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Auditor-General slams Department of Human Services over handling of Medicare

The Auditor-General has raised questions about the ability of the department responsible for Medicare to safeguard the integrity of the $19 billion program.

Medicare is the fourth-largest item in the federal budget, costing $18.6 billion or about 5 per cent of all Commonwealth spending last financial year. Spending is expected to reach $23.7 billion by 2016-17.

Health Minister Peter Dutton has flagged an overhaul of Medicare, warning the current rate of spending growth is unsustainable and arguing well-off Australians should pay more for their care. He has refused to confirm media reports this week that the government has adopted a proposal to introduce a $6 fee to see the doctor, a change that would effectively end bulk-billing.

In two separate reports tabled in Federal Parliament this week, the Australian National Audit Office has criticised the Department of Human Services' stewardship of Medicare. 

In the first report, Auditor-General Ian McPhee detailed how the department botched a massive crackdown on Medicare rorting by doctors, leaving taxpayers with a $128 million shortfall.

In a second report, Mr McPhee raised concerns about the reliability and security of the customer data the department holds, suggesting Medicare may be paying benefits to people who are ineligible. 


In 2008 the Rudd government allocated $77 million over four years to the department, to increase the number of audits it completed on doctors' Medicare claims each year from 500 to 2500.

The audits, which examine whether doctors are delivering the services they are billing Medicare for, was supposed to recover $147 million, to deliver a net saving of $70 million. 

But the Auditor-General showed the department identified incorrect claims of $49 million while actually recovering less than $19 million over this period, leaving a shortfall of more than $128 million. 

"The ANAO’s analysis indicates the program of additional compliance audits funded under the budget measure was delivered at a net cost to the Australian government and did not  represent a positive financial return on its investment," the report said.

Mr McPhee found that, until recently, the department lacked a process to analyse the risks of doctors rorting the system and was unable to report definitive results from the expanded audits.

He also found the department did not have a consistent approach to calculating debts for incorrect or fraudulent claiming by doctors, and there were inaccuracies in the department's audit data.

Of 359 Medicare audits completed between March and June 2013, almost 10 per cent were incorrectly recorded as non‐compliant when they were actually compliant. 

In the second report, which focused on Medicare's customer database, Mr McPhee found active records for people who were ineligible for Medicare and records containing inaccurately recorded information, such as one that said a person's age was 143.

His report identified more than 40,000 records for people who may be dead and at least 18,000 possibly duplicated customer enrolments.

The department also reported instances where the records of two different customers had been combined, giving rise to privacy and safety concerns.

The Auditor-General said the department was not complying with government standards for data security. It noted the department had implemented only two of six recommendations made by an audit office review almost 10 years ago.

The department said it was "strongly committed to ensuring the ongoing completeness, accuracy and reliability of customer records".

In response to the first report, Minister for Human Services Marise Payne said the department had started introducing improvements to its processes, including its analysis of risks.

“Moving to a more structured, risk-driven approach to Medicare audits will ensure they are targeted in the right area and achieve the intended results," Senator Payne said.

“While the overwhelming majority of health professionals and patients do the right thing, the public expects us to ensure Medicare benefits are claimed appropriately.”

In response to the Auditor-General, the department said its Medicare compliance program had other objectives than achieving savings, such as education and reinforcing doctors' awareness of their obligations.