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



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ISSN 1328-8091

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BILLS DIGEST NO. 124, 2017-18 20 JUNE 2018

Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018 Kaushik Ramesh Law and Bills Digest Section

Contents

The Bills Digest at a glance .............................................. 3

Purpose of the Bill ........................................................... 4

Commencement details................................................... 4

Structure of the Bill ......................................................... 4

Background ..................................................................... 4

Health Benefit Compliance ......................................... 4

Proposed amendments ............................................... 5

Committee consideration ................................................ 6

Senate Community Affairs Legislation Committee ..... 6 Position of major interest groups..................................... 6

Responses to the consultation paper ......................... 6

Compacts ..................................................................... 6

Financial implications ...................................................... 7

Statement of Compatibility with Human Rights................ 7

Parliamentary Joint Committee on Human Rights ......................................................................... 8

Key issues and provisions ................................................ 8

Debt Recovery ............................................................. 8

Compulsory Offsetting .............................................. 8

Garnisheeing of Funds ............................................... 9

Shared Debt Determinations (Organisational Billing) ........................................................................ 9

Power to obtain information relating to a debt ..... 10 Professional Services Review .................................... 11

Date introduced: 23 May 2018

House: House of Representatives

Portfolio: Health

Commencement: Schedule 1 commences on 1 July 2019. Schedules 2 to 5 commence on 1 July 2018.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at June 2018.

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Improving consistency of administrative arrangements ............................................................ 11

Record keeping requirements ................................. 11

Administrative Penalties ......................................... 12

Concluding comments ................................................... 13

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The Bills Digest at a glance The Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018 (the Bill) arises out of the Government’s policy objective of increasing compliance under and protecting the integrity of the Medicare Benefits Schedule (MBS), the Child Dental Benefits Schedule (CDBS) and the Pharmaceutical Benefits Scheme (PBS). The Bill implements the 2017-18 Budget Measure Guaranteeing Medicare—Medicare Benefits Schedule—improved compliance.

Most significantly, the Bill introduces new debt recovery powers that allow the Commonwealth to offset Medicare payments to those practitioners who are in debt and, for those who do not bulk-bill, allows the Commonwealth to tap into funds that are owed to practitioners who are in debt. The Bill also recognises that compliance debts may sometimes need to be shared between a practitioner and their employer, and introduces new measures to this effect that account for organisational billing practices. In addition, the Bill standardises administrative arrangements across the three frameworks, including those requirements relating to record keeping and administrative penalties.

The proposed amendments are likely to have broad stakeholder support as they are backed by compacts made between the Minister for Health and the Australian Medical Association and the Royal Australian College of General Practitioners. The bulk of the proposed amendments commence on 1 July 2018, however the proposed amendments relating to organisational billing commence on 1 July 2019 to allow for additional consultation.

Specifically the Bill achieves its policy objectives by amending the Health Insurance Act 1973 (which provides for the MBS) the Dental Benefits Act 2008 (which provides for the CDBS) and the National Health Act 1953 (which provides for the PBS).

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Purpose of the Bill The purpose of the Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018 (the Bill) is to amend the Health Insurance Act 1973 (HIA), the Dental Benefits Act 2008 (DBA) and the National Health Act 1953 (NHA) to:

• introduce new and standardise existing debt recovery powers across the three Acts

• standardise administrative arrangements across the three Acts

• make other minor clarifications and corrections to the legislation.

Commencement details Clauses 1-3 of the Bill commence on the day of Royal Assent. The bulk of the proposed amendments (Schedules 2-5) commence on 1 July 2018. Schedule 1, which amends the HIA to create shared debt determination provisions, commences on 1 July 2019. The Explanatory Memorandum explains that this delayed commencement date is to allow for additional consultation on the administrative aspects of the new scheme.1

Structure of the Bill The Bill contains five schedules as follows:

• Schedule 1 amends the HIA to give the Chief Executive Medicare (CEO) the power to make a shared debt determination

• Schedule 2 amends the HIA in order to expand the scope of the Professional Services Review’s oversight

• Schedule 3 amends the HIA to introduce new debt recovery arrangements and to amend record-keeping requirements and administrative penalties

• Schedule 4 amends the DBA to introduce new debt recovery arrangements and to amend record-keeping requirements and administrative penalties

• Schedule 5 harmonises the NHA with the HIA and the DBA, introduces new debt recovery arrangements and creates a new compliance regime.

Background

Health Benefit Compliance As part of the 2017-18 Federal Budget, the Department of Health’s portfolio budget statement outlined a ‘Health Benefit Compliance’ program aimed at supporting the integrity of health benefit claims under Medicare services.2 Specifically, the portfolio budget statement outlined the following with regards to this program:

In a further move to improve Medicare’s fiscal sustainability, in 2017-18, legislation will be introduced to strengthen compliance, including by increasing the Government’s debt recovery powers. Currently, only 20 per cent of Medicare debts through inappropriate claiming are recovered. This measure will generate estimated net savings of $103.8 million to be reinvested in Medicare services.

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The name of the specific 2017-18 Budget measure is ‘Guaranteeing Medicare - Medicare Benefits Schedule - improved compliance’ and includes the aims of improving consistency around record

1. Explanatory Memorandum, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, p. 9. 2. Australian Government, Portfolio budget statements 2017-18: budget related paper no. 1.10: Health Portfolio, p. 106. 3. Ibid.

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keeping requirements, administrative penalties and requirements to produce documents along with introducing debt recovery measures.4

On its ‘Health Professional Compliance’ website, the Department of Health notes the main health payment and services programs as being the Medicare Benefits Schedule (MBS), the Pharmaceutical Benefits Scheme (PBS) and the Child Dental Benefits Schedule (CDBS).5

Proposed amendments The Department of Health sought input on proposed amendments to the HIA, the DBA and the NHA, aimed at achieving this budget measure, in a consultation paper.6 The consultation paper noted the reasoning for the proposed changes as follows:

The nature of health practice is changing from small owner-operated medical practices to larger business enterprises. However, the current legislative framework is focused on individual providers, rather than the corporate entities and organisations that are increasingly billing Medicare on their behalf.

Providers under the MBS continue to receive full payment of benefits while they have outstanding debts arising from incorrect claiming, inappropriate practice and in a very small number of cases, fraud. Compulsory offsetting powers under the National Health Act 1953 and the Dental Benefits Act 2008 allow such debts to be compulsorily recovered for PBS and CDBS debts. It is proposed that compulsory offsetting of up to 20 per cent of future payments be applied to the MBS.

Other inconsistencies among the three Acts mean that doctors and other MBS providers, pharmacists and dentists face different accountabilities and penalties for similar actions. These inconsistencies include record keeping requirements, administrative penalties and requirements to produce documentation to support claiming.

The proposed legislative changes are to harmonise compliance and administrative arrangements across MBS, PBS and CDBS to ensure consistency in approach for pharmacists, dentists, doctors and other health providers. 7

The consultation paper put forward the following proposals that would be achieved by way of amending the HIA, the DBA and the NHA:

• reflect the reality of practices, hospitals and corporations engaging in billing on behalf of individual providers

• allow the Department of Health to offset up to 20 per cent of future MBS payments to help recover debt owing to Medicare

• streamline administrative processes associated with billing and compliance.8

Stakeholder submissions in response to the consultation paper are outlined in the ‘Position of major interest groups’ section below.

The proposed changes outlined in the consultation paper and the above Budget measure form the basis of the proposed amendments put forward in the Bill.

4. Department of Human Services (DHS), ‘Guaranteeing medicare — Medicare Benefits Schedule — improved compliance - Budget 2017-18’, DHS website, updated 27 August 2017. 5. Department of Health (DoH), ‘Health Professional Compliance’, DoH website, updated 6 February 2018. 6. DoH, Consultation paper: improving Medicare compliance , DoH, Canberra, September 2017. 7. Ibid., p. 2.

8. Ibid., pp. 3-4.

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Committee consideration

Senate Community Affairs Legislation Committee The Bill was referred to the Senate Community Affairs Legislation Committee. The Committee determined by unanimous decision that there were no substantive matters in the Bill that required examination.9

Position of major interest groups

Responses to the consultation paper While there is a lack of stakeholder comments on the Bill itself, some of the submissions in response to the consultation paper discussed above are publically available. As already noted, the proposals in the consultation paper largely form the basis of the proposed amendments in the Bill. The ‘Key issues and provisions’ section below looks at some of the key amendments in the Bill in more detail.

The Royal Australian College of General Practitioners (RACGP) was largely supportive of the proposals. The RACGP supported the organisational billing proposal, noting that ‘members have long raised concerns regarding the focus on the billing practices of individual providers, as opposed to practices who often bill on their behalf.’10 The RACGP was also broadly supportive of the compulsory offsetting proposal, but questioned the rationale behind the ‘20 percent’ rate.11

The Australian Association of Practice Management (AAPM) is a peak body that supports ‘effective Practice Management in the healthcare profession’.12 AAPM supported the compulsory offsetting proposal in principle, noting that practical issues may arise with reconciliations in practice management software when MBS payments are withheld.13 However AAPM seemed broadly unsupportive of the shared debt determination proposal, noting in its submission:

It is still important that the individual provider is required to take responsibility for their billings as the patient assigns their rights to the individual practitioner, not to the Organisation. The liability should remain with the doctor as they determine the charge. No other staff should determine the doctors charge. We are concerned that the liability will automatically shift to the Organisation if the debt cannot be claimed from the individual.

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Compacts The Minister for Health, Greg Hunt, noted the following in his second reading speech when introducing the Bill:

The amendments are supported by the government's compacts with the Australian Medical Association and the Royal Australian College of General Practitioners. I thank them for their help and support in the development of these amendments. These compacts reflect shared principles that support a stronger,

9. Senate Community Affairs Legislation Committee, Consideration of time critical Bills, 2018, The Senate, 5 June 2018, p. 1. 10. B Seidel, Consultation paper: improving Medicare compliance (RACGP submission), The Royal Australian College of General Practitioners, Melbourne, 11 October 2017, p. 1. 11. Ibid., p. 2. 12. Australian Association of Practice Management Ltd (AAPM), ‘About AAPM’, AAPM website, 2018. 13. AAPM, Consultation paper on improving Medicare compliance: AAPM Submission, October 2017, AAPM, Melbourne,

October 2017, p. 4. 14. Ibid., p. 2.

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sustainable health system, including improved compliance processes to ensure Medicare overpayments are detected and recovered. 15

The compact between the Minister for Health and the Australian Medical Association (AMA) notes that the AMA supports measures aimed at greater compliance in the area of health benefit payments:

In terms of accountability, changes to compliance arrangements which provide the ability to investigate billing by organisations, and to compulsorily offset a portion of future MBS payments against MBS debt, are also supported. 16

The compact with the RACGP contains similar wording:

The RACGP acknowledges that Medicare billing is often directed by the organisation/practice, as opposed to the individual practitioner. Therefore, changes to compliance arrangements, which encourage quality practice and provide the ability to investigate billing by both practitioners and organisations, are supported by the RACGP.

The RACGP also supports changes to compliance mechanisms that compulsorily offset a portion of future MBS payments against MBS debt for practitioners. 17

The Minister for Health reiterated this industry support for the proposed amendments in the Bill:

Ultimately, this follows from the government's agreements with the sector. This change has been strongly supported by the medical sector because it ensures that the vast bulk, the overwhelming majority, of extraordinarily capable Australian doctors and the medical workforce will be supported and that the very, very small number who have done the wrong thing, either inadvertently or intentionally, will have the responsibility to make redress. At the end of the day, though, what we are doing is ensuring that there is a long-term absolute guarantee about the future of Medicare and the PBS.

18

Financial implications The Financial Impact Statement in the Explanatory Memorandum states that the Bill will achieve savings of $103.8 million over four years.19

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible, as any limitations on human rights are reasonable, necessary and proportionate to achieving Medicare compliance and improving healthcare for Australians.20

15. G Hunt, ‘Second reading speech: Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018’, House of Representatives, Debates, 23 May 2018, p. 2. 16. Australian Government and the Australian Medical Association, A shared vision for Australia's health system: principles agreed to by the Government and the Australian Medical Association (AMA), n.p., 2017-18, p. 2. 17. Australian Government and the Royal Australian College of General Practitioners (RACGP), Strengthening Medicare:

agreement with the Royal Australian College of General Practitioners (RACGP) on behalf of general practitioners, n.p., 2017-18, p. 3. 18. G Hunt, ‘Second reading speech’, op. cit., p. 3. 19. Explanatory Memorandum, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, p. 2.

20. The Statement of Compatibility with Human Rights can be found at pages 3-7 of the Explanatory Memorandum to the Bill.

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Parliamentary Joint Committee on Human Rights At the time of writing this Digest, the Parliamentary Joint Committee on Human Rights had not considered the Bill.

Key issues and provisions

Debt Recovery The Bill introduces measures to better recover debts owed to the Commonwealth as a result of excess payments made under the MBS, PBS and CDBS as a result of making a false or misleading statement. This is one of the key features of the Bill, and as highlighted in the ‘Background’ section, arose from measures originally announced in the 2017-18 Budget.

Current section 129AC of the HIA outlines that where payments or benefits paid under that Act exceed the amount that should have been paid as a result of a false or misleading statement, then this excess is recoverable as a debt due to the Commonwealth. The same section prescribes that if a person does not produce a document in respect of a professional service as required by a notice issued under section 129AAD, then the benefit paid in respect of the service becomes a debt owed to the Commonwealth.

Similar provisions exist in the DBA with regards to debts owed to the Commonwealth in relation to CDBS payments (section 56 and 56A). The NHA provides for unauthorised payments and incorrectly paid advances under the PBS to become debts to the Commonwealth (sections 99AA and 99AB). Schedule 5 of the Bill creates provisions similar to the HIA and the DBA in the NHA, i.e. debts to the Commonwealth resulting from specifically making a false or misleading statement.

Debt recovery is one of the key policy purposes of the Bill. The Bill creates debt recovery mechanisms in the form of compulsory offsetting and garnisheeing arrangements.

Compulsory Offsetting The Bill introduces the ability for the Commonwealth to offset payments under the MBS in order to recover a debt owing to it. As stated in the Bill’s Explanatory Memorandum:

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. 21

Item 31 of Schedule 3 of the Bill inserts proposed section 129AEF into the HIA, this proposed section allows for amounts owing to the Commonwealth to be ‘set off’ against amounts payable under the HIA. Proposed subsection 129AEF(3) caps the amount to be set off at 20 per cent of the payable amount unless the CEO and the person agree to a higher percentage.

In effect this amendment means that Medicare can withhold up to 20 per cent of payments under the MBS in order to pay off debts owed by practitioners to the Commonwealth. Provisions already exist in the NHA and DBA to allow for such compulsory offsetting,22 however Schedule 5 creates offsetting provisions in the NHA with respect to debts arising from false and misleading statements specifically.

21. Explanatory Memorandum, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, p. 26. 22. Section 58 of the DBA and section 99AA and 99AB of the NHA.

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Garnisheeing of Funds The Bill will also allow for the garnisheeing of certain funds to allow for debts owed to the Commonwealth under the MBS, PBS and CDBS to be repaid. Item 31 of Schedule 3 of the Bill inserts proposed section 129AEG into the HIA to allow the CEO to issue a garnishee notice to a person who owes or may later owe money to a person who has a debt to the Commonwealth. Item 12 of Schedule 4 of the Bill inserts a similar provision (proposed section 58AA) into the DBA and item 5 of Schedule 5 inserts a similar provision (proposed section 99ABJ) into the NHA.

The Bill thereby strengthens the Commonwealth’s ability to recover debts under the MBS, the PBS and the CDDS. The Explanatory Memorandum explains the rationale of this mechanism in relation to the HIA amendments:

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.

23

The second reading speech accompanying the Bill makes clear that the garnisheeing mechanism is considered a last resort and an incentive to repay debts owing to the Commonwealth:

An offset or garnishee arrangement will only apply if all rights for review have expired and the practitioner does not agree to a repayment plan within 90 days. These new arrangements will start on 1 July 2018. Indeed, it is my hope that the very fact of these new arrangements will mean that they do not have to be brought into action.

24

All three Acts will be amended so as to allow the possibility of reviewing a decision to give a garnishee notice in the Administrative Appeals Tribunal (AAT) (see item 31 of Schedule 3, item 12 of Schedule 4 and item 5 of Schedule 5).

Shared Debt Determinations (Organisational Billing) Schedule 1 of the Bill introduces the power for the CEO to make shared debt determinations under the HIA. These amendments effectively allow for debt owed to the Commonwealth under the HIA to be shared. The Government’s rationale for such amendments is explained in the Minister’s second reading speech:

The current legislation places all of the liability for Medicare claiming against an individual practitioner, except in clear cases of fraud. This reflects the old business model of single-doctor practices. However, in contemporary practice there has been an increase in the role of practices, corporate entities and hospitals in the billing of MBS services on behalf of individual practitioners.

The amendments will introduce a scheme where, if there is an employment or other contractual relationship, the practitioner and their employer (or other related party) will each be responsible for the repayment of part of the compliance debt. 25

The Explanatory Memorandum states:

from 1 July 2019, [the Bill will] 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. 26

23. Explanatory Memorandum, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, p. 26. 24. G Hunt, ‘Second reading speech’, op. cit., p. 2. 25. Ibid., p. 3.

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Item 14 of Schedule 1 inserts proposed section 129ACA (making of a shared debt determination) and proposed section 129ACB (review of decisions relating to shared debt determinations) into the HIA. Proposed section 129ACA allows for a debt to the Commonwealth under the HIA to be claimed or claimed in part from a secondary debtor. Proposed paragraph 129ACA(2)(b) provides that the secondary debtor must have employed or otherwise engaged the primary debtor to render professional services in respect of which the original Commonwealth payment was made, or had an arrangement or agreement with the primary debtor relating to those professional services, or is in a class of person prescribed under a legislative instrument made by the Minister (see proposed paragraph 129ACA(9)(a)).

Proposed paragraph 129ACA(2)(c) sets out criteria that the CEO should have regard to when deciding whether to make a shared debt determination; this criteria includes whether the secondary debtor could have controlled or influenced the circumstances that led to the making of the false or misleading statement to which the debt relates and whether the secondary debtor directly or indirectly obtained a financial benefit from the making of the false and misleading statement.

Under the new regime, this secondary debtor will normally be the employer of the medical practitioner:

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).

27

The Explanatory Memorandum notes that the intention is that a legislative instrument will stipulate the amount of debt apportionment where a contractual arrangement is identified between a secondary and primary debtor.28

Power to obtain information relating to a debt All three Acts will be amended in a similar fashion to give the CEO or the Secretary of the Department of Health, as appropriate, power to obtain information in relation to a debt.

For example, proposed section 56H under item 11 of Schedule 4 to the Bill gives the CEO power to obtain certain information relating to a debt under the CDBS, such as an address and information and documents relating to the person’s financial situation. Proposed subsection 56H(4) also requires a person to give information or a document that would help locate another person who owes the prescribed debt to the Commonwealth. The proposed section creates a civil penalty of 20 penalty units ($4,200) for an individual or 100 penalty units ($21,000) for a body corporate for failing to comply with a notice requiring the person to provide the requested documents or information (proposed subsection 56H(6)). This is another mechanism that the Bill uses to strengthen the Commonwealth’s debt recovery powers in this area.

26. Explanatory Memorandum, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, p. 1. 27. Ibid., p. 13. 28. Ibid., p. 9.

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Professional Services Review Schedule 2 of the Bill amends provisions of the HIA relating to the Professional Services Review (PSR). The Explanatory Memorandum outlines the function of the PSR:

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.

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Schedule 2 clarifies the persons whom the PSR can review. In particular, items 1,2,3,5 and 18 expand the scope of PSR related provisions to capture persons where there is no formal employment relationship through use of the words ‘or otherwise engaged’. The rationale for these amendments is that ‘practitioners are increasingly employed as contractors’.30

Improving consistency of administrative arrangements One of the proposals put forward in the Department of Health consultation paper involved ‘changes to harmonise administrative arrangements across the three Acts so that the same standards and administrative penalties apply to all health providers, including pharmacists and dentists.’31 The Explanatory Memorandum notes specifically that record keeping requirements to produce and retain documents relating to claims will be standardised across all three professions (along with the associated penalties).32 AAPM made comments in its submission that it ‘agrees that bringing all health care professionals under the same set of regulations is also very reasonable.’33

Record keeping requirements The Bill attempts to standardise and clarify record keeping requirements across the MBS, PBS and CDBS frameworks. The most significant of the record keeping amendments are those that will affect the MBS. Schedule 3 of the Bill contains several proposed amendments largely aimed at introducing a uniform two=year record keeping period into the HIA. The Explanatory Memorandum summarises the changes to record keeping requirements under the HIA as follows:

Current Law New Law

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

29. Ibid., p. 19. 30. Ibid.

31. DoH, Consultation paper: improving Medicare compliance, op. cit., p. 4. 32. Explanatory Memorandum, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, p. 1. 33. AAPM, Consultation paper on improving Medicare compliance: AAPM Submission, October 2017, op. cit., p. 5.

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Current Law New Law

months 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

Source: Explanatory Memorandum, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, p. 25.

Administrative Penalties Schedule 4 of the Bill introduces an administrative penalty scheme to the DBA similar to the scheme that already exists under the HIA. Item 11 of Schedule 4 introduces this new administrative penalty scheme by adding proposed sections 56E, 56F, 56G and 56H into the DBA.

Proposed section 56E stipulates when a person is liable for an administrative penalty, namely if the person is served a notice by the CEO that they have a debt owing to the Commonwealth and if this debt is more than $2,500. Proposed subsection 56F(2) outlines that an administrative penalty for a dental service is 20 per cent of the recoverable debt to the Commonwealth. However, proposed subsection 56F(3) provides that this base penalty amount is reduced by a stipulated percentage in certain circumstances (for example the base penalty will be reduced by 100 per cent if the person voluntarily informs Medicare of an overpayment prior to being contacted).

Proposed section 56G outlines the requirements of the written notice that the CEO must provide to a person liable for an administrative penalty. Proposed subsections 56G(3) and (4) allow a person to apply to the AAT for a review of an administrative penalty assessment if a garnishee notice is given under proposed subsection 58AA(2) (similar amendments will be introduced to the administrative penalty scheme in the HIA, see item 29 of Schedule 3).

Schedule 5 of the Bill inserts similar provisions into the NHA to provide for an administrative penalty scheme where an overpayment under the PBS has occurred due to a false or misleading statement. Item 5 inserts proposed section 99ABE that creates a liability for an administrative penalty where a debt to the Commonwealth exceeds $2,500 and proposed section 99ABF stipulates that the penalty will be 20 per cent of the recoverable debt. Under proposed subsection 99ABF(3) a penalty will be reduced by 50 per cent if the person voluntarily informs the Secretary of the Department of an excessive payment after a notice to produce documents relating to a pharmaceutical benefit is given (proposed subsection 99ABB(2)).

House of Representatives Amendments

After the introduction of the Bill into the House of Representatives, the Government proposed two amendments to the Bill as introduced.34 These amendments proposed to amend item 6 of Schedule 2 of the Bill and item 34 of Schedule 3 of the Bill. The Bill’s Supplementary Explanatory Memorandum notes that the first proposed amendment, relating to the PSR, was the result of advice from the AMA:

34. Government proposed amendments, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, Government (Sheet EU135).

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The first amendment would omit an amendment that was proposed to Part VAA of the Health Insurance Act. Section 106B deals with the power of a Professional Services Review Committee to summons a person to attend a hearing and give evidence. The AMA identified that the change may have the unintended consequence of subjecting a practitioner to both disqualification to billing Medicare and a possible criminal prosecution for failing to attend in accordance with a summons. This was not the intention of the proposal, but to avoid doubt the Government proposes removing the relevant provision.

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The Government’s second amendment allows the CEO to set off the whole or part of a recoverable amount under proposed section 129AEF, regardless of whether the debt became due to the Commonwealth before, on, or after the commencement of item 34. The Government notes that this will allow the Bill to meet its purpose of recovering compliance debts.36 The Government’s amendments were agreed to by the House of Representatives after debate.

Concluding comments The Bill strengthens debt recovery powers and harmonises administrative requirements across three professional segments of the healthcare industry and attempts to better reflect modern billing practices.

35. Supplementary Explanatory Memorandum, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, p. 1. 36. Ibid.

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