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The Health Legislation Amendment (Medicare Compliance and Other Measures) Bill 2021 (bill) was introduced to the House of Representatives on 21 October 2021. On 2 December 2021, the Senate referred the provisions of the bill to the Community Affairs Legislation Committee (committee) for inquiry and report by 21 April 2022.
Purpose of the bill
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The bill seeks to support the integrity of payments under the Medicare Benefits Schedule (MBS), the Pharmaceutical Benefits Scheme (PBS) and the Child Dental Benefits Schedule (CDBS).
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The bill is intended to strengthen the compliance powers of the Professional Services Review (PSR) and improve the PSR's ability to address inappropriate practice by bodies corporate and non-practitioners. The bill also proposes to ‘update and align’ legislative provisions dealing with compliance and debt recovery across the Health Insurance Act 1973 (HIA), Dental Benefits Act 2008 (DBA) and National Health Act 1953 (NHA).
Report structure
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This report contains two chapters:
Chapter 1 outlines the purpose of the bill and its key provisions, and discusses various administrative details relating to the inquiry.
Chapter 2 examines the key issues raised by inquiry participants and provides the committee’s view and recommendation.
Background
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The MBS, PBS and CDBS are programs that form part of Australia’s Medicare system. Medicare provides eligible people access to essential health services. The MBS provides ‘essential health services, such as seeing a doctor, getting medicines, mental health services and other medical services’. In 2020–2021, Services Australia provided $27.7 billion in benefits under the MBS.
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The PBS subsidises access to medicines and provides a safety net for those who require a large number of prescription medicines in a calendar year. Services Australia provided $13.7 billion in PBS benefits in 2020–2021.
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The CDBS provides families, teenagers and approved care organisations with financial support for basic dental services, capped at $1000 per eligible child over two consecutive calendar years. In 2020–2021, Services Australia provided $316.0 million in CDBS benefits.
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In 2020–2021, the total cost of the MBS, PBS and CDBS was $41.7 billion. This is expected to increase to around $44.0 billion in 2021–2022.
Responding to ‘inappropriate practice’
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In view of the significant level of investment in Medicare programs, the government uses a range of compliance measures to assist healthcare providers to meet their obligations. According to the Department of Health (the department):
…compliance activities focused on early intervention and prevention. This assists health providers in receiving correct entitlements and, through support and education initiatives, meeting their obligations and responsibilities.
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The explanatory memorandum states that ‘[w]hile most health practitioners claim benefits appropriately, a few do not. Some claims do not meet legislative requirements, are fraudulent or relate to inappropriate practice.‘
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A practitioner engages in ‘inappropriate practice’ if they knowingly, recklessly, or negligently cause or permit a practitioner employed or otherwise engaged by them to engage in conduct that constitutes inappropriate practice by the practitioner under the HIA. Practitioners engage in inappropriate practice if they provide or initiate health services that the practitioner’s peers could reasonably conclude was unacceptable to the general body of their profession.
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Practitioners, non-practitioners and corporations may also engage in inappropriate practice if they cause or permit another person to engage in inappropriate practice.
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The Chief Executive Medicare (CEM) may refer concerns about possible inappropriate practice to the PSR for consideration by the Director of the PSR (Director).
The Professional Services Review
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The PSR serves two basic purposes:
(a)
protect patients and the community in general from the risks associated with inappropriate practice; and
(b)
protect the Commonwealth from having to meet the cost of services provided as a result of inappropriate practice.
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A referral to the PSR in response to concerns about inappropriate practice may result in no further action; a written agreement between the Director and the person under review; or referral to a committee of professional peers for further consideration.
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Compared to referring a matter for review, written agreements provide a faster path to resolution when the person under review accepts there has been inappropriate practice and is willing to agree to specified actions. A further benefit is that written agreements are confidential, and therefore incentivise cooperation.
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The making of written agreements is supported by an independent body under the HIA (the Determining Authority), which ensures written agreements are fair and reasonable before they can come into force.
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During the period 2020–2021, the PSR finalised 105 matters, comprising 90 written agreements, 9 final determinations and 6 instances where the Director decided to take no further action. The PSR issued repayment orders totalling more than $24.6 million.
Key provisions
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The bill contains a single schedule, which is divided into four parts:
Part 1 amends the PSR scheme.
Part 2 amends provisions dealing with applications to the Administrative Appeals Tribunal (AAT) in relation to garnishee notices.
Part 3 clarifies debt recovery arrangements following passage of the Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Act 2018
Part 4 brings the NHA and DBA into alignment with the HIA by changing references to ‘false and misleading statements’ to read ‘false and misleading information’.
Part 1 – Professional Services Review scheme
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A significant limitation of the PSR scheme is that the Director is currently only permitted to enter into a written agreement with a person under review if that person is a practitioner. The bill would amend the HIA to enable the Director to make written agreements with any person under review, including corporations and non‑
practitioners.
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Currently, provisions about sanctions for a failure to produce documents or attend a hearing also only apply where the person under review is a practitioner.
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Part 1 of the schedule amends the PSR scheme to address these and other related issues.
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Item 6 enables corporate entities and other non-practitioner persons under review to enter into a written agreement with the Director.
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Items 8 and 10 of the bill broaden the range of actions that may be included in a written agreement. Items 15–17 enable the director, subject to appropriate notice and safeguards, to publish information about a person who has not performed the actions necessary to give effect to a written agreement.
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The bill makes further amendments to provide procedures, powers and enforcement mechanisms for non-practitioners and bodies corporate, and to clarify when provisions should only apply to practitioners. Significant changes include:
Item 28, which sets out the rights of bodies corporate under review at hearings.
Item 32, which establishes the process in the event a body corporate fails to appear, give evidence or answer a question.
Item 34, which makes it an offence for a person under review, who is not a practitioner, to fail to appear, give evidence or answer a question.
Item 41, which increases the penalty for failing to produce documents from 20 to 30 penalty units, adds civil penalty provisions, and provides a streamlined process to enable the Federal Court of Australia to order a body corporate to produce documents.
Part 2 – Review of certain debt recovery decisions
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Part 2 amends and aligns provisions under the DBA, HIA and NHA that deal with applications for review in the AAT in relation to garnishee notices.
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According to the explanatory memorandum, these amendments are ‘are intended to prevent a debtor from lodging multiple applications for review in the AAT, where multiple garnishee notices are required to recover a single debt.’
Part 3 – Miscellaneous debt recovery amendments
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The amendments in Part 3 of the bill seek to ensure consistency between the HIA, DBA and NHA in the application of set off, garnishee and financial information gathering powers for the purpose of debt recovery. These powers were introduced by the Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Act 2018.
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The bill seeks to resolve the following areas of inconsistency arising after the passage of the 2018 amendments:
the application of debt recovery provisions;
clarifying that interest on Commonwealth debt is recoverable;
use of financial information powers;
recovery from estates; and
clarifying that administrative penalties under the Shared Debt Recovery Scheme apply if the total debt exceeds $2500.
Part 4 – False or misleading information
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The Health Insurance Amendment (Compliance Administration) Act 2020 amended the HIA to clarify that an amount can be recovered if a Medicare benefit or payment is paid due to the provision of false or misleading information. Previously, the HIA referred to false or misleading ‘statements’.
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These amendments removed the requirement to identify a false or misleading ‘statement’ resulting in improper payment of a MBS benefit. This had become a barrier to recovering improper payments due to the increasing use of electronic claiming mechanisms, which generally do not provide a specific statement or declaration that the claim is in accordance with the HIA.
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The DBA and NHA continue to refer to false or misleading ‘statements’. Part 4 of the bill aligns the DBA and NHA with the HIA to ‘ensure post‑payment compliance activities for dental or pharmaceutical benefits are similarly not constrained by the type of claiming mechanism (manual or electronic) which is used’.
Financial implications of the bill
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The explanatory memorandum states that ‘there is no financial impact from this bill’.
Consideration by other committees
Senate Standing Committee for the Scrutiny of Bills
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The Senate Standing Committee for the Scrutiny of Bills (scrutiny of bills committee) reported its concerns regarding the reversal of the evidential burden of proof in Schedule 1, item 34 of the bill (proposed section 105AA).
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The scrutiny of bills committee noted that proposed subsections 105AA(1) and 105AA(4) would create strict liability offences for individual persons and body corporates that fail to appear, give evidence or answer questions at a hearing. The bill provides offence specific defences under proposed subsection 105AA(2) (for individuals) and 105AA(5) (for bodies corporate). To avail themselves of these defences, a defendant must raise evidence about the matters covered by subsections 105AA(2) and 105AA(5).
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The scrutiny of bills committee questioned why the bill placed an evidential burden for establishing these defences on individuals and body corporates as defendants when it is ordinarily the duty of the prosecution to prove all elements of an offence.
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In response, the Minister has explained that placing the evidential burden on defendants to raise these defences is appropriate as the defences rely on ‘matters peculiarly within the knowledge of the defendant’ and that these matters would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish. The scrutiny of bills committee has requested the Minister to provide this information as an addendum to the explanatory memorandum.
Parliamentary Joint Committee on Human Rights
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The Parliamentary Joint Committee on Human Rights made no comment on the bill’s engagement with human rights 'based on an assessment of the bill and relevant information provided in the statement of compatibility accompanying the bill'.
Conduct of the inquiry
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In accordance with usual practice, the inquiry was advertised on the committee’s webpage. The committee called for submissions by 4 February 2022 and wrote to a range of stakeholders inviting them to make submissions.
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The committee received 9 submissions, listed at Appendix 1. The committee thanks submitters for their contributions to this inquiry.