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2008-2009
THE PARLIAMENT OF THE COMMONWEATLH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
HEALTH INSURANCE AMENDMENT (COMPLIANCE) BILL 2009
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health and Ageing,
the Hon Nicola Roxon, MP)
HEALTH INSURANCE AMENDMENT (COMPLIANCE) BILL 2009
OUTLINE
This Bill will amend the Health Insurance Act 1973 to give effect to the
Increased MBS Compliance Audits initiative which was announced in the 2008-
09 Budget.
Expenditure on the Medicare scheme was over $14 billion in 2008-09.
Compliance audits are conducted to ensure that taxpayers' money is spent
appropriately. At present, many practitioners voluntarily cooperate with
Medicare Australia during a compliance audit. However, around 20% of
practitioners either do not respond to or refuse to cooperate with a
request for documents and Medicare Australia does not have the authority to
require the production of relevant documents. This legislation is intended
to address that deficiency.
The Report of the Senate Community Affairs Legislation Committee Inquiry
into Medicare Compliance Audits recommended that Regulations to ensure that
patient clinical records are only required to be accessed where necessary
during a compliance audit should be developed. The Government has accepted
the substance of the recommendation. However given the concerns expressed
during the hearing it is more appropriate to address this in the primary
legislation. Therefore the Bill will provide for significant involvement
by medical practitioners employed by Medicare Australia in the compliance
audit process.
This Bill will enable the Chief Executive Officer (CEO) of Medicare
Australia to give a notice requiring the production of documents to a
practitioner, or another person who has custody, control or possession of
the documents, to substantiate whether a Medicare benefit paid in respect
of a service should have been paid. However before a notice to produce
documents can be given to a person the CEO must fulfil several conditions:
. Firstly, the CEO must have a reasonable concern that the Medicare
benefit paid in respect of a service may exceed the amount that should
have been paid. A reasonable concern may be related to a particular
practitioner, a group of practitioners or a particular service or
groups of services. For example, the use of a particular Medicare
Benefits Schedule item may have grown so significantly or unexpectedly
that the CEO can have a reasonable concern about the provision of any
service associated with that item number. The CEO may also have a
concern about a professional service if it has been provided by a
person who is a particular type of practitioner and the CEO has a
concern about that specific group of practitioners.
. Secondly the CEO must take advice from a medical practitioner employed
by Medicare Australia on potential sensitivities associated with the
kinds of documents a practitioner may need to provide to substantiate
the service.
. Thirdly the CEO must give the person a reasonable opportunity to
voluntarily respond to an audit request. This means that
practitioners who choose to voluntarily tell Medicare Australia that
they have received a benefit that exceeds the amount they should have
been paid will still benefit from discounts on any financial penalty
that may apply.
Only when these three conditions are met can the CEO serve a notice under
new section 129AAD requiring a person to produce documents to substantiate
a Medicare benefit paid in respect of a service.
This legislation does not specify the actual document(s) that the person
may need to produce in response to a notice. It will be up to the person
who receives the notice to decide what documents they have available to
substantiate the service.
However the request to produce documents must include a statement that
documents containing clinical details do not have to be produced unless
these are necessary to substantiate the service. The Bill also includes a
provision that a person is not required to produce documents containing
clinical details to any employee who is not a medical practitioner employed
by Medicare Australia. Medicare Australia will have qualified medical
practitioners available to receive documents in all audits.
In addition, Medicare Australia is working with relevant stakeholders,
including the Australian Medical Association, to develop guidelines for
practitioners on the kinds of information that will substantiate particular
services or groups of services. These guidelines will be publicly
available and will emphasise that clinical information is not to be
provided unless it is absolutely necessary to substantiate the service.
The provisions in this Bill do not commence until 1 January 2010 in order
to allow for the development and publication of these guidelines.
The Bill provides protection for practitioners by providing that the
documents and information about particular services provided in response to
a notice cannot be used as the basis for a referral to Professional
Services Review or for most criminal and civil proceedings. This means
that information relating to identified services produced in response to a
notice to produce documents will not be able to be used in any other
proceedings except for those relating to false and misleading statements
under the Health Insurance Act 1973.
The Bill ensures that practitioners will be notified of the outcome of an
audit in which they were involved. Where a practitioner is found to owe a
debt to the Commonwealth, the Bill also introduces a requirement that they
be given 28 days in which to seek internal review of the decision before a
debt notice is issued.
At present, where the amount paid in respect of the service cannot be
substantiated, the practitioner is required to repay the amount. This will
continue to occur. In addition, this Bill provides that a practitioner who
cannot substantiate the amount paid in respect of a service may also be
liable for a financial administrative penalty. A base penalty amount of
20% will be applied to debts in excess of $2,500 or a higher amount if
specified in regulations.
An analysis of Medicare Australia data indicates that this threshold
reflects the point at which mistaken claims may become routine, or
reflective of poor administration or decision making. In 2008-09, only 22%
of practitioners who were found to have made incorrect claims were asked to
make repayments of more than $2,500. The threshold may be increased by
regulations. This provides for future adjustments of the threshold to
ensure that practitioners are not disadvantaged by incremental increases in
the value of the Medicare benefit amount paid in respect of services.
The Bill allows the base penalty amount of 20% to be reduced or increased
according to individual circumstances described in the legislation. If a
practitioner:
. tells Medicare Australia that an incorrect amount has been paid in
respect of the service prior to being contacted by the CEO, there is a
100% reduction in the penalty;
. tells Medicare Australia that an incorrect amount has been paid in
respect of the service before a notice to produce documents is issued,
the penalty is reduced by 50%;
. tells Medicare Australia that an incorrect amount has been paid in
respect of the service after a notice to produce documents has been
issued but before completion of the audit, the penalty is reduced by 25%;
. does not respond to a notice to produce documents, the full amount of the
services identified in the notice become repayable and the penalty is
increased by 25%;
. has been unable to substantiate an amount paid in respect of other
services in the previous 24 months and the total they repaid was more
than $30,000, the penalty in respect of the current amount which is being
recovered is increased by 50%.
The Bill is not retrospective and will only apply to Medicare services
provided after the commencement of the legislation on 1 January 2010.
This Bill forms part of the Government's commitment to responsible economic
management.
Financial Impact Statement
The implementation of IMCA will provide savings of $147.2 million over four
years and will cost $76.9 million to administer, leading to net savings of
$70.3 million over four years (Budget Paper No.2 2008-09 Health and Ageing
portfolio).
The budgeted annual costs, including the cost to Medicare Australia to
increase the number of audits conducted and manage the program, are set out
in the table below:
|Expense ($m) |
| |2008-09 |2009-10 |2010-11 |2011-12|
|Medicare Australia |14.2 |18.7 |18.8 |19.0 |
|Department of Health and |-21.2 |-42.2 |-41.5 |-42.4 |
|Ageing | | | | |
|Total |-6.9 |-23.5 |-22.7 |-23.3 |
|Related capital ($m) | | | | |
|Medicare Australia |6.2 | | | |
HEALTH INSURANCE AMENDMENT (COMPLIANCE) BILL 2009
NOTES ON CLAUSES
Clause 1: Short Title
This clause provides that the Bill, once enacted, may be cited as the
Health Insurance Amendment (Compliance) Act 2009.
Clause 2: Commencement
The Bill will commence on 1 January 2010.
Clause 3: Schedule(s)
This clause provides that each Act that is specified in a Schedule to the
Bill is amended or repealed as set out in the Schedule concerned. Any
other item in a Schedule has effect according to its terms. The Bill
contains one Schedule which amends the Health Insurance Act 1973 and
provides applications and savings provisions.
Schedule 1 - Amendments to the Health Insurance Act 1973
Schedule 1 amends the Act to:
. require persons who are given a notice under the Act to produce
documents to substantiate a Medicare benefit amount paid in respect of a
service;
. require that before a notice to produce can be given under the Act the
Medicare Australia CEO must have a reasonable concern, take advice from
a medical practitioner employed by Medicare Australia about the types of
documents that may be produced; and have given the person an opportunity
to voluntarily respond to a request to produce relevant documents;
. require Medicare Australia to inform individuals that documents
containing clinical details should only be produced if necessary to
substantiate a Medicare benefit paid in respect of a service;
. provide that documents containing clinical details only need to be
produced to a medical practitioner employed by Medicare Australia;
. introduce a financial administrative penalty for practitioners who do
not comply with a notice to produce documents or comply but are unable
to substantiate Medicare benefit amounts above a certain threshold;
. introduce a civil penalty for other persons who do not comply with a
notice to produce documents to substantiate a service in respect of which
a Medicare benefit amount has been paid; and
. introduce an internal review process for practitioners who are found to
owe a debt to the Commonwealth under existing section 129AC or new
provisions 129AC(1A), (1C) and (1E).
Item 1:
This item inserts a definition for medicare number into subsection 3(1).
It provides that the term will have the same meaning as in subsection 84(1)
of the National Health Act 1953 that states:
"medicare number" means:
a) in relation to a particular person covered by a medicare card - the
particular combination of numbers, or letters and numbers, on the
card that is applicable only to that person as a person covered by
that card; and
b) in relation to a person who the Medicare Australia CEO is satisfied
is, or is entitled to be treated as, an eligible person within the
meaning of the Health Insurance Act 1973 but who is not covered by a
medicare card - the particular combination of numbers, or letters and
numbers, that would be applicable to that person if that person were
covered by a medicare card.
This is necessary as the notice to produce documents (new section 129AAD)
which will be issued by the Medicare Australia CEO will identify the
particular services which are being audited and will specify the Medicare
number of the person who received that service (see subsection129AAD(8)).
Item 2:
Item 2 inserts into the Act, after section 129AAC, new sections 129AAD,
129AAE, 129AAF, 129AAG, 129AAH, 129AAI and 129AAJ.
Section 129AAD Notice to produce documents
Subsection 129AAD(1) applies this new section when the Medicare Australia
CEO has:
a) a reasonable concern that an amount paid in respect of a service may
have exceeded the amount that should have been paid; and
b) considered advice provided by an employee of Medicare Australia who is a
medical practitioner about the types of documents that may contain
information relevant the concern.
The requirement for the CEO to have a reasonable concern is included to
ensure that compliance audits are not conducted on a random basis.
Medicare Australia will use a range of sophisticated data analysis
techniques as well as gathering information that is provided by members of
the public in order to identify potential risks to the integrity of the
Medicare scheme. The reasonable concern developed by the CEO is based on
this analysis work.
The note under section 129AAD(1) describes the kinds of circumstances which
might form the basis of a reasonable concern on which to conduct a
compliance audit. The CEO's concern regarding a particular service does
not need to be based on information about a specific service or a specific
person. For example, the use of a particular Medicare item may have grown
so significantly or unexpectedly that the CEO can have a reasonable concern
about the provision of any service associated with that item number. The
CEO may also have a concern about a professional service if it has been
provided by a person who is a particular type of practitioner and the CEO
has a concern about that specific group of practitioners.
Subsection 129AAD(1)(b) provides that the CEO must take advice from an
employee of Medicare Australia who is a qualified medical practitioner
before a notice can be issued under 129AAD(2). This provision will mean
that a medical practitioner employed by Medicare Australia will consider
the proposed audit and provide advice to the CEO on the kinds of documents
a practitioner may need to provide to substantiate the service and any
potential sensitivities associated with those documents. This will allow
the CEO to consider the practicality, scope, sensitivity and details of the
request to produce documents (including the potential relevance of
documents containing clinical details).
Subsection 129AAD(2) provides that the notice to produce documents may be
given to the practitioner who rendered the service or on whose behalf the
service was rendered (paragraph (a)) or another person (paragraph (b)) who
the CEO believes has custody, control or possession of documents relevant
to ascertaining whether the amount paid in respect of the professional
service should have been paid. Paragraph 2(b) addresses situations where a
third party has control of documents relevant to the professional service
rendered by the practitioner (for example, corporate practices or hospitals
that contract with individual practitioners). It aims to encourage third
parties to cooperate with an audit request so that practitioners who do not
control the relevant documents are able to substantiate services. It is
also intended to discourage practitioners from establishing corporate
structures in order to avoid compliance with a notice to produce documents
issued under this legislation.
Subsection 129AAD(2) deals with notices to practitioners and other persons.
Subsection 129AAD(7) prevents this notice to produce documents under
section 129AAD from being given to the patient. The definition of 'another
person' does not include the patient (the person to whom the professional
service was rendered) or the person who incurred the medical expense. In
itemising or providing details on an account for a professional service for
which a Medicare rebate may be payable, the practitioner is stating that
the requirements of the Medicare item have been fulfilled. This is not a
requirement that the patient (or the person who incurred the medical
expense) is able to fulfil. If the practitioner who rendered the service
or on whose behalf the service was rendered causes an incorrect Medicare
payment to be made, the amount that was paid incorrectly is recovered from
the practitioner. This ensures that the patient is not disadvantaged.
Subsection 129AAD(3) provides that the CEO must give a person the
opportunity to voluntarily comply with an audit request before a notice to
produce documents under subsection 129AAD(2) can be issued. This ensures
that practitioners are provided with an opportunity to cooperate with
Medicare Australia prior to a formal notice under the Act being issued. It
means that practitioners who choose to voluntarily tell Medicare Australia
that they have received a benefit that exceeds the amount they should have
been paid still receive discounts on any financial penalty that may apply.
Subsection 129AAD(4) provides that the notice to produce documents only
applies to those service(s) which were rendered in the two years
immediately preceding the date of the notice. This effectively limits the
scope of compliance audit activity under the provisions in this Bill
providing more certainty for practitioners than currently exists.
Subsection 129AAD(5) describes what the person who is given a notice to
produce documents may be required to do in response to a notice to produce.
The CEO may require the person to produce the documents (or extracts or
copies of the documents) that are relevant to substantiating the Medicare
benefit paid in respect of the service(s) specified in the notice to the
CEO or to an employee of Medicare Australia. The relevancy test operates
to ensure that once the person has provided information which substantiates
the service, no further documents can be sought. This means that
practitioners will not have to produce all parts of a document, or all
documents relating to a service, and only need to produce enough
information to address the CEOs concern and substantiate the service.
The note to subsection 129AAD(5) describes the consequences if a
practitioner (a person described in paragraph 129AAD(2)(a)) is given a
notice to produce documents and they fail to comply with that notice. A
failure to comply with a notice may lead to Medicare Australia commencing
recovery action for the Medicare benefit amount that has been paid in
respect of the services specified in the notice (see section 129AC). In
addition an administrative penalty may also apply if the total amount of
the services specified in the notice is above the threshold amount (see
sections 129AEA, 129AEB and 129AEC). A person described in paragraph
129AAD(2)(b) may be subject to a civil penalty if they fail to comply with
a notice (see section 129AAE).
This legislation does not specify the actual document(s) that the person
will need to produce in response to a notice. It will be up to the person
who receives the notice to decide what documents they have available to
them to substantiate the service. However if the person decides that it is
necessary to provide documents containing clinical details to substantiate
the service(s) specified in the notice, subsection 129AAD(6) provides that
they may produce those documents to a medical practitioner employed by
Medicare Australia rather than an administrative compliance auditor. This
provides the person with the opportunity to explain their concerns about
the material to another medical practitioner recognising that individuals
may be more comfortable providing clinical information to qualified medical
practitioners employed by Medicare Australia, rather than administrative
staff. All medical practitioners employed by Medicare Australia are
subject to the provisions of the Public Service Act 1999 and the secrecy
provisions in the Health Insurance Act 1973.
Subsection 129AAD(9) provides that the requirement to produce documents
under this section includes the production of documents containing health
information about an individual, within the meaning of section 6 of the
Privacy Act 1988 that states:
health information means:
a) information or an opinion about:
i) the health or a disability (at any time) of an individual; or
ii) an individual's expressed wishes about the future provision of
health services to him or her; or
iii) a health service provided, or to be provided, to an individual;
that is also personal information; or
b) other personal information collected to provide, or in providing, a
health service; or
c) other personal information about an individual collected in connection
with the donation, or intended donation, by the individual of his or
her body parts, organs or body substances; or
d) genetic information about an individual in a form that is, or could
be, predictive of the health of the individual or a genetic relative
of the individual.
This includes relevant information from a patient medical record where
necessary to substantiate the Medicare benefit paid in respect of the
service. This provision is needed because some Medicare items specify
certain clinical actions which must be undertaken if a Medicare benefit to
be payable in respect of the service. The information needed to
substantiate these services may only be contained in a patient's medical
record. For example, some items require a blood pressure reading and a
weight, height and BMI calculation to be made. The only place this kind of
information is likely to be located is in the patient medical record. In
these cases, the person will be required to provide an extract of that
record to allow Medicare Australia to ascertain whether the item
requirements were met and whether the Medicare benefit paid in respect of
the service was correct.
One of the intents of this legislation is to formalise existing voluntary
compliance audit processes. At present there is confusion amongst
practitioners about the kind of information they should provide during an
audit. Consequently practitioners respond in a range of ways, with some
refusing to cooperate, while others disclose health information and/or
patient medical records which are not relevant to the concern being
audited. While the Privacy Act allows personal information to be disclosed
to bodies such as Medicare Australia where that disclosure is reasonably
necessary to protect the public revenue, many practitioners remain unclear
about what their obligations are. This legislation addresses this
confusion, by making it clear that all practitioners (and other specified
persons) must produce documents to substantiate a Medicare benefit paid in
respect of a professional service when issued a notice under new section
129AAD.
Medicare Australia is working with stakeholders, including the Australian
Medical Association, to develop guidelines for practitioners to provide
examples of the kinds of information that will substantiate particular
services or groups of services. The provisions in this Bill do not
commence until 1 January 2010 in order to allow for the development and
publication of these guidelines.
Subsection 129AAD(8) provides that Medicare Australia must inform the
person who is given the notice to produce documents that they are not
required to produce documents containing clinical details unless these are
necessary to substantiate the service. The notice must also specify
details of each professional service, including details of the item, date
the service was rendered, the medicare number of the person in respect of
whom the service was rendered and the reason(s) for the CEO's concern. To
assist in patient identification, the notice may also include a patient
reference number and/or a name. In addition the notice will tell the
person how the document is to be produced and the period within which, and
place at which, the document is to be produced. The person must be given
at least 21 days to produce the document. Given the operation of subsection
129AAD(6) the person will be given the contact details of the compliance
officer conducting the audit, as well as the contact details of a Medical
Adviser.
This provision does not introduce any additional record keeping
requirements. Subregulation 9(1) of the Health Insurance (General Medical
Services Table) Regulations describes the elements of a professional
attendance for a broad range of Medicare attendance items. Recording the
clinical details of the service provided to the patient is one element of
the professional attendance.
New section 129AAD is not limited by any other provision of the Act, the
Medicare Australia Act or any other Act that relates to the powers of the
CEO to require the production of documents (subsection 129AAD(10)).
Existing provisions which can be used to compel individuals to produce
specialist referrals or diagnostic imaging or pathology records remain
unchanged (sections 20BA, 23DK, 23DKA, 23DR and 23DS).
Section 129AAE Civil penalty - failure to comply with requirements in
notice
Section 129AAE provides for a civil penalty if a person other than the
practitioner who rendered the service or on whose behalf the service was
rendered (the person referred to in paragraph 129AAD(2)(b)) is given a
notice to produce under section 129AAD but fails to comply within the
period specified in the notice. The civil penalty is 20 penalty units for
an individual (i.e. $2,200) and 100 penalty units for a body corporate
(i.e. $11,000).
This civil penalty provision is required to encourage third parties who
might control relevant documents to comply with a notice to produce.
Examples where this may occur include corporatised medical practices that
employ health professionals who provide Medicare services and hospitals
where medical practitioners have rights of private practice. It would not
be acceptable to seek recovery of Medicare benefits from a practitioner and
impose a penalty if that practitioner was unable to verify the Medicare
benefit paid in respect of the service due to refusal by another party to
provide relevant documents. This compliance measure would also be
unworkable if practitioners were able to establish corporate entities or
structure employment arrangements in such a way as to avoid complying with
the requirements of the proposed legislation.
Subsection 129AAE(2) also sets out the circumstances which constitute a
defence to proceedings for the person (described at paragraph 129AAD(2)(b))
following a failure to comply with the notice. It applies when the person
fails to comply with a notice to produce documents because of the actions
of another person (who is not under the control of the person described in
paragraph 129AAD(2)(b) who is given a notice) or a non-human act such as a
natural disaster, which could not reasonably have been anticipated.
The note to this section says that the person (described at paragraph
129AAD(2)(b)) bears the responsibility of establishing that a failure to
comply with a notice given under new section 129AAD was due to
circumstances described in subsection 129AAE(2).
Section 129AAF Self-incrimination etc.
New section 129AAF deals with self-incrimination. Subsection 129AAF(1)
provides that, if a notice to produce documents is provided to a person,
that person is not excused from producing the documents on the basis that
the production of the documents may tend to incriminate the person or
expose them to a penalty.
The abrogation of the common law privilege against self-incrimination is
necessary to ensure that the compliance measures contained in this Bill are
able to operate effectively. A very large amount of public money is
expended under Medicare (over $14 billion in 2008-09). Auditing activity
is undertaken by Medicare Australia to ensure that this money is spent
appropriately. Many practitioners voluntarily comply with Medicare
Australia requests for information. However around 20% of practitioners do
not cooperate and Medicare Australia does not presently have the power to
require the production of relevant information. This legislation will
address that deficiency. The provisions of this Bill will, when enacted,
enable the Medicare Australia CEO to require the production of documents to
verify whether an amount of Medicare benefit paid in respect of a
professional service should have been paid. Practitioners may be liable
for financial penalties where the amount cannot be substantiated. The new
'notice to produce documents' provision would not be workable if
practitioners were able to resist notices by claiming privilege against
self-incrimination. Medicare Australia's auditing ability would be
severely compromised; the gap which this legislation aims to fill would
remain.
A standard use and derivative use immunity provision will protect
practitioners against other possible consequences of responding to notices
to produce documents. Subsection 129AAF(2) provides that the production of
documents, and information obtained as a direct or indirect result of the
production of documents in response to a notice under section 129AAD,
cannot be used as evidence against the person in any criminal proceedings,
other than for offences concerning false or misleading information or
documents under the Act or the Criminal Code, or in any civil proceedings
other than those arising under Part VIA of the Act (which deals with civil
penalties).
Section 129AAG Medicare Australia CEO or an employee of Medicare Australia
may deal with documents etc. produced
New section 129AAG describes what the Medicare Australia CEO is able to do
with documents produced under the notice. Subsection 129AAG(1) provides
that the CEO may take any of the actions set out in subsection 129AAG(2) in
order to ascertain whether the information contained in documents
substantiates an amount paid in respect of a service. This is a common
provision in Commonwealth legislation dealing with notices to produce
documents.
The note to subsection 129AAG(1) describes the action that may result if
the information contained in documents provided in response to a notice
under new section 129AAD does not substantiate the Medicare benefit paid in
respect of the service.
Subsection 129AAG(2) allows the CEO to inspect the document, make a copy
of, or take an extract from the document and retain the document, extract
or copy for a reasonable period. The CEO must provide a certified copy of
the document as soon as practicable (subsection 129AAG(3)) to the person
who provided the original document. The certified copy will be received in
all courts or tribunals as if it were the original (subsection 129AAG(4)).
Until a certified copy is supplied, the CEO must allow the person who
provided the document (or a person authorised by that person) to inspect,
make copies of, or take extracts from the document or extract (subsection
129AAG(5)). This provides protection for practitioners if they mistakenly
supply an original document rather than a copy or extract to Medicare
Australia. If this were to occur, this provision would require Medicare
Australia to give the person access to the original document prior to
arranging its return.
Documents produced under section 129AAD will be viewed by a limited number
of specially trained and authorised staff; including medical practitioners
employed by Medicare Australia who will be available to receive documents
contain clinical details. These authorised staff will be located in
National and State or Territory offices. Medicare Australia already has a
conflict of interest policy that prohibits staff from being involved in
compliance activities when they are acquainted with an individual connected
to the audit. Information will be stored in accordance with relevant
legislation, current policies and Government requirements that safeguard
personal information including the Privacy Guidelines for the Medicare
Benefits and Pharmaceutical Benefits Programs issued by the Privacy
Commissioner under section 135AA of the National Health Act. Those
safeguards prevent and detect unauthorised access and cover all facets of
personnel security, physical security and IT security.
New section 129AAG is not limited by any other provision of the Act, the
Medicare Australia Act or any other Act that relates to the powers of the
CEO to deal with a document as described in subsection 129AAG(2)
(subsection 129AAG(6)).
Section 129AAH Notice of decision: no amount recoverable because amounts
paid substantiated etc.
Subsection 129AAH(1) provides that the Medicare Australia CEO must advise a
person in writing when the documents they have provided substantiate the
Medicare benefit paid in respect of the service. This applies when the
person has voluntarily cooperated with a request and when a person complies
with a notice to produce documents under section 129AAD. This ensures that
the person is advised of the outcome of the audit.
Subsections 129AAH(2) and (3) provide that the CEO must advise a person in
writing when the CEO is satisfied that the documents are not able to be
produced due to circumstances beyond their control as set out in subsection
129AC(1B), (1D) and (1F).
Subsection 129AAH(4) provides that the notice of decision under 129AAH(1),
(2) and (3) may include decisions about more than one specified service,
including decisions relating to amounts which are owed to the Commonwealth
referred to in section 129AAI. This is important as some audits may
involve more than one service. This means that a notice of decision may
contain different outcomes for the different services particularly where
some services have been substantiated while others were not. This
provision therefore allows Medicare Australia to provide one audit outcome
notice covering all the services that were audited, and the decision in
relation to each of those services.
Section 129AAI Notice of decisions: amounts recoverable
Subsection 129AAI(1) provides that a person must be advised in writing when
the Medicare Australia CEO decides to issue a decision notice claiming an
amount that is owed to the Commonwealth under subsection 129AC(1), and new
subsections 129AC(1A), (1C) and/or (1E). This decision notice must include
the reasons for the decision to claim the amount as a debt and information
on how the person can seek internal review of the decision under new
section 129AAJ.
Subsection 129AAI(2) provides that the notice of decision under subsection
129AAI(1) may include decisions about more than one specified service,
including decisions referred to in new section 129AAH. The decision notice
under subsection 129AAI(1) may be used to advise a person when the CEO is
not satisfied that documents are not able to be produced due to
circumstances beyond their control as set out in new subsections 129AC(1B),
(1D) and (1F).
Subsection 129AAI(3) provides that the validity of the decision is not
affected if the person is not advised in writing of a decision under
subsection 129AAI(1). However until such time as the person is advised by
the CEO of the intention to claim an amount as a debt due to the
Commonwealth, the debt notice for that amount cannot be issued to the
person.
Under subsection 129AAI(4) the CEO must wait 28 days after giving the
person written notice of the decision under subsection 129AAI(1) before
issuing a debt notice for the amount owed to the Commonwealth. This enables
the individual who is affected by the decision to consider the outcome of
the audit and if unsatisfied, seek a review of the decision under section
129AAJ.
129AAJ Review of decision to claim amounts as debts
Section 129AAJ sets out the internal review process for decisions to claim
amounts as debts. Subsection 129AAJ(1) provides that where the Medicare
Australia CEO makes a decision to claim an amount recoverable under
subsections 129AC(1), (1A), (1C) or (1E) as a debt due to the Commonwealth
from a person or an estate, that person or estate may seek internal review
of the decision. A request for internal review must be made in the form
approved in writing by the CEO of Medicare Australia. Administratively,
the form will be given to the person or the estate when the notice is
issued under subsection 129AAI(1) and will also be made publicly available
by Medicare Australia through appropriate channels. The person must apply
for review within 28 days following notification of the decision
(subsection 129AAJ(2)). In practice the power to make decisions under the
provisions in this Bill will be delegated to senior officers within
Medicare Australia. This means that the internal review powers under
section 129AAJ will be exercised by the CEO or a delegate who will be a
senior officer of Medicare Australia who is not involved in the compliance
audit activity.
Following application by the person, the CEO will review the decision and
either confirm, revoke or vary it (subsection 129AAJ(3)). The CEO must
write to the person or estate with the outcome of the review within 28 days
of the review application (subsection 129AAJ(4)). Subsection 129AAJ(5)
provides that the validity of the decision is not affected if the person or
estate is not advised in writing of a decision within the 28 day timeframe,
as required by subsection 129AAJ(4). A decision under subsection 129AAI(1)
may only be reviewed once (subsection 129AAJ(6)).
Item 3:
Item 3 makes clear that the new sections 129AAD, 129AAH and 129AAI will
apply prospectively. That is, the amended arrangements will only apply to
professional services rendered on or after the commencement of the Bill on
1 January 2010. This means that the Medicare Australia CEO will not be
able to issue a notice to produce documents under new section 129AAD, or
issue a decision notice under new sections 129AAH or 129AAI, in relation to
any service that was rendered prior to the legislation commencing.
Item 4:
This item inserts eight new subsections after subsection129AC (1).
Subsection 129AC(1A) deals with failure to produce documents in respect of
one or more services specified in a notice under new section 129AAD. If a
practitioner (the person who rendered the service, or on whose behalf a
service was rendered, as described in paragraph 129AAD(2)(a)) is required
by a notice to produce documents in respect of a specified service (new
section 129AAD) and the person does not comply with the requirement, the
Medicare benefit amount paid in respect of the service is recoverable as a
debt due to the Commonwealth from the person, or the person's estate,
whether or not the amount was paid to the person. For example, if a person
receives a notice to produce under new section 129AAD and the notice
specifies 20 services, but the person only provides documents in relation
to 12 services, then the Medicare benefit amount which has been paid in
relation to the remaining 8 services becomes a debt which is recoverable
from the person or their estate.
Subsection 129AC(1C) deals with an amount not properly substantiated. This
relates to situations where a practitioner (a person described in
paragraph 129AAD(2)(a)) complies with a notice to produce a document in
respect of a service (new section 129AAD) but the information in the
document does not substantiate the Medicare benefit amount paid in respect
of the service. In these circumstances, the amount which cannot be
substantiated is recoverable as a debt due to the Commonwealth from the
practitioner or the practitioner's estate (if that practitioner has died
after the notice has been given). The amount which is not substantiated
may be the whole amount or it may be the difference between the amount paid
and the Medicare service which has been substantiated by the documents
provided by the person. The amount is recoverable from the practitioner
who rendered the service (person described in paragraph 129AAD(2)(a))
whether or not the amount was paid to that person because their actions
caused an incorrect Medicare amount to be paid.
Subsection 129AC(1E) deals with an amount not properly substantiated. This
relates to situations where a notice to produce documents is given to a
person described in paragraph 129AAD(2)(b), who is not the practitioner who
rendered the service, and that person complies with the notice. Subsection
129AC (1E) provides that if the relevant documents do not substantiate
(wholly or partly) the Medicare benefit amount paid in respect of the
service, the Medicare benefit amount which is not substantiated is
recoverable as a debt due to the Commonwealth from the practitioner (the
person who rendered the service, described in paragraph 129AAD(2)(a)) or
their estate.
Subsections 129AC(1B), (1D) and (1F) provide that the new subsections
129AC(1A), (1C) and (1E) do not apply if the person (the practitioner)
satisfies the CEO that the non-compliance with a notice to produce under
new section 129AAD, or the failure to substantiate the Medicare benefit
paid in respect of the professional service, is due to circumstances beyond
the control of the persons described in paragraphs 129AAD(2)(a) and (b).
This is intended to address circumstances such as if documents have been
destroyed during a natural disaster, or some other circumstance not caused
by the person.
Subsection 129AC(1G) describes what occurs when a person is given a notice
of liability to pay an administrative penalty under section 129AEC and the
person does not pay the penalty by the date set out in the notice. Under
these circumstances the amount is recoverable as a debt due to the
Commonwealth from the person or the person's estate.
Subsection 129AC(1H) provides that a Medicare benefit amount paid under the
Act can only be recovered once under section 129AC.
The notes to subsections 129AC(1B), (1D) and (1F) refer readers to new
section 129AAJ which deals with the internal review of decisions to claim
an amount as a debt due to the Commonwealth.
Note 1 replaces the heading to section 129AC with 'Recovery of amounts
overpaid etc. and administrative penalties', to properly reflect the
revised content of the section.
Note 2 inserts a new subheading 'False or misleading statements' to
subsection 129AC(1).
Item 5:
This item adds reference to new subsections 129AC(1A), (1C), (1E) and (1G)
to the end of paragraph 129AC(2)(a). This extends the current provision
for liability for interest on amounts under existing subsection 129AC(1) to
amounts due as debts under new subsections 129AC(1A), (1C), 1(E) and (1G) .
The item also inserts a new heading, 'Interest on amounts' to subsection
129AC(2).
Item 6:
This is a machinery amendment to include 'and' at the end of paragraph
129AC(2)(a).
Item 7:
This item repeals the existing subsection 129AC(4) and substitutes a new
subsection 129AC(4). It allows the person and the Medicare Australia CEO
to agree to an arrangement whereby a debt can be recovered from future
payments that Medicare Australia may make to that person. This facility is
only available where the Medicare benefits paid in respect of professional
services are assigned to the practitioner under existing section 20A of the
Act, and both parties agree to the arrangement. The ability to enter such
an agreement is contained in existing legislation but is further clarified
by new subsection 129AC (4).
Item 8:
This item is an application and savings provision. It applies new
subsection 129AC(4) to the amounts recoverable under subsection 129AC(1) of
the Act before, on or after the commencement of this item (1 January 2010).
In addition, if a person has an existing agreement in force to pay an
amount to the Commonwealth immediately before the commencement of this
item, the arrangements under that agreement will continue unless the person
withdraws from the agreement.
Item 9:
This item inserts new sections 129AEA, 129AEB and 129AEC after section
129AE.
Section 129AEA Liability for administrative penalty
Under subsection 129AEA(1) a practitioner (the person described in
paragraph 129AAD(2)(a)) is liable for an administrative penalty in respect
of a Medicare benefit paid in respect of one or more services rendered by
them or on their behalf, if:
. the Medicare Australia CEO has given the person a notice claiming a debt
due to the Commonwealth under subsection 129AC(1); and
. the notice specifies the total amount recoverable amount in respect of
the service(s); and
. the total amount is more than $2,500 (or a higher amount if prescribed by
the regulations).
Paragraph 129AEA(1)(c) provides that the total amount cannot include debts
that became due more than two years prior to the notice under 129AC(1)
being given to the person.
Practitioners (persons described in paragraph 129AAD(2)(a)) who make
voluntary admissions and/or cooperate with an audit process will not be
given a notice to produce documents under new subsection 129AAD. Under
subsection 129AC(1), if a person makes a false or misleading statement
which results in an amount paid in respect of a service exceeding the
amount that should have been paid, the excess amount is recoverable as a
debt due to the Commonwealth. This will remain unchanged. However, the
new subsection 129AEA(1) allows an administrative penalty to be applied to
amounts which total more than $2,500 (or a higher amount set by
regulations).
An analysis of Medicare Australia data indicates that this threshold
reflects the point at which mistaken claims may become routine, or
reflective of poor administration or decision making. In 2008-09, only 22%
of practitioners who were found to have made incorrect claims were asked to
make repayments of more than $2,500. The ability to adjust the threshold
by regulations will ensure that practitioners are not disadvantaged by
incremental increases in the value of Medicare benefit amount paid in
respect of services. The regulations may only increase the threshold
amount; regulations cannot be used to decrease the threshold amount.
Subsection 129AEA(2) provides that a practitioner (the person described in
paragraph 129AAD(2)(a)) is liable for an administrative penalty in respect
of a service if:
. the CEO has given the person a notice to produce document under new
section 129AAD; and
. the person has incurred a debt to the Commonwealth under new subsections
129AC(1A) or (1C) in respect of one or more services specified in the
notice; and
. the CEO has given the person a notice under new subsection 129AAI
claiming an amount as a debt due to the Commonwealth; and
. the total amount that may be recovered in respect of the service(s)
specified in the notice is more than $2,500 (or a higher amount if
prescribed by regulations).
Subsection 129AEA(3) provides that a practitioner who rendered a particular
service, or on whose behalf a particular service has been rendered
(described in paragraph 129AAD(2)(a)), is liable for an administrative
penalty in respect of the service if:
. the CEO has given another person (described in paragraph 129AAD(2)(b)) a
notice to produce documents under new section 129AAD relating to one or
more services; and
. the other person has complied with the notice under new section 129AAD
but the information provided does not substantiate the amount paid in
respect of the service(s) (subsection 129AC(1E));
. the CEO has given the practitioner a notice under new subsection 129AAI
claiming an amount as a debt due to the Commonwealth; and
. the total amount that may be recovered from the practitioner in relation
to the services specified in the notice is more than $2,500 (or a higher
amount if prescribed by regulations).
The administrative penalty applies to the practitioner who rendered the
service or on whose behalf the service was rendered (described in paragraph
129AAD(2)(a)) where an amount is recoverable as a debt due to the
Commonwealth because another person (described in paragraph 129AAD(2)(b))
has provided documents which do not, or do not wholly, substantiate the
amount paid in respect of the service(s) identified in the notice and
rendered by the practitioner (new subsection 129AC(1E)).
Section 129AEB Amount of administrative penalty
Subsection 129AEB(1) describes how the administrative penalty in respect of
a service is calculated.
Subsection 129AEB(2) provides that the base penalty amount is 20% of the
amount which is recoverable in respect of the service under paragraph
129AEA(1)(b), (2)(e) or (3)(e) as applicable. The base penalty amount may
be increased or decreased subject to subsections 129AEB(3), (4), (5), and
(6). When more than one service is identified in a notice to produce
documents under new section 129AAD or a debt notice under subsection
129AC(1), the administrative penalty will be calculated for each service
where the Medicare benefit amount exceeded the amount (if any) that should
have been paid.
Subsection 129AEB(3) provides that a person's base penalty amount for a
professional service is reduced as follows:
. 100% if the practitioner voluntarily tells Medicare Australia, in the
approved form, that an amount paid in respect of a service exceeded the
amount that should have been paid. This information must be provided
before the Medicare Australia CEO makes a request for documents or gives
the practitioner a notice to produce documents under new section 129AAD.
This addresses instances where a practitioner contacts Medicare Australia
to admit that they have caused an incorrect Medicare benefit amount to be
paid in respect of a service. At present some practitioners contact
Medicare Australia and make an admission following publication of the
National Compliance Program which describes the specific risks Medicare
Australia will be investigating during the year;
. 50% if Medicare Australia asks the practitioner to voluntarily provide
documents to substantiate a Medicare benefit paid in respect of a service
and the practitioner voluntarily tells Medicare Australia, in the
approved form, that an amount paid in respect of a service exceeded the
amount that should have been paid. This information must be provided
before the CEO gives the practitioner a notice to produce documents under
new section 129AAD (item 2 of the table); and
. 25% if the CEO gives a notice to produce documents under new section
129AAD to the practitioner and, before the end of the period specified in
the notice, the person tells the CEO, in the approved form, that an
amount paid in respect of the service exceeded the amount that should
have been paid (item 3 of the table).
Subsection 129AEB(4) provides for a 25% increase in the base penalty amount
if a practitioner does not provide any response to a notice to produce
documents given under new section 129AAD (other than where the person has
satisfied the CEO that the non-compliance is due to circumstances beyond
their control (new subsection 129AC(1B)).
Subsection 129AEB(5) applies a 50% increase in the base penalty amount for
the latest professional service specified in a notice to produce under new
section 129AAD, if in the previous 24 months the CEO has:
. given one or more other notices to the practitioner under new section
129AAD specifying other professional services; or
. served a notice on the practitioner claiming an amount as a debt due
under subsection 129AC(1); or
. given to another person one or more notices under new section 129AAD
specifying other professional services that were rendered by, or on
behalf of the practitioner;
and the total amount of the sum of the previous debts (recoverable amounts
plus base penalty amounts) is more than $2,500 (or a higher amount if
prescribed in regulations).
For example, if a practitioner receives a notice under new section 129AAD
in respect of 20 services totalling $3,000 and fails to substantiate any of
the specified services, then they would be liable to repay the Medicare
benefit amount ($3,000) and the base penalty amount of 20% of $3,000 ($600)
so the total amount payable would be $3,600.
However if a practitioner receives a notice under new section 129AAD in
respect of 20 services totalling $3,000 and fails to substantiate any of
the specified services, and the in the previous two years the practitioner
has been given a notice under subsection 129AC(1) and/or a notice under new
section 129AAD, and/or a notice has been issued to another person under new
section 129AAD in respect of services rendered by the practitioner, and the
total amount of those combined notices is more than $30,000, then the base
penalty increases by 50%. This means the practitioner would be liable to
repay the Medicare benefit amount ($3,000) and a base penalty amount of 30%
(base penalty amount 20% x 50% increase) of $3,000 ($900) so the total
amount payable would be $3,900.
Subsection 129AEB(5)(c) provides for the $2,500 threshold to be adjusted in
the future to make sure that practitioners are not disadvantaged by
incremental increases in the value of the Medicare benefit amount paid in
respect of services. The regulations may only increase the threshold; the
threshold cannot be decreased by the regulations.
Subsection 129AEB(6) provides that if both the 25% increase in the base
penalty amount and the 50% increase in the base penalty amount apply to a
debt, then the 25% increase is applied first, followed by the 50% increase
Subsection 129AEB (7) provides that if a base penalty amount is subject to
both a reduction and an increase, the reduction is applied first.
Section 129AEC Notice of administrative penalty
New section 129AEC provides for the Medicare Australia CEO to issue
a written notice to a person who is liable for an administrative
penalty. The notice of administrative penalty will include the
administrative penalty relating to each professional service
specified in the notice to produce issued under new section 129AAD
and/or in the debt notice issued under existing subsection 129AC(1)
as well as the total amount of the administrative penalty. The
notice of administrative penalty may also separately include the
Medicare benefit amount paid in respect of a service which is being
recovered as a debt due to the Commonwealth under section 129AC.
This will mean that Medicare Australia is able to provide a
practitioner with one notice listing both the debt amount and the
base penalty amount owed to the Commonwealth
Item 10: Application
This item provides for the application of the administrative penalty
provisions (new sections 129AEA, 129AEB and 129AEC of the HIA). These new
sections apply in respect of professional services rendered on or after the
commencement of those sections (1 January 2010).