Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Minister for Health) Share this | Link to 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.

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

Today I rise to support the Health Insurance Amendment (Inappropriate and Prohibited Practices and Other Measures) Bill 2007. This bill will ensure that a patient’s access to pathology and diagnostic imaging services is not clouded by considerations other than a clinical need. The bill will strengthen Medicare, and allow the government to deliver on its commitment to act on the recommendations of the Phillips Fox review of enforcement and offence provisions of the Health Insurance Act as they relate to the provision of pathology services under Medicare.

Claims have been made, whether or not they are substantiated, that a minority of providers, particularly within the pathology industry, may make payments or other considerations so that practitioners will be more likely to refer their patients to them for service. This could, if it were true, lead to the ordering of excess services that may not be clinically necessary and may cause undue alarm and concern to patients about their health status. This perception by patients is of concern, and I believe this bill is a sensible way to overcome the potential of this issue arising. Clinical need should be the most important consideration in referring patients for tests to diagnose illness. Health, especially in rural and regional areas, has always been of great concern to me. I am pleased that this amending legislation will enforce penalties if this issue arises and medical practitioners are encouraged or induced by payments or other benefits to direct their patients to a particular provider.

I feel confident that I have a very good relationship with medical service providers within the Riverina, particularly the diagnostic services and pathology laboratories. I believe that each and every one of them is dedicated to providing the best service, and at a minimal charge to the patients at most times. But if there are concerns, particularly in the patient arena, then this legislation offers great comfort to patients. Particularly when you note the difficult times that people in the Riverina are experiencing with the ongoing drought and the downturn in their employment opportunities because of it, to have to pay for services that may not be required is just another burden. It is an extraordinary strain on the household budgets of the many people who have chronic and ongoing diseases and who require more frequent treatments or visits to pathology and diagnostic imaging facilities than the general public.

I have great sympathy with the upsurge in the referral of patients, particularly to pathology and diagnostic imaging providers, by doctors. Consumer litigation has increased substantially in our modern age. If, as a doctor, I were in the position of diagnosing and treating a patient, first and foremost I would go to all lengths to ensure that the patient’s needs were addressed because doctors, specialists and others in the medical profession are dedicated to patient care above and beyond all.

But underlying this there must be a certain feeling that, should you misdiagnose a patient for the lack of getting some other diagnostic tests done, now, more than ever before, there is the potential for a litigation case to be brought against you. It is a sad indictment on our community that we have become so focused on litigation and on making everybody personally responsible for outcomes that there is an underlying insecurity in many of the professions, not just the medical profession. I certainly feel that, in order to ensure that diagnostic facilities and pathology facilities are appropriately used clinically, there is a need to put in place comfort legislation such as this.

The amending legislation has three aims. One is to prohibit certain practices relating to the rendering of pathology and diagnostic imaging services, including prohibiting inducements between requesters and providers of those services. When you go to a doctor and get a pathology service referral or a diagnostic imaging referral it is written out on a particular service provider’s letterhead. That may lead the patient to falsely assume that there is some type of connection between that doctor or that surgery and the provider of that service when that may not be the case.

It certainly has led to some confusion when patients maybe feel that they have to attend this service provider in lieu of the service provider that they may be more comfortable with. But of course we know that this is not the case. Even if a request is written out on a service provider’s form, it can easily be taken to another service provider to fulfil the same tests—but sometimes the patient gets confused with that.

Another part of this amendment will prevent payments for pathology and diagnostic imaging services that simply do not benefit patients. In addition, these amendments will encourage fair competition between the many providers of services on the basis of quality of services provided and cost to the patient. Referrals should be made in the best interest of the patient, and in most cases predominantly those are the circumstances. Medical tests can be daunting for people, as they can indicate a new illness or an extension of an existing illness that could be worsening and could have become more serious. Patients do not need the added stress of potentially being part of a non-permitted transaction through medical professionals and diagnostic providers who may do deals to ensure that referrals are made to a particular practice.

The reforms are proposed to take effect from 1 March 2008, and the bill sets out new prohibitions relating to both pathology and diagnostic imaging services, as I have outlined. It would not be permitted for a commercial transaction between requestors and providers to be linked in any way to the number, type or value of the services requested. The provisions prohibit both requestors and providers from being involved in non-permitted transactions, including those that are channelled through third parties. These also include civil penalties where pathology or diagnostic imaging providers offer or provide non-permitted benefits or make threats to requestors. I find it hard to believe that that could happen, but obviously there has been some view that this may be a practice in some areas. At no time do I think that the providers in my electorate are actually stooping to such a low level. I am very comforted that this bill will give them—and also the provider—the protection that they need. When some of these allegations may be made after this legislation is enacted, the providers and the referrals can clearly say, ‘That simply can’t be the case because there is legislation that prohibits that from happening.’ So everyone will be protected by the introduction of this legislation.

Providers and requestors will also be held liable when non-permitted benefits are asked for, offered or exchanged or when threats are made by someone connected to them. The relationships covered will include relatives, partnerships and any other close financial relationship. The prohibitions are supported by penalties of up to $66,000 against individual requestors or providers or $660,000 for corporations. It is not possible to quantify the Medicare outlays that may be saved through these measures, but with Medicare outlays on pathology and diagnostic imaging running at around $3.2 billion a year, even if 0.5 per cent of the outlays was being saved by preventing inappropriate practices, this would mean a $16 million saving to the budget per year that could be applied to other very worthwhile and worthy health areas.

Pathology and diagnostic imaging services, particularly in the Riverina, play a critical role in health care. In areas like the Riverina where sometimes services are few and far between, these services are almost an entire service of their own. The doctors—particularly in diagnostic imaging—play a critical role in early diagnosis and detection of breast cancer and many other cancers and many other forms of disease that can enable speedy treatment to take place for country people.

I applaud doctors who have diagnostic facilities in those areas. It is very difficult to get a workforce of diagnostic imaging doctors in country areas. We face a dire shortage of them. In the Riverina, many of these doctors have been committed to our region over long periods but have felt for many reasons that they have had to move and relocate in Melbourne, Sydney or other areas. We are now forced to fly in many diagnostic doctors from Adelaide and other places in South Australia to provide these services. By no means do I underestimate the performance of the doctors involved in diagnostic imaging services and the critical role that they play in my electorate. I congratulate them on their dedication. It is all very well to have radiographers and people who conduct tests, but to have that diagnostic facility—doctors diagnosing and reading all of these results—is absolutely imperative. We need to ensure that these doctors are still settling in regional Australia and that we are not reduced to fly-in fly-out services.

Pathology and imaging account for a significant amount of taxpayer funded outlays from the national health care budget. This is commensurate with the absolutely sensational diagnostic services that they provide. There are approximately 83 million Medicare funded pathology services such as X-ray, ultrasound, computer tomography, CTs and magnetic resonance imaging. MRIs are performed daily in my electorate. This expenditure equates to in excess of $3.2 billion, which represents approximately 30 per cent of the total Medicare outlay in 2005-2006.

It is hoped that these changes will ensure that the small number—and I suspect that it is a very small number—of requesters and providers of diagnostic services who currently engage in inappropriate practices will cease doing so or be subject to significant penalties. If there is any evidence that the provisions are not addressing such activities, the government will look at this in consultation with stakeholders further down the path. Also, criminal offence or civil penalty provisions can only be added by the passage of some additional legislation. I suspect that it will not be required and that we will find that this legislation will provide comfort and security to both the practitioner and the patient.

As with tax avoidance legislation, we need to keep pace with any potential underhanded rorting whatsoever of the system. This is not picking on pathologists and radiologists or the doctors who refer to them; it is purely providing a support and safety network for the referral, the referrer and the referee. The legislation review process has taken four years and has involved close consultation with the professions and the related industries. The final shape of the bill has taken into account that a one-size-fits-all solution simply does not fit both the pathology and the radiology industries.

The review of pathology enforcement and offence provisions included the preparation and dissemination of an issues and options paper back in January 2005. The paper was distributed for comment to all the relevant government agencies, the pathology providers, the pathology professionals, the peak industry organisations, the state and territory governments, the medical registration authorities and the peak consumer groups.

Again, I wish to emphasise my support for the amendments in this bill because not only do they ensure that patient access to pathology and diagnostic imaging services is not clouded by considerations other than clinical needs but they also provide a security that will underpin the pathology and diagnostic imaging services. If there is some allegation that inappropriate practices are taking place due to some ill-informed or little understood way of how procedures should take place, then the provider can always refer back to this bill and say: ‘This simply is not happening. It cannot possibly happen because there is legislation and there are very appropriate fines that prevent such practices from occurring.’ So the integrity of the service provider is kept absolutely intact.

I congratulate the minister on his cooperation in working with and involving all industries in the lead-up to the presentation of this bill. Again, I congratulate the industry on its cooperation with the department and the minister. The industry certainly was not dragged kicking and screaming to support this legislation. It understands the issues and perceptions that can arise. It is every bit as interested in ensuring integrity in our system as the government is interested in ensuring that the industry cannot possibly make any illegal use of the healthcare budget and that the healthcare budget is used only for its intended purposes. I commend the bill to the House.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

The Health Insurance Amendment (Inappropriate and Prohibited Practices and Other Measures) Bill 2007 is important legislation because it guarantees the integrity of the system and ensures that we get the best use of our health dollars. The bill amends the Health Insurance Act to replace existing provisions regarding the payment of benefits between providers and requesters of pathology and diagnostic imaging services with new provisions aimed at prohibiting certain practices in relation to rendering pathology and diagnostic imaging services, including prohibiting inducements and other relationships between requesters and providers of pathology services and diagnostic imaging services, preventing payment for pathology and diagnostic imaging services that do not benefit patients and encouraging fair competition between pathology and diagnostic imaging providers on the basis of quality of service provided and cost to patients. These are very important issues. It is extremely important that the integrity of the system is guaranteed and that patients are not referred off for services that they do not need—that is contraindicated; it is against the best interests of those patients. Ensuring that the system is fair, that there is a level playing field, is vital.

I note the recommendations of the review commissioned by the department of health and undertaken by Phillips Fox lawyers, which specifically examined the enforcement and offence provisions of the Health Insurance Act as they relate to the provision of pathology services under Medicare. The Phillips Fox review was a response to claims that a minority of providers—I emphasise here that it is a minority of providers; it is not widespread—particularly within the pathology industry, were providing payments or other inducements to practitioners so that practitioners would refer patients to them.

The member for Riverina referred to service providers’ referral forms. Most doctors will fill out the referral form of a particular service provider. Doctors will refer a patient to a pathologist or a diagnostic imaging service that is appropriate for the test or service that their patient needs or, alternatively, one that is located in the vicinity of where they live or one that they can easily access.

I do not see the fact that a doctor fills out a particular referral form to a particular pathologist or diagnostic image provider as the issue. The issue is where inappropriate inducements are offered. Whilst the Phillips Fox lawyer investigation did not go into this in detail, they said there was clear anecdotal evidence that it did occur and therefore it was very important that this issue be addressed.

It is important to put on the record that for the 2005-06 year, there were 83 million Medicare funded pathology services performed, with approximately 10 million Australians accessing these services. During the same period, approximately 15 million diagnostic imaging services were performed. That is X-rays, ultrasounds, and MRIs, which benefited 6.5 million Australians. This equated to $3.2 billion. That is approximately 30 per cent of the total Medicare outlays in 2005-06. Therefore, it is imperative to ensure that the services that are paid for are appropriate services and that there is no inappropriate servicing prompted by providers paying inappropriate benefits to requesters. It has not been quantified, but the anecdotal evidence is there and it has been tagged at about $16 billion a year.

This legislation will, I believe, remedy the situation. This legislation will ensure the integrity of the system. I probably should mention the kind of inducements that have been referred to anecdotally. They include things such as gifts, lump sum payments, providing staff to practices and inducements to encourage referrers to refer to particular services. I think one of the most important things for us as a society, when we are looking at the kinds of services that are prescribed and the kinds of services that patients have, is to know that those services are needed and that the integrity of the system is guaranteed.

It is interesting to note that the interest groups have basically supported this. The AMA do not oppose the actual legislation although they have stated that they do think that there are currently sufficient regulatory mechanisms in place. The Chief Executive Officer of the Royal College of Pathologists of Australasia, Dr Debra Graves, is reported as having argued that while the problem is not widespread, there are reports of a small number of practices that have not acted appropriately. It is this behaviour that the anti-rorting legislation will target. So the pathologists themselves see that this is important legislation. It is important that it is supported.

It is clear that the current legislation has proved ineffective in tackling this problem. That is why we need this new legislation and why all members in the parliament should support it. Persistent claims of overservicing and prohibited practices within the pathology and diagnostic imaging sectors undermine the integrity of the system and increase the cost of payments to that sector when scarce healthcare dollars could be used in other areas. On that point alone the legislation that we are debating today should be supported.

These changes to the Health Insurance Act arise from several thorough reviews of the operation of Commonwealth legislation for pathology arrangements under Medicare and have been the subject of extensive consultation with pathology providers, professional and peak industry groups, state and federal government agencies, and consumer groups, so they have the support of people and organisations that are involved in the industry. We support this legislation because we are confident that the new provisions will be more effective than the current enforcement and offence provisions of the HIA in tackling the problem that has been outlined.

There have been persistent reports of overservicing and prohibited practices in the pathology system and also in diagnostic imaging services and it is imperative that these things be removed. The overservicing in some cases, particularly when you are looking at people being overexposed to diagnostic imaging, can actually be harmful, so it is a health issue as well as a dollars and cents issue. As a person who is passionate about health and passionate about Australians getting the best quality health services available, I see that this legislation will lead towards that. I am totally committed to Medicare and see it as the cornerstone of our health system, and I see this as a way of strengthening Medicare and stopping some practices that could be undermining Medicare. I know it is important that we get the most we can out of the health dollar and I think that, if certain sectors are overservicing and inappropriately spending that health dollar, it is not in Medicare’s interests or the interests of the Australian people.

All of us in this parliament should be committed to seeing that the health services Australians get are the health services they need and not health services that are being driven by alternative mechanisms. I am very happy to support this legislation. Legislation like this is definitely in the interests of Medicare and in the interests of the Australian people.

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

The Health Insurance Amendment (Inappropriate and Prohibited Practices and Other Measures) Bill 2007 has been approached in a very unusual way. We have in the explanatory memorandum the setting out of options and choices available to the government in the pathology area. Then we have the pros and cons: doing nothing, minor fiddling and redrafting proposals, which are the key options. They are set out in tabular form, together with the impact on Commonwealth, state and other authorities. And then, by a process of deduction, the explanatory memorandum takes the reader through the process to finally announcing the government’s decision, which is to wipe out sections of the act and redraft and reattempt the management of this area.

In early 2000, the Commonwealth initiated a review of Commonwealth legislation for pathology arrangements under Medicare. That was supposed to report back in December 2000. The problem with some of these things is that, when you send them off to an expert group, they can have a life of their own. This one certainly did. It was supposed to take them nine months to meet that December deadline; it took them two years and nine months. They finished the job in December 2002.

The review concluded that the legislative arrangements for regulating pathology services needed to be updated and streamlined because they wanted to have bribery and prohibited offences provisions in the Health Insurance Act. As a result, the Commonwealth commissioned Phillips Fox to evaluate the effectiveness of the current enforcement, to identify the compliance arrangements that also apply to providers of pathology services, to identify different options for compliance regimes and to evaluate each of the identified options. That provision has been moved into the explanatory memorandum, which really runs the argument of the ‘do nothing’ proposal. Option B is to amend the existing provisions, and option C is to repeal and replace the existing provisions.

What the government wanted to achieve with this was to reduce the inappropriate expenditure for pathology and diagnostic imaging services provided under the MBS and to ensure that competition between providers of pathology and diagnostic imaging services was based on quality of service and cost to patients and not skewed in favour of those who provided the benefits to requesters of pathology and diagnostic imaging services. They were saying that the radiologists and radiographers are the providers of the service and so this service should not be set up to suit them but be set up on the basis of quality of service and cost to patients. That requirement of the government was a very sensible approach.

In order to achieve these objectives, the government decided it would revise the existing provisions to clarify the intention of the current prohibitions and it would extend the current provisions to include requesters of pathology and diagnostic imaging services. So, for the first time, the requesters of pathology were going to be included in the group that must comply with some sort of regime of integrity so that you would not have anybody through the back door requiring more requests of diagnostic imaging and pathology services than was sensible.

We went through this at the beginning of Medibank. The case of Dr Geoffrey Edelsten was notorious. As the House may remember, he had a regime of his own. My office, incidentally, was right next-door to his first surgery. There were deep pink carpets, a grand piano was played day and night for those who visited, there was a playground for the children and there were all of these very salubrious—

Andrew Southcott (Boothby, Liberal Party) Share this | Link to this | Hansard source

A disco.

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

A nightclub, almost. There were dimmed lights. And Geoffrey Edelsten had a pink helicopter and a lovely wife or girlfriend—I do not know which.

Andrew Southcott (Boothby, Liberal Party) Share this | Link to this | Hansard source

Leanne.

Alan Cadman (Mitchell, Liberal Party) Share this | Link to this | Hansard source

Leanne—that is right. Those circumstances bring back to my memory what has been dealt with here in a more refined way. The House is looking at a refining of the limitations that should be put on professionals in the way in which $1.6 billion of Commonwealth funds is spent. It is a large amount of money and it is open to abuse, so the Commonwealth looked at the various options. This legislation is a revamp of what is currently in place.

The key changes that the House is looking at include extending the prohibitions to include requesters of pathology and diagnostic imaging services; strengthening the prohibition on arm’s length distancing between pathology and diagnostic imaging providers and requesters through the use of family, commercial and/or corporate arrangements—that is, company structures or trusts, which link people together in a way which is poor corporate practice if one wants to achieve openness and clarity; and the broadening of definitions that could be interpreted as an inducement.

The legislation also looks at the introduction of mechanisms to ensure legitimate commercial transactions between pathology and diagnostic imaging providers and requesters; the creation of an expanded range of penalties to those that are relevant at the current time; the incorporation of Crown activities, such as those involving MBS billing by state and territory health authorities within the scope of the provision—gathering in everybody so there is no escape hole from the net that is cast over this provision—and the introduction of a ministerial exemption capacity within the legislation to enable sufficient flexibility so as to avoid unintended consequences. That is another sensible let-out for something that the community would regard as desirable, which allows the minister to declare that something should happen. Ministers are appointed to make decisions and they should be allowed to do so. I think that is a very sensible discretion for the minister.

Groups that were consulted and considered were the Australian government, the states and territories, pathology providers, diagnostic imaging service providers, requesters of pathology and diagnostic imaging services, and consumers. It covers a multiplicity of professions. It was a thorough process and we now have the legislation.

I endorse the legislation. I am particularly enthralled by the way in which the logic is argued. The clarity of the decision and the processes used to reach these conclusions are set out for an inexperienced reader. It should allow the medical profession and their financial and corporate advisers to understand the reasons for the government’s decision. It should allow them to be able to chart a course of practice and conduct which is beyond question and which will clearly achieve the government’s objectives—that is, to demonstrate quite openly and transparently that there is no link between the request for these pathology and diagnostic imaging services that is anything but appropriate and proper in the circumstances.

One of the complaints I hear from practitioners is that it is easy for a young or busy doctor to send somebody off to get everything done and, in some instances, just cherry pick the stuff that comes back that may be applicable to that person, whether they need to or not. Is it being super careful? Yes. Do we like medicos to be super careful? Yes, we do, but we also expect them to use some professional judgement gained by experience and through their knowledge, education and training. I believe this prohibition and its application, together with the penalties, is a very fine piece of work.

Being a member of the government members’ health committee, I commend the minister and those involved with him for the way in which this legislation has been developed. I think the inquiry two years ago was a bit of a mistake or rather unfortunate because the community could have benefited from this legislation then. I commend the bill to the House.

Peter Lindsay (Herbert, Liberal Party, Parliamentary Secretary to the Minister for Defence) Share this | Link to this | Hansard source

Thank you to all of the members who have spoken on the Health Insurance Amendment (Inappropriate and Prohibited Practices and Other Measures) Bill 2007, both opposition and government—the members for Gellibrand, Riverina, Shortland and Mitchell. I appreciate their contributions to this debate. The bill before the Main Committee today addresses the limitations of provisions in the Health Insurance Act 1973 relating to pathology and diagnostic imaging services funded under Medicare. There is strong public interest, particularly taxpayer interest, in the provisions in this bill before the parliament today.

The bill amends the act to more clearly express the government’s intention to prevent inducements between providers and requesters of pathology and diagnostic imaging services. From a policy perspective, it moves to safeguard the public interest and protect Medicare from those very few people who wish to put greed ahead of good practice. We want to ensure that pathology and diagnostic services are referred and provided only in the best clinical interests of patients. We want to ensure that access to Medicare in these areas is not a licence to rort the system for personal or corporate gain. I stress, though, that, in the view of the government, the professions and industries of pathology and radiology do not have widespread problems in this regard, but we all agree that public confidence demands prudence and the ability to take effective action against those who let the whole of the community down by their wrong and unethical actions.

The amendments before the parliament have three main aims: first, to prohibit inappropriate practices relating to the rendering of pathology and diagnostic imaging services, including prohibiting inducements between requesters and providers of those services; second, to prevent payments for pathology and diagnostic imaging services that do not benefit patients; and, third, to encourage fair competition between providers of those services on the basis of the quality of services and their cost to patients.

The revised provisions define commercial relationships that are permitted between those who can request Medicare funded pathology and diagnostic imaging services and those who provide those services. They prohibit requesters and providers from being involved in non-permitted transactions, including those that are channelled through third parties. In other words, they give the legislation compliance and enforcement teeth that it has never had before. The provisions include civil penalties where pathology and diagnostic imaging providers offer or provide non-permitted benefits or make threats to requesters. The bill also prevents requesters from asking for or accepting non-permitted benefits from providers. Similar exchanges of benefits or threats will represent a criminal offence subject to a penalty of up to five years imprisonment where it can be shown that the person intended to induce the requester to request services from a particular provider.

Some stakeholders have raised concerns that the legislation may contain unintended loopholes allowing some inappropriate practices to continue. The government are confident that the legislation and the regulations that will underpin its implementation will address the substance of these concerns. However, we are still considering relevant stakeholders, and the government reserve the right to introduce amendments in the Senate if necessary. These reforms will take effect from 1 March 2008. This will allow everyone to familiarise themselves with the changes and aid a smooth transition to new ways of doing things.

I note that the shadow minister, the member for Gellibrand, made some criticisms of the time taken to conduct these reviews and make consequent legislative changes. As she would understand, this is a highly delicate and sensitive issue for practitioners and the industries in which they work. It was definitely, in the government’s view, a matter of ‘hastening slowly’ and working with the profession and industry, as we share a common interest in stamping out practices when they occur that affect the reputations of all of us. The best result is not a rushed result. For the same reasons, the government decided to pass this legislation before finalising the regulations to give it full effect.

We depend on the deep specialist and corporate knowledge of the industry and profession to implement these changes. By passing this legislation we are giving them assurances about the boundaries of the detailed regulation so that they can work with us with confidence. Therefore, the government undertake to work closely with stakeholders during the development of the regulations to ensure that they do not produce any unintended consequences and so they reflect best professional and corporate practice. We will also ensure that the changes are well understood by those who may be affected. In closing, I would like to thank both government speakers and members of the opposition who have supported this bill. That support is very much appreciated. On behalf of the government, I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.