WARNING:
This Digest is prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments.
This Digest was available from 3 May 1996.
CONTENTS
Date introduced: 1 May 1996
House: Senate
Portfolio: Health and Family Services
Commencement: On Royal Assent, if Royal Assent has
not been given before 1 July 1996, it will be taken to have
commenced on 30 June 1996.
To provide that certain investigative powers of the Health
Insurance Commission to monitor compliance with, and investigate
breaches of, requirements relating to Medicare and pharmaceutical
benefits remain in force.
The Bill amends the Health Legislation (Powers of
Investigation) Amendment Act 1994 (the Principal Act) and the
Human Services and Health Legislation Amendment Act (No. 3)
1995.
The Principal Act, which commenced on 21 July 1994, provided the
Health Insurance Commission (HIC) with certain investigative powers
to monitor compliance with, and investigate breaches of,
requirements relating to Medicare and pharmaceutical benefits.
The Health Legislation (Powers of Investigation) Amendment Bill
1993 (the Bill) was introduced by the Keating Government in
December 1993 to give effect to a 1993-94 Budget announcement. In
the 1993-94 Budget, it was announced that:
The Government intends to introduce, in cooperation with the
Australian Medical Association, an enhanced peer review scheme,
with powers to investigate the practices of medical practitioners
suspected of overservicing, and the capacity to apply effective
penalties where overservicing is found.(1)
The Bill also represented the Government's response to Audit
Report No. 17 of 1992-93, titled Medifraud and Excessive
Servicing: Health Insurance Commission, of the Australian
National Audit Office (ANAO). The key findings of the audit
included:
- that there was a lack of prosecutions and disciplinary action
taken against unethical practitioners; and
- the HIC's legislative powers to combat fraud and excessive
servicing are deficient in regard to the investigation and
prosecution of unethical medical providers.(2)
During its passage through the Senate, the Bill was considerably
amended and referred to the Senate Standing Committee on Legal and
Constitutional Affairs. The Bill, as presented by the Government,
raised a number of concerns for members of the then Opposition and
the Australian Democrats, particularly in relation to the
authorisation of HIC officers to investigate medifraud instead of
the Australian Federal Police, the grant of new powers to the HIC
to carry out such investigations, and the privacy of individual
patient records.
The amendments proposed by this Bill provide for the omission of
the following sunset clauses:
- section 2 of the Principal Act which provides that the
Principal Act, unless repealed sooner, ceases to have effect from 1
July 1996; and
- item 68 of Schedule 1 of the Human Services and Health
Legislation Amendment Act (No. 3) 1995 which provides that
item 66 of Schedule 1 ceases to have effect from 1 July 1996 (Item
66 provides that the HIC must return, subject to a contrary order
of a court, evidential material seized if the reason for its
seizure no longer exists, or a decision is made not to use it as
evidence).
The sunset clauses originated from a Committee stage motion
moved by the then Opposition. The rationale given by Senator Newman
for the Opposition moving the insertion of the sunset clause
provisions was
I said then that given the nature of the bill and the largely
uncharted territory that the HIC will find itself in, we believe it
is reasonable that a sunset provision be included in the bill. We
do not believe that any reasonable person or government could
oppose such a suggestion because it will allow the parliament to
evaluate after a reasonable period the effectiveness of the
legislation and the effectiveness of the HIC in administering
it.(3) Senator Newman's motion was agreed to without a
division.
It is stated in the Explanatory Memorandum to this Bill
that the Principal Act was part of the 1993 Budget measures to
reduce medical fraud and overservicing and that this Bill will
allow those measures to continue to be achieved. It was estimated
in the Explanatory Memorandum to the Health Legislation
(Powers of Investigation) Amendment Bill 1993 that savings of $25
million were anticipated in 1993-94 and $64.9 million in 1994-95
from a combination of measures, of which that Bill formed a part,
to reduce Medicare fraud and overservicing.
It is unclear from available data whether the Principal Act, as
amended by the Senate, has led to a significant reduction in
Medicare fraud and overservicing. HIC professional review division
head Dr John Nearhos and manager of compliance Ralph Watzlaff are
reported in The Australian Doctor of 10 November 1995 as
saying that while the Health Legislation (Powers of
Investigation) Amendment Act 1994 was working well in some
respects, the provisions relating to monitoring medical practices
for compliance was not working at all. Mr Watzlaff said that the
Senate amendments had emasculated the HIC's capacity to monitor
fraud because it outlawed random audits if there was no suspicion.
Dr Nearhos said the HIC's compliance-ordering powers needed to be
revisited because the legislation's original intentional had been
removed.
Items 1 and 2 of the Schedule to the Bill provide for the
omission of the sunset clause provision attaching to the Principal
Act and item 68 of Schedule 1 of the Human Services and Health
Legislation Amendment Act (No. 3) 1995.
(1) Budget Statements 1993-94, Budget Paper No. 1, p. 3.73.
(2) Australian National Audit Office, Medifraud and
Excessive Servicing: Health Insurance Commission, Audit Report
No. 17 1992-93, p. x.
(3) Parliamentary Debates, Hansard, Senate, 3 May 1994,
p. 74.
Ian Ireland Ph. 06 277 2438
Bills Digest Service
Parliamentary Research Service
This Digest does not have any official legal status. Other sources
should be consulted to determine whether the Bill has been enacted
and, if so, whether the subsequent Act reflects further
amendments.
PRS staff are available to discuss the paper's contents
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the public.
ISSN 1323-9032
Commonwealth of Australia 1995
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Published by the Department of the Parliamentary Library,
1995.
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Commonwealth of Australia
Last updated: 8 May 1996
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