Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Minister for Health) Share this | Hansard source

I rise today to speak on the Health Insurance Amendment (Inappropriate and Prohibited Practices and Other Measures) Bill 2007. The bill proposes to amend the Health Insurance Act 1973 to replace existing prohibitions on the payment of medical benefits for pathology and diagnostic imaging services. The new provisions are aimed at, firstly, prohibiting certain practices in relation to the rendering of pathology and diagnostic imaging services, including prohibiting inducements and other relationships between requesters and providers of pathology services and diagnostic imaging services; secondly, preventing payments for pathology and diagnostic imaging services that do not benefit patients; and, thirdly, encouraging fair competition between pathology and diagnostic imaging providers on the basis of quality services provided and the cost to patients.

These new provisions represent a response to persistent long-term claims that a minority of providers, particularly within the pathology industry, were providing payments or other inducements to practitioners so that practitioners would refer patients to them. For example, pathology companies and third parties acting for them have allegedly been offering inflated rents, gifts, lump sum payments and staff to general practices to encourage referrals. There have also been some reports of doctors actively soliciting inducements, gifts and benefits. Of course, it is always impossible for us to know the extent or veracity of a range of these claims, and I do emphasise that there is no suggestion that many of the providers who do great work for us in the community are participating in these practices, but there have nevertheless been persistent claims. There are I think very legitimate concerns for us to be acting upon and it is important that the government has taken some action to make sure that those people who are doing the wrong thing are able to be covered by the legislation and stopped from participating in these sorts of practices.

While current sections—129AA, which deals with bribery, and 129AAA, which deals with prohibited practices in relation to the rendering of pathology services—of the Health Insurance Act do contain a range of provisions addressing bribery, inducements, overservicing and prohibited practices relating to the provision of services, ongoing reports from within the pathology industry do allege that these provisions are being circumvented by operators who are contravening the known intent of the legislation. The provisions have been ineffective in their deterrent and enforcement aspects for the relevant agencies. Medicare Australia and the DPP have been unable to successfully prosecute any alleged offenders.

Among the difficulties identified with the current provisions relating to pathology are that they are expressed very broadly, their scope is unclear, it is difficult to discharge the burden of proof, it is difficult to determine the preconditions for application of the relevant sanctions and it is difficult to establish the facts necessary to apply the relevant sanctions. The sections also apply differentially to requesters and providers of these services. Obviously, when this line of complaint can be made about the existing provisions, it is important to take the action that the government has taken so that we ensure that the people who are determined to get around the intent of those laws are able to be caught by the new provisions which we are debating in the bill today.

With regard to the current prohibitions that I have just listed, and the range of problems with them, the diagnostic imaging servicing provisions contained in division 3 of part IIB do not carry any criminal or civil sanctions at all. This bill sensibly repeals these sections and replaces them with a new part IIBA, which sets out new provisions relating to both pathology and diagnostic imaging services. These changes arise from several thorough reviews of the operation of Commonwealth legislation for pathology arrangements under Medicare. In 2002, the Department of Health and Ageing undertook a review of Commonwealth legislation for pathology arrangements under Medicare, including the Health Insurance Act. The final report was released in December 2002 and noted then that the legislative arrangements for regulating pathology services needed updating and streamlining. The report particularly highlighted the areas of offences and enforcement provisions. You can see from that that these problems have been around for some time. It has certainly taken some time to get where we are today, but we welcome being able to debate what will hopefully close down some of the persistent rumours and any untoward activities that some providers might be involved in.

After the review in 2002, in 2005 the Department of Health and Ageing commissioned a further review, undertaken by Phillips Fox lawyers, to specifically examine the pathology enforcement and offence provisions. The review included extensive consultation with pathology providers, professional and peak industry groups, state and federal government agencies, and consumer groups. The Phillips Fox review did not attempt to substantiate any of the actual allegations concerning inducements for service providers or claims that some medical practitioners were demanding payments from pathology providers; rather, the authors of the review accepted that ‘the frequency and consistency of claims made across the sector generates a high level of confidence that such conduct is, in fact, occurring’. That was a quote from the review.

The Phillips Fox review made 52 recommendations, including the need to redraft the enforcement and offence provisions to express more clearly the government’s intent to prevent benefits and bribes between pathology providers and requesters of services and to extend the application of provisions to create an enforcement framework that can be more effectively applied. The Minister for Health and Ageing, Mr Abbott, accepted the bulk of the Phillips Fox report’s recommendations when he released the government’s response to the report on 2 June last year.

It is clear from all of this background that the current legislation has proven ineffective in tackling persistent claims of overservicing and prohibited practices within the pathology sector particularly. Of course, we all know that, if there is inappropriate use—and this is why the government is acting sensibly—this is a great cost to Medicare and the health system more generally.

To put this in perspective for those who are listening to or reading this debate and do not always deal with the detail that we need to deal with in this place, 83 million Medicare-funded pathology services were performed in 2005-06, with approximately 10 million Australians accessing those services. During the same period, approximately 15 million Medicare-funded diagnostic imaging services—such as X-rays, ultrasounds, and CT and MRI scans—were performed, benefiting more than 6½ million Australians. This equates to expenditure in excess of $3.2 billion, representing approximately 30 per cent of the total Medicare outlay in that year. This is obviously a big chunk of the Medicare budget. If there is anything that can be done to stamp out inappropriate practices, particularly when those practices pass on a cost—usually to the government—and do not necessarily benefit the consumer, then obviously action needs to be taken.

Of course, while it is impossible for us to quantify the level of inappropriate servicing in these sectors, the explanatory memorandum to this bill notes that a 0.5 per cent reduction in Medicare-funded pathology and diagnostic imaging services, by tackling inappropriate use of Medicare funding, would nevertheless result in a saving of approximately $16 million a year. If this is a widespread practice, the savings would be much more significant. If it is not a widespread practice, that is still an amount of money that could be put to better use. Particularly in budget week when we debate these sorts of things, we know that there are plenty of worthy things that we can spend money on in the healthcare budget, and we do not want any of it to go astray because of these inappropriate practices.

Labor knows how important it is to get the most out of the healthcare dollar and will always support measures which will result in savings to Medicare and the health system more broadly. If even a fraction of inappropriate servicing by pathologists or diagnostic imaging services is tackled with this new regime, it will free up much needed resources for other areas of the health system.

Let me turn now to some detailed consideration of the provisions of the bill. Schedule 1 amends the Health Insurance Act 1973, the Medicare Australia Act 1973 and the Veterans’ Entitlements Act 1986. Schedule 2 makes some minor procedural amendments to the Health Insurance Act and the pathology services regulations. The major amendments are to the Health Insurance Act and involve the repeal of the current prohibited practices provisions, as I have already mentioned, and insert a new part IIBA, which contains the new civil penalty provisions and offences relating to requests for both pathology and diagnostic imaging services.

The new part IIBA contains three divisions. Division 1 outlines procedural and definitional aspects related to the new part, including the meaning of ‘requester’ and ‘provider’, one of those issues that was dealt with in the earlier reviews. For pathology services, ‘requester’ means:

(a)

a practitioner—

defined in section 3(i) of the Health Insurance Act as a medical practitioner or a dental practitioner—

(b)

a person who employs, or engages under a contract for services, a practitioner;

(c)

a person who exercises control or direction over a practitioner (in his or her capacity as a practitioner).

For diagnostic imaging services, a ‘requester’ means a medical practitioner or, if the service is of a kind specified in regulations made under section 16B, a dental practitioner, a chiropractor, a physiotherapist, a podiatrist or an osteopath, or a person who employs or engages under a contract for services one of those people specified above. So attempts have been made with these new definitions to make sure that all people who might be involved in requesting these services are properly covered by the provision. A ‘provider’ of pathology service or diagnostic imaging service means:

(a)

a person who renders that kind of service;

(b)

a person who carries on a business of rendering that kind of  service …

I tell you what: from reading some of the section numbers that are in this bill, there must be a case to be made at some point, if ever there were some spare time, which I am sure the health department rarely finds, for doing some renumbering. The new section that I am going to talk about is proposed section 23DZZIF. I am sure even the tax act would be pushing it to find that sort of numbering. Nevertheless, that proposed section describes what is and what is not a permitted benefit. The new provisions are aimed at preventing the payment of inappropriate and unethical benefits in any form including money, property or services from a provider to a requester, either directly or indirectly, but are not intended to capture or prohibit legitimate commercial transactions. Amongst other matters, this proposed section deals with what is permitted in cases where a service requester, such as a GP, owns or part owns a pathology or diagnostic imaging service provider, or where a requester and a provider share premises—something that of course is increasingly happening as we see the growth of superclinics and larger GP clinics as some of these services try to co-locate for the convenience of patients.

New division 2 of part IIBA contains civil penalty provisions that are entirely new provisions for the Health Insurance Act and are imposed where a court is satisfied on the balance of probabilities that a relevant person, a requester or provider, has contravened the provisions. The maximum penalties under the civil penalty provisions are 600 penalty units or $66,000 for an individual, including executive officers of corporations, and 6,000 penalty units or $660,000 for a corporation. Under division 2:

• A requester must not ask for or accept a pathology or diagnostic imaging service-related benefit (other than a permitted benefit) from a provider or a person connected to a provider.
• A provider must not offer or provide such a benefit to a requester or a person connected to a requester.
• A provider must not make a pathology or diagnostic imaging service-related threat to a requester or a person connected to a requester.

The provisions may also be contravened by a requester or a provider if they know that a person connected to him or her has asked for, accepted, offered or provided such a benefit or made such a threat and they fail to report the person within 30 days to the Medicare Australia CEO.

The complexity of these provisions is designed to acknowledge one of the persistent allegations in this area—that it is not all in one direction: there are practices that people are concerned about by some who are running pathology services but there are also practices that people are concerned about by some who are requesting these services, such as GPs and others. So the redrafting and restructuring of this is aimed at covering all of those options. It may make tedious reading for those who are not involved with it, but it does seem to me to be an attempt to more thoroughly make sure that, when these practices do come to light, it is possible to effectively prosecute them. Ultimately, that is the only thing that is going to stop anyone who is determined to do the wrong thing.

New division 3 of part IIBA contains the criminal offences. Many of the elements of the offences are similar to the civil penalty provisions, but it is necessary, of course, to prove beyond reasonable doubt certain levels of intention and/or knowledge on the part of persons involved in the making or receiving of requests or benefits, or the making of threats. The maximum penalty for a division 3 offence is five years imprisonment or 300 penalty units.

Here is another good section. I am going to bore you, I am afraid, Mr Deputy Speaker, with a range of these. Under the new section 23DZZIQ there are two sets of offences—firstly, where a requester asks for or accepts a prohibited benefit, and, secondly, where a requester knows that another person has asked for or accepted a prohibited benefit and has not reported it to Medicare Australia. These offences are mirrored in the new section 23DZZIR, which deals with people who offer or provide the benefits. Section 23DZZIS provides that a person also commits an offence if they threaten a second person intending that that threat will induce a requestor of pathology or diagnostic imaging services to request services for a particular provider.

Notably, this bill makes explicit reference to executive officer liability in a number of new provisions. The elements required for executive officer liability mirror those in other Commonwealth legislation, such as section 54B of the Therapeutic Goods Act 1989. Obviously, again, this is an attempt to make sure not just that it is the particular professionals who will be covered by this but that, if there are others involved in owning businesses that might participate in these sorts of activities, they also at the highest levels will be able to be pursued and prosecuted if they are behaving inappropriately.

Items 39 to 84 of the bill amend various elements of part VB of the Health Insurance Act, dealing with the Medicare Participation Review Committee. Currently, in cases where persons have been convicted of Health Insurance Act pathology related offences or are considered to have contravened the prohibitions relating to diagnostic imaging services, the Medicare Participation Review Committee may take a range of actions, including making services provided by that person ineligible for Medicare payments. The bill amends part VB so that the jurisdiction of the committee applies on conviction of the new offences or a court order giving an order for civil penalties—obviously, again, just to expand the range of options that can be found if someone has been found to have behaved inappropriately.

Item 85 inserts a new part VIA, which outlines some of the details about civil penalties, including Federal Court powers and clarifying the relationship between civil penalty proceedings and criminal proceedings. The bill makes a large number of consequential and other amendments arising from the introduction of the new regime, which you will be pleased to know, Mr Deputy Speaker, I do not propose to go through in any detail today.

Schedule 1 also amends the Medicare Australia Act 1973 and the Veterans’ Entitlements Act 1986. The Medicare Australia Act contains certain powers that allow authorised officers to require the production of information or conduct searches where there are reasonable grounds to believe that Medicare related offences have been committed. Items 98 to 109 of schedule 1 amend the act for these powers to apply to situations where it is suspected that a civil penalty provision might have been contravened. Obviously, again, it is trying to get all of the changes in a row. If we get our definitions clear and the nature of the offences clear, we need to have the proper powers to be able to investigate as well. Schedule 1 substitutes a new definition of ‘approved pathology practitioner’ in subsection 93E(9) of the Veterans’ Entitlements Act to reflect amendments to the Health Insurance Act. Schedule 2 makes some minor procedural amendments to the regulations.

According to the government, these changes have been the subject of extensive consultations with pathology providers, professional and peak industry groups, state and federal government agencies, and consumer groups. Certainly the gestation period of the bill has been a pretty extensive one, so we would expect that within that time that consultation has occurred.

There are some media reports that suggest that the Australian Medical Association believes that there are already sufficient regulatory mechanisms in place to address inappropriate interactions between requesters and providers of pathology services. However, representatives of the Royal College of Pathologists of Australasia and the Australian Association of Pathology Practices have expressed support for the measures contained in the bill. I understand from the reports and discussions that the AMA’s view is more that this is a belts-and-braces approach rather than one that is strictly necessary; however, the strong support from the others in the field makes it clear that there is acknowledgement that, if there are people doing the wrong thing, they need to be stopped—not only does it cost the government and the health budget a lot of money if there are abuses; it costs the rest of the profession some of their integrity. I am sure there is an interest to make sure that inappropriate practices are stamped out.

In line with this stakeholder support, Labor support this legislation because we are confident that the new provisions will prove more effective than the current enforcement and offence provisions of the Health Insurance Act in tackling prohibited inducements and other relationships between requesters and providers of pathology services and diagnostic imaging services.

We clearly understand that overservicing and prohibited practices in pathology and diagnostic imaging sectors—indeed, in any sector—serve to undermine the whole system and to cast a shadow over the good work done by the vast majority of providers who are doing the right thing. It is not fair that the majority of providers who are doing the right thing face commercial losses simply because they comply with the spirit of the legislation, while their competitors do not. Labor support legislative frameworks that encourage fair competition between providers of pathology and diagnostic imaging services on the basis of the quality of the services provided and the costs to patients, rather than inducements in other relationships. Performing unnecessary procedures is not just deceitful; it is wasteful and costly. It is costly to Medicare, it is costly to the broader health system and inevitably it is costly to the whole community.

Labor are committed to the universal provision of quality health care for all Australians. Past Labor governments built Medicare, and Labor believe that Medicare should be retained, defended and strengthened. Labor know that Medicare is the cornerstone of our health system. Labor obviously do not and cannot support the abuse of Medicare. We support this legislation because we believe that Medicare must be protected from inappropriate use by deceitful service providers.

The major changes envisaged in this bill, in schedule 1, will take effect from 1 March 2008, some time out from today. The government has noted that this will allow stakeholders time to familiarise themselves with the changes and will aid in a smooth transition. If these problems have been going on for some time, there are many who would be impatient for those changes to be implemented immediately; however, it is understood that throughout the industry there are difficulties in ensuring that the transition happens smoothly and properly. That transition would have been a little smoother had the government already prepared regulations to accompany this new scheme. We do understand that, prior to the proposed commencement, the government has pledged to develop with stakeholders regulations that provide comprehensive details about specific elements of the reforms. As ever, it would have been helpful for all concerned, and particularly for us, if the government had been organised and interested enough to ensure that these details were available more broadly in time for the consideration of this bill. Notwithstanding this small shortcoming, Labor supports this bill and commends it to the House.

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