Bills Digest No 71 1995-96 Health Legislation (Powers of Investigation) Amendment Bill 1996


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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

Passage History

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.

Purpose

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.

Background

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.

Main Provisions

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.

Endnotes

(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.

Contact Officer and Copyright Details

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 with Senators and Members and their staff but not with members of the public.

ISSN 1323-9032
Commonwealth of Australia 1995

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1995.

This page was prepared by the Parliamentary Research Service, Commonwealth of Australia
Last updated: 8 May 1996


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