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Medicare crackdown falls short

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A Federal Government crackdown on Medicare rorts has raised a fraction of the expected revenue and has ended up costing the Commonwealth rather than saving health funds, according to a damning audit report.

Intensified checks of compliance with Medicare rules were expected to deliver $70 million in savings between 2008-09 and 2012-13, but an investigation by the Australian National Audit Office has found that the Department of Human Services bungled the process, conducting far fewer reviews and audits than expected, and recovering far less money.

The-then Rudd Government provided the Department with almost $77 million to conduct an additional 8000 Medicare compliance audits and reviews over a four-year period. The extra effort was expected to result in the recovery of more than $147 million, providing a net saving of $70 million.

But the ANAO found that in four years debts worth just $49.2 million were identified and, of this, just $18.9 million had been recovered – meaning the crackdown resulted in an additional cost to the Government of $58 million, rather than a saving.

“The available Human Services’ data shows that there was a $128.3 million shortfall in the savings achieved by the Department, in the form of monies actually recovered, against the target set by the Budget initiative – some 87 per cent less than the $147.2 million expected savings,” the ANAO report said. “Even if all the debts raised ($49.2 million) were recovered, the result would be a shortfall of $98 million, or 66 per cent less than the expected savings.”

When the crackdown was initiated in 2008, the Expenditure Review Committee of Cabinet asked the responsible Ministers to report back on progress in 20011-12, but the Audit Office found “Human Services did not develop or implement its proposal to monitor and report on savings – an opportunity missed, given ministerial expectations of a significant return on the Government’s investment”.

Instead, the ANAO found that the Department tried to fudge reports on the extent to which it increase audit and compliance activity.

According to the Audit Office report, just once – in 2011-12 – did the Department reach its key performance target of completing 2500 audits and reviews each year.

It found that in 2012-13 Human Services, on its own initiative and without ministerial input, changed the mix of activities that counted toward compliance activity to include less rigorous actions, such as ‘targeted feedback letters’. Including such actions bumped reported compliance activity for the year up to 2819 cases, whereas the ANAO found the actual number of agreed compliance actions was 2073.

“While acknowledging the Department’s advice that targeted feedback letters were a valid compliance treatment intended to encourage voluntary compliance, their inclusion resulted in inaccurate performance reporting for the budget measure, as well as inaccurate and inflated internal reporting of its compliance coverage rate,” the Audit Office said.

In addition, the ANAO found significant deficiencies in the consistency and quality of compliance data collected by Human Services.

In a review of 359 Medicare audits completed by the Department between March and June last year, the Audit Office found that 33 (almost 10 per cent) “contained data inaccuracies that resulted in compliant claims being incorrectly recorded and reported as non‑compliant”.

Responding to the findings, the Department accepted the ANAO’s recommendations to strengthen and refine its risk management frameworks and to develop a methodology to monitor and report on the effectiveness of Medicare compliance audits.

But it defended its decision to include feedback letters, education programs and other activities in its compliance work.

“While risk management, the completion of audit work and achievement of savings is key to the Department’s compliance activities, the Department is also pleased that the ANAO has noted the additional objectives of the Compliance Program, including education and reinforcing health professionals’ awareness of compliance obligations. Prevention and positive behaviour change are a very important part of the department’s Compliance Program,” Human Services said.

Adrian Rollins

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