Bills Digest No 71 1995-96
Health Legislation (Powers of Investigation) Amendment Bill 1996
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 with
Senators and Members and their staff but not with members of the public.
ISSN 1323-9032
Commonwealth of Australia 1995
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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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