BILLS DIGEST NO. 37, 2020–21              8 December 2020

Health Insurance Amendment (Compliance Administration) Bill 2020

Melanie Conn
Social Policy Section 

Date introduced: 29 October 2020

House:  House of Representatives

Portfolio: Health

Commencement: The day after the Act receives the Royal Assent

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at December 2020.

Purpose of the Bill

The purpose of the Health Insurance Amendment (Compliance Administration) Bill 2020 (the Bill) is to amend the Health Insurance Act 1973 to clarify the circumstances in which the Commonwealth can recover a Medicare benefit or payment where it has been provided on the basis of false or misleading information—regardless of the form in which that information is provided.

Background

About Medicare

Medicare is Australia’s national health insurance scheme which subsidises the cost of many medical and allied health services. It is governed by the Health Insurance Act and related regulations. Medicare operates by paying a specified benefit (in the form of a rebate) for an eligible health or medical service for which a claim is submitted.

The Health Insurance Act includes provisions for the Commonwealth to recover amounts paid that were overpaid or should not have been paid.[1] This could arise as a result of incorrect claiming, inappropriate practice or fraud by health care providers.

The Bill continues efforts to protect the integrity and financial viability of Medicare, which helps to meet the cost of hundreds of millions of services each year. In 2018–19, Medicare paid benefits totalling $24 billion for 424 million services.[2] That year, the Department of Health recovered $49.3 million in claims which should not have been paid, and reported $123.4 million in estimated savings through changes in claiming behaviour of providers.[3]

Previous changes to debt recovery

The Bill follows a more substantive legislative change aimed at improving health provider compliance arrangements which was contained in the Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Act 2018 (2018 Act). Those changes came into effect on 1 July 2018.[4]

The 2018 Act contained improvements which were intended to ‘strengthen debt recovery powers, including compulsory setoffs and garnishee processes’. According to the Explanatory Memorandum to the originating Bill:

When this legislation was announced in the 2017–18 Budget, only 20 per cent of Medicare debts raised were being recovered. While the debt recovery rate is now around 40 per cent, stronger powers are needed so that the Government can recover more of the funds that have been overpaid due to incorrect claiming, inappropriate practice and fraud.[5]

The enactment of the 2018 Act was expected to generate net savings of $103.8 million over four years.[6]

Committee consideration

Senate Community Affairs Legislation Committee

The Bill was referred to the Senate Community Affairs Legislation Committee (Community Affairs Committee) for inquiry and report by 2 December 2020.[7] The inquiry received five submissions, four from stakeholder groups and one from the Department of Health.

The Community Affairs Committee recommended that the Bill be passed. As explained in the Committee’s report:

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.[8]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills had no comment on the Bill.[9]

Policy position of non-government parties/independents

In requesting scrutiny of the Bill by the Community Affairs Committee, Australian Greens Senator Rachel Siewert asked that ‘the impact debt recovery will have on people who have accessed Medicare’ be considered, ‘especially in light of the robodebt program’.[10]

At the time of writing, no further comments from non-government parties/independents on this Bill had been identified.

Position of major interest groups

The Australian Medical Association and Royal Australian College of General Practitioners (RACGP) expressed no concerns about the Bill in their submissions to the Community Affairs Committee.[11]

The RACGP stated:

We have been advised by the Department of Health (the Department) that the proposed amendments do not influence the scope or frequency of debt recovery activities, nor increase the debt recovery powers of the Department. We understand the Bill will not expand the capacity of the Department to undertake compliance activities or increase the administrative burden for general practitioners (GPs) in the event of any compliance activity. The Department has confirmed that the retrospective application does not apply to existing court cases which have not yet been the subject of finally determined proceedings, or proceedings in which judgement is reserved. As such, we have no immediate concerns about the passage of the Bill.[12]

Medical indemnity insurance provider MIGA endorses the need to maintain Medicare system integrity and ensure the system remains fit for purpose amidst technological change. MIGA objected to the retrospective recovery of Medicare claims under the proposed changes, which could permit recovery relating to compliance processes already underway or completed prior to commencement of the changes, unless already heard by a court.[13]

The Royal Australasian College of Surgeons supported the context and need for improved Medicare compliance but expressed concern about whether the amendments would affect procedural fairness.[14] The Department of Health in its submission to the Community Affairs Committee outlined the arrangements affording procedural fairness to a practitioner that will continue to apply.[15]

Financial implications

The Explanatory Memorandum states there is no financial impact from this Bill.[16]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[17]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights had no comment on the Bill.[18]

Key issues and provisions

Section 129AC of the Health Insurance Act relates to recovery of amounts overpaid and administrative penalties. Subsection 129AC(1) provides that where, as a result of a false or misleading statement, an amount of benefit or a payment made under the Health Insurance Act exceeds the amount that should have been paid, the excess is recoverable as a debt due to the Commonwealth.

Items 1–4 of the Bill amend subsection 129AC(1) to replace references to ‘making a false or misleading statement’ with references to the ‘giving of false or misleading information’.

Items 6, 8 and 9 make equivalent amendments to subsection 129ACA, which provides for a shared debt recovery scheme.[19] 

Items 5 and 7 insert proposed subsections 129AC(1AAA) and 129ACA(1A) respectively to make clear that the form in which the false or misleading information is given is immaterial. This provides flexibility in the form in which information may be provided and can be regarded as modernising the circumstances in which debt can be recovered.

Existing subsection 129AC(1) has been unchanged since added to the Health Insurance Act by the Health Legislation Amendment Act (No. 2) 1985.[20] Medicare claims have changed significantly since that time, with many claims today processed electronically, either in the doctor’s office or by submitting a claim through a Medicare online account or the Medicare mobile app.[21] 

Speaking in relation to the Bill, Minister for Population, Cities and Urban Infrastructure, Alan Tudge stated:

It is worth recalling that the provisions for recovery of amounts overpaid were first enacted more than three decades ago, that is – in digital technology timeframes, at least – eons ago. Technological advances in Medicare claiming may be easily accommodated because of the stipulation that it is the giving of information, regardless of its form, rather than the making of a statement that will be the basis for a claim for Medicare payment.[22]

These amendments are also intended to clarify that recovery of Medicare payments is permitted where incorrect information is provided, whether intentionally or unintentionally. As outlined by the Minister:

The Bill corrects a possible misunderstanding about the operation of the Act. Medicare benefits are recoverable if incorrect information provided in connection with a claim leads to an overpayment, even if the information was not intentionally incorrect [emphasis added]. [23]

Item 10 provides that the amendments will apply retrospectively, except in relation to proceedings where judgment has been reserved or the matter has been finalised by a court.

The Bill makes no change to other provisions in the Health Insurance Act relating to debt recovery processes.

Concluding comments

The Bill modernises the terminology around the circumstances in which the Commonwealth may recover a Medicare payment, replacing ‘statement’ with ‘information’. It is intended to recognise that electronic claiming (and potential future developments) alters the way in which claims are made, and therefore, how the false or misleading basis for a claim may occur.

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[1].              Health Insurance Act 1973, sections 129AC and 129ACA.

[2].              A Tudge, ‘Second reading speech: Health Insurance Amendment (Compliance Administration) Bill 2020’, House of Representatives, Debates, (proof), 29 October 2020, p. 2.

[3].              Australian National Audit Office (ANAO), Managing health provider compliance: Department of Health, Report, 17, 2020–21, ANAO, Canberra, 2020, p. 6.

[4].              For information about the measures in the originating Bill see K Ramesh, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, Bills digest, 124, 2017–18, Parliamentary Library, Canberra, 2018.

[5].              Explanatory Memorandum, Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018, p. 1.

[6].              Ibid., p. 2.

[7].              The terms of reference for the inquiry, submissions to the Senate Community Affairs Legislation Committee and the Committee’s final report are available in the inquiry homepage.

[8].              Senate Community Affairs Legislation Committee, Health Insurance Amendment (Compliance Administration) Bill 2020 [Provisions], The Senate, Canberra, December 2020, p. 8.

[9].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 16, 2020, 20 November 2020, p. 29.

[10].              Senate Standing Committee for the Selection of Bills, Report, 10, 2020, The Senate, Canberra, 12 November 2020.

[11].              Australian Medical Association (AMA), Submission to the Senate Community Affairs Legislation Committee, Inquiry into the Health Insurance Amendment (Compliance Administration) Bill 2020, [Submission no. 3], 24 November 2020.

[12].              Royal Australian College of General Practitioners (RACGP), Submission to the Senate Community Affairs Legislation Committee, Inquiry into the Health Insurance Amendment (Compliance Administration) Bill 2020, [Submission no. 2], 23 November 2020.

[13].              MIGA, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Health Insurance Amendment (Compliance Administration) Bill 2020, [Submission no. 1], 22 November 2020.

[14].              Royal Australasian College of Surgeons, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Health Insurance Amendment (Compliance Administration) Bill 2020, [Submission no. 4], 27 November 2020.

[15].              Department of Health, Submission to Senate Community Affairs Legislation Committee, Inquiry into the Health Insurance Amendment (Compliance Administration) Bill 2020, [Submission no. 5], November 2020.

[16].              Replacement Explanatory Memorandum, Health Insurance Amendment (Compliance Administration) Bill 2020, p. 4. The Replacement Explanatory Memorandum replaced the original Explanatory Memorandum tabled on 29 October 2020. That original Explanatory Memorandum contained errors in referring to amendments that were not actually included in the Bill.

[17].              The Statement of Compatibility with Human Rights can be found at page 5 of the Replacement Explanatory Memorandum to the Bill.

[18].              Parliamentary Joint Committee on Human Rights, Human rights scrutiny report, 14, 2020, 26 November 2020, p. 56.

[19].              Where contractual or other arrangements exist between a practitioner and an employer or corporate entity, both may be held responsible for the repayment of a compliance debt.

[20].              Inserted by item 52 of the Health Legislation Amendment Act (No. 2) 1985.

[21].              Services Australia, ‘Medicare claims’, Services Australia website, last updated 21 February 2020.

[22].              Tudge, ‘Second reading speech’, op. cit., p. 2.

[23].              Ibid.