2.1
This chapter discusses issues related to the targeting of reviews of recipients of the Disability Support Pension (DSP), a major component of the risk management approach adopted by the Department of Social Services (DSS) and Department of Human Services (DHS) in their administration of the DSP. This chapter comprises:
Committee conclusions and recommendations
Implementation of Australian National Audit Office (ANAO) recommendations
Targeting as a form of risk management
Balance and transfer of risk
Committee conclusions and recommendations
2.2
The Committee considers that accurate targeting of individuals for review of their DSP is essential to efficiently achieve policy outcomes, reduce administrative costs and minimise unnecessary burden on vulnerable members of the public.
2.3
The Committee notes that some submissions have raised concerns with DHS’ targeting of reviews of the DSP. The Committee is concerned to hear that some recipients with manifest or severe disability have had their DSP reviewed under the 2014–15 measure for targeted review of recipients under 35 years of age.
2.4
The Committee considers that DHS could undertake a more efficient targeting process to help inform recipient selection using rent assistance and related data. It is considered highly unlikely that DSP recipients who meet the threshold for ongoing state-funded residential care will have ceased to be eligible for the DSP.
2.5
The Committee's attention was drawn to the initial outcomes of the 2016–17 reviews—that only 1.6 per cent of reviews have resulted in people being moved off the DSP. Further, the ANAO reported that 13.7 per cent of the 2014–15 reviews undertaken by October 2015 had resulted in cancellation of payment. Given the significant reduction in identification of ineligible recipients, the Committee considers the efficacy of the risk profiling and selection criteria for these reviews should be evaluated.
2.6
The Committee acknowledges statements made by DHS that it has refined its targeting of reviews from the 2014–15 Budget measure to the 2016–17 Budget measure. However, the department provided little in the way of evidence as to the nature of these refinements.
2.7
The Committee has not been provided with a copy of, or extracts from, the Regulatory Impact Statement for the review measures. The departments, while providing some information on the new targeting measures, have not provided the Committee with specific detail on how the targeting of reviews has been refined over time.
2.8
Without regulatory impact data, or adequate detail on how the targeting has been refined, the Committee is unable at this time to draw conclusions on the effectiveness of the refined targeting approach. It is also unable to draw conclusions about whether the need for payment integrity was adequately balanced with the costs of reviews and the need to minimise burdens imposed on recipients. A full assessment of the cost to Government of the reviews should include the administrative costs to the departments, as well as other costs such as Medicare charges for medical assessments, reports and tests.
2.9
The Budget measures have substantially increased the number of medical reviews undertaken each year—the ANAO found these are far more likely to result in cancellation of the DSP than other types of reviews. A focus on medical reviews, coupled with proper targeting of recipients most likely to have changed medical circumstances, helps to balance the risks of the DSP program.
2.10
The Committee heard evidence from submitters that data matching with other Government payments and systems is not being used to exclude recipients who present little risk of becoming ineligible for the DSP. As a result, an individual in full-time state-funded residential care and a carer in receipt of the Government’s Carer Payment were selected for review. DHS confirmed it has limited capacity to cross-check data.
2.11
Therefore, the Committee recommends that the outcomes of the Budget measures be evaluated in order to fully scrutinise the effectiveness of targeting and risk management of the DSP program. This evaluation should explicitly consider:
whether the initial objectives and performance criteria of the reviews were achieved;
any burdens imposed on recipients, and in particular whether certain recipients were more affected;
whether targeting of reviews was effective, including the efficacy of risk profiling and selection criteria;
the cost efficiency of conducting reviews;
trend data between the two reviews; and
improvements to possible future review processes.
2.12
The Committee recommends that the Department of Social Services and Department of Human Services undertake and publicly report the outcomes from an evaluation of the reviews of recipients under 35 years of age and the 2016–17 measure for 90,000 additional reviews, and give particular emphasis to the issues raised in paragraph 2.11.
2.13
The Committee recommends that the Department of Social Services and Department of Human Services investigate the capture and sharing of data between Federal departmental systems and with State and Territory governments to improve the identification and exclusion from review of manifestly eligible and other severely disabled recipients.
Review of evidence
2.14
This section reviews the evidence received by the Committee regarding the targeting of DSP reviews, including:
Implementation of ANAO recommendations
Targeting as a form of risk management
Balance and transfer of risk
Implementation of ANAO recommendations
2.15
The ANAO found that documentation could be improved, as could the targeting of reviews.
2.16
As will be explored further in Chapter 3, comprehensive documentation of a claimant’s medical conditions in the initial assessment of DSP claims would support the capacity for appropriately targeting reviews.
2.17
The ANAO made two recommendations in this respect:
Recommendation No.1: To provide full documentation of eligibility decisions, the ANAO recommends that Human Services:
(a) review the guidance it provides to assessors on the level of detail to be included in Job Capacity Assessment reports, particularly for assessments of impairment ratings, a person’s inability to work and program of support obligations; and
(b) require delegates to clearly specify any changes they make to the Job Capacity Assessment reports.
Recommendation No.2: To improve the efficiency and effectiveness of the current review process, the ANAO recommends that Human Services, in cooperation with DSS, include options in its risk profiling to better identify recipients whose medical conditions have a greater prospect of improvement.
2.18
DHS and DSS agreed with the above recommendations and acknowledged that improvements can be made to provide full documentation of eligibility decisions and in the efficiency and effectiveness of risk profiling to identify recipients subjected to review.
2.19
DHS advised the Committee that both recommendations have been fully implemented.
2.20
At the public hearing, DHS informed the Committee that it has ‘implemented and published training and revised procedures which clearly outline the level of detail required in job capacity assessment reports’. DHS advised the Committee that job capacity assessors have ‘clear and current guidelines on accessing work capacity using the impairment tables’. Furthermore, DHS has developed a training package to advise delegates on how to take action to override a job capacity assessment report if they so need to.
2.21
The improvements DSS and DHS have made to risk profiling (targeting) reviews are discussed in detail below.
2.22
Since the ANAO’s audit, DHS has changed the process for collecting documentation to support a DSP claim. Chapter 3 of this report examines evidence from submissions that raise concern with the efficiency and robustness of the new processes.
Targeting as a form of risk management
2.23
Commonwealth entities are required under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) to ‘establish and maintain… an appropriate system of risk oversight and management for the entity… and internal control’. The Commonwealth Risk Management Policy supports this framework by setting the standard for managing risks in the public sector.
2.24
In relation to the administration of the DSP, risk is managed in part by risk-based compliance reviews. The aim of these reviews is to ‘ensure people are on the right support for their situation and assist people where appropriate to move into work and study’.
2.25
During the audit, the ANAO noted a disconnect between the type of review undertaken and the likelihood of that review affecting an individual’s eligibility: while medical reviews are the review type mostly likely to result in a rejection of a DSP claim, only five per cent of reviews included one. As a result, ANAO found the significant activity required to conduct these reviews did not necessarily result in equally significant numbers of reductions or cancellations of DSP eligibility. For the period of the audit fieldwork, the ANAO reported that each year approximately 68,000 DSP recipients had their eligibility tested; 6,600 (just under 10 per cent) of those had their payments reduced or cancelled as a result.
2.26
During the audit, the Government announced in the 2014–15 Budget a measure to medically review 28,000 recipients under the age of 35 years. The ANAO reported that by October 2015, 13.7 per cent of the 18,742 reviews of under 35s undertaken had resulted in cancellation of payment.
2.27
The ANAO found that this measure consequently decreased the chances of recipients above that age bracket having their eligibility reviewed. In the 2016–17 Budget, the Government announced funding to medically review 90,000 more DSP recipients, which would include those over 35 years. DSS is expecting this measure to result in 10 per cent of recipients reviewed being moved off DSP.
2.28
For the 2016–17 measure, as at February 2017, 14,613 reviews have commenced, with 4,222 finalised. Of those finalised, only 1.6 per cent have been taken off the DSP.
2.29
The Committee asked for a breakdown of reviews conducted under Budget measures and those as a result of DHS’ own compliance activities. DHS did not provide this detail to the Committee, but referred the Committee to its Annual Report, which aggregates all Social Security and Welfare Programme Compliance, without breaking down the data by pension type. The Committee did not consider this to be a helpful response.
Evidence of poor targeting
2.30
The 2014–15 and 2016–17 Budgets allocated funds to conduct targeted DSP reviews with the aim to reduce the number of recipients. The ANAO noted that priority ought to be given to reviewing recipients whose conditions are likely to improve within two to five years. Evidence from submissions suggests that some recipients who are highly unlikely to see improvement have been included in the reviews. Instead, criteria such as extensive time spent overseas are used to prompt a review.
2.31
People granted DSP under manifest rules are supposed to be excluded from these reviews. However, the Committee received evidence that, as recently as September 2016, DHS has conducted medical reviews into recipients with manifest disability, often with seemingly substantial supporting evidence that should already be available to DHS.
2.32
DHS noted that its targeting is only as good as the information on its system. Dr Jill Charker, Deputy Secretary, DHS, further explained:
So if we do not have indicators in the system which indicate, for example, that a person may in fact be manifestly eligible…then we may, unfortunately, pick up a small number of them, but we are looking to try to find other indicators which together might indicate that someone is actually quite likely to be manifestly eligible, and we then undertake additional checks of that person before we then initiate the review.
2.33
Inclusion Australia has received complaints from people with intellectual disability and their families granted DSP on manifest grounds that have been subject to a review.
2.34
Similarly, Down Syndrome Australia is aware that people with Down syndrome are being medically reviewed. Down Syndrome Australia propose that people with Down syndrome and other chromosomal disorders be excluded from medical reviews of their DSP given the permanent nature of the disorders.
2.35
DHS advised the Committee that a person with a severe intellectual disability, as defined in the impairment tables, is excluded under the manifest rules. However, the Department’s records may not sufficiently record manifest eligibility, particularly if the grant was approved prior to 2012.
2.36
DSS gave evidence to the Committee that ‘the terms and criteria around manifest grants are not in fact legislated. It is a policy guidance’.
2.37
DHS advised the Committee that in implementing the ANAO’s recommendation on this matter, it has refined indicators used to identify recipients who may no longer medically qualify for DSP. The Committee heard that the department used results of the 2014–15 reviews to improve the indicators for the 2016–17 Budget measure for reviews.
2.38
DHS also advised that in October 2016, ‘additional exclusion criteria were added to reduce the risk of selecting recipients with severe disabilities which may not be considered manifest, but are unlikely to improve over time. More than 100 conditions were added to the exclusion criteria including intellectual disability, neurodegenerative disorders and congenital syndromes.’
2.39
Evidence from DHS and submitters suggests there is limited capacity for departmental systems and procedures to identify serious, non-treatable conditions that are not considered manifest, and to prioritise reviews according to the severity of the condition and likelihood of recovery.
2.40
DHS provided the Committee with some of the criteria used to target reviews for the 2016–17 Budget measure. These include:
the person’s age and the length of time in receipt of Disability Support Pension;
whether they were granted before the Impairment Tables were implemented in January 2012;
if the person has regularly reported any income;
if the person has a pattern of overseas travel;
if the person has not previously attended a Job Capacity Assessment; and
if the person has not been medically reviewed in the last two years.
2.41
The Committee asked how the criteria were modified from previous reviews but was not provided a response.
2.42
Asked why it does not publish the criteria for targeting of reviews, DHS explained that ‘there are quite a number of them and the effect of them will differ according to a particular person’s circumstances’.
Data matching
2.43
More broadly, poor targeting of reviews is often the result of incomplete information. Submitters suggest data matching with other Government payments and systems is not being used effectively to exclude recipients who present little risk of becoming ineligible for the DSP. For example, in the absence of data matching, DHS reviewed a recipient who lives in residential care funded by the government and another recipient who has a carer receiving the Government’s Carer Payment, administered by DHS. These submitters raised issue with DHS wasting their time and money, and causing psychological and financial stress, reviewing individuals who receive government-funded full-time care.
2.44
At the hearing, DHS confirmed that the system used to identify DSP recipients does not have the capability to cross-check against DHS records on rent assistance payments made for residential care. For example, DHS was unable to provide the number of recipients who live in state-supported residential care who had their DSP reviewed.
2.45
DSS gave evidence to the Committee that ‘manifest grants may be made where a person…has an assessment indicating the person requires nursing home level care’. Despite this, DHS advised that ‘the specifics of the care, whether it was home-based, state-based or private, would not be captured in code that can be extracted for reporting purposes’.
2.46
While DSS and DHS have a data-matching program—governed by the Data-matching Program (Assistance and Tax) Act 1990—the objectives of the program appear to be focussed on identifying debts owed to Government.
Overseas travel as a trigger for review
2.47
In its submission, the Australian Council of Social Service (ACOSS) discusses the use of overseas travel as a trigger to instigate a review. ACOSS notes that this ‘provides some evidence in support of concerns in the sector that reviews are poorly targeted, with arbitrary criteria used to select people for review’. ACOSS said it is ‘unclear what relationship overseas travel bears to meeting qualification criteria for DSP’.
2.48
Submitters suggest that first reviewing these people’s files would in cases confirm the ongoing, severe and permanent nature of the disability or illness; this would also confirm the client is a low risk of subverting the eligibility criteria.
Balance and transfer of risk
2.49
Submitters noted the costs, financial and time, associated with providing evidence to demonstrate eligibility, as well as the stress burden borne by DSP recipients facing a review of their eligibility.
2.50
DHS confirmed to the Committee that a Regulatory Impact Statement outlining the likely costs to individuals was produced but cannot be released or published as it remains Cabinet-in-Confidence.
2.51
Similarly, while the review process seeks to manage the risk of paying recipients who do not qualify for the DSP, it comes at the expense of increasing the risk of individuals being put onto other income support payments.
2.52
As some stakeholders noted, a consequence of the reduced granting of DSP eligibility is an increase in Newstart recipients with a partial work capacity:
It is likely that the number of long-term recipients of Newstart (those who receive the payment for 12 months or more) will rise if more people with partial work capacities are moved onto the payment from DSP.
2.53
Under the 2014–15 measure, 2,800 recipients of DSP were transferred to the Newstart Allowance between 1 July 2014 and September 2016. As at 30 December 2016, 99 per cent of these were still receiving Newstart.
2.54
In DSS’ submission to this inquiry it only referred to the risk of people staying on the DSP when they are no longer eligible. No other understanding of risk as it relates to the administration of the DSP or other social security payments was discussed.