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This Digest was prepared for debate. It reflects the legislation as
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CONTENTS
Health Insurance Amendment Bill (No. 1)
1997
Date Introduced: 26 March 1997
House: House of Representatives
Portfolio: Health and Family Services
Commencement: 28 days after Royal Assent
The major amendments:
- remove the restriction on the Minister with respect to the
number of Deputy Directors of Professional Service Review he/she
may appoint;
- provide a Professional Services Review Committee (a Committee)
with power to require persons, including those under review, to
provide the Committee with such documents as they specify prior to
a hearing;
- make it an offence to obstruct or hinder a Committee or
Committee member in the performance of the Committee's functions,
or to disrupt a Committee hearing;
- require a person under review to repay any medicare benefit
paid for inappropriate services rendered by specified categories of
persons, namely, themselves, one of their employees, or an employee
of a corporation of which they are an officer; and
- increase the maximum disqualification period which may be
imposed for a practitioner who engaged in an inappropriate
practice.
The Health Insurance Amendment Bill (No. 1) 1997 deals with the
issues of fraud and overservicing (or inappropriate practice) under
Medicare and the Pharmaceutical Benefits Scheme. The Bill seeks to
amend provisions of the Health Insurance Act 1973 which relate to
the operation of the Professional Services Review Scheme. This
scheme was established in 1995 to combat inappropriate practice in
two key health programs: Medicare and the Pharmaceutical Benefits
Scheme (PBS), both of which are administered by the Health
Insurance Commission (HIC). The amendments proposed by this Bill
are intended to overcome several aspects of the operation of the
Professional Services Review Scheme which are regarded as
cumbersome and which have been under challenge from individual
practitioners. The Australian Medical Association (AMA) is
supportive of the amendments.(1)
The Professional Services Review Scheme is an independent form
of peer review which determines "whether the conduct of a
practitioner in rendering or initiating services under Medicare or
the Pharmaceutical Benefits Scheme constitutes inappropriate
practice".(2) In his second reading speech on the Bill, the
Minister stated that the Professional Services Review Scheme "is
this Government's primary means of investigating allegations of
inappropriate practice and taking action when those allegations are
proven".
The extent of medical fraud and inappropriate practice has long
been contentious and gauging an accurate picture of the incidence
and costs of each has proved elusive. A variety of estimates have
emerged from inquires into medical fraud and overservicing which
have been conducted during the 1980s and 1990s by bodies such as
the Joint Committee of Public Accounts (JCPA) and the Australian
National Audit Office (ANAO).
A report was recently released of a performance audit conducted
by the ANAO on the efforts of the Health Insurance Commission in
detecting and combating medical fraud and overservicing (Medifraud
and Inappropriate Practice: Health Insurance Commission, Audit
Report No. 31, 1996-97). In its report, the ANAO found that an
accurate calculation of the incidence and costs of medical fraud
and inappropriate practice was not possible given the available
data, but estimated that medical fraud could be costing the
Commonwealth between 0.7 and 1.6 per cent of Medicare and
Pharmaceutical Benefits Scheme payments, or between $52 million and
$135 million per year. It estimated that inappropriate practice
could be costing a further $60 million (one per cent of payments)
per year.
The ANAO estimates that in total, some $110 million to $190
million per year, or between 1.3 to 2.3 per cent ofpayments under
the Medicare and Pharmaceutical Benefits schemes, could represent
the level of medical fraud and inappropriate practice. The ANAO
argues that these estimates should be regarded as interim until the
Health Insurance Commission (HIC) is able to provide firmer
estimates. The HIC has indicated that it will re-examine the
possibility of publishing an estimate of the extent of medical
fraud and inappropriate practice in 1997.(3) Given the interim
nature of these estimates of medical fraud and inappropriate
practice, it is emphasised that the figures should be treated with
caution and regarded as indicative at best.
In 1995-96, 464 medical practitioners and eight optometrists
were counselled due to concerns about their practices and 19
medical practitioners were referred to the Director, Medical
Services Review. The available information indicates that in
1995-96, the Health Insurance Commission referred 13 providers to
the DPP for prosecution and 4 successful prosecutions were
achieved. In 1995-96, some $1.1 million in Medicare and
Pharmaceutical Benefits payments which had been paid incorrectly
was recovered from providers and the public(4).
Number of Deputy Directors of Professional Services Review
The effect of the amendment proposed by item 4 of
Schedule 1 of the Bill is to remove the restriction
imposed on the Minister under subsection 85(2) of the Health
Insurance Act 1973 (the Principal Act) with respect to the number
of Deputy Directors of Professional Services Review he/she may
appoint. Subsection 85(2) currently restricts the number of Deputy
Directors which may be appointed to a maximum of 15.
Remarks: The rationale given by the Government
in the Explanatory Memorandum for removing the 15 Deputy Directors
limit is that the current limit unnecessarily restricts the
creation of review Committees and places a burden on a few
dedicated practitioners. It could be argued that the proposed
amendment is also a response to the estimated high level of fraud
and overservicing and the need to deter such inappropriate
practices. The Australian National Audit Office estimates that
around 1.3 to 2.3 per cent of payments from Medicare and
Pharmaceutical Benefits Schemes ($110 million to $190 million) per
annum is lost through fraud and inappropriate practices.(5)
Content and form of HIC referrals to Director of Professional
Services Review
Provision is made under section 86 of the Principal Act for a
referral for investigation of inappropriate practice to the
Director of the Professional Services Review by the Health
Insurance Commission (HIC). Section 87 deals with what a section 86
referral must specify. Specifically, a referral must specify
whether it relates to:
- specified services; and/or
- services rendered or initiated by a practitioner that are of a
specified class, to a specified class of person, or provided within
a specified location.
To (B), above, is added by item 5 of Schedule 1
services provided within a specified period.
Remarks: The rationale given by the Government
in the Explanatory Memorandum for the proposed amendment is that
the Professional Services Review Scheme is based on considering
conduct and it is necessary for the scheme to be effective that a
persons conduct to be able to be assessed in relation to a period
of time.
Offence for failure to produce documents prior to a Committee
hearing
A new section 105A is inserted in the Principal Act by
item 9 of Schedule 1 which provides a Professional
Services Review Committee (a Committee) with power to require
persons, including those under review, to give them such documents
as they specify prior to a hearing. Notice of a requirement to
produce documents must be given at least seven days before the day
on which the documents are required to be produced (proposed
subsection 105A(2)).
The documents must be produced to a Committee member, or persons
nominated by a Committee member, at the time and place specified in
the notice informing the person of the requirement to produce the
documents. Failure to produce documents constitutes an offence
punishable by a maximum penalty of 20 penalty units ($2 000)
(proposed subsection 105A(3)).
The power accorded by proposed section 105A is mitigated by
proposed subsection 105A(7) which provides that the relevant
document/s and any information or thing obtained is not admissible
in evidence in criminal proceedings or proceedings for recovery of
a pecuniary penalty against the person producing the document.
Proposed section 105A(8) provides an exception to proposed
subsection 105A(7), that is, where a person knowingly produces a
document that contains a false or misleading statement. In such a
case the information obtained can be used in criminal proceedings
or proceedings for recovery of a pecuniary penalty against the
person producing the document.
Documents produced prior to a hearing may be inspected by a
Committee member; retained by a Committee member for a reasonable
period; and a Committee member may make copies of, or take extracts
from, the document (proposed subsection 105A(4)).
It is an offence, punishable by a maximum penalty of 20 penalty
units ($2 000) for a person to knowingly produce a document that
contains a false or misleading statement without identifying the
respects in which they know it be false or misleading (proposed
subsection 105A(5)).
Self incrimination will not be an excuse for the non-production
of document except for a person under review (proposed subsection
105A(6)).
Remarks: A number of rationale are provided by
the Government in the Explanatory Memorandum for proposed section
105A, including: to ensure a Committee can properly consider the
documents before a hearing or setting a hearing date; and several
of the Committees have been concerned that medical records may have
been altered following the issuing of a notice.
Offence of contempt of Committee
Item 10 of Schedule 1 inserts a new section
106EA in the Principal Act making it an offence to obstruct or
hinder a Committee or Committee member in the performance of the
Committee's functions, or to disrupt a Committee hearing. The
penalty for such an offence is 20 penalty units ($2 000).
Remarks: The rationale given by the Government
in the Explanatory Memorandum for proposed section 106EA is that
experience has shown that existing provisions are likely to be
inadequate in dealing with disruptions and threats against
Committee members.
Content of determinations for engaging in inappropriate
practice
Existing section 106U of the Principal Act specifies the actions
the Director of Professional Services Review, or their nominee, can
take against a person engaging in an inappropriate practice. These
include:
that the person under review repay the Commonwealth an amount
equivalent to any medicare benefit paid for inappropriate services
(whether or not the medicare benefit was paid to the person), and
that any medicare benefit that would otherwise be payable for those
services cease to be payable (subparagraph 106U(1)(c));
A new paragraph 106U(1)(c) is substituted in the Principal Act
by item 17 of Schedule 1. It provides that the
person under review repay to the Commonwealth the whole or a part
of the medicare benefit paid (whether or not it was paid to them)
for services that:
- were rendered by the person under review, an employee of the
person under review, or an employee of a corporation of which the
person under review is an officer; and
- are services in connection with which the person is stated in a
report to the Determining Officer to have engaged in inappropriate
practice;
and that any medicare benefit that would otherwise be payable
for the services cease to be payable.
Remarks: The major difference between proposed
paragraph 106U(1)(c) and the current paragraph 106U(1)(c) is in
their scope. Whereas the current paragraph 106U(1)(c) requires a
person under review to repay any medicare benefit paid for the
inappropriate services, proposed paragraph requires a person under
review to repay any medicare benefit paid for inappropriate
services rendered by specified categories of persons, namely,
themselves, one of their employees, or an employee of a corporation
of which they are an officer.
In essence, the rationale provided by the Government in the
Explanatory Memorandum to the Bill for extending the scope of
paragraph 106U(1)(c) is that 'No one can condone abuse of Medicare
and cases with a proven high degree of culpability involving
hundreds of thousands of dollars warrant strong action at the top
end of the measures provided in section 106U'(6).
Period of disqualification for engaging in an inappropriate
practice
Subsection 106U(3) of the Principal Act provides in relation to
a practitioner who has engaged in an inappropriate practice for
their disqualification for a maximum of 12 months in respect
of:
Item 20 of Schedule 1 increases the maximum
disqualification period that must be imposed from 12 months to 3
years.
Subsection 106U(4) of the Principal Act provides in relation to
a practitioner who has engaged in an inappropriate practice for
their disqualification for a maximum of 3 months. Item 21
of Schedule 1 increases the maximum disqualification
period from 3 months to 3 years.
Referrals by the Determining Officer
A new section 106XA is inserted in the Principal Act by
item 24 of Schedule 1 which provides the
Determining Officer (the Determining Officer makes determinations
dealing with inappropriate practice found by a Committee) with the
power to refer material before him/her to a body specified in the
regulation, where of the opinion it may be required against a
person under review for an inappropriate practice. Referred
material must not disclose the identity of a particular person
unless the Determining Officer believes the body needs to know the
identity of that person in order to properly carry out its
functions. Where identity is disclosed, the identified person must
be notified of the disclosure.
- Anastasopoulos, C., "Tougher law on doctor conduct", Australian
Dr, 18 April 1997.
- Health Insurance Commission, Annual Report 1995-96, Canberra,
HIC, 1996.
- Australian National Audit Office, Medifraud and Inappropriate
Practice: Health Insurance Commission, Audit Report No. 31 1996-97,
Canberra, AGPS, 1997.
- Ibid., p. xiii.
- Ibid., p. xii.
- Health Insurance Amendment Bill (No. 1) 1997, Explanatory
Memorandum, p. 5.
Paul Mackey and Ian Ireland
25 July 1997
Bills Digest Service
Information and Research Services
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.
IRS staff are available to discuss the paper's contents
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ISSN 1328-8091
Commonwealth of Australia 1997
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Published by the Department of the Parliamentary Library,
1997.
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Commonwealth of Australia
Last updated: 12 August 1997
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