Linda Kirk (SA, Australian Labor Party) Share this | Link to this | Hansard source

I seek leave to incorporate Senator McLucas’s speech.

Leave granted.

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Ageing, Disabilities and Carers) Share this | Link to this | Hansard source

The incorporated speech read as follows—

I rise today to speak on the Health Insurance Amendment (Inappropriate and Prohibited Practices and Other Measures) Bill 2007.

This 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/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 of services provided, and 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.

While current sections 129AA (Bribery) and 129AAA (Prohibited practices in relation to the rendering of pathology services) of the Health Insurance Act contain a range of provisions addressing bribery, inducements, over-servicing and prohibited practices relating to the provision of pathology services, ongoing reports from within the pathology industry 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, with the relevant agencies – Medicare Australia and the Director of Public Prosecutions – 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 the requesters and providers of these services.

Notably, the current prohibitions relating to diagnostic imaging services contained in Division 3 of Part IIB do not carry any criminal or civil penalty sanctions.

This Bill repeals these sections and replaces them with a new Part MBA, which sets out new prohibitions 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.

The Department of Health and Ageing in 2002 undertook a review of Commonwealth legislation for pathology arrangements under Medicare, including the HIA. The final report was released in December 2002 and noted that the legislative arrangements for regulating pathology services needed updating and streamlining, particularly highlighting the area of offences and enforcement provisions.

In 2005, DoHA commissioned a further review, undertaken by Phillips Fox Lawyers, to specifically examine the pathology enforcement and offence provisions of the HIA. The review included extensive consultation with pathology providers, professional and peak industry groups, State and Federal Government agencies, consumer groups.

The Phillips Fox Review did not attempt to substantiate any of the allegations concerning inducements from service providers or claims that some medical practitioners were demanding payments from pathology providers; rather the authors 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’.

The Phillips Fox Review made 52 recommendations including the need for enforcement and offence provisions be redrafted 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.

Minister Abbott accepted the bulk of the Phillips Fox report’s recommendations when he released the Government’s response to the Phillips Fox report on 2 June 2006.

It is clear from this background that the current legislation has proven ineffective in tackling persistent claims of over servicing and prohibited practices within the pathology sector particularly.

This is at great cost to Medicare and the health system more generally.

To put this into perspective – in 2005-06, 83 million Medicare funded pathology services were performed, with approximately 10 million Australians accessing these services. During the same period, approximately 15 million Medicare funded diagnostic imaging services such as X-rays, ultrasound, CT and MRI were performed, benefiting more than 6½ million Australians. This equates to expenditure in excess of $3.2 billion, representing approximately 30 per cent of total Medicare outlays in 2005-06.

While noting that it was impossible to quantify the level of inappropriate servicing in these sectors, the Explanatory Memorandum noted that a 0.5% reduction in Medicare funded pathology and diagnostic imaging services would result in a saving of approximately $16 million a year in inappropriate use of Medicare funding.

As my colleague the Shadow Minister for Health Nicola Roxon emphasised in the House, Labor knows how important it is to get the most out of the health dollar and will always support measures which will result in savings to Medicare and the health system more broadly. If this new regime manages to tackle even a fraction of inappropriate servicing by pathologists or diagnostic imaging services – then that will free up much-needed resources for other areas of the health system.

Detailed consideration

Turning now to the provisions of this 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 Health Insurance (Pathology Services) Regulations 1989.

The major amendments are to the Health Insurance Act and involve the repeal of the current prohibited practices provisions for diagnostic imaging and pathology services and the insertion of a new Part IIBA, which contains the new civil penalty provisions and offences relating to requests for both pathology and diagnostic imaging services.

New Part IIBA contains three Divisions:

Division 1 —Preliminary, which outlines procedural and definitional aspects related to the new Part, including the meaning of “requester” and “provider” for the purposes of Part IIBA.

For pathology services, a “requester” means: a practitioner (as defined in s 3(1) as a medical practitioner or dental practitioner; a person who employs, or engages under a contract for services, a practitioner; or 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; if the service is of a kind specified in regulations made under section 16B —a dental practitioner, a chiropractor, a hysiotherapist, a podiatrist or an osteopath; or a person who employs, or engages under a contract for services, one of the people specified above.

A “provider” of a pathology service or diagnostic imaging service means a person who renders that kind of service; or a person who carries on a business of rendering that kind of service.

New section 23DZZIF describes what is, and 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 section deals with what is permitted in cases where a service requester (such as a General Practitioner) owns, or part owns, a pathology or diagnostic imaging service provider, or where a requester and a provider share premises.

New Division 2 of Part llBA contains civil penalty provisions that are entirely new provisions for the HIA and are imposed where a court is satisfied on the balance of probabilities that the relevant person, a requester or provider, has contravened the relevant provisions. The maximum penalty under the civil penalty provisions are 600 penalty units ($66,000) for an individual (including executive officers of corporations) and 6,000 penalty units ($660,000) for a corporation.

Under Division 2:

• A service 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 service provider must not offer or provide such a benefit to a requester or a person connected to a requester.
• A service 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 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.

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 to prove beyond reasonable doubt certain levels of intention and/or knowledge on the part of the 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 5 years imprisonment (or 300 penalty units by virtue of subsection 4B(2) of the Crimes Act 1914).

Under 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 this to the Medicare Australia CEO.

These offences are mirrored in new section 23DZZIR which deal with people who offer or provide prohibited benefits. New section 23DZZIS provides that a person also commits an offence if the person threatens a second person, intending that the threat will induce a requester of pathology or diagnostic imaging services to request services from a particular provider.

Notably, this Bill makes explicit reference to Executive Officer liability in a number of the 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.

Items 39 to 84 of the Bill amend various elements of Part VB of the Health Insurance Act, which deals with the Medicare Participation Review Committee (MPRC). Currently, in cases where persons have been convicted of HIA pathology-related offences or are considered to have contravened the prohibitions relating to diagnostic imaging services, the MPRC 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 MPRC applies on conviction of a Part IIBA offences or a court giving an order for a civil penalty.

Item 85 inserts a new Part VIA – Civil Penalties (new sections 125A-125H) which outlines some of the details about civil penalties, including Federal Court powers and clarifying the relationship between civil penalties proceedings and criminal proceedings under the HIA.

The Bill makes a large number of consequential and other amendments to the Health Insurance Act, arising from the introduction of this new regime. I do not propose to go through these in 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 allows ‘authorised officers’ to require the production of information or conduct searches where there are reasonable grounds for believing Medicare-related offences have been committed. Items 98-109 of Schedule 1 amend the Act for these powers to apply to situations were it is suspected that a civil penalty provision under the HIA has been contravened.

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 Health Insurance Act and the Health Insurance (Pathology Services) Regulations 1989.

According to the Government, these changes have been the subject of extensive consultation with pathology providers, professional and peak industry groups, State and Federal Government agencies and consumer groups.

Media reports suggest that the Australian Medical Association (AMA) 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 (AAPP) have expressed support for the measures contained in this Bill.

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

Labor understands that over-servicing and prohibited practices in the pathology and diagnostic imaging sectors – or indeed in any sector – serves to undermine the whole system, and casts 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 should face commercial losses simply because they comply with the spirit of the legislation while their competitors do not.

Labor supports legislative frameworks that encourage fair competition between providers of pathology and diagnostic imaging services on the basis of quality of service provided, and cost to patients, rather than inducements and other relationships.

Performing unnecessary procedures is not just deceitful, it is wasteful and costly. Costly to Medicare and costly to the broader health system.

Labor is committed to the universal provision of quality health care for all Australians. Just as past Labor governments built Medicare, Labor believes that Medicare should be retained, defended and strengthened. Labor knows that Medicare is the cornerstone of our health system, and obviously does not support the abuse of Medicare. Labor supports this legislation because we believe that Medicare must be protected from inappropriate use by deceitful service providers.

In conclusion, as I said at the outset, Labor will be supporting the bill.

Question agreed to.

Bill read a second time.