Important changes to the Health Insurance Act 1973 (Cth) for non-practitioners and corporate entities being reviewed by the Professional Services Review

16 December 2022

On 5 December 2022, the Health Legislation Amendment (Medicare Compliance and other Measures) Bill 2022 (Bill) was assented to by the Governor-General. With the medical profession currently under close scrutiny for its Medicare servicing, the amendments to the Health Insurance Act 1973 (Cth) (Act) are timely. One of the primary goals of these amendments is to strengthen general compliance with the requirements of Medicare servicing by proposing to amend Part VAA of the Act. Part VAA governs the current process established to review practitioners’ billing practices by way of the Professional Services Review (PSR).

An equally important objective of the Bill was the extension of the opportunity to engage with the review process in an efficient and cost-effective manner for both non-practitioners and corporate entities, as well as individual practitioners. Under the previous version of the Act, the Director of the PSR did not have the option of entering into agreements with non-practitioners and corporate entities and instead had to refer them to a Professional Services Review Committee if they identified concerns. This required non-practitioners and corporate entities to undergo sometimes lengthy and often very costly proceedings to respond to any concerns of compliance with their Medicare servicing unlike individual practitioners who were often afforded the opportunity to avoid this process by entering into agreements with the Director of the PSR. The Bill (now, the Amending Act) allows non-practitioners and corporate entities to also enter into such agreements.

The Professional Services Review Scheme

Medicare has access to and reviews the statistical data of all claims rendered by practitioners and body corporates under the Medicare Benefits Schedule (MBS). If this statistical data gives rise to concerns of “inappropriate practice”, the PSR will conduct a review of that practitioner or body corporate’s Medicare servicing. “Inappropriate practice” is defined under section 82 of the Act as:

  • the rendering or initiation of services which would be considered unacceptable to the general body of practitioners, specialists, or consultant physicians, of which that person is member;
  • the rendering or initiation of services which constitutes a prescribed pattern of services; or
  • knowingly, recklessly or negligently causing or permitting a practitioner employed or otherwise engaged by a person to engage in conduct that constitutes inappropriate practice.

The PSR is an independent agency established under the Act for the purpose of reviewing and investigating any concerns of potential “inappropriate practice” identified by Medicare. Under the Act, any concerns relating to the conduct of an individual practitioner will first be referred to the Director of the PSR (Director). The Director will conduct an interview with that practitioner to gauge a better understanding of that practitioner’s clinical practice and associated billing processes. If at the conclusion of that interview, the Director still has concerns with the practitioner’s Medicare servicing, the Director may determine to, amongst other things, enter into an agreement with that practitioner under section 92 of the Act (Section 92 Agreement). While the terms of a Section 92 Agreement are a matter for negotiation between the parties, they will always include an acknowledgement by the practitioner that they have engaged in “inappropriate practice” and will otherwise tend to include a requirement that the practitioner repay some or all of the Medicare benefits received, and temporary partial or full disqualification from claiming Medicare benefits. The Section 92 Agreement is an efficient and effective means of responding to concerns of “inappropriate practice” and, by imposing financial sanctions, ensuring similar conduct does not occur again.

Until recently, however, this option was not available to corporate entities. Previously, if the Director of the PSR identified concerns that a corporate entity may have knowingly, recklessly or negligent caused its practitioners to engage in “inappropriate practice”, the Act did not permit the Director of the PSR to enter into a Section 92 Agreement with the entity.

Instead, a body corporate (and a non-practitioner) had to be referred to a Committee of Peers (Committee) if persisting concerns were identified by the Director of the PSR. The Committee process remains a feature of the Act, however, it is now no longer necessarily the first port of call for body corporates. The Committee is convened to review a selection of the body corporate’s medical records relating to the MBS claims and conduct a hearing to determine if “inappropriate practice” has occurred.

A Committee hearing can be an onerous, costly, and lengthy process requiring attendance at each day of the hearing. If the Committee does in fact find that “inappropriate practice” has occurred, the process does not end there. The Committee then refers its findings to the Determining Authority to decide the appropriate sanctions. Sanctions can include a reprimand, counselling, part or full disqualification from claiming Medicare benefits, or an order for repayment of any benefits received.

Amendments to the Act

On 3 August 2022 date, the Bill was tabled before Parliament. As was stated in the Explanatory Memorandum, one of the primary intentions of the Bill was to broaden the scope of the Act so that corporate entities were also offered the opportunity to enter into Section 92 Agreements. This was to enable “an expedient resolution for any persons who are willing to acknowledge inappropriate practice, in lieu of having to engage in the lengthy and onerous process of review by a Committee”. Further, the Explanatory Memorandum clarified that transitional provisions under the Bill would allow non-practitioners and body corporates who were referred to the Committee in the 18 months prior to the commencement of the Amending Act to enter into Section 92 Agreements.

An equally important goal of the Bill, however, was to strengthen compliance of practitioners and corporate entities with the Medicare servicing requirements.

Under the previous Act, Section 92 Agreements were entirely confidential. By comparison, the findings of a Committee hearing were, and still are, in certain circumstances, published by the PSR.

Senator K Gallagher emphasised in her second reading speech that the public component of the PSR process can create significant consequences for any practitioner or corporation. While she suggested that the confidential nature of Section 92 Agreements encouraged cooperation on the part of the practitioner, she stated that “the Bill creates an exception to the general rule that agreements made under section 92 are confidential by giving the Director the discretion to publish details of an agreement, where the person under review has not fulfilled their obligations”.

Senator Carol Brown echoed these comments in her second reading speech, and went on to say, “another important safeguard protecting the compliance terms negotiated in agreements is the extension of the government’s ability to garnishee the bank accounts of person or corporations that renege on agreements to repay a debt to the Commonwealth”.

Key takeaways

While there may be additional sanctions available to the Director where a party fails to comply with a Section 92 Agreement, recent amendments to the Act now allow corporate entities to forego the “lengthy and resource-intensive” Committee review saving unnecessary costs and resources. Body corporates should be encouraged to pursue this newly established option for them, should the proposed terms of any Section 92 Agreement be reasonable. In accordance with the transitional provisions, this applies to any body corporate who has been referred to the Committee from 6 June 2021.

Need further advice?

The Health team at HWL Ebsworth Lawyers has extensive experience in assisting both individual medical practitioners and corporate entities through the PSR process and with other compliance activity undertaken by Medicare. Feel free to get in contact with our team if you would like further information or require assistance with a Medicare, Practitioner Review Program or PSR review.

This article was written by Scott Chapman, Partner, Luke Depares, Associate and Stephanie Graham, Solicitor. 

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