Medicare shared debt “claw back” scheme

12 July 2019

The way that medical rooms are managed, and in particular – how Medicare benefits have been claimed – has changed dramatically over the years.It had too – to deal with practices incorporating multiple professionals (and in some cases different health professional groups) and the additional administrative burdens placed on health professionals.

This is a far cry from the old fashioned single medical practitioner where a receptionist could deal with the mundane (and much reduced) administrative requirements then imposed.

Now-a-days, specialised serviced companies/trusts are often needed to look after these administrative tasks, so health professional can do what they do best – provide professional advice – alleviating them of the administrative (and sometimes complicated) burdens now imposed.

Medicare has finally recognised that change and introduced a system that alleviates the health professional of 100% of the blame for incorrect Medicare claims.It has done so by introducing a new Medicare shared debt scheme (Scheme) that apportions responsibility for incorrectly Medicare claims amongst the health professional and the entity entrusted with those administrative responsibilities.

That Scheme recently came into effect and could change the way practices deal with their professional staff.It applies to all health professional groups such as doctors, allied health professionals and pharmacists.

The Scheme commenced on 1 July 2019 and will only apply to Medicare audits conducted from that date. It has some retrospective effect because the Scheme applies to professional medical services provided from 1 July 2018.

The Scheme allows Medicare to recover from practices monies improperly paid based on false or misleading statements.It has far reaching application and can even apply where the practitioner received 100% of the Medicare benefit.

All Medicare needs to show is:

  • a false or misleading statement was made;
  • there is a relationship between the practice and practitioner such that the practice could have controlled or influenced the making of that false or misleading statement;
  • the practice obtained a direct or indirect financial benefit from the false or misleading statement or there are other factors that make it “fair and reasonable” to do so; and
  • it complied with certain procedural steps (including giving the practice a notice asking the practice to show cause why an amount should not be payable by the practice and not being satisfied with that response).

Once the above has been established, Medicare can issue notice to the practice requiring the payment of a percentage of the improperly paid Medicare benefit.That percentage will be 35%, unless the circumstances require otherwise.

In addition, the practice can be liable for an administrative penalty (currently a base rate of 20% of the outstanding amount) if the amount payable by the practice is greater than a prescribed amount (currently $2,500).

What should practices be doing to guard against this “claw-back” regime ?

Firstly, keep and maintain proper records.The Department of Health recommends a minimum 2 year retention period, but 6 years is preferable to align the retention period with the statutory limitation period for potential claims.

Secondly, ensure robust policies and procedures are in place that track the flow of information to and from the practitioner so the practice can apportion blame, illustrating how the false or misleading statement arose.That will not, in every circumstance, prevent Medicare from claiming the monies from the practice. However, it will give the practice the evidence necessary to apportion blame to the practitioner.

Thirdly, make sure the agreement with the practitioner is robust enough to address the audit process and allow recovery of those amounts (and costs) from the practitioner where the practitioner is to blame.

As a result of these changes, we have implemented significant changes to our standard service agreement that better protect the practice from any adverse claw back claims from Medicare.

If you would like to discuss the application of this new Scheme to your practice, please contact our medical practice partner, Antony Harrison.