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2022-2023
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
HEALTH INSURANCE AMENDMENT (PROFESSIONAL SERVICES
REVIEW SCHEME) BILL 2023
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health and Aged Care,
the Hon Mark Butler MP)
HEALTH INSURANCE AMENDMENT (PROFESSIONAL SERVICES
REVIEW SCHEME) BILL 2023
OUTLINE
The purpose of the Health Insurance Amendment (Professional Services Review
Scheme) Bill 2023 (the Bill) is to implement priority changes arising from
recommendations of the independent Review of Medicare Integrity and Compliance
undertaken by Dr Pradeep Philip (Philip Review). The Philip Review commenced in
November 2022, and the final report was released on 4 April 2023.
The measures in the Bill amend the Health Insurance Act 1973 (the Act) to:
• remove the requirement for the Australian Medical Association (AMA) to
agree to the appointment of the Director of the Professional Services Review
(PSR);
• amend consultation requirements for appointing other statutory office holders
of the PSR to enable consultation with relevant peak bodies directly;
• establish the new statutory office of Associate Director of the PSR; and
• remove the requirement for the Chief Executive Medicare (CEM) to consult
with stakeholder groups prior to issuing a notice to produce documents.
The PSR is an independent statutory agency responsible for investigating and
sanctioning inappropriate practice by health professionals to maintain the integrity of
the Medicare program.
Currently the Act prohibits the Minister from appointing a person as Director of the
PSR unless the AMA agrees, effectively giving the AMA a 'veto power' over the
appointment of the Director. The current arrangement is inconsistent with public
expectations regarding the independence of the PSR and may undermine public
confidence in its role as a regulator. Given the potential conflict between the PSR's
objective to safeguard Medicare and the AMA's role in representing the interests of
medical practitioners who may be subject to PSR review, it is appropriate for the veto
power to be removed.
The Bill will also enable direct consultation with relevant peak bodies regarding
appointments of medical practitioners as Deputy Directors and Panel members of the
PSR, instead of making arrangements for the AMA to provide advice, as is the current
requirement. Similarly, the Bill removes the requirement to consult with the AMA on
the appointment of the Chair and other members of the Determining Authority.
Instead, the Minister is to consult directly with relevant peak bodies on appointments
of medical practitioner members of the Determining Authority, which is consistent
with current requirements for other health practitioners.
Although consultation with the medical profession is important to assess the
suitability of candidates and to maintain the profession's confidence in the system, the
Minister should not be constrained by the current legislative requirement for
consultation with specific organisations. The amendments in the Bill will remove
potential conflicts of interest to enhance public perceptions of the PSR and ensure the
PSR process can operate with impartiality and independence.
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The Bill also creates a new statutory office of Associate Director of the PSR.
Associate Directors would be able to exercise the same powers as the Director for
particular cases as necessary. Under the current Part VAA of the Act, the majority of
the Director's functions, duties and powers cannot be exercised by another person.
This includes key aspects of the PSR Scheme, including the threshold question of
whether to undertake a review, and if a review is undertaken, whether to negotiate a
written agreement with the person, to refer them to a Committee of peers, or to take
no further action. There are currently no provisions in the Act in the event that the
Director has a conflict of interest or is otherwise unable to make decisions on a case.
The appointment of Associate Directors will assist with managing conflicts of
interest, unexpected absences and workload pressures. The Minister will be able to
appoint one or more Associate Directors at the same time, depending on the
operational needs of the PSR. Having multiple full and/or part-time appointments will
also allow for recruitment of more wide-ranging medical expertise.
The Bill also removes the requirement for reasonable steps to be taken to engage with
stakeholder groups prior to issuing a notice to produce documents during an audit of
whether Medicare benefits should have been paid. Consulting with a non-regulated
entity about a regulated entity does not demonstrate clear and accountable natural
justice to the regulated entity. This amendment will streamline the audit process
without limiting the documents or other information that a person may provide. There
will be no impact on procedural fairness requirements during an audit. A person being
audited will continue to have the opportunity to make submissions about their matter
and to provide any information or documents they consider relevant.
However, engagement with the medical profession remains an integral part of the
compliance program and stakeholder groups would still be consulted as necessary to
inform compliance activities.
Financial Impact Statement
The Bill implements legislation which was agreed in the 2023-24 Budget process, as a
response to the independent Review of Medicare Integrity and Compliance. There is
no financial impact from the Bill.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011
HEALTH INSURANCE AMENDMENT (PROFESSIONAL SERVICES
REVIEW SCHEME) BILL 2023
This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011.
Overview of the Bill
The purpose of the Health Insurance Amendment (Professional Services Review
Scheme) Bill 2023 (the Bill) is to implement priority changes arising from
recommendations of the independent Review of Medicare Integrity and Compliance
undertaken by Dr Pradeep Philip (Philip Review). The Philip Review commenced in
November 2022 and the final report was released on 4 April 2023.
The measures in the Bill amend the Health Insurance Act 1973 (the Act) to:
• remove the requirement for the Australian Medical Association (AMA) to
agree to the appointment of the Director of the Professional Services Review
(PSR);
• amend consultation requirements for appointing other statutory office holders
of the PSR to enable consultation with relevant peak bodies directly;
• establish the new statutory office of Associate Director of the PSR; and
• remove the requirement for the Chief Executive Medicare (CEM) to consult
with stakeholder groups prior to issuing a notice to produce documents.
Human rights implications
The Right to Health
The Bill engages the right to health. Article 12(1) of the International Covenant on
Economic, Social and Cultural Rights (ICESCR) promotes the right of all individuals
to enjoy the highest attainable standard of physical and mental health.
The Bill assists with the progressive realisation of the right of all individuals to enjoy
the highest attainable standard of physical and mental health by supporting the
integrity of Australia's Medicare program.
The PSR protects patients and the community from the risks associated with
inappropriate practice by health professionals and protects the Commonwealth from
having to meet the cost of services provided as a result of this inappropriate practice.
As the primary mechanism for monitoring the clinical relevance of professional
services provided under the Medicare program, the PSR performs a public health role.
The PSR supports the right to health by sanctioning practitioners for providing
services that are not clinically necessary (including requiring repayment of benefits or
disqualification from Medicare) and by ensuring that the Commonwealth's limited
resources are directed to necessary and effective health services.
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The amendments made by this Bill ensure the independence of the PSR by removing
the perceptions of or potential for undue influence over appointments of the Director
and other statutory office holders of the PSR. The Bill also improves the operation of
the PSR by providing for the appointment of one or more Associate Directors who
can also make key decisions to assist with managing conflicts of interest, unexpected
absences, and workload pressures.
Similarly, the CEM has a role in supporting the integrity of Medicare by identifying
non-compliance by health professionals and recovering benefits that should not have
been paid under the Act. Removing the requirement to engage with stakeholder
groups prior to issuing a notice to produce documents will streamline the Medicare
compliance audit process without affecting the rights of the person who is the subject
of an audit. This amendment will not change existing obligations for health
practitioners. Other existing requirements for issuing a notice to produce documents
remain in place, including that the CEM must have a reasonable concern and must
have given the person a reasonable opportunity to respond to a written request before
issuing a notice. Moreover, there will be no impact on procedural fairness as a person
being audited will continue to have the opportunity to make submissions about their
matter and to provide any information or documents they consider relevant.
Non-compliance and inappropriate practice by health practitioners result in increased
Commonwealth expenditure on health services. Supporting the integrity of the
Medicare program ensures that health expenditure remains sustainable and continues
to be accessed and enjoyed by the community.
Conclusion
This Bill is compatible with human rights as it maintains the right to health.
The Hon Mark Butler MP, Minister for Health and Aged Care
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HEALTH INSURANCE AMENDMENT (PROFESSIONAL SERVICES
REVIEW SCHEME) BILL 2023
NOTES ON CLAUSES
Clause 1 - Short Title
Clause 1 provides for the short title of the Act to be the Health Insurance Amendment
(Professional Services Review Scheme) Act 2023 (the Act).
Clause 2 - Commencement
Clause 2 provides that the Act will commence the day after the Act receives Royal
Assent.
Clause 3 - Schedules
Clause 3 provides that each Act that is specified in a Schedule to this Bill is amended
or repealed as set out in the applicable items in the Schedule concerned, and any other
item has effect according to its terms. This is a technical provision which gives
operational effect to the amendments contained in the Schedules.
SCHEDULE 1 -- Professional Services Review Scheme
Part 1--Main amendments
Health Insurance Act 1973 (the Health Insurance Act)
Items 1 and 2 - Subsection 81(1) and Subsection 81(1) (at the end of the
definition of Director)
Items 1 and 2 amend subsection 81(1) to insert a new definition of 'Associate
Director' and new notes under the definitions of the terms 'Associate Director' and
'Director'. Subsection 81(1) defines certain terms in Part VAA of the Health
Insurance Act, which establishes the Professional Services Review (PSR) Scheme.
The definition of Associate Director is 'an Associate Director of Professional Services
Review appointed under section 83A'.
The notes inserted after the definition of 'Associate Director' and 'Director' are
identical and clarify that a reference to the Director in Part VAA of the Health
Insurance Act includes a reference to an Associate Director, subject to certain
exceptions, which are section 83, paragraph 106ZM(2)(b), sections 106ZPL and
106ZPLA and Subdivision A of Division 6 as outlined in item 5.
Item 3 - Division 2 of Part VAA (heading)
Item 3 makes a consequential amendment to add a reference to Associate Directors to
the heading of Division 2 of Part VAA.
Item 4 - Subsection 83(2)
Item 4 repeals subsection 83(2) of the Health Insurance Act, which requires that the
Minister must not appoint a medical practitioner as Director of the PSR unless the
Australian Medical Association (AMA) agrees to the appointment. This current
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requirement effectively gives the AMA a 'veto power' over the appointment of the
Director. Removing this requirement ensures there are no conflicts of interest between
the PSR's statutory objectives to protect the integrity of Medicare and the role of the
AMA in representing its members who may be subject to review.
Item 5 - After section 83
Item 5 inserts a new section 83A after section 83 of the Health Insurance Act, which
provides for a new statutory office of Associate Director of the PSR.
Subsection 83A(1) allows the Minister to appoint a medical practitioner as an
Associate Director. There is no limit on the number of Associate Directors that may
be appointed at one time. The Minister may appoint one or more Associate Directors
concurrently as necessary to assist the Director in performing their duties. Associate
Directors may review inappropriate practice as an alternative decision-maker to the
Director to assist in managing conflicts of interest, unexpected absences and workload
pressures.
Subsection 83A(2) provides that a reference in Part VAA to the Director also includes
a reference to an Associate Director, which allows Associate Directors to exercise the
same functions and powers as the Director in reviewing inappropriate practice.
However, subsection 83A(2) also provides that this does not include
paragraph 106ZM(2)(b), and sections 106ZPL and 106ZPLA, as Associate Directors
do not have a role in the administration of the PSR Agency. The Director is the head
of the agency and accountable authority for the purposes of the Public Governance,
Performance and Accountability Act 2013. Subsection 83A(2) also excludes section
83 and Subdivision A of Division 6 of Part VAA, as these provisions are specific to
the Director's appointment. Item 11 adds a new subdivision which outlines details of
an Associate Director's appointment.
Items 6 and 7 - Subsection 84(3) and Subsection 84(4)
Items 6 and 7 repeal subsection 84(3) and omit the phrase 'other than a medical
practitioner' from subsection 84(4) to align consultation requirements for appointing
medical practitioners and other health professionals as Panel members.
Items 8 and 9 - Subsection 85(3) and Subsection 85(4)
Items 8 and 9 repeal subsection 85(3) and omit the phrase 'other than a medical
practitioner' from subsection 85(4) to align consultation requirements for appointing
medical practitioners and other health professionals as Deputy Directors.
Item 10 - Division 6 of Part VAA (heading)
Item 10 makes a consequential amendment to add a reference to Associate Directors
to the heading of Division 6 of Part VAA.
Item 11 - After Subdivision A of Division 6 of Part VAA
Item 11 inserts a new Subdivision AB, which outlines the details of an
Associate Director's appointment. The provisions regarding the Associate Director's
appointment are equivalent to the provisions in Subdivision A for the Director.
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Item 12 - Subsection 106ZPB(2)
Item 12 repeals subsection 106ZPB(2) to remove the requirement that the Minister
must not appoint a person as a member of the Determining Authority unless the
Minister has consulted the AMA. This requirement applies to the Chair, non-
practitioner member(s) referred to in paragraph 106ZPA(1)(b) and practitioner
members referred to in paragraph 106ZPA(1)(c).
Item 13 - Subsection 106ZPB(3)
Item 13 omits the phrase 'other than a medical practitioner' from
subsection 106ZPB(3) to align consultation requirements for appointing medical
practitioners and other health professionals as members of the Determining Authority
referred to in paragraph 106ZPA(1)(c).
Items 14 and 15 - Subsection 106ZPH(4) and Subsection 106ZPH(4)
Items 14 and 15 make consequential amendments resulting from item 12 repealing
subsection 106ZPB(2).
Item 16 - After subparagraph 106ZPLA(a)(i)
Item 16 adds a reference to Associate Directors after subparagraph 106ZPLA(a)(i) so
that Associate Directors are also included as officials in the listed entity known as the
Professional Services Review.
Item 17 - Paragraph 129AAD(1)(b)
Item 17 is a consequential amendment resulting from item 18 repealing
paragraph 129AAD(1)(c).
Item 18 - Paragraph 129AAD(1)(c)
Item 18 repeals paragraph 129AAD(1)(c), removing the requirement for the
Chief Executive Medicare (CEM) to take reasonable steps to consult with a relevant
professional body as a prerequisite to issuing a notice to produce documents under
subsection 129AAD(2). This amendment streamlines Medicare compliance audits
without limiting the types of documents a person may provide during an audit of
payments.
There are no changes to other existing requirements for issuing a notice to produce
documents, including that the CEM must have a reasonable concern and must have
given the person a reasonable opportunity to respond to a written request before
issuing a notice. There are also no changes to procedural fairness requirements for a
person who is the subject of an audit. A person being audited will continue to have the
opportunity to provide submissions about the matter and to provide any information
or documents they consider relevant.
Item 19 - Subsections 129AAD(12) and (13)
Item 19 makes a consequential amendment to repeal subsections 129AAD(12) and
(13), which define the term 'relevant professional body' in section 129AAD and allow
the Minister to declare an organisation as a 'relevant professional body'. These
provisions are no longer required with the repeal of paragraph 129AAD(1)(c) by
item 18.
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Item 20 and 21 - After paragraph 130(5E)(a) and Subsection 130(5E)
Items 20 and 21 insert references to an Associate Director of the PSR in
subsection 130(5E) to allow disclosure of information by the CEM or a Departmental
employee. This means that information may be disclosed to an Associate Director to
help in the performance of functions or duties, or the exercise of powers, under Part
VAA, consistently with the Director, a PSR Committee or Determining Authority.
Part 2--Other minor amendments
Items 22, 23 and 24 - Subsection 106ZD(1), Subsection 106ZK(1) and
Subsection 106ZPG(1)
Items 22, 23 and 24 make minor amendments to subsections 106ZD(1), 106ZK(1) and
106ZPG(1) for consistency with the standard form in the Office of Parliamentary
Counsel's Drafting Direction No 3.6. The provisions relate to termination of the
appointments of the Director of PSR, Panel members and members of the
Determining Authority respectively. These amendments update the wording of the
provisions but do not change the substantive effect of the law.
Part 3--Application of amendments
Item 25 - Application of amendments
Item 25 sets out the application provisions for the amendments in Part 1.
Subitem 25(1) provides that the amendments made in Part 1 to sections 83, 84 and 85
of the Health Insurance Act apply in relation to appointments made after
commencement of this Act.
Subitem 25(2) provides that the amendments in Part 1 to requirements for notices to
produce documents under section 129AAD of the Health Insurance Act apply in
relation to notices given after commencement of this Act (whether the amount to
which the notice relates is paid before or after that commencement).
Subitem 25(3) provides that the amendments in Part 2 to termination clauses in
subsections 106ZD(1), 106ZK(1) and 106ZPG(1) of the Health Insurance Act apply
in relation to appointments terminated after the commencement of this Act (whether
the appointment is made before or after that commencement)
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