The Health Insurance Amendment (Compliance Administration) Bill 2020 (bill) was introduced in the House of Representatives on 29 October 2020.
The bill seeks to amend the Heath Insurance Act 1973 (Act) to clarify arrangements for the recovery of incorrectly-claimed Medicare payments owed to the Commonwealth, regardless of whether those claims were made manually or electronically.
Conduct of the inquiry
Pursuant to the adoption of the Selection of Bills Committee report, the provisions of the bill were referred to the committee on 12 November 2020 for inquiry and report by 2 December 2020.
The committee advertised the inquiry on its website and invited submissions by 23 November 2020.
The committee received five submissions, listed at Appendix 1 of this report.
Note on the availability of the Explanatory Memorandum
An incorrect version of the Explanatory Memorandum was tabled when the bill was first introduced into the House of Representatives, however an accurate replacement version was subsequently tabled on 30 November 2020. It was also made available to the committee ahead of tabling.
As the replacement version was not publicly available before the due date for submissions, one submitter referenced provisions in the incorrect Explanatory Memorandum which are not included in the bill before Parliament. The committee has noted those comments, but has chosen not to make further consideration of those issues raised due to their irrelevance to the actual provisions of the bill.
Medicare is Australia's health care system which provides affordable medical, optometry and hospital care to eligible individuals. Medicare is administered by Services Australia.
Currently around 6800 different medical services, listed in the Medicare Benefits Schedule (MBS) and detailed in regulations, are subsidised through Medicare. In 2019–20, over 433 million medical services were provided through Medicare, totalling $25 billion in benefits provided by the Commonwealth.
Claiming Medicare benefits
Medicare benefits for an eligible MBS health service are paid through a claim made either by the patient, or by the health professional or practice which provided the service.
Patients who are charged a fee for an MBS service may make a direct claim for a benefit in one of in three ways:
by paying the health professional directly, then making a digital claim through the health practice to be paid through EFTPOS or electronic transfer into a registered bank account;
by paying the health professional directly, then lodging a claim with Services Australia through their Medicare account in MyGov or the Express Plus Medicare app, or by phone or mail, or in person at a service centre; or
by lodging an unpaid account with Services Australia, and receiving a cheque to be given to the health professional along with any remaining balance of the fee to be paid.
Patient claims represent just 12 per cent of all Medicare benefit claims received each year and are largely based on digital claims information lodged directly by the health practice.
By contrast, 80 per cent of all Medicare claims are made through bulk billing, where a patient agrees to have a Medicare benefit paid directly to the health professional, and the health professional or practice claims the Medicare benefit directly as the full fee for the service.
Simplified billing claims, representing the remaining 8 per cent of total Medicare claims, are made by hospitals and other providers as part of a streamlined process for billing patients following a hospital admission which limits the number of invoices a patient receives after an admission.
Almost all Medicare claims made by patients and health practitioners each year – more than 99 per cent in 2019–20 – are processed through digital transactions. Around 76 per cent of health practices in Australia make one hundred per cent of their claims digitally.
Responsibility for making correct Medicare claims sits with the health practitioner who provides the MBS service, as the practitioner is the person who determines whether the service was delivered in accordance with the MBS requirements.
Although Services Australia administers Medicare payments, the Department of Health (department) is responsible for managing health provider compliance, including conducting activities to prevent, identify and rectify incorrect Medicare claiming, inappropriate practice and fraud.
Most compliance activities undertaken by the department focus on encouraging voluntary compliance, such as through education programs, feedback to professional colleges, and contacting health practitioners who make unusual or unexplained claims.
Where the department encounters significant or persistent non-compliance in Medicare claiming, it can:
recover overpayments that have been incorrectly claimed where the practitioner made a false or misleading statement by claiming for MBS services that did not meet legislative requirements;
refer a practitioner for Professional Services Review to determine if there has been inappropriate practice; and/or
prepare briefs of evidence about alleged fraudulent claiming for referral to the Commonwealth Director of Public Prosecution.
As Medicare billing is frequently delegated to non-practitioner staff or administered in central billing areas, and organisational processes and policy can in some instances result in incorrect billing practices, there are also provisions through the Shared Debt Recovery Scheme to hold both the practitioner and another party, such as their employer, responsible for any incorrect Medicare claims.
Recovering Medicare overpayments
Subsection 129AC(1) of the Act provides that the Commonwealth may recover Medicare payments which were made as the 'result of the making of a false or misleading statement'. This terminology is also reflected in provisions for the Shared Debt Recovery Scheme at section 129ACA.
The department submitted that the kinds of non-compliance that can result in a debt being recovered under the Act can include circumstances such as:
When a GP submits an MBS claim and receives benefits for a higher priced consultation item to prepare a chronic disease management plan but does not prepare a plan;
Where a specialist submits an MBS claim for a higher priced consultation item, but the patient does not have the required referral from a GP; and
Where a practitioner makes multiple claims for the same service.
When Medicare compliance provisions were first introduced into the Act in 1985, claiming involved making a statement on a paper form. The terminology currently used in legislation therefore does not reflect the technological advances in how Medicare claims are now made, as electronic claiming methods may no longer support the inclusion of a specific statement or declaration being made by a person in relation to a Medicare claim.
For example, a person who makes a claim through electronic billing, such as using Easyclaim on an EFTPOS terminal, does so:
… by entering data into the system in order to communicate a fact in relation to that claim, i.e. the MBS item number. That information would be false or misleading where, for example, the service in relation to the MBS item number was not rendered in accordance with the legislative requirements.
To address this issue, the current bill proposes changes to the Act to ensure that false or misleading information in Medicare claims can be subject to compliance measures regardless of the form in which the information is given.
Provisions of the bill
The bill contains 10 items in one schedule which amend the Act by:
updating wording in subsection 129AC(1) and section 129ACA to reflect a change in terminology from 'false or misleading statement' to 'false or misleading information';
inserting new subsections 129AC(1AAA) and 129ACA(1A) to clarify that it is immaterial whether false and misleading information is given as document, statement or any other form; and
providing that the amendments apply in relation to payments made before, on or after commencement of the bill, as long as those payments are not subject to finalised determinations or current court proceedings.
These provisions have the effect of ensuring that Medicare overpayments can be recovered where false or misleading information is provided in relation to a claim, regardless of whether the claim is made electronically or manually, or whether the information was given intentionally or unintentionally.
The department submitted that these changes to the Act will not adversely affect patients, nor impose any additional requirements on practitioners. The bill does not increase the debt recovery powers or scope of compliance activities by the Commonwealth, but instead modernises the existing provisions in the Act to 'enable it to function as intended'.
There is no financial impact from this bill.
Neither the Senate Standing Committee for the Scrutiny of Bills nor the Parliamentary Joint Committee on Human Rights made any comments on the provisions of the bill, as it raised no scrutiny or human rights concerns.
Comments from submitters
In addition to a submission from the department, the committee received four submissions from stakeholders representing the interests of health practitioners.
Support for changes
Both the Royal Australian College of General Practitioners and the Australian Medical Association supported the bill, as does not make any change to existing compliance policy or processes, but '[closes] an apparent loophole that impacts on the administration of compliance laws'.
MIGA, a medical defence organisation and medical indemnity insurer, also endorsed the changes to ensure Medicare system integrity 'amidst technological change'.
The Royal Australasian College of Surgeons also supported the context and need for improvements to Medicare compliance, but raised some minor concerns about the provisions of the bill, detailed below.
The Royal Australasian College of Surgeons expressed concern about the procedural fairness of the Medicare compliance program, particularly in relation to Professional Services Review processes which determine whether health practitioners have committed fraud in their claiming. It interpreted that in making the terminology changes in the bill, Medicare would no longer be required to identify and inform a practitioner about what about a claim was false or misleading before a debt decision is made.
However, the department's submission clarifies that the compliance processes will not change and that Commonwealth can only establish a debt if there is evidence of that debt. Health practitioners will continue to be provided with a preliminary view of a debt decision for the sake of procedural fairness, as:
This step gives the practitioner an opportunity to be heard and respond to [Medicare] on the issues before a decision is made.
Importance of a broad compliance program
Although not specific to the provisions of the bill, submitters also made general comments on the strength and importance of the broader Medicare compliance program, not just overpayment recovery.
The Royal Australian College of General Practitioners noted that 'compliance processes can be stressful for providers and affect the quality and timeliness of patient care', reinforcing the importance of prioritising educational activities for health practitioners above formal compliance activities.
MIGA shared this view, emphasising the importance of ensuring that the processes and requirements of Medicare claiming are clear and simple for health practitioners to reduce the risks of incorrect claiming.
The Royal Australasian College of Surgeons further supported the calls for 'non-confrontational mechanisms' of compliance and the need for additional education activities for health practitioners. It detailed the particular challenges faced by surgeons billing in conjunction with other practitioners in private hospital settings and the risks of errors in relation to those processes, and noted a willingness to work with government to improve messaging for surgeons about compliance policy.
MIGA raised concerns about the retrospective application of the bill's provisions submitting that this appears to 'be at odds' with the prospective application of the Shared Debt Recovery Scheme in recent years, and could create a possibility of 're-opening past Medicare compliance and Professional Services Review matters'.
The Royal Australian College of General Practitioners reported in its submission that it had confirmed with the department that the retrospective application would not apply to any existing court proceedings where a decision has not been finalised or judgement had been reserved.
The Explanatory Memorandum also clarifies that the purpose of the retrospective application is not to revisit prior compliance activities, but to ensure that Commonwealth money is protected and is able to be recovered. It notes that:
Where a person gives false or misleading information to the Commonwealth and the Commonwealth pays a benefit that should not have been paid, it is in the public interest to be able to recover the payment, even where this conduct has occurred prior to the commencement of the Bill.
The Health Insurance Amendment (Compliance Administration) Bill 2020 updates Medicare compliance provisions to address technological advancements in claiming technologies over the past 30 years.
The new provisions will mean that the Department of Health can recover overpaid Medicare subsidies which were paid based on false or misleading information in a claim, regardless of whether that claim is made in an electronic or manual form.
The amendments do not make any changes to the Commonwealth's Medicare compliance policy or processes, and are supported by health practitioners.
The committee is of the view that the bill will play a vital role in protecting the integrity and financial viability of the Medicare system, which provides millions of health care services to Australians each year.
The committee recommends that the bill be passed.
Senator Wendy Askew