Practices to share in repayment of Medicare debts

29 April 2019

In an effort to improve the rate of recovery of debts owed for incorrect or false claiming under the MBS, the government has passed legislation granting Medicare enhanced debt-recovery powers. Medicare can now offset up to 20% of MBS benefits payable to a practitioner against debts owed or garnish the salaries of employed practitioners to recover debts. From 1 July 2019, Medicare will be able to determine that debts for false or misleading MBS billings are to be shared between the rendering practitioner and a practice, hospital or employer which engaged the practitioner.

The new legislation will also extend the Professional Services Review (PSR) scheme to allow the Director to review persons who contract with persons who render professional services. Previously, only the providers of professional services themselves or their employers could be reviewed. This will expand the PSR scheme to potentially include medical practices which engage independent contractors and referral schemes such as home call services.

To aid enforcement under the expanded scheme, Medicare will be given expanded powers to recover debts related to the payment of MBS benefits. Medical practitioners who are indebted to the Commonwealth due to overpaid or falsely claimed MBS benefits will be encouraged to enter a payment plan within 90 days. If that does not occur, Medicare may:

  • Offset up to 20% of amounts that become payable to the medical practitioner for MBS benefits; or
  • Issue a garnishee notice to a person who owes money to the medical practitioner – such as a hospital at which the medical practitioner is employed – to pay the recoverable amount or a specified percentage to the Commonwealth.

Further provisions coming into effect from 1 July 2019 will empower the Chief Executive of Medicare to determine that debts owed are shared debts where the medical practitioner (the primary debtor) was employed or otherwise engaged by another person or entity (the secondary debtor). Shared debt determinations will be able to be made against medical practices, hospitals or others who engage medical practitioners.

In determining whether a shared debt arrangement should be made, the Chief Executive will consider:

  • Whether the secondary debtor could have controlled or influenced the circumstances that led to the making of the false or misleading statement (in most cases the claim for an MBS benefit) to which the debt relates;
  • Whether the secondary debtor directly or indirectly obtained a financial benefit from the making of the false or misleading statement; and
  • Whether any other factors make it fair and reasonable for such a determination to be made.

If you have any concerns about potential exposure, either as someone who renders professional services or as someone who contracts with persons who provide professional services, under the new provisions you should seek advice about your specific circumstances.

This article was written by Katharine Philp, Partner and Joshua Liddle, Associate.

Katharine Philp

P: +61 7 3169 4974


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