioners are required to keep copies of referrals for two years

The payment of a rebate for a professional service may be conditional on the creation of a document, but there is no requirement for a practitioner to keep a copy of the document

If a document is specifically mentioned in an item (such as a GP Health Assessment), and is created by the practitioner, then the practitioner must keep a copy for two years

Amendments to address unintended consequences of the current law

A notice to produce issued under 129AAD can request documents to substantiate specific services which were rendered in the two years immediately prior to the date the notice to produce was issued. However, a pre-condition of a notice to produce is that the CEM has previously requested the documents, which means that the longer the time the CEM provides for a practitioner to respond to the original request prior to moving to a notice to produce, the fewer services are captured within the audit.  The Bill addresses these issues by setting a consistent time period for the audit process. 

Previously the CEO could only issue a notice to require production of documents under 129AAD(3) relating to a service that was rendered in the two years before the notice.  However, a notice can only be issued after a request for the same documents had been issued.  This creates a situation where the period for the two requirements differs.  The amendments at section 129AAD(4) and (4A) link the two year period to the initial request rather than the notice to ensure that any time passed between the request and the notice can still be captured in an audit.

The Bill also simplifies the current administrative penalty regime and reduces the maximum administrative penalty from 37.5 per cent of the compliance debt to 25 per cent of the compliance debt.  

More efficient recovery of outstanding compliance debts

Only some practitioners who incur a Medicare debt agree to enter into arrangements to repay it.  Those that refuse to agree to a repayment arrangement can continue to make further Medicare claims and may continue to receive payments directly from the Commonwealth for bulk-billed services.

The Bill ensures that practitioners who fail to enter in to an agreement to repay a debt can have their future bulk-billed payments reduced or set off by up to 20 per cent to repay that debt.  Compulsory set-off arrangements are only possible where benefits are being paid directly to the practitioner when they bulk bill a patient.

For those practitioners that owe a debt who do not bulk-bill, the amendments will allow garnisheeing of other funds owed to them including funds held in bank accounts and income from employers.  In addition to the capacity to recover debts, the garnishee provisions are intended to be a disincentive to practitioners who seek to avoid set off arrangements by reducing or stopping bulk-billed services.  Practitioners will have the right to appeal to the Administrative Appeals Tribunal if a garnishee order is issued.   

The debts to be captured by these changes include debts from audits under the Health Insurance Act, debts resulting from agreements with the Director of the PSR and debts ordered by the PSR Determining Authority. 

The Bill includes protections for practitioners in cases of hardship. A limit of 20 per cent of MBS payments can be offset against compliance debts and practitioners experiencing hardship may seek a repayment plan which, if agreed, would mean compulsory set-offs would not be used.

Set-off or garnishee arrangement are a last resort and will only apply if all rights of review have expired and the practitioner does not agree to a repayment plan within 90 days. 

Item 1

This item inserts a definition of civil penalty order to mean an order under subsection 125A(2) of the Health Insurance Act.

Item 2

This item inserts subsection 4(3) at the end of section 4 of the Health Insurance Act which has the effect of providing that where a claim has been made for a fee applicable to an item in the general medical services table, and the item requires the person who renders the professional service (a health provider) to create a record, the health provider must retain the record for a period of 2 years beginning on the day on which the service was rendered. This obligation to retain a document only applies to a document that was created by the health provider. A person who fails to comply with this requirement will be liable to a civil penalty of 5 penalty units. This item also inserts new subsection 4(4) which provides that subsection 4(3) does not apply if the person has a reasonable excuse.

This amendment will make it easier for the Department to determine whether a health provider has satisfied all the requirements of a particular item (and therefore whether a fee is payable) because there has previously been no express requirement for the health provider to retain such a record. This amendment will also make it easier for a patient to gain access to a document (for example, a chronic disease management plan or a GP mental health treatment plan) that has been prepared for them.

Item 3

This item amends paragraph 20BA(1)(d) of the Health Insurance Act by removing the reference to ‘18 months’ and substituting it with ‘2 years’ to reflect the longer record keeping requirement.  

Item 4

This item inserts new section 20BB after section 20BA of the Health Insurance Act which provides that where a legislative instrument made under subsection 3C(1) makes a determination with respect to a health service, and the effect of the legislative instrument is that a fee is only payable if the health service was provided as a result of a referral by a medical practitioner, a general practitioner, a specialist or consultant physician, then the person who rendered the health service must retain the referral for the period of 2 years beginning on the day the service is rendered. The person who rendered the service must produce the referral if asked to do so in writing by the Chief Executive Medicare to a medical practitioner who is a Departmental employee within the meaning of the Human Services (Medicare) Act 1973 . A Departmental employee is defined in that Act as an APS employee in the Department. The referral must be produced within 7 days after receiving the request.

Subsection 20BB(4) includes a strict liability offence provision with a penalty of maximum 5 penalty units if a person contravenes this section. This offence provision does not apply if the person has a reasonable excuse (subsection 20BB(5)). Section 6.1 of the Criminal Code also provides that a defence of mistake of fact is available under section 9.2 of the Code where a law creates a strict liability offence. Section 9.2 of the Criminal Code allows a defence of honest and reasonable mistake of fact to be raised for strict liability offences. Under this defence, a defendant must turn his or her mind to the existence of the facts and be under a mistaken, but reasonable, belief about those facts.

This new section will ensure that practitioners do not fail to keep referrals, or destroy referrals, when asked to provide them for compliance purposes under the Health Insurance Act. The insertion of a strict liability offence is reasonable, necessary and proportionate to the key purpose of the Bill to improve the recovery arrangements for Medicare debts owed to the Commonwealth. The penalty is relatively minor and does not include imprisonment, but will deter non-compliance with the Act.

Item 5

This item amends subsections 23DK(1) and (2), 23DKA(3), 23DR(1) and 23DS(3) of the Health Insurance Act by removing the references to ‘18 months’ and substituting ‘2 years’. This amendment reflects the new longer record keeping requirement.

Item 6

Under subsection 129AAD(3) omits ‘other than under this section’.

Item 7

This item repeals subsection 129AAD(4) of the Health Insurance Act and substitutes the repealed subsection with new subsections 129AAD(4) and 129AAD(4A). New subsection 129AAD(4) provides that a notice may only be given in respect of a professional service for which a claim for an amount to be paid under the Act was made during the period outlined in new subsection 129AAD(4A).

Subsection 129AAD(4A) provides a limit on the power to give a notice, namely that a notice can only be given in respect of a professional service rendered in the period two years immediately before the first written request was made subsection 129AAD(3).

This amendment limits the scope of compliance audit activity under the provision in this Bill providing more certainty than currently exists and ensuring that there is not a gap in compliance between a written request being given to a person and a notice being given. 

For example, if a person receives three written requests and the requests specify 15 services, and any of those same services are then listed in a notice given to the person, then the two year period is the two year period immediately before the earliest of the written requests was given to the person.

Item 8

This inserts new subsection (9A) in section 129AAD of the Health Insurance Act which gives a person authorisation to produce any relevant documents if requested to do so under subsection 129AAD(3). The item makes clear that this authorisation includes a document that contains health information (within the meaning of the Privacy Act 1988 ) about an individual.

This item ensures that the production of relevant documents will be ‘authorised by or under law’ for the purposes of Australian Privacy Principle 6.2(b) in Schedule 1 to the Privacy Act 1988 .

Item 9

This item inserts new subsection 129AAD(10A) after subsection 129AAD(10) of the Health Insurance Act. Subsection 129AAD(10A) provides for circumstances where copies of a notice given under subsection 129AAD(2) or of a written request made under subsection 129AAD(3) in relation to a professional service rendered are to be given.

Subsection 129AAD(10A) provides, where the professional service was rendered, or purportedly rendered, in a public hospital mentioned in subsection 129AAD(10B), then a copy of the notice or request may be given to the head (however described) of the Health Department (within the meaning of the National Health Reform Act 2011 ) of that State or Territory. This is because States and Territories have a direct interest in whether the Commonwealth is undertaking compliance action in respect of a person whom is employed or engaged by them.

That definition of Health Department provides the following:

Health Department , of a State or Territory, means a Department of State that:

(c)     deals with matters relating to health; and

(d)    is administered by the State/Territory Health Minister of the State or Territory.

Item 10

This item inserts new section 129AADA after section 129AAD of the Health Insurance Act which provides for requirements to keep documents relating to a notice to produce. A person who receives a written request to produce documents under subsection 129AAD(3) or who is given a written notice under subsection 129AAD(2) is required to retain any document that is relevant to whether an amount should have been paid under the Act in respect of a service.

Subsection 129AADA(2) provides that the person must retain the document until the person receives a written notice under subsection 129AAH(1) of the Health Insurance Act that the Chief Executive Medicare has decided that the amount paid should have been paid, or the person is given a notice under subsection 129AAI(4) claiming the amount as a debt. Subsection 129AAD(3) provides that, if the person has applied for review of the decision to claim the amount as a debt under subsection 129AAJ(1), then the person must retain the documents until notified of the outcome of the review under subsection 129AAJ(5).

Subsection 129AADA(1) provides a civil penalty of 20 penalty units for an individual and 100 penalty units for a body corporate. Subsection 129AADA(4) provides that subsection 129AADA(1) does not apply if the person has a reasonable excuse for refusing or failing to comply with a notice.

Item 11

This item inserts new subsection 129AAH(5) to section 129AAH of the Health Insurance Act. Section 129AAH relates to the giving of notices where an amount paid, by way of benefit or payment under the Act, is decided by the Chief Executive Medicare to have been substantiated and correctly paid. Subsection 129AAH(5) provides for circumstances where copies of a notice given under subsections 129AAH(1), (2) and (3) in relation to a professional service rendered should be given.

Subsection 129AAH(5) provides that, where the professional service was rendered or purportedly rendered, in a public hospital mentioned in subsection 129AAH(6), the Chief Executive Medicare may give a copy of the notice to the head (however described) of the Health Department (within the meaning of the National Health Reform Act 2011 ) of that State or Territory.  This is because States and Territories have a direct interest in whether the Commonwealth is undertaking compliance action in respect of a person whom is employed or engaged by them.

That definition of Health Department provides the following:

Health Department , of a State or Territory, means a Department of State that:

(e)     deals with matters relating to health; and

(f)     is administered by the State/Territory Health Minister of the State or Territory.

Item 12

This item amends paragraph 129AAI(1)(c) of the Health Insurance Act by removing the reference to ‘the right’ and substituting ‘any right’ in its place to reflect that there is more than one right of review under the Act. 

Item 13

This item inserts new subsections (5), (6) and (7) at the end of section 129AAI of the Health Insurance Act. New subsection 129AAI(5) provides that subsection 129AAI(4) will not apply in certain circumstances. Subsection 129AAI(4) provides that the Chief Executive Medicare must not serve a notice claiming an amount as a debt until 28 days after written notice of the outcome of the reviewable decision is given. New subsection 129AAI(5) provides that subsection (4) will not apply where the person or estate has waived their right to review the decision to claim the amount as a debt under new subsection 129AAJ(1A). 

New subsection 129AAI(6) provides that if a notice is given under subsections 129AAI(1) or (4), the Chief Executive Medicare may give a copy of the notice to the head (however described) of the Health Department (within the meaning of the National Health Reform Act 2011 ) of the State or Territory if the service was rendered in, or purportedly rendered in a public hospital mentioned in subsection 129AAI(7). This is because States and Territories have a direct interest in whether the Commonwealth is undertaking compliance action in respect of a person whom is employed or engaged by them.

That definition of Health Department provides the following:

Health Department , of a State or Territory, means a Department of State that:

(g)     deals with matters relating to health; and

(h)    is administered by the State/Territory Health Minister of the State or Territory.

Item 14

This item inserts subsection 129AAJ(1A) after subsection 129AAJ(1) of the Health Insurance Act and provides that subsection 129AAJ(1) does not apply where the person has told the Chief Executive Medicare that they waive their right of review in relation to the decision to claim the amount as a debt.

Item 15

This item inserts the words ‘(the reconsidered decision )’ after the word ‘decision’ in subsection 129AAJ(5) of the Health Insurance Act.  Subsection 129AAJ(5) of the Health Insurance Act provides that that the Chief Executive Medicare must give the applicant written notice of the decision on the review within 28 days after receiving the application for review under subsection 129AAJ(1).

Item 16

This item repeals subsection 129AAJ(6) and substitutes that subsection with new subsections 129AAJ(6), (7), (8), (9) and (10). The effect of these amendments is to provide internal and external merits review.

New subsection 129AAJ(7) provides a person can apply to the Administrative Appeals Tribunal for review of a reconsidered decision made by the Chief Executive Medicare about whether to claim an amount as a debt under subsection 129AAJ(5). Subsection 129AAJ(8) clarifies that an application for review of a reconsidered decision under subsection 129AAJ(7) can only be made if a garnishee notice is given under new subsection 129AEG(1) in relation to the debt to which the reconsidered decision relates.

Subsection 129AAJ(9) provides that, despite paragraph 29(1)(d) of the Administrative Appeals Tribunal Act 1975 (which requires that an application to the Administrative Appeals Tribunal for a review of certain decisions must be lodged within the prescribed time), an application to the Administrative Appeals Tribunal must be made within 28 days after the garnishee notice is given. This provision is intended to make it clear that where a garnishee notice is given in relation to a decision to claim an amount as a debt, the time period for seeking review of a reconsidered decision in the Administrative Appeals Tribunal commences from the date the garnishee notice was given, not the date the person received notice of a decision to claim an amount as a debt under subsection 129AC(1).

Internal review is a relatively quick and inexpensive way to re-examine a decision, while the availability of external merits review in addition to internal review is an important accountability measure for administrative decisions made under Commonwealth legislation.

Subsection 129AAJ(10) provides, for the avoidance of doubt, that a decision under subsection 129AAJ(1) may only be reviewed by the Chief Executive Medicare under subsection 129AAJ(4) once. It is also provides that a reconsidered decision will take effect on the day specified in the reconsidered decision or, if a day is not specified, on the day on which the reconsidered decision is made.

Item 17

This item repeals subsection 129AC(4) of the Health Insurance Act because set-off provisions are inserted in the Health Insurance Act by item 29 of this Bill.

Item 18

This item repeals the heading for subsection 129AD of the Health Insurance Act and substitutes that heading with a new heading of ‘Recovery of certain determined amounts’.

Item 19

This item amends paragraph 129AEA(1)(a) by removing all of the words after ‘has served a notice’ and substitutes those words removed with the following words ‘(as mentioned in subsection 129AAI(4)) on the person claiming an amount (the total amount ) as a debt due to the Commonwealth under subsection 129AC(1); and’. This amendment clarifies when a person will be liable to pay an administrative penalty. 

Item 20

This item repeals paragraph 129AEA(1)(c) of the Health Insurance Act. The repeal of this paragraph means that not only will services provided in the 2 years prior to the finalisation of an ‘audit’ period be included for the purpose of calculating an administrative penalty, but so will those services provided during the ‘audit’ period.

Item 22

This item amends subsection 129AEB(2) of the Health Insurance Act by removing references to paras (4), (5) and (6) and substituting those references only with a reference to paragraph (4) as this Bill removes subsections (5) and (6).

Item 22

This item amends table item 1 in subsection 129AEB(3) of the Health Insurance Act by removing ‘(whether by notice under subsection 129AAD or otherwise)’ and by substituting ‘under subsection 129AAD(2) or (3)’. This amendment will make it clear as to when this penalty applies.

Item 23

This item amends table item 2 in subsection 129AEB(3) of the Health Insurance Act by removing the cell and inserting a cell providing that the base penalty amount would only be reduced by 50 per cent if the person voluntarily tells the Chief Executive Medicare or a Departmental employee (within the meaning of the Human Services (Medicare) Act 1973 ) that an amount should not have been paid after the CEO contacts the person about the service as mentioned in subsection 129AAD(3), and before the person is given a notice under subsection 129AAD(2) and before a notice is given to the person under subsection 129AAI(1) claiming the amount as a debt.

Item 24

This item amends table item 3 in subsection 129AEB(3) by removing the cell and inserting a cell providing that the base penalty amount would only be reduced by 25 per cent if the person voluntarily tells the Chief Executive Medicare or a Departmental employee (within the meaning of the Human Services (Medicare) Act 1973 ) that an amount should not have been paid after the CEO contacts the person about the service as mentioned in subsection 129AAD(2), and before the period specified in the notice; and before the Chief Executive Medicare gives the person a notice under subsection 129AAI(1) claiming the amount as a debt.

Item 25

This item repeals subsections 129AEB(5) and (6) of the Health Insurance Act, removing the Chief Executive Medicare’s power to increase the base penalty amount.

Item 26

Amends section 129AEC(heading), inserts ‘and review of assessments’ after penalty. 

Item 27

This item inserts ‘(1)’ before ‘The Chief Executive Medicare’ in section 129AEC of the Health Insurance Act to create this as a subsection as this Bill creates more subsections to section 129AEC.

Item 28

This item omits the sentence ‘The Chief Executive Medicare must give to a person who is liable for an administrative penalty written notice of the following’ in section 129AEC of the Health Insurance Act and inserts instead ‘The Chief Executive Medicare (the CEO ) must give to a person who the CEO has assessed, in accordance with sections 129AEA and 129AEB, is liable to an administrative penalty, written notice of the assessment which includes the following’, for clarity.

Item 29

This item inserts subsections 129AEC(2), (3) and (4) to section 129AEC of the Health Insurance Act. Subsection 129AEC(2) provides that a person can apply to the Administrative Appeals Tribunal for review of an assessment by the Chief Executive Medicare of the person’s liability to pay an administrative penalty for which a notice has been given under subsection 129AEC(1). Subsection 129AEC(3) clarifies that an application for review under subsection 129AEC(2) may only be made if a garnishee notice has been given under new subsection 129AEG(1) in relation to the debt to which the administrative penalty relates.

Subsection 129AEC(4) provides that, despite paragraph 29(1)(d) of the Administrative Appeals Tribunal Act 1975 (which requires that an application to the Administrative Appeals Tribunal for a review of certain decisions must be lodged within the prescribed time), an application to the Administrative Appeals Tribunal must be made within 28 days after the garnishee notice is given. This provision is intended to make it clear that where a garnishee notice is given in relation to the debt to which the administrative penalty relates, the time period for seeking review of a reconsidered decision in the Administrative Appeals Tribunal commences from the date the garnishee notice was given, not the date the person received notice of the assessment of the person’s liability to pay an administrative penalty under 129AEC(1).

Internal review is a relatively quick and inexpensive way to re-examine a decision, while the availability of external merits review in addition to internal review is an important accountability measure for administrative decisions made under Commonwealth legislation.

Item 30

This item inserts provisions after section 129AEC of the Health Insurance Act allowing the Chief Executive Medicare to obtain information in certain circumstances.

Subsection 129AECA(1) allows the Chief Executive Medicare to obtain certain information from a person or estate who owes a debt to the Commonwealth under or as a result of the amendments made by this Bill. Such a person or estate may be requested to give information, or to produce documents that are in the person’s custody or control, concerning the person’s financial situation to the Chief Executive Medicare or a Departmental employee (within the meaning of the Human Services (Medicare) Act 1973 ).

Subsection 129AECA(2) provides that a person may also be required to provide the Chief Executive Medicare or a Departmental employee (within the meaning of the Human Services (Medicare) Act 1973 with an address for the purpose of giving documents to the individual relating to the debt with 14 days after the notice being served.  Subsection 129AECA(3) requires a person who has a debt and has provided their address to update their address within 14 days of moving.    

Subsection 129AECA(4) deals with information or documents that would help the Chief Executive Medicare or a Departmental employee locate a person who owes a debt under or as a result of this new Act or that is relevant to the debtor’s financial situation. The Chief Executive Medicare may require a person who may have such information or documents to give the information or documents to the Chief Executive Medicare or a Departmental employee (within the meaning of the Human Services (Medicare) Act 1973 ). 

Subsection 129AECA(5) provides that the notice given under subsections 129AECA(1) or (4) must specify particular matters, including how the person is to give the information, the period (at least 14 days) within which the person must produce the information or document and the provision the notice is given under. Subsection 129AECA(6) provides that a person must not refuse or fail to give information or produce a document as required by this section. The penalty for contravention of the section is a maximum 20 penalty units for an individual and 100 penalty units for a body corporate. There is no contravention of the section if the person has a reasonable excuse (see subsection 129AECA(7)).

Item 31

This item inserts new section 129AEF and section 129AEG which follow section 129AEE of the Health Insurance Act.

Subsection 129AEF(1) applies when an amount is recoverable from a person as a debt due to the Commonwealth under subsections 129AC(1), (1A), (1C), (1E) or (1G), any review rights under section 129AAJ have been exhausted or have expired, and when the 3 month period referred to in subparagraph 129AC(2)(c)(i) has expired.

Subsection 129AEF(2) allows the Chief Executive Medicare, on behalf of the Commonwealth, to impose offsetting arrangements to recover amounts from a person where there is a recoverable amount, and an amount becomes payable to that person under the Act. This section is intended to improve debt recovery rates.

Subsection 129AEF(3) clarifies that an amount set off under subsection 129AEF(2) must not exceed 20 per cent of the payable amount, or, if the Chief Executive Medicare and the person (or estate) has agreed to a higher percentage of the amount payable - that percentage.

Section 129AEG enables the Chief Executive Medicare to give a garnishee notice to a third party who owes or may later owe money to the person from whom the amount is recoverable (or from the person’s estate). The section sets out when a third party will be regarded as owing money, how much is payable under the notice, when an amount must be paid, when the debtor must be notified, when amounts can be set off and when a third party is indemnified for the payment. Section 129AEG also provides for circumstances where a garnishee notice will be issued to the Commonwealth, State or Territory and that the section binds the Crown.   Subsection 129AEG(12) provides that this section does not imply that the Crown is, or is not, bound by any other provision of this Act.

Subsection 129AEG(13) provides that an application to the Administrative Appeals Tribunal is available for review of a decision by the Chief Executive Medicare to give a garnishee notice.

The giving of a garnishee notice under subsection 129AEG will also trigger a person’s, or an estate’s, eligibility to apply to the Administrative Appeals Tribunal for review of:

·          a reconsidered decision made by the Chief Executive Medicare under subsection 129AAJ(5) about whether to claim an amount as a debt (subsections 129AAJ(7)-(9));

·          an assessment by the Chief Executive Medicare of a person’s liability to pay an administrative penalty (subsections 129AEC(2)-(4)).

That is, a person or estate may only apply to the Administrative Appeals Tribunal for review of a reconsidered decision, or an assessment of liability to pay an administrative penalty, if a garnishee notice is given under subsection 129AEG(1). The application for review in each case must be made within the period of 28 days after the garnishee notice is given.

This item also inserts section 129AEH. Section 129AEH includes an offence provision with a penalty of maximum 20 penalty units if a person fails to comply with a garnishee notice. Section 58AB(2) provides that a court may also order the person to pay the Chief Executive Medicare an amount not exceeding the amount specified in the notice given under section 129AEG.

Item 32

This item inserts section 130H after section 130G of the Health Insurance Act, providing for the person claiming an exception to the civil penalty provisions to bear the evidential burden in claiming the exception.

This item also inserts new section 130J which provides that no State or Territory law may operate to prevent a person from giving information, producing a document or giving evidence that the person is required to give or produce for the purposes of the Act.

Item 33

This item is an application provision. It makes clear that the record-keeping requirements provided in new section 4 of the Health Insurance Act only apply in relation to documents created on or after the commencement of this item, regardless of whether the service to which the document relates was rendered before, on or after the commencement of this item. This means that new records created on or after 1 July 2018 that are subject to section 4 will need to be kept for a minimum 2 years.

This item also provides that the amendments made to paragraph 20BA(1)(d) and subsections 23DK(1)-(2), 23DKA(3), 23DR(1) and 23DS(3) of the Health Insurance Act apply in relation to referrals, requests, confirmations and records required to be first retained on or after the commencement of this item, or that were required to be retained at the commencement of this item. In practice, noting that the commencement date of this schedule is 1 July 2018, this means that such referrals, pathology requests, pathology confirmations, records of pathology services, requests relating to R-Type diagnostic imaging services and other records relating to a diagnostic imaging service created on 1 January 2017 onwards will need to be kept for a minimum of 2 years.

This item also provides that the requirements in relation to referrals in section 20BB of the Health Insurance Act only apply in relation to referrals created on or after the commencement of this item, because referrals are not currently required to be kept under the Health Insurance Act.

Item 34

This item inserts an application provision which provides that:

·          Subsection 129AAD(9A) will apply in relation to documents produced in response to a request under subsection 129AAD(3) that was made before, on or after the commencement of this item (regardless of whether the request was made before, on or after the commencement of this item).

·          Subsection 129AAD(10A), 129AAH(5) and 129AAI(6) will apply in relation to notices or requests given to a person on or after the commencement of this item.

·          Section 129AADA will apply in relation to notices given under subsection 129AAD(2) and requests made under subsection 129AAD(3) on or after the commencement of this item.

·          Subsection 129AAJ(6) as substituted by Schedule 3 will apply in relation to applications for review made on or after the commencement of this item, such that a failure to comply with the requirements of subsection 129AAJ(5) does not affected the validity of the review or reconsidered decision.

·          The amendments to subsection 129AEB(3) will apply prospectively in relation to professional services for which the Chief Executive Medicare first contacts the person under subsection 129AAD(3) on or after the commencement of this item.

·          Section 129AEC(2), (3) and (4) relating to applications to the Administrative Appeals Tribunal for review will apply in relation to assessments of a person’s liability to pay an administrative penalty in relation to which written notice is given to the person on or after the commencement of this item.

·          Section 129AECA, which deals with the Chief Executive Medicare’s power to obtain information relating to a debt, will apply in relation to debts for which notice is served on or after the commencement of this item regardless of whether the debt became due to the Commonwealth before, on or after the commencement of this item.

·          Section 129AEF, relating to the offsetting of recoverable amounts, will apply in relation to recoverable amounts that become debts due to the Commonwealth on or after the commencement of this item.

Item 35

This item inserts an application provision which provides that new sections 129AEG and 129AEH relating to the giving of garnishee notices and the failure to comply with garnishee notices will apply to eligible recoverable amounts on or after the commencement of this item regardless of whether the debt became due to the Commonwealth before, on or after the commencement of this item.

This item also provides that section 130J of the Health Insurance Act will operate prospectively to information given, documents produced, or evidence given in response to a garnishee notice on or after the commencement of this item.

Item 36

This item provides that subsection 129AAD(4) of the Health Insurance Act, as in force immediately before the commencement of this item, continues to apply in relation to notices given before that commencement as if the repeal and substitution of subsection 129AAD(4) had not happened.

This item also provides that the setting off of recoverable amounts for which the person’s agreement was obtained before the commencement of item will continue to have effect on and after the commencement of this item as if the repeal of subsection 129AC(4) had not happened.

Item 37

This item is a transitional provision, which provides that if a written request mentioned in subsection 129AAD(3) of the Health Insurance Act (as in force immediately prior to the commencement of this item) that was given to a person before the commencement of this item will, from the commencement of this item, be taken to be a request under subsection 129AAD(3) as amended by Schedule 3.



 

SCHEDULE 4 — AMENDMENT OF THE DENTAL BENEFITS ACT 2008

This schedule provides for amendments to the Dental Benefits Act made by the Bill. It provides amendments to the Act in relation to record-keeping requirements, administrative penalties and new debt-recovery arrangements.

Schedule 4 commences on 1 July 2018.

Background

The Dental Benefits Act provides a legislative framework for the payment of benefits under the CDBS, while the Dental Benefits Rules 2014 provides for the operational framework and service items relating to the CDBS.

The CDBS provides benefits for a range of basic dental services to eligible children aged between 2 and 17 years. In 2018, benefits under the CDBS are capped at $1,000 over two consecutive calendar years. To be eligible for the CDBS, the children’s family must receive Family Tax Benefit Part A or a relevant Australian Government payment.

The purpose of the amendments in this schedule is to: address some unintended consequences of the current law in relation to the issuing of a notice to produce (mirroring the changes made under Schedule 3 to the Health Insurance Act), and to introduce greater consistency in the compliance regime by introducing administrative penalties, which are already in place under the Health Insurance Act.

The Bill also seeks to allow for more effective debt recovery in circumstances where a dental practitioner fails to enter into an arrangement to repay an outstanding compliance debt.  The Bill introduces new garnishee arrangements where the Chief Executive Medicare may give a garnishee notice to a third party who owes or may later owe money to the person from whom the amount is recoverable.  Where a garnishee notice is to be given in relation to an outstanding debt, the person will be able to appeal to the Administrative Appeals Tribunal.

Item 1

This item removes the words ‘other than under this section’ in subsection 32C(4) of the Dental Benefits Act, for clarity.

Item 2

This item repeals subsection 32C(5) of the Dental Benefits Act and substitutes the repealed paragraph with a new paragraph which provides limitations on the power to give notice, namely that a notice can only be given in respect of a dental service rendered in the period two years immediately before the first written request was made. This effectively limits the scope of compliance audit activity under the provisions in this Bill providing more certainty than currently exists and ensuring that there is not a gap in regulation between a written request being given to a person and a notice being given.

For example, if a person receives three written requests and the requests specify fifteen services, and any of those same services are then listed in a notice given to the person, then the two year period is the two year period immediately before the earliest of the written requests was given to the person.

Item 3

This item inserts new paragraph (7A) after subsection 32C(7) of the Dental Benefits Act which gives a person authorisation to produce documents containing health information if requested to do so under subsection 32C(4).  

Items 4, 5 and 6

Item 4 repeals the heading for section 56A of the Dental Benefits Act and substitutes a new heading to reflect the addition of administrative penalties in s 56A.

Item 5 inserts new subsection 56A(8) at the end of section 56A which provides that a person who does not pay an administrative penalty by the day set out in the notice given under section 56G, then the amount set out in the notice is recoverable as a debt due to the Commonwealth from the person or the estate of the person.

Item 6 inserts a reference to this subsection in 56C(1), which provides for the giving of a notice in relation to a decision to claim an amount as a debt.

Item 7

This item inserts new subsection 56C(5) to the end of section 56C of the Dental Benefits Act. New subsection 56C(5) provides that subsection 56C(4) will not apply in certain circumstances. Subsection 56C(4) provides that the Chief Executive Medicare must not serve a notice claiming an amount as a debt until 28 days after written notice of the outcome of the reviewable decision is given. New subsection 56C(5) provides that paragraph (4) will not apply where the person has waived their right to review the decision to claim the amount as a debt under new subsection 56D(1A). 

Item 8

This item inserts subsection 56D(1A) after subsection 56D(1) of the Dental Benefits Act and provides that subsection 56D(1) does not apply where the person has told the Chief Executive Medicare that they waive their right of review in relation to the decision to claim the amount as a debt. Section 56D of the Dental Benefits Act provides that a person has a right to internal review by the Chief Executive Medicare in relation to a decision to claim an amount as a debt.

Item 9

This item inserts the words ‘(the reconsidered decision )’ after the word ‘decision’ in subsection 56D(5) of the Dental Benefits Act. Section 56D(5) provides that that the Chief Executive Medicare must give the applicant written notice of the decision on the review within 28 days after receiving the application for review under subsection 56D(1).

Item 10

This item repeals subsection 56D(6) and substitutes that subsection with new subsections 56D(6), (7), (8), (9) and (10). The effect of these amendments is to provide internal and external merits review.

New subsection 56D(6) provides that a failure to comply with the requirements of subsection (5) does not affect the validity of the review or of the reconsidered decision.

New subsection 56D(7) provides a person can apply to the Administrative Appeals Tribunal for review of a reconsidered decision. Subsection 56D(8) clarifies that an application for review of a reconsidered decision under subsection 56D(76) may only be made if a garnishee notice is given under new subsection 58AA(2) in relation to the debt to which the reconsidered decision relates.

Subsection 56D(9) provides that, despite paragraph 29(1)(d) of the Administrative Appeals Tribunal Act 1975 (which requires that an application to the Administrative Appeals Tribunal for a review of certain decisions must be lodged within the prescribed time), an application to the Administrative Appeals Tribunal must be made within 28 days after the garnishee notice is given. This provision is intended to make it clear that where a garnishee notice is given in relation to a decision to claim an amount as a debt, the time period for seeking review of a reconsidered decision in the Administrative Appeals Tribunal commences from the date the garnishee notice was given, not the date the person received notice of a decision to claim an amount as a debt.

Internal review is a relatively quick and inexpensive way to re-examine a decision, while the availability of external merits review in addition to internal review is an important accountability measure for administrative decisions made under Commonwealth legislation.

Subsection 56D(10) provides, for the avoidance of doubt, that a decision under subsection 56D(1) may only be reviewed by the Chief Executive Medicare under subsection 56D(4) once. It is also provides that a reconsidered decision will take effect on the day specified in the reconsidered decision or, if a day is not specified, on the day on which the reconsidered decision is made.

Item 11

This item provides for an administrative penalty scheme and inserts new sections 56E, 56F, 56G and 56H after section 56D of the Dental Benefits Act. 

Section 56E provides for when a person is liable for an administrative penalty, being in the following circumstances:

·          The Chief Executive Medicare has served a notice on the person claiming an amount as a debt due to the Commonwealth; and

·          The notice includes an amount which is payable as a debt to the Commonwealth; and

·          The total amount claimed in the notice is more than $2,500 or, if a higher amount is prescribed by the regulations - that higher amount.

Section 56F provides for the amount of administrative penalty to be applied. Subsection 56F(2) provides that the administrative penalty is 20 per cent except where it is decreased or increased in accordance with subsections 56F(3) and (4) of the Dental Benefits Act. This penalty is referred to as the base penalty amount .

Subsection 56F(3) provides that a person’s base penalty amount will be reduced as follows:

·          100 per cent if the person voluntarily tells the Chief Executive Medicare, or a Human Services employee that an amount paid purportedly by way of a payment of dental benefit under the Act, in respect of the dental service, exceeds the amount, if any, that should have been paid. This information must have been provided before the Chief Executive Medicare makes a request for documents or gives the person a notice to produce documents under subsection 32C. This addresses instances where a practitioner contacts the Chief Executive Medicare or a Human Services employee (as defined in section 4 of the Dental Benefits Act) to admit that they have caused an incorrect benefit amount to be paid for a service (item 1 of the table);

·          50 per cent if the Chief Executive Medicare asks the person to voluntarily provide documents in relation to an amount purportedly by way of a payment of dental benefit under the Act, in respect of the dental service, and the person voluntarily tells the Chief Executive Medicare or a Human Services employee that the amount paid exceeded the amount that should have been paid. This information must be provided before the Chief Executive Medicare gives the person a notice to produce documents under subsection 56C(1) (item 2 of the table);

·          25 per cent if the Chief Executive Medicare gives the person a notice under subsection 32C(1) and, before the end of the day specified in the notice given, the person tells the Chief Executive Medicare that an amount paid, purportedly by way of payment of dental benefit, in respect of the service exceeds the amount, if any, that should have been paid (item 4 of the table).

For example, if a person receives a notice under subsection 32C(1) for 20 services with a total rebate paid of $3,000 and fails to substantiate any of the specified services, then they would be liable to repay the benefit paid  ($3,000) for the services, and the base penalty amount of 20 per cent of $3,000 ($600) so the total amount payable would be $3,600.

Subsection 56F(4) provides that a person, after receiving a notice from the Chief Executive Medicare, does not comply with the notice in respect of the service or another dental service specified in the notice given under subsection 32C(1). In this circumstance, the base penalty amount is increased by 25 per cent. 

Subsection 56F(5) provides that if a base penalty amount is subject to both a reduction and an increase, the reduction should be applied first.

Section 56G(1) gives the Chief Executive Medicare the power to give a notice to a person who is liable for an administrative penalty under sections 56E and 56F. The notice of administrative penalty will include the administrative penalty relating to each dental service specified in the notice to produce issued under section 32C as well as the total amount of the administrative penalty. The notice of administrative penalty may also separately include the benefit amount paid for a service which is recovered as a debt due to the Commonwealth under section 56C. This will mean that the Chief Executive Medicare is able to provide a person with one notice listing both the debt amount and the base penalty amount owed to the Commonwealth. The penalty will become due for payment at least 14 days after the day on which the notice is given.

Subsection 56G(3) provides that a person can apply to the Administrative Appeals Tribunal for review of an assessment by the Chief Executive Medicare of the person’s liability to pay an administrative penalty for which a notice has been given under subsection 56G(1). Subsection 56G(4) clarifies that a person can only seek review of a decision in the Administrative Appeals Tribunal under subsection 56G(3) if a garnishee notice is given under new subsection 58AA(2) in relation to the debt to which the administrative penalty relates.

Subsection 56G(5) provides that, despite paragraph 29(1)(d) of the Administrative Appeals Tribunal Act 1975 (which requires that an application to the Administrative Appeals Tribunal for a review of certain decisions must be lodged within the prescribed time), an application to the Administrative Appeals Tribunal must be made within 28 days after the garnishee notice is given. This provision is intended to make it clear that where a garnishee notice is given in relation to the debt to which the administrative penalty relates, the time period for seeking review of a reconsidered decision in the Administrative Appeals Tribunal commences from the date the garnishee notice was given, not the date the person received notice of the assessment of the person’s liability to pay an administrative penalty under subsection 56G(1).

Subsection 56H(1) allows the Chief Executive Medicare to obtain certain information from a person who owes a debt to the Commonwealth under or as a result of this new Act. Such a person may be requested to give information, or to produce documents that are in the person’s custody or control, concerning the person’s financial situation to the Chief Executive Medicare. Subsection 56H(2) provides that a person with a debt to the Commonwealth must notify the Chief Executive Medicare of an address for the purposes of giving documents to the individual relating to the debt within 14 days.  This subsection includes a civil penalty provision of 20 penalty units.

Subsection 56H(3) requires an individual who owes a debt, and who has provided an address to notify the Chief Executive Medicare of any change of that address within 14 days of the change of address. The penalty for contravening subsection 56H(3) is a maximum of 20 penalty units.

Subsection 56H(4) deals with information or documents that would help the Chief Executive Medicare locate a person who owes a debt under or as a result of this new Act or that is relevant to the debtor’s financial situation. The Chief Executive Medicare may require a person who may have such information or documents to give the information or documents to the Chief Executive Medicare. 

Subsection 56H(5) provides that the notice given under subsections 56H(1) or (4) must specify particular matters, including how the person is to give the information, the period (at least 14 days) within which the person must produce the information or document and the provision the notice is given under. Subsection 56H(6) provides that a person must not refuse or fail to give information or produce a document as required by this section. The penalty for contravention of the section is a maximum 20 penalty units for an individual and 100 penalty units for a body corporate. Subsection 56H(7) provides that Part VIA of the Health Insurance Act applies in relation to this section 56H as if subsections 56H(2), 56H(3) and 56H(6) were civil penalty provisions as defined in section 125B of the Health Insurance Act. Part VIA of the Health Insurance Act provides for a regime for the obtaining of orders for a civil penalty.

Section 56H(8) provides that subsections (2), (3), or (6) do not apply if the person has a reasonable excuse for refusing or failing to comply with a notice.

Item 12

This item inserts new section 58AA and section 58AB which follow section 58 of the Dental Benefits Act.

Section 58AA enables the Chief Executive Medicare to give a garnishee notice to a third party who owes or may later owe money to the person from whom the amount is recoverable (or from the person’s estate). The section sets out when a third party will be regarded as owing money, how much is payable under the notice, when an amount must be paid, when the debtor must be notified, when amounts can be set off and when a third party is indemnified for the payment. Section 58AA also provides for circumstances where a garnishee notice will be issued to the Commonwealth, State or Territory and that the section binds the Crown.

Subsection 58AA(14) provides that an application to the Administrative Appeals Tribunal is available for review of a decision by the Chief Executive Medicare to give a garnishee notice.

·           

Under subsection 58AA(14) a person or estate may only apply to the Administrative Appeals Tribunal for review of a reconsidered decision, or an assessment of liability to pay an administrative penalty, if a garnishee notice is given under section 58AA. The application for review in each case must be made within the period of 28 days after the garnishee notice is given.

This item also inserts section 58AB. Section 58AB includes an offence provision with a penalty of maximum 20 penalty units if a person fails to comply with a garnishee notice. Section 58AB(2) provides that a court may also order the person to pay the Chief Executive Medicare an amount not exceeding the amount specified in the notice given under section 58AA.

  Item 13

This item inserts new paragraph (aa) after paragraph (a) in section 63 to make clear that Part 8 of the Dental Benefits Act makes provision in relation to the operation of certain State and Territory laws.

Item 14

This item inserts new section 64A which provides that no State or Territory law may operate to prevent a person from giving information, producing a document or giving evidence that the person is required to give or produce for the purposes of the Act.

Item 15

This item inserts an application provision which provides that:

·          subsection 32C(7A) will apply in relation to documents produced in response to a request made under subsection 32C(4) of that Act on or after the commencement of this item regardless of whether the request was made before, on or after the commencement of this item.

·          sections 56E, 56F and 56G will apply in relation to dental services for which notice is served on or after the commencement of this item. This is subject to sub item (3) of this item regarding the application of section 56G.

·          subsections 56G(3), (4) and (5) relating to applications to the Administrative Appeals Tribunal for review will apply in relation to assessments of a person’s liability to pay an administrative penalty for which written notice is given to the person under subsection 56G(1) of the Act on or after the commencement of this item.

·          section 56H, which deals with the Chief Executive Medicare’s power to obtain information relating to a debt, will apply in relation to debts for which notice is served on or after the commencement of this item regardless of whether the debt became due to the Commonwealth before, on or after the commencement of this item.

·          sections 58AA and 58AB relating to the giving of garnishee notices and the failure to comply with garnishee notices will apply to eligible recoverable amounts on or after the commencement of this item regardless of whether the debt became due to the Commonwealth before, on or after the commencement of this item.

·          section 64A will operate prospectively to information given, documents produced, or evidence given on or after the commencement of this item.

Item 16

This item provides that subsection 32C(5) of the Dental Benefits Act, as in force immediately before the commencement of this item, continues to apply in relation to notices given before that commencement as if the repeal and substitution of subsection 32C(5) had not happened.

Item 17

Item 17 is a transitional provision, which provides that if a written request mentioned in subsection 32C(4) of the Dental Benefits Act (as in force immediately prior to the commencement of this item) that was given to a person before the commencement of this item will, from the commencement of this item, be taken to be a request under subsection 32C(4) as amended by Schedule 4.



 

SCHEDULE 5 — AMENDMENT OF THE NATIONAL HEALTH ACT 1953

Schedule 5 to the Bill will insert provisions in the National Health Act that harmonise it with the Health Insurance Act and the Dental Benefits Act. Amongst other things it will enable the Secretary to recover certain statutory debts due to the Commonwealth to be recovered by giving a garnishee notice and introduces new requirements for pharmacists to provide documents to substantiate claims.

The Schedule commences 1 July 2018.

Background

The National Health Act allows approved suppliers of PBS medications (approved pharmacists, which may be individuals or companies, approved medical practitioners or approved hospital authorities) to supply a pharmaceutical benefit to patients on presentation of a prescription written by a PBS prescriber.

Patients take their prescription to the approved supplier and pay a co-payment towards the cost of the PBS medication.  The amount of the co-payment depends on whether the patient is eligible for a concessional benefit and/or has reached the PBS safety net. 

The approved supplier is responsible for determining if a pharmaceutical benefit should be paid.

Most PBS claims are processed electronically, however, like the MBS, the integrity of the system relies on practitioners making correct claims, and on post-payment compliance activities. 

The Department of Health conducts post payment compliance activities to identify incorrect claiming and recover debts. 

New compliance regime

Under the National Health Act a new compliance regime is being introduced where there is a concern that an overpayment has been made as a result of a false or misleading statement.  It does not apply to claims adjustments where the approved supplier submits the claim in good faith and then contacts the Department of Human Services to correct an error.

Currently approved suppliers must only supply PBS medication with a valid prescription (unless certain exceptional circumstances exist).

The National Health (Pharmaceutical Benefits) Regulations 2017 require that approved suppliers must keep the relevant documents that relate to the supply for at least two years from the date the pharmaceutical benefit was supplied by the approved supplier. However, unlike the Health Insurance Act or Dental Benefits Act, the National Health Act does not require approved suppliers to produce these documents to prove that the claim is correct. This means there is limited capacity to undertake audits and raise debt notices against approved suppliers who are incorrectly claiming payments through the PBS.

This Bill will introduce a notice power which can require approved suppliers of PBS medications to produce the documents they are required to keep relating to the supply of the pharmaceutical benefit.

Where a pharmacist was paid for a claim that cannot be substantiated, the pharmacist is required to repay the amount.  In addition, this Bill provides that an approved supplier who cannot substantiate the amount paid in respect to the supply of a pharmaceutical benefit may also be liable for a financial administrative penalty.

Consistent with provisions under the Health Insurance Act and Dental Benefits Act, administrative penalties will only apply if the amount of the debt is more than $2,500 or higher if specified in regulations.

To encourage voluntary compliance, the Bill allows the base penalty amount of 20 per cent to be discounted by 50 per cent if the approved supplier tells the Secretary that an incorrect amount has been paid in respect of the supply of pharmaceutical benefit after a notice to produce documents has been issued but before 21 day notice period has expired.

Administrative penalties also apply to debts under the Health Insurance Act and the Dental Benefits Act and encourage practitioners to respond to requests for information promptly. Discounts apply for voluntarily reporting incorrect claims as a result of a false or misleading statement.

The National Health Act already allows for the offset of a debt against future payments of pharmaceutical benefits. This Bill allows debts arising from the application of the administrative penalty to also be offset.

In many cases overpayments would be repaid through offsetting future payments of pharmaceutical benefits paid to the approved supplier.

However, in the unlikely scenario that they are no longer operating as an approved supplier, the Bill introduces garnishee arrangements to allow payments to be sought from third parties who owe or may later owe money to the debtor.  This is consistent with amendments in this Bill that apply to the Health Insurance Act and Dental Benefits Act.

The garnishee power will only be exercised after all rights for review have expired.  The Secretary will contact the debtor and provide notice at least 30 days in advance prior to issuing a garnishee notice.  A person may also apply to the Administrative Appeals Tribunal for a review of decision by the Secretary to give a garnishee notice.

Item 1

This item inserts a definition of civil penalty provision in s 4(1) of the National Health Act. The effect of the new definition is that in the National Health Act, unless the contrary intention appears, the term civil penalty provision will have the same meaning as in the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act).

The item will also insert a definition of Regulatory Powers Act which is defined to mean the Regulatory Powers (Standard Provisions) Act 2014 .

 

Item 2

This item inserts a new heading before section 99AA of the National Health Act for Division 3AA, dealing with the recovery of payments for the supply of pharmaceutical benefits.

Item 3

This item amends paragraph 99AA(2)(a) by inserting a reference to ‘or purportedly supplied’ after ‘is supplied’. This amendment is intended to enable the Commonwealth to recover an amount paid by the Commonwealth in respect of a purported supply of a pharmaceutical benefit to the person, for example, where an approved supplier claims that he or she supplied a pharmaceutical benefit to a person, but did not in fact do so.

Item 4

This item amends paragraph 99AA(2)(b) by inserting a reference to ‘or purportedly supply’ after ‘supply’. This amendment is intended to enable the Commonwealth to recover an amount paid by the Commonwealth in respect of a purported supply of a pharmaceutical benefit to the person, for example, where an approved supplier claims that he or she supplied a pharmaceutical benefit to a person, but did not in fact do so.

Item 5

Item 5 inserts, after section 99AB, new sections 99ABA, 99ABB, 99ABC, 99ABD, 99ABE, 99ABF, 99ABG, 99ABH, 99ABI, 99ABJ, 99ABK and 99ABL, in the National Health Act.

Section 99ABA Recovery of amounts for false or misleading statements

New section 99ABA of the National Health Act allows the Commonwealth to recover excess amounts paid, purportedly by way of benefit or payment under that Act, where the payment was made as a result of a false or misleading statement. It is broadly similar to section 56 of the Dental Benefits Act and subsection 129AC(1) of the Health Insurance Act.

Subsection 99ABA(1) provides that section 99ABA will apply if:

·          an amount is paid purportedly by way of benefit or payment; and

·          as a result of the making of a false or misleading statement, the amount paid exceeds the amount (if any) that should have been paid.

Subsection 99ABA(2) of the National Health Act provides that the excess amount is recoverable as a debt due to the Commonwealth from the person who made the statement (or on whose behalf the statement was made), or from the estate of that person.

Subsection 99ABA(3) clarifies that subsection 99ABA(2) applies whether or not the amount was paid to the person who made the statement, and whether or not any person has been convicted of an offence in relation to the making of the statement.

Section 99ABB Notice to produce documents

Section 99ABB introduces a new power that enables the Secretary to require an approved supplier to substantiate a claim for a pharmaceutical benefit by producing a copy of a document that an approved supplier is required to keep and which is specified in a written notice given by the Secretary. This would include, for example, an electronic prescription, a paper-based prescription, a medication chart prescription and a repeat authorisation form.

This provision will strengthen the Department’s capacity to verify that an approved supplier was entitled to receive payment in respect of the supply of a pharmaceutical benefit.

Subsection 99ABB(1) specifies that the new provision applies in the following circumstances:

·          an amount is paid to a person by the Commonwealth in respect of the supply, or purported supply, of a pharmaceutical benefit;

·          the person was an approved pharmacist, approved medical practitioner or approved hospital authority when the amount was paid; and

·          the person is required under the National Health Act, the regulations made under the National Health Act or another legislative instrument under the National Health Act, to keep a document relating to the supply of the pharmaceutical benefit.

Subsection 99ABB(2) provides for the Secretary to give a written notice to the person requiring the person to produce the document, or copy of the document, to the Secretary.

Subsection 99ABB(3) provides that the person must produce the document or copy to the Secretary within the period specified in the notice, which must not be less than 21 days.

Subsection 99ABB(4) provides that if the person fails to comply with a notice to produce the document or copy to the Secretary, the amount paid to the person in respect of the supply, or purported supply, of the pharmaceutical benefit is recoverable as a debt due to the Commonwealth from the person or the estate of the person.

Subsection 99ABB(5) provides that subsection 99ABB(4) does not apply if the person satisfies the Secretary that the non-compliance with a notice to produce under subsection 99ABB(2) is due to circumstances beyond the person’s control. This is intended to address circumstances such as documents having been destroyed during a natural disaster, or some other circumstance not caused by the person.

Section 99ABC Notice of decision to claim amounts as debts

Section 99ABC(1) of the National Health Act provides that a person must be advised in writing when the Secretary decides to claim an amount that is owed to the Commonwealth under subsection 99ABA(2) (for the recovery of excess amounts paid as a result of a false or misleading statement) or subsection 99ABB(4) (for repayment of an amount equal to the amount paid by the Commonwealth with respect to the supply of a pharmaceutical benefit where the approved supplier fails to comply with a notice to produce a document or copy of a document). This notice must include the reasons for the decision to claim the amount as a debt and information on how the person can seek internal review of the decision under new section 99ABD. The effect of s 25D of the Acts Interpretation Act is that the reasons must set out the findings on materials questions of fact and refer to the evidence or other material on which those findings were based.

Subsection 99ABC(2) provides that the notice of decision under subsection 99ABC(1) may include notice of other decisions referred to in section 99ABC that are also required to be given to the person or estate.

Subsection 99ABC(3) provides that the validity of the decision is not affected   by a failure to comply with the requirements in subsection 99ABC(1). However until such time as the person is advised by the Secretary of the intention to claim an amount as a debt due to the Commonwealth, the debt notice for that amount cannot be issued to the person. This is because, under subsection 99ABC(4) the Secretary must wait 28 days after giving the person written notice of the decision under subsection  99ABC(1) before serving the notice which claims the amount as a debt. This enables the person or estate who is affected by the decision to consider the outcome and, if dissatisfied with the decision, to seek a review of the decision under new section 99ABD of the National Health Act.

Subsection 99ABC(5) provides that subsection 99ABC(4) does not apply if the person or estate, in the form approved in writing by the Secretary, waives the person’s right to review of the decision to claim the amount as a debt.

Section 99ABD Review of decisions to claim amounts as debts

Section 99ABD of the National Health Act gives a person or an estate the right to seek internal review of a decision to claim an amount as a debt to the Commonwealth. Subsection 99ABD(1) provides that where the Secretary makes a decision to claim an amount recoverable under subsections 99ABA(2) or 99ABB(4) as a debt due to the Commonwealth from a person or an estate, that person or estate may seek internal review of the decision. A request for internal review must be made in the form approved in writing by the Secretary.

Subsection 99ABD(2) clarifies that subsection 99ABD(1) does not apply if the person or estate has notified the Secretary that the person waives the person’s right to review of the decision to claim the amount as a debt. This notice must be in the form approved in writing by the Secretary.

Subsection 99ABD(3) provides that when making an application for review under subsection 99ABD(1), the person or estate may provide additional information to the Secretary, in order to wholly or partly substantiate the amount paid in respect of the pharmaceutical benefit.

The person must apply for review within 28 days following notification of the decision (subsection 99ABD(4)). Following application by the person, the Secretary will review the decision and either confirm, revoke or vary it (subsection 99ABD(5)). The Secretary must write to the person or estate with the outcome of the decision (the reconsidered decision ) on the review (within 28 days of the review application (subsection 99ABD(6)).  Subsection 99ABD(7) provides that a failure to complete the review within 28 days does not invalidate the review. 

Subsection 99ABD(8) provides that a person can apply to the Administrative Appeals Tribunal for review of a reconsidered decision made by the Secretary about whether to claim an amount as a debt under subsection 99ABD(5). Subsection 99ABD(9) clarifies that an application for review of a reconsidered decision under subsection 99ABD(8) may only be made if a garnishee notice is given under subsection 99ABJ(2) in relation to the debt to which the reconsidered decision relates.

Internal review by the Secretary is a quick and inexpensive way to re-examine a decision, while the availability of external merits review in addition to internal review is an important accountability measure for administrative decisions made under Commonwealth legislation.

Subsection 99ABD(10) provides that despite paragraph 29(1)(d) of the A dministrative Appeals Tribunal Act 1975 (which requires that an application to the Administrative Appeals Tribunal for a review of certain decisions must be lodged within the prescribed time), if a garnishee notice is given under subsection 99ABJ(2) in relation to the debt to which the reconsidered decision relates, then an application to the Administrative Appeals Tribunal for review of the reconsidered decision must be made within the period of 28 days after the day the garnishee notice is given. This provision is intended to make it clear that where a garnishee notice is given in relation to a decision to claim an amount as a debt, the time period for seeking review of a reconsidered decision in the Administrative Appeals Tribunal commences from the date the garnishee notice was given, not the date the person received notice of a decision to claim an amount as a debt under subsection 99ABC(1).

Subsection 99ABD(11) provides, for the avoidance of doubt, that a decision under subsection 99ABD(1) may only be reviewed by the Secretary under subsection 99ABD(5) once. It is also provides that a reconsidered decision will take effect on the day specified in the reconsidered decision or, if a day is not specified, on the day on which the reconsidered decision is made.

Section 99ABE Liability for administrative penalty

Under section 99ABE a person is liable for an administrative penalty in respect of the supply or purported supply of a pharmaceutical benefit, if:

·          the Secretary has served a notice on the person claiming an amount as a debt due to the Commonwealth;

·          the total amount consists of, or includes an amount in respect of the benefit recoverable as a debt to the Commonwealth; and

·          the total amount claimed in the notice is more than $2,500 (or a higher amount if prescribed by the regulations).

Section 99ABF Amount of administrative penalty

New section 99ABF of the National Health Act describes how the amount of administrative penalty is calculated. Subsection 99ABF(2) provides that the administrative penalty is 20 per cent of the recoverable amount. This penalty is referred to as the base penalty amount .

Subsection 99ABF(3) provides that a person’s base penalty amount is reduced by 50 per cent if the Secretary gives the person a notice under subsection 99ABB(2) requiring the person to produce a document in relation to an amount paid under the National Health Act in respect of the supply, or purported supply, of a pharmaceutical benefit, and the person voluntarily tells the Secretary that the amount paid exceeded the amount that should have been paid. This information must be provided before the end of the period specified in the notice.

Section 99ABG Notice of administrative penalty and review of assessments

New section 99ABG of the National Health Act provides for the Secretary to issue a written notice to a person who the Secretary has assessed is liable for an administrative penalty. The notice of administrative penalty will include:

·          the person’s liability to pay an administrative penalty in respect of one or more pharmaceutical benefits;

·          the pharmaceutical benefit to which each administrative penalty relates;

·          the total amount of the administrative penalty (if there is more than one pharmaceutical benefit);

·          the day by which the penalty becomes due for payment (which must be at least 14 days after the notice is given); and

·          the fact that the notice is given under section 99ABG.

The notice of administrative penalty may also deal with a debt due to the Commonwealth under subsection 99ABA(2), in relation to excess amounts paid as a result of a false or misleading statement, or under subsection 99ABB(4), in relation to repayment of an amount equal to the amount paid by the Commonwealth with respect to the supply of a pharmaceutical benefit where the approved supplier fails to comply with a notice to produce a document or copy of a document.

Subsection 99ABG(3) deals with failure to pay an administrative penalty. It provides that if a person is given a notice to pay an administrative penalty under subsection 99ABG(1), and the person does not pay the penalty by the day set out in the notice as the day by which the penalty becomes due for payment, the amount set out in the notice is recoverable as a debt due to the Commonwealth from the person or the estate of the person.

Subsection 99ABG(4) provides that a person may apply to the Administrative Appeals Tribunal for review of an assessment by the Secretary of a person’s liability to pay an administrative penalty. Subsection 99ABG(5) clarifies that a person may only seek review of a decision in the Administrative Appeals Tribunal under subsection 99ABG(4) if a garnishee notice is given under in relation to the debt to which the administrative penalty relates. The availability of external merits review is an important accountability measure for administrative decisions made under Commonwealth legislation.

Subsection 99ABG(6) provides that despite paragraph 29(1)(d) of the A dministrative Appeals Tribunal Act 1975 (which requires that an application to the Administrative Appeals Tribunal for a review of certain decisions must be lodged within the prescribed time), if a garnishee notice is given under subsection 99ABJ(2) in relation to the debt to which the administrative penalty relates, then an application to the Administrative Appeals Tribunal for review of the reconsidered decision must be made within the period of 28 days after the day the garnishee notice is given. This provision is intended to make it clear that where a garnishee notice is given in relation to a decision to claim an amount as a debt, the time period for seeking review of a reconsidered decision in the Administrative Appeals Tribunal commences from the date the garnishee notice was given, not the date the person received notice of the Secretary’s assessment that the person is liable for an administrative penalty under subsection 99ABG(1).

Section 99ABH Power to obtain information relating to a debt

Section 99ABH allows the Secretary to obtain certain information from a person who owes a debt to the Commonwealth. Such a person may be requested to give information, or to produce documents that are in the person’s custody or control, concerning the person’s financial situation to the Secretary.

Subsection 99ABH(2) provides that, within 14 days of being served a notice, the person is required to notify the Secretary of an address for the purposes of giving documents to the individual relating to the debt. The penalty for contravening subsection 99ABH(2) is a maximum of 20 penalty units.  Subsection 99ABH(3) provides that if an individual has a debt, and has notified the Secretary of an address, they must notify the Secretary of a change of that address within 14 days after the change.  The penalty for contravening subsection 99ABH(3) is a maximum of 20 penalty units. 

Subsection 99ABH(4) deals with information or documents that would help the Secretary locate a person who owes a debt to the Commonwealth for which notice has been served or that is relevant to the debtor’s financial situation. The Secretary may require a person who he or she reasonably believes may have such information or documents to give the information or produce the documents to the Secretary.

Subsection 99ABH(5) provides that a notice under subsection 99ABH(1) or (4) must specify how the person is to give the information or produce the document, within what period of time (which must be at least 14 days after notice is given) and that the notice is given under subsection 99ABH(1) or (4) as the case requires.

Subsection 99ABH(6) provides that a person must not fail to give information or produce a document as required by section 99ABH. The penalty for contravention is a maximum 20 penalty units. ‘Penalty unit’ is defined by s 2B of the Acts Interpretation Act. The effect of that definition is that penalty unit, including in relation to a civil penalty provision, has the meaning given by s 4AA of the Crimes Act 1914.

Subsection 99ABH(7) provides that subsection 99ABH(2), (3) or (6) does not apply if the person has a reasonable excuse for refusing or failing to comply with a notice.

The note reminds the reader that, a person bears an evidential burden in relation to the matter in subsection 99ABH(7).

Section 99ABI Amounts recoverable once only

New section 99ABI of the National Health Act provides, for the avoidance of doubt, that an amount can only be recovered from a person or an estate of a person, in respect of the supply or purported supply of a pharmaceutical benefit under Division 3AA once.

Section 99ABJ Garnishee notices

Under section 99ABJ of the National Health Act, the Secretary may give a garnishee notice to a third party who owes or may later owe money to the person from whom the amount is recoverable (or from the estate of that person). The section sets out when a third party will be regarded as owing money, how much is payable under the notice, when an amount must be paid, when the debtor must be notified, when amounts can be set off and when a third party is indemnified for the payment. Section 99ABJ also provides for circumstances where a garnishee notice will be issued to the Commonwealth, State or Territory and provides that the section binds the Crown. Subsection 99ABJ(13) provides that this section does not imply that the Crown is, or is not, bound by any other provision of this Act.

Subsection 99ABJ(14) provides that a person may apply to the Administrative Appeals Tribunal for review of a decision by the Secretary to give a garnishee notice.

The giving of a garnishee notice under subsection 99ABJ(2) will also have the effect of making review by the Administrative Appeals Tribunal available in relation to:

·          a reconsidered decision made by the Secretary under subsection 99ABD(5) about whether to claim an amount as a debt (subsections 99ABD(7)-(9));

·          an assessment by the Secretary of a person’s liability to pay an administrative penalty (subsections 99ABG(4)-(6)).

That is, a person or estate may only apply to the Administrative Appeals Tribunal for review of a reconsidered decision, or an assessment of liability to pay an administrative penalty, if a garnishee notice is given under subsection 99ABJ(2). The application for review in each case must be made within the period of 28 days after the garnishee notice is given.

Section 99ABK Failure to comply with garnishee notice

Section 99ABK of the National Health Act includes an offence provision with a penalty of maximum 20 penalty units if a person fails to comply with a garnishee notice. Subsection 99ABK(2) provides that a court may also order the person to pay the Commonwealth an amount not exceeding the amount specified in the notice given under section 99ABJ. The penalty for contravening subsection 99ABK(1) is 20 penalty units.

Section 99ABL Recoverable amounts may be set off

Subsection 99ABL(1) provides that this new section applies when an amount is recoverable from a person as a debt due to the Commonwealth under subsection 99ABA(2), 99ABB(4) or 99ABG(3), and any review rights under section 99ABD have been exhausted or have expired.

Section 99ABL(2) allows the Secretary, on behalf of the Commonwealth, to impose offsetting arrangements to recover amounts from a person or estate where there is a recoverable amount, and an amount becomes payable to that person under the National Health Act. This section is intended to improve debt recovery rates.

Subsection 99ABL(3) clarifies that an amount set off under subsection 99ABL(2) may be equal to or less than 100 per cent of the payable amount, and that the payable amount is taken to have been paid in full to the person or estate if the payable amount, less any amount set off under section 99ABL(3), is paid to the person or estate.

Item 6

This item inserts section 134D after section 134C.

Subsection 134D(1) triggers the civil penalty provisions in Part 4 of the Regulatory Powers Act, which means that each of the civil penalty provisions in the National Health Act is enforceable under that Part of the Regulatory Powers Act.

Part 4 of the Regulatory Powers Act creates a framework for the use of civil penalties to enforce civil penalty provisions. Subsection 78(2) of the Regulatory Powers Act states that, in order for Part 4 of the Regulatory Powers Act to operate, a civil penalty provision must be made enforceable under that Part by another Act (a triggering Act). When a triggering Act applies Part 4 of the Regulatory Powers Act, it must identify the authorised person or persons and relevant court or courts that may exercise powers under that Part (see sections 80 and 81 of the Regulatory Powers Act). The triggering Act must also express whether the authorised person may delegate his or her powers and functions in relation to the civil penalty provisions of the triggering Act (see subsection 80(3) of the Regulatory Powers Act).

New subsection 134D(2) of the National Health Act identifies the Secretary as the authorised applicant in relation to the civil penalty provisions of the National Health Act. It also identifies the Federal Court of Australia, the Federal Circuit Court of Australia and a court of a State or Territory that has jurisdiction in relation to matters arising under the National Health Act as a relevant court for the purposes of Part 4 of the Regulatory Powers Act.

Item 6 also inserts new section 134E of the National Health Act. The section provides that no State or Territory law or general law may operate to prevent a person from giving information, producing a document or giving evidence that the person is required, or authorised, to give or produce under a provision purposes of the National Health Act.

Item 7 Application provision

This item inserts an application provision which provides that:

·          section 99ABA, relating to the recovery of excess amounts paid as a result of a false or misleading statement, will apply in relation to amounts paid, purportedly by way of benefit or payment, on or after the commencement of this item.

·          section 99ABB will operate prospectively to enable the Secretary to require the production of documents relating to the supply of a pharmaceutical benefit only if the documents are required to be kept on or after the commencement of this item.

·          section 99ABH, which deals with the Secretary’s power to obtain information relating to a debt, will apply in relation to debts for which notice is served on or after the commencement of this item regardless of whether the debt became due to the Commonwealth before, on or after the commencement of this item.

·          sections 99ABJ and 99ABK relating to the giving of garnishee notices and the failure to comply with garnishee notices will apply to eligible recoverable amounts on or after the commencement of this item regardless of whether the debt became due to the Commonwealth before, on or after the commencement of this item.

·          section 99ABL, relating to the offsetting of recoverable amounts, will apply in relation to debts for which notice has been served on or after the commencement of this item regardless of whether the debt became due to the Commonwealth before, on or after the commencement of this item.

·          section 134E will operate prospectively to information given, documents produced or evidence given in response to a garnishee notice on or after the commencement of this item.