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2004-2005-2006-2007
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
HEALTH INSURANCE AMENDMENT (INAPPROPRIATE AND PROHIBITED
PRACTICES AND OTHER MEASURES) BILL 2007
EXPLANATORY MEMORANDUM
Circulated by authority of the Minister for Health and Ageing,
the Honourable Tony Abbott MP
HEALTH INSURANCE AMENDMENT (INAPPROPRIATE AND PROHIBITED
PRACTICES AND OTHER MEASURES) BILL 2007
OUTLINE
Pathology and diagnostic imaging services play a critical role in health care. They also
account for a significant amount of taxpayer funded outlays from the national health care
budget. In 2005-06 approximately 83 million Medicare funded pathology services were
performed. During the same period, approximately 15 million Medicare funded diagnostic
imaging services such as x-rays, ultrasound, computed tomography (CT) and magnetic
resonance imaging (MRI) were performed. This equates to expenditure in excess of
$3.2 billion, representing approximately 30% of total Medicare outlays in 2005-06.
In 2002, a review of Commonwealth legislation for pathology arrangements was undertaken.
The review noted that the legislative arrangements for regulating pathology services needed
updating and streamlining. The area of offences and enforcement provisions was highlighted
as one area of concern, particularly in relation to bribery and prohibited practices.
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 of the Health Insurance Act 1973 (HIA). There was extensive consultation with
Government and industry stakeholders during the development of the review.
The Phillips Fox review included 52 recommendations. It was recommended that the
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.
The main purpose of this Bill is to amend the HIA to reflect Government policy, implement
many of the recommendations in relation to pathology related offences and to also implement
similar changes in relation to diagnostic imaging.
In summary, the Bill replaces existing prohibitions on the payment of benefits between
providers and requesters of pathology and diagnostic imaging services with new and
strengthened provisions aimed at:
· 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;
· preventing payments for pathology and diagnostic imaging services that do not benefit
patients; and
· encouraging fair competition between pathology/diagnostic imaging providers on the
basis of quality of service provided, and cost to patients.
A summary table of the prohibitions is included at Attachment A.
This Bill also makes a number of more minor, technical amendments to clarify the policy
intent of the legislation and enable more efficient and effective implementation of the policy
intent. The majority of these changes have been made in response to concerns raised by
industry and other stakeholders regarding the current lack of clarity.
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FINANCIAL IMPACT STATEMENT
The Bill will have no financial impact.
REGULATION IMPACT STATEMENT
1. PROBLEM AND BACKGROUND
The prohibition of inducements and similar activities by pathology service providers in
relation to referrals for pathology services is a long-standing element of the legislative
provisions relating to pathology services in the HIA. The prohibitions are contained largely
in sections 129AA and 129AAA of the HIA and are intended to prevent referrers of
pathology services from gaining a benefit, which could be an incentive for overservicing.
Despite numerous amendments since the mid 1980s to increase the effectiveness of the
provisions, their deterrent and enforcement effect has remained at lower than desirable levels.
Ongoing reports from within the pathology industry allege that the prohibited practice
provisions are being circumvented by operators who are contravening the known intent of the
legislation. These allegations indicate the possibility that competition between pathology
providers may be skewed to favour those providers who are able to provide a benefit to
pathology requesters.
Despite this, the relevant agencies (Medicare Australia and the Director of Public
Prosecutions) have been unable to successfully prosecute any alleged offenders. The current
sanctions are difficult to apply because it is difficult to discharge the burden of proof, to
determine the preconditions for application of the relevant sanctions and to establish the facts
necessary to apply the relevant sanctions. The intent of the legislation is widely recognised
as not being stated clearly enough to support its effective interpretation and application.
Notably, the current rules of conduct do not apply equally to requesters and providers of these
services. Consequently, even if it was clear that a referrer had knowingly entered into an
arrangement with a provider that involved some form of bribery or inducement, there is no
mechanism at present to apply the same penalties to the referrer as opposed to a provider who
might be engaged in inappropriate activity.
A reliance on market mechanisms is insufficient in this situation. Consumers are unlikely to
possess the necessary knowledge to assess appropriate use of these services and are therefore
not generally equipped to identify overservicing or inappropriate ordering of services. More
stringent enforcement actions are required to ensure more effective regulation of industry
practices.
The prohibited practice provisions relating to diagnostic imaging services, contained in
Division 3 of Part IIB of the HIA, mirror most of the prohibited practice provisions for
pathology. Likewise, there are several inadequacies in the diagnostic imaging provisions and
there are considerable barriers to enforcement action being taken. Given that the diagnostic
imaging provisions mirror those in pathology and are intended to proscribe the same type of
arrangements between requesters and providers, it is proposed that these provisions also be
reviewed.
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Medicare Funding
The Australian Government currently provides Medicare rebates for a wide range of
pathology and diagnostic imaging services. For the period 1 July 2005 to 30 June 2006,
approximately 83 million Medicare funded pathology services were performed. This equates
to expenditure in excess of $1.6 billion. During the same period, approximately 15 million
Medicare funded diagnostic imaging services such as x-rays, ultrasound, CT and MRI were
performed, costing approximately $1.6 billion. The amount of inappropriate servicing
prompted by providers paying inappropriate benefits to requesters cannot be quantified.
However, even if inappropriate expenditure accounts for only 0.5% of all Medicare funded
pathology and diagnostic imaging services, this equates to approximately $16 million a year
in inappropriate use of Medicare funding.
2. OBJECTIVES
The objectives of the proposed regulatory changes are to:
· reduce inappropriate expenditure for pathology and diagnostic imaging services provided
under the Medicare Benefits Scheme (MBS); and
· ensure that competition between providers of pathology and diagnostic imaging services
is based on quality of service and costs to patients and is not skewed in favour of those
who provide benefits to requesters of pathology and diagnostic imaging services.
In order to achieve these objectives the Government will:
· revise the existing provisions to clarify the intent of the current prohibitions;
· extend the current provisions to include requesters of pathology and diagnostic imaging
services; and
· introduce a range of penalties commensurate with the severity of the offences in respect
of prohibited practices.
3. OPTIONS
Currently, the HIA contains provisions intended to prohibit inducements and similar activities
by pathology and diagnostic imaging service providers. As these provisions have been
identified as problematic the following options are alternate ways in which inadequacies in
the existing legislation could be addressed.
Option A: Do nothing
This option would require no change to the legislative provisions. Government agencies
would continue to attempt to enforce the current provisions prohibiting inducements in
relation to pathology and diagnostic imaging services.
Option B: Amend the existing provisions
This option would use the existing prohibited practices legislative provisions as a basis to
more clearly and explicitly set out the Government's intentions to prohibit the use of
inducements to encourage pathology and diagnostic imaging services.
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Option C: Repeal and replace the existing provisions
This option would involve repealing the current legislative provisions and replacing them
with new provisions that more clearly and explicitly set out the Government's intentions, and
extend the current prohibition parameters for inducements to encourage referrals for
pathology and diagnostic imaging services.
The key changes would 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;
· broadening the definitions of what could be interpreted as an inducement;
· introducing mechanisms to ensure legitimate commercial transactions between pathology
and diagnostic imaging providers and requesters;
· creating an expanded range of penalties that are relevant to the scale of the offence;
· incorporating Crown activities (such as those involving MBS billing by State and
Territory health authorities) within the scope of the provisions where possible; and
· introducing a Ministerial exemption capacity within the legislation to enable sufficient
flexibility so as to avoid unintended consequences.
The changes will include any consequential amendments to the HIA and the Medicare
Australia Act 1973 to give effect to the new requirements.
4. IMPACT ANALYSIS
The following groups are considered to be the key groups or bodies potentially affected by
the options outlined above:
· Australian Government
· State and Territory Governments
· pathology service providers (Approved Pathology Practitioners, Approved Pathology
Authorities, and their employers and associated medical entrepreneurs)
· diagnostic imaging service providers (including radiologists, nuclear medicine physicians,
cardiologists, obstetricians and gynaecologists, vascular surgeons, and their employers
and associated medical entrepreneurs)
· requesters of pathology and diagnostic imaging services (general practitioners, medical
specialists, dental practitioners, physiotherapists, chiropractors, osteopaths and
podiatrists, and their employers and associated medical entrepreneurs)
· consumers
Option A: Do nothing
Impact on the Australian Government
Benefits
There are no benefits arising from this option as the problem would not be addressed.
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Costs
While few breaches have been recorded to date, anecdotal evidence, particularly in
pathology, suggests that the existence of the prohibited practices in question is real and of
concern to the industry. If no action is taken to address these concerns, the Government may
be seen to be tacitly approving inappropriate activity in the pathology and diagnostic imaging
sectors.
The existence of inducements to secure patient referrals, albeit by a very small number of
requesters and providers, undermines the basis of agreements made as part of the
Government's Memoranda of Understanding (MoU) with pathology and diagnostic imaging
industry groups. The Government has committed more than $15 billion over five years to
these agreements. The inability to apply sanctions could lead to claims that the Australian
Government is not applying sufficient attention to reducing inappropriate expenditure for
pathology and diagnostic imaging services under the MBS.
Over-servicing can result in increased risks to patients associated with testing, increased costs
to the Government via the MBS and/or an inappropriate mix of services under the capped
funding arrangements. While there is no quantitative data as to the level of inappropriate
servicing, even if this was as low as 0.5% of total Medicare benefits paid for pathology and
diagnostic imaging services, it would equate to approximately $16 million a year.
Lack of Government action to properly address inappropriate activities within the pathology
and diagnostic imaging sectors may lead to a lack of confidence by law-abiding providers in
the Government's commitment to its stated intent and a lack of willingness on their part to
work with Government agencies on other initiatives.
Medicare Australia will still incur the costs of administering and enforcing the current
requirements, which have been identified as being inadequate. This could lead to a waste of
resources.
Impact on State and Territory Governments
This option would have no impact.
Impact on providers of pathology and diagnostic imaging services
Benefits
There are no benefits to the vast majority of providers, who comply with the legislation, as
the problem would not be addressed. However, providers engaged in prohibited practices
with requesters of pathology and diagnostic imaging services will continue to benefit from
the difficulty of enforcing the current provisions.
Costs
Providers complying with the legislation will continue to be disadvantaged by those who may
be acting inappropriately. The existence of apparently acceptable loopholes may lead to
pressure on a greater number of pathology and diagnostic imaging providers to adopt
prohibited practices to remain competitive within the industry.
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Impact on requesters of pathology and diagnostic imaging services
Benefits
There are no benefits to requesters of pathology and diagnostic imaging services who comply
with the spirit of the legislation as the problem would not be addressed.
Requesters engaged in business relationships with providers of pathology and diagnostic
imaging services which constitute prohibited practices will continue to benefit from the
difficulty of enforcing the current provisions.
Costs
Requesters complying with the spirit of the legislation will continue to be disadvantaged by
those who may be acting inappropriately.
Impact on consumers
Benefits
There are no benefits arising from this option as the problem would not be addressed.
Costs
Inducement arrangements may lead to over-servicing and/or inappropriate testing, potentially
leading to increased risks and costs to patients.
Option B: Amend the existing provisions
Impact on the Australian Government
Benefits
Varying the current provisions would help to address the problem and may have a stronger
deterrent effect on those considering engaging in inducement or bribery activities.
The Government may save Medicare funds by reducing inappropriate services.
Costs
The current pathology provisions reflect a series of amendments to the original provisions
over a number of years which have been made with the intention of clarifying and
strengthening the intent of the original provisions. The resulting structure of the legislation
has led to further difficulties in interpreting and enforcing appropriate arrangements in the
pathology industry. There is no strong reason to believe that it will be possible to achieve the
desired outcome with further amendments to the existing provisions.
The diagnostic imaging prohibited practice provisions have been in existence since 1991. As
mentioned earlier, they largely reflect the pathology provisions that existed at the time and
are intended to proscribe the same types of inappropriate activity between requesters and
providers. While there is no evidence to suggest that there is widespread non-compliance
with the diagnostic imaging provisions, the deficiencies identified in the pathology provisions
apply equally to the diagnostic imaging provisions.
The extent of amendments required to rectify identified problems would make drafting
complex and very difficult, especially if amendments must be made within the existing
legislative framework. Such large-scale re-working of existing provisions is also more likely
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to result in a less clear outcome and the creation of further unintended loopholes and
inconsistencies.
The capacity to effectively enforce the amended requirements is dependent upon the degree
of clarity in the re-worked provisions. The cost of administering and enforcing the amended
requirements by Medicare Australia may be greater if there are unintended loopholes in the
re-worked provisions.
Impact on State and Territory Governments
As for option A.
Impact on pathology and diagnostic imaging service providers
Benefits
This option would help to address the problem.
There would be clearer guidance for pathology and diagnostic imaging service providers on
the extent of the intended prohibition of inducements and bribery practices, including the
nature of the inducements and the means by which such inducements might be offered.
Costs
The poor track record of the existing provisions suggests that it is unlikely that such an
amendment process would result in significant changes to their effectiveness.
Impact on requesters of pathology and diagnostic imaging services
As for option A.
Impact on consumers
Benefits
Amending the current provisions may help to reduce inducement activities and provide the
legal framework to prevent over-servicing and inappropriate testing. As a consequence, the
cost to consumers associated with over-servicing and inappropriate testing may be reduced.
Costs
Although amending the provisions may help to reduce costs to consumers associated with
over-servicing and inappropriate services may be reduced, the risk of loopholes allowing
some inappropriate practices will continue.
Option C: Repeal and replace the existing provisions
Impact on the Australian Government
Benefits
Reviewing and replacing the current provisions signals to the pathology and diagnostic
imaging sectors a renewed commitment by the Government regarding its intent to prevent the
misuse of pathology and diagnostic imaging services funded under Medicare.
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The introduction of a range of penalties from civil to criminal, depending on the severity of
the offence, will make it more likely that Medicare Australia and the Director of Public
Prosecutions will be able to pursue breaches more effectively, thus creating a greater
deterrent effect than produced by the current legislation.
The revised and clarified prohibition framework may result in better adherence to the
legislative intent and a lesser need for enforcement activities.
While Medicare Australia will still incur the cost of administering and enforcing the new
requirements, it may cost less than administering the existing or amended provisions as it will
be easier to enforce compliance.
The provision of a Ministerial power to make determinations on exemptions allows some
flexibility for the Government to minimise unintended effects and respond to valid industry
concerns about counter-productive consequences of particular prohibitions.
Costs
Medicare Australia will still have the costs of administering and enforcing the amended
requirements. However, with less likelihood of loopholes, these costs are likely to be less
than with option B.
The Department of Health and Ageing would incur costs associated with educating
practitioners and other Government agencies to ensure that the amendments are well
understood.
Impact on State and Territory Governments
Benefits
The law would apply equally to State and Territory Governments as for other providers of
pathology and diagnostic imaging services.
Costs
State and Territory Government agencies gaining access to MBS funding will need to
examine their existing processes and make sure that they are not in breach of the HIA
prohibition provisions. Where breaches are discovered and the relevant agencies wish to
continue to have access to Medicare funding, changes to existing arrangements may be
required.
Impact on pathology and diagnostic imaging service providers
Benefits
Repealing and replacing the existing provisions will create clearer and more comprehensive
guidance for providers on the extent of the intended prohibition of inducements, including the
nature of the inducements and the means by which such inducements might be offered.
The parameters of the offence provisions will be widened to incorporate any type of "arms-
length" arrangements that may be used to circumvent the intent of the legislation. This will
mean that providers complying with the spirit of the current legislation can have confidence
that inappropriate behaviour is more likely to be addressed.
8
Amending the current provisions would make the law apply equally to all providers of
pathology and diagnostic imaging services, including public providers.
The introduction of a range of penalties from civil to criminal, depending on the severity of
the offence, may have a stronger deterrent effect on those considering engaging in
inducement or bribery activities. It may also mean that a greater number of offenders are
prosecuted and potentially penalised.
The provision of an avenue for the granting of exemptions to the provisions through a
legislative instrument allows providers to state their claim for exemption of specific practices
and the Government to consider the validity of those claims.
For diagnostic imaging providers, there will be a public record of decisions about whether
there has been a breach of the provisions, rather than such decisions being confidential under
the Medicare Participation Review Committee process.
Costs
There may be increased compliance costs where it is necessary for providers to offer
evidence to Medicare Australia (and/or the courts) of the commercial appropriateness of
transactions between providers and requesters (such as rental payments or the provision of
statistics). However, these costs would be minimal.
In addition, the inclusion of referrers in the enforcement and offence provisions will require
pathology and diagnostic imaging providers to give due consideration to the nature of their
dealings with referrers, including the full extent of primary and secondary connections
through personal and/or corporate dealings.
Impact on requesters of pathology and diagnostic imaging services
Benefits
The amended provisions would extend prohibition parameters to include requesters of
pathology and diagnostic imaging services as well as providers. Requesters complying with
the spirit of the current legislation will be assured that their colleagues who may be acting
inappropriately would be more likely to face prosecution.
For diagnostic imaging requesters, there will be a public record of decisions about whether
there has been a breach of the provisions, rather than such decisions being confidential under
the Medicare Participation Review Committee process.
Costs
The proposal, extending the full range of prohibition parameters to include requesters of
pathology and diagnostic imaging services, will require requesters to be fully informed about
the risks that are associated with entering into any form of commercial or other benefit-
accruing arrangement with providers or persons/entities with business or family connections
with those providers.
For the first time, penalties ranging from civil to criminal, depending on the severity of the
breach, will apply to requesters and/or their associates.
9
Impact on consumers
Benefits
This option will provide the legal framework to prevent over-servicing and inappropriate
testing. As a consequence, consumers will not incur costs associated with these practices.
Costs
There are no costs to consumers under this option.
SUMMARY OF IMPACT OF REGULATORY CHANGES
Stakeholder Option A: Do nothing Option B: Amend the Option C: Repeal and
existing provisions replace the existing
provisions
Australian Benefits Benefits Benefits
Government No benefits as problem - Would help to address - Signals Government's
not addressed the problem commitment to
- May have a stronger preventing misuse of
Costs
deterrent effect on those Medicare funding
- Government seen to
considering engaging in - Range of penalties
be approving
prohibited practices will make it more
inappropriate activity
- Government may save likely that
- Undermines basis of
Medicare funds enforcement will be
agreements made
more effective
between Government Costs
- May result in better
and industry - The extent of
adherence and less
- MBS funding of amendments required
need for enforcement
approximately $16 would make drafting
- Lower costs in
million a year more complex and more
administration and
expended on likely to result in a less
enforcement
inappropriate clear outcome,
- Ministerial power for
servicing unintended loopholes
exemptions allows
- Government seen to and inconsistencies
flexibility for
not apply attention to - Cost of administering
Government to
reduce inappropriate and enforcing by
minimise unintended
MBS expenditure Medicare Australia may
consequences
- Lack of confidence in be greater
Government results in Costs
industry not willing - Medicare Australia
to work will still have costs in
collaboratively with administration and
Government agencies enforcement, albeit
lower than costs
on other initiatives
- Government associated with
resources wasted on current provisions
inadequate - Department of Health
administrative and and Ageing will incur
enforcement costs associated with
requirements communicating the
amendments to those
affected
State and No impact As for Option A Benefits
territory - Law would apply
Governments equally to State and
Territory
Governments as for
10
Stakeholder Option A: Do nothing Option B: Amend the Option C: Repeal and
existing provisions replace the existing
provisions
other providers of
services
Costs
- State and Territory
Governments
accessing MBS
funding may need to
change existing
arrangements
Providers of Benefits Benefits Benefits
pathology and - No benefits to those - May help to address - Will create clearer and
diagnostic who comply with problems comprehensive
imaging services current legislation as - Clearer guidance for guidance on the extent
problem not providers on extent of of intended
the intended prohibitions
addressed prohibitions
- Non-compliant - Providers complying
Costs
providers will benefit with spirit of current
- Poor track record of
from enforcement legislation will be
existing provisions
difficulties confident that
makes it unlikely that
competitors'
Costs amendments would
inappropriate
- Compliant providers result in significant
behaviour is more
disadvantaged change
likely to be addressed
- Loopholes may lead
- Law would apply
to pressure on
equally to all
providers to adopt
providers, including
prohibited practices
public providers
to remain competitive
- Introduction of a
range of penalties may
have a stronger
deterrent effect
- Provision for Minister
to make exemptions
allows avenue for
industry to state
claims for exemption
for specific practices
- For diagnostic
imaging, there will be
a public record of
those in breach of the
provisions
Costs
- There may be
increased compliance
costs where it is
necessary for
providers to prove
validity of
commercial
transactions
- Compliance costs will
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Stakeholder Option A: Do nothing Option B: Amend the Option C: Repeal and
existing provisions replace the existing
provisions
apply equally to all
providers, including
those who are not
offering inducements
- Inclusion of
requesters in the
provisions will require
providers to give due
consideration to
commercial
transactions with
requesters
Requesters of Impact on requesters As for Option A Benefits
pathology and same as impact on - Those complying with
diagnostic providers spirit of current
imaging services provisions will be
assured that
colleagues acting
inappropriately will
be more likely to face
prosecution
- For diagnostic
imaging, there will be
a public record of
those in breach of the
provisions
Costs
- Requesters will need
to be fully informed
about the risks
associated with
entering into
prohibited commercial
transactions with
providers
- For the first time,
penalties will also
apply to requesters
and their associates
Consumers Benefits Benefits Benefits
- No benefits as - Costs associated with - Will provide the legal
problem not over-servicing and framework to prevent
addressed inappropriate testing costs associated with
may be reduced over-servicing and
Costs
inappropriate testing
- May lead to Costs
inappropriate testing - Amendments unlikely to Costs
- May lead to increased result in significant None
costs change and some
inappropriate practices
may continue
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5. CONSULTATION
The review of the pathology enforcement and offence provisions included preparation and
dissemination of an Issues and Options Paper in January 2005. The paper was distributed for
comment to:
· relevant Government agencies
· pathology providers
· pathology professional and industry peak organisations
· State and Territory Governments and medical registration authorities
· peak consumer groups.
The consultants also conducted a number of face-to-face meetings with interested parties.
Twenty-seven submissions were received and analysed as part of the preparation of the final
report of the review. The final report was made available publicly by the Minister for Health
and Ageing in September 2005.
Meetings regarding the report, its recommendations and proposed timetable were held with
key stakeholders, including:
· relevant Government agencies--Department of Prime Minister and Cabinet, Attorney
General's Department, Director of Public Prosecutions, Department of Finance and
Administration, Medicare Australia, and Professional Services Review
· State and Territory health authorities
· peak professional and industry groups, including the Australian Medical Association,
Royal College of Pathologist of Australasia (RCPA) , Royal Australian College of
General Practitioners, National Coalition of Public Pathology (NCOPP) and the
Australian Association of Pathology Practices (AAPP)
· relevant consultative forums including the Pathology Consultative Committee and the
National Pathology Accreditation Advisory Council
· other private pathology providers with a particular interest in the issues.
The final report was distributed to a wide range of diagnostic imaging stakeholders in
December 2005 and commensurate changes in diagnostic imaging were foreshadowed.
These stakeholders included:
· professional organisations and peak industry groups for diagnostic imaging service
provider groups, including
- Royal Australian and New Zealand College of Radiologists (RANZCR)
- Australian Diagnostic Imaging Association (ADIA)
- Royal Australian and New Zealand College of Obstetricians and Gynaecologists
- National Association of Specialist Obstetricians and Gynaecologists
- Royal Australian College of General Practitioners
- Australian College of Rural and Remote Medicine
- Cardiac Society of Australia and New Zealand
- Australian and New Zealand Association of Physicians in Nuclear Medicine
- Australian and New Zealand Society of Vascular Surgery
- Australian Institute of Radiography
- Australian Sonographers Association
- Australasian Society for Ultrasound in Medicine
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· Professional and peak industry groups for requesters of diagnostic imaging services.
Industry briefing sessions were held for requesters and providers of diagnostic imaging
services in Melbourne and Sydney in February 2006. Comments in writing were sought from
those who attended the briefing sessions.
Information from these sessions was made available to stakeholders who were unable to
attend a briefing session. These stakeholders were also invited to provide written comments.
Written comments were provided by eight stakeholders, including RANZCR, ADIA, the
Royal Australian and New Zealand College of Ophthalmologists, the Australian
Physiotherapy Association and the Australian Dental Association. The remaining
submissions were received from individual practitioners.
The majority of diagnostic imaging peak industry or professional groups who provided
written submissions to the Department supported the proposal, either without qualification or
on an in-principle basis pending further consultations on the detail of the legislative
provisions.
Arguments from diagnostic imaging stakeholders who opposed the legislation centred on
whether there was a need to make amendments to the diagnostic imaging provisions. Some
felt that diagnostic imaging should have its own full review, like that undertaken in respect of
pathology.
Follow-up consultations were held with ADIA and RANZCR in response to issues raised by
stakeholders during the industry briefing sessions. Separate discussions were held with a
representative from the Cardiac Imaging MoU Management Committee.
ADIA sought assurances that proposed amendments would apply equally to all providers and
requesters, including the public sector and non-specialist radiology practices.
The Government response to the Phillips Fox review, which supports the majority of the
recommendations, was issued in May 2006. All of the recommendations contained in the
review have been the subject of public consultation.
Further consultation sessions with key Government agencies and major pathology and
diagnostic imaging stakeholders were undertaken in June 2006 to inform stakeholders of the
proposed framework and timing of the legislation, as well as ensuring that the drafting
instructions contain all relevant material and the policy direction is properly applied.
In general, there was broad support for the proposed framework of the legislation. All
stakeholders expressed a desire to work collaboratively with the Government during the
drafting process to ensure that inappropriate practices are explicitly prohibited and that the
legislation does not produce any unintended consequences for appropriate practices.
In December 2006, the Department disseminated an Exposure Draft of the Bill to peak
industry bodies and targeted Commonwealth and State Government agencies to further assist
in ensuring there are no unintended consequences arising from the drafting process.
The peak pathology bodies (RCPA, NCOPP and AAPP) submitted a joint response to the
Exposure Draft. While the pathology industry's submission indicated strong support for the
14
proposed changes, they recommended further amendments aimed at more clearly stating the
Government's intent to prevent inappropriate and anti-competitive referral practices.
Likewise, the peak diagnostic imaging bodies (ADIA and RANZCR) submitted a joint
response. Although the diagnostic imaging industry clearly supports the Government
prohibiting inducements to encourage requests for services, they hold the view that
amendments to the current diagnostic imaging provisions may not be necessary. They are
also of the view that the legislation may produce unintended consequences for diagnostic
imaging providers and requesters.
While the Government recognises the differences in the pathology and diagnostic imaging
industries, the existing provisions are similar (in some cases identical) and are intended to
proscribe unethical referral practices that do not benefit patients. If the diagnostic imaging
provisions are not amended in line with the pathology provisions, the Government may be
perceived as supporting a regulatory regime that favours requesters and providers of
diagnostic imaging over requesters and providers of pathology services.
Drafting of the changes to exclude arms-length inducement activities has been undertaken
carefully to ensure no negative impact on consumers or those who may be assisting them to
obtain the pathology and/or diagnostic imaging services to which they have been referred
and/or are entitled. Wherever practical, concerns raised by stakeholders have been addressed
in the drafting of the Bill.
6. CONCLUSION AND PREFERRED OPTION
The inadequacies of the existing pathology and diagnostic imaging prohibited practice
provisions and the potential for inappropriate Medicare billing to continue without penalty
are not addressed by Option A. While there are potential savings to the Government in not
amending the current legislation, competition will remain skewed in favour of those who are
engaging in unethical conduct.
Maintaining the status quo (Option A) offers no deterrent to those pathology and diagnostic
imaging providers currently making inappropriate payments to secure referral streams from
requesters of services. It is possible under this option that a greater number of pathology and
diagnostic imaging providers may feel pressured to make inappropriate payments in order to
remain competitive.
Consequently, it is possible that the Government will incur additional costs under Option A
due to a potential increase in the number of inappropriate Medicare funded pathology and
diagnostic imaging services. With Medicare expenditure on pathology and diagnostic
imaging services running at $3.2 billion a year, if just 0.5% of Medicare expenditure was as a
consequence of inappropriate payments this would equate to approximately $16 million of
Medicare funding a year.
Given the considerable barriers to enforcing the current requirements, Option A is not a
viable option.
Option B would help to address the inadequacies of the existing legislation and may act as a
deterrent for those providers considering engaging in prohibited practices. The Government
may save Medicare funds by reducing inappropriate service.
15
However, the current provisions reflect a series of amendments which have been made with
the intention of clarifying and strengthening the intent of the original provisions. The
resulting structure of the amended provisions has led to further difficulties in interpreting and
enforcing appropriate arrangements in the pathology and diagnostic imaging industries. The
poor track record of the existing provisions suggests that such an amendment process would
be unlikely to result in significant changes to their effectiveness.
Option C is the preferred option because it reduces the potential for any ambiguity or
inconsistency which might arise from amending the existing requirements. Replacing the
current requirements with new and updated provisions sends a stronger message to the
industry regarding the Government's expectations in relation to inappropriate payments.
Option C delivers significant benefits to the Government and to those requesters and
providers of pathology and diagnostic imaging services who are currently being
disadvantaged by the existing regulatory framework. This option would ensure a level
playing field for the conduct of pathology and diagnostic imaging business, allow the
Government to proactively contain Medicare expenditure on appropriate and relevant
pathology and diagnostic imaging services, and impose sanctions on those requesters and
providers who operate outside the law.
The current provisions do not apply equally to requesters and providers and there may be
some costs arising from the implementation of Option C, albeit minimal. Similarly, there
may be some costs to State and Territory Governments arising from the implementation of
this option as the current provisions are not binding on the Crown. However, an assessment
of the current administration of Medicare funds by the States and Territories has indicated
that their existing practices are not likely to be inconsistent with the regulatory changes
proposed.
7. IMPLEMENTATION AND REVIEW
Introduction of changes on 1 March 2008 will allow familiarisation and smooth transition.
This is in addition to the previous period of approximately 2 years during which the
Government has clearly stated its intention to act on many of the recommendations of the
Phillips Fox review.
It will be necessary for the Government to ensure that all pathology and diagnostic imaging
providers and referring practitioners (and their associates) are aware of the proposed changes
in order to avoid inadvertent breaches. The Department of Health and Ageing will work with
key industry, professional, consumer and Government stakeholders to develop effective
strategies for ensuring that the changes are well understood.
16
HEALTH INSURANCE AMENDMENT (INAPPROPRIATE AND PROHIBITED
PRACTICES AND OTHER MEASURES) BILL 2007
NOTES ON CLAUSES
Clause 1--Short title
This clause provides that the Act may be cited as the Health Insurance Amendment
(Inappropriate and Prohibited Practices and Other Measures) Act 2007.
Clause 2--Commencement
This clause provides that sections 1 to 3 and Schedule 2 of the Bill commence on the day that
the Bill receives Royal Assent. Schedule 1 commences on 1 March 2008.
Schedule 1 contains the major changes to the HIA and in particular includes new offences
relating to prohibited benefits flowing between requesters and providers of pathology
services. The purpose of setting the commencement date at 1 March 2008 is as follows:
· to provide certainty for providers and requesters about when the new offence provisions
will take effect;
· to enable requesters and providers of pathology and diagnostic imaging services to make
any adjustments to their business practices to ensure that they are not in contravention of
the new legislation; and
· to ensure that there are at least six months between passage of the legislation and date of
effect (as is consistent with Commonwealth Government criminal law policy in
circumstances where new criminal offences are being created).
Clause 3--Schedule(s)
This clause provides that each Act that is specified in a Schedule to this Bill is amended or
repealed as set out in the applicable items in the Schedule concerned and any other item has
effect according to its terms.
SCHEDULE 1--MAIN AMENDMENTS
In accordance with section 2, each of the amendments detailed in Schedule 1 commence on
1 March 2008.
Health Insurance Act 1973
Items 1 to 3
These items amend subsection 3(1) of the HIA by inserting new definitions for the terms
"civil penalty provision", "pecuniary penalty order" and "penalty unit". These terms are used
in subsequent provisions.
Item 4
This item amends subsection 3(1) of the HIA by repealing the definition of "prohibited
diagnostic imaging practice". This term is no longer used because the existing prohibited
diagnostic imaging practices have been replaced with new provisions which apply to both
diagnostic imaging and pathology services--see item 34.
17
Item 5
Paragraph 16A(5AA)(c) of the HIA currently provides that one of the circumstances in which
a medicare benefit may be payable is if the pathology specimen was collected from the
person by certain people detailed in the paragraph. In particular subparagraph
16A(5AA)(c)(iii) provides that a medicare benefit is payable where a specimen is collected
by an employee of the treating practitioner on behalf of the treating practitioner.
Since the time that this provision was drafted, the nature of medical practice has changed and
in many cases practitioners now engage contract staff to take samples rather than employees.
This item therefore amends subparagraph 16A(5AA)(c)(iii) to clarify that a medicare benefit
will potentially be payable if the pathology specimen was collected from the person:
· by the person himself or herself; or
· by the treating practitioner; or
· on behalf of the treating practitioner by either an employee of the treating practitioner, or
a person engaged directly or indirectly under a contract for services with the treating
practitioner; or
· if the treating practitioner is employed, or engaged under a contract for services, by a
medical entrepreneur--on behalf of the treating practitioner, by another employee of that
medical entrepreneur, or by a person engaged under a contract for services by that
medical entrepreneur.
Item 6
This item replaces the wording of existing subsection 16A(5A) of the HIA. The existing
wording currently provides that a medicare benefit is not payable in respect of a pathology
service that has been rendered by or on behalf of an approved pathology practitioner if the
request for the service was because of:
· any consideration given, or promise made, by the approved pathology practitioner (or the
proprietor of the laboratory in which the service was rendered) to:
- the treating practitioner; or
- the requesting practitioner; or
- an employee of the treating practitioner or requesting practitioner; or
- a medical entrepreneur; or
· any agreement, arrangement or understanding between the approved pathology
practitioner (or the proprietor of the laboratory in which the service was rendered) and:
- the treating practitioner; or
- the requesting practitioner; or
- an employee of the treating practitioner or requesting practitioner; or
- a medical entrepreneur.
The purpose of this subsection is to prevent the payment of medicare benefits where there are
inappropriate agreements or benefits flowing between requesters and providers. This item
therefore updates this existing section so that it better reflects the new prohibited practices,
and enables non-payment of medicare benefits where a person has committed an offence
under the HIA or breached a civil penalty provision.
In summary, a medicare benefit is not payable in respect of a pathology service that has been
rendered by or on behalf of an approved pathology practitioner if:
· the request for the service was made:
18
- to the approved pathology practitioner by the treating practitioner (the requesting
practitioner); or
- by another approved pathology practitioner (the requesting practitioner) to whom the
treating practitioner made the request; and
· the request for the service was made as a result of:
- conduct in respect of which the approved pathology practitioner or the requesting
practitioner has been convicted of an offence under Division 3 of Part IIBA of the
HIA; or
- conduct in respect of which the approved pathology practitioner or the requesting
practitioner has been ordered to pay a pecuniary penalty under Part VIA of the HIA.
Items 7 and 8
These items make consequential changes to section 19B of the HIA to reflect changes to
section numbering that have resulted from other amendments. These changes do not alter the
substance of section 19B which prevents the payment of medicare benefits in respect of
services rendered by disqualified practitioners.
Item 9
This item amends paragraph (b) of the definition of "disqualified practitioner" in subsection
19D(11) of the HIA to reflect a reference to an amended provision under the Medicare
Participation Review Committee Arrangements in Part VB resulting from the amalgamation
of the pathology and diagnostic imaging prohibited practice provisions.
Section 19D deals with offences for practitioners disqualified from medicare benefits. The
changes are consequential only and have no impact on the substantive operation of the
section.
Item 10
Section 23DA is the interpretation section for Part IIA (special provisions relating to
pathology) of the HIA. This is the section that contains relevant definitions for the Part. This
item inserts a new definition into subsection 23DA(1). The item provides that "relevant civil
contravention" has the same meaning as in subsection 124B(1) of the HIA.
Item 11
This item amends the definition of "relevant person" within subsection 23DA(1) of the HIA
by adding two new categories of person to the definition:
· a person against whom a pecuniary penalty order has been made in respect of a relevant
civil contravention; or
· a person who the Minister has reasonable grounds to believe may have committed a
relevant civil contravention.
This change reflects the introduction of civil penalty provisions for prohibited pathology
practices.
Item 12
Subsection 23DA(3) of the HIA defines a "prescribed person" and paragraph 23DA(3)(b)
provides that a person is a "prescribed person" if the Minister has reasonable grounds to
believe that they may have committed a relevant offence in relation to which a determination
has not been made by a Medicare Participation Review Committee under subsection 124F(2)
of the HIA whether to apply sanctions to the person.
19
This item amends paragraph 23DA(3)(b) by replacing the reference to a relevant offence with
a reference to an offence or relevant civil contravention to cater for the introduction of civil
penalties for persons engaged in prohibited pathology practices.
Item 13
Paragraph 23DA(4)(a) provides that a reference in Part IIA of the HIA to disqualification (in
relation to a prescribed person) is a reference to a determination made by a Medicare
Participation Review Committee. This item updates the paragraph references to reflect
amendments to the Medicare Participation Review Committee provisions of the HIA
resulting from the amalgamation of the pathology and diagnostic imaging prohibited practice
provisions.
Items 14 and 15
Currently, where an applicant has applied to the Minister for approval as an approved
pathology practitioner, subsection 23DC(5) of the HIA provides that the Minister must be
satisfied that the applicant is a "fit and proper person" to be an approved pathology
practitioner.
In determining whether a person is a "fit and proper person" to be an approved pathology
practitioner, paragraph 23DC(6)(a) requires the Minister to consider the applicant's "formal
qualifications and experience". However, paragraph 23DC(6)(a) does not currently identify
the types of qualifications and experience that would be considered to be appropriate.
Item 14 amends subsection 23DC(5) to add that in addition to requiring that the Minister be
satisfied that the person is a "fit and proper person", the Minister must also be satisfied that
the person has formal qualifications and experience determined to be appropriate for the
person under subsection (6A).
Item 15 then inserts a new subsection 23DC(6A) which provides that the Minister may, by
legislative instrument, determine the formal qualifications and experience that are appropriate
for a specified class of persons.
Item 16
This item repeals subsection 23DC(17) of the HIA. This subsection clarifies that for the
purposes of subsection 23DC(1) a medical practitioner includes a person who, immediately
before 1 August 1977, was carrying on the business of rendering certain pathology services at
the request of medical practitioners. This savings provision is no longer needed as non-
medical practitioners from before 1 August 1977 have ceased operating. Only medical
practitioners with suitable qualifications and experience should be able to be approved
pathology practitioners.
Item 17
This item repeals subsection 23DN(3) of the HIA. It has been replaced by new subsection
23DN(6A), introduced and discussed at items 18 to 21.
Item 18
Item 18 inserts a new subsection 23DN(6A) into the HIA which provides that the Minister
must, in exercising the Minister's powers under section 23DN at a particular time, apply the
principles determined under section 23DNA that are in force at that time. The principles
applied under section 23DNA are principles relating to the granting, revocation or variation
20
of accreditation of pathology laboratories. Item 21 describes the changes that are made to the
Minister's powers to issue principles.
Item 19
This item amends subsection 23DNA(1) of the HIA by clarifying that the principles
determined by the Minister in relation to accreditation of pathology laboratories are
legislative instruments.
Item 20
This item amends subsection 23DNA(1) of the HIA by omitting the cross-reference to
subsection 23DN(1) and replacing it with a cross-reference to section 23DN. The heading to
section 23DNA is also altered so that it reads "Determination of principles for accreditation
as pathology laboratory or revocation or variation of accreditation". This reflects the changes
made to subsection 23DNA(2) as described in item 21.
Item 21
This item repeals subsection 23DNA(2) of the HIA and replaces it with a new subsection
23DNA(2) which provides that without limiting the generality of subsection (1), the
principles may provide for:
· the allocation of different categories of accreditation as a pathology laboratory to different
premises in accordance with the criteria set out in the principles. This reflects the existing
wording of subsection (2); and
· the circumstances in which an approval may be varied or revoked in order to prevent
harm to the health or safety of the public or a section of the public. This enables the
Minister to make principles prescribing the grounds on which accreditation as pathology
laboratory will be varied or revoked. This could include, for example, failure to achieve
accreditation from an independent authority such as the National Association of Testing
Authorities.
Item 22
This is a consequential amendment because of the changes made to subsection 23DNA(2) of
the HIA under item 21.
Items 23 and 24
Section 23DNA of the HIA provides that the Minister may determine principles that are to be
applied for accreditation as a pathology laboratory, and that such principles can detail criteria
for the allocation of different categories of accreditation.
Currently paragraph 23DNA(3)(c) provides that the criteria may relate to the extent to which
the pathology services performed on the premises are to be performed under the direction,
control or supervision of a pathologist, scientist, senior scientist, medical practitioner or any
other person having specified qualifications or skills.
Subsections 23DNA(4) and (5) then define the words pathologist, scientist and senior
scientist for the purposes of the section. However, over time, these definitions have become
outdated.
In order to address this problem, item 23 amends paragraph 23DNA(3)(c) by removing the
references to pathologist, scientist, senior scientist and medical practitioner. Instead, the new
paragraph will simply provide that the criteria may relate to the extent to which the pathology
21
services performed on the premises are to be performed under the direction, control or
supervision of a person having specified qualifications or skills.
Item 24 then repeals subsections 23DNA(4) and (5) as they are no longer needed.
Item 24 also repeals subsection 23DNA(6) which is no longer required due to the amendment
made to subsection 23DNA(1) by item 19.
Item 25
Subsection 23DNBA(1) of the HIA currently provides that "The Minister may grant an
approval to an approved pathology authority for an eligible collection centre conducted (or to
be conducted) on premises of which the authority is the owner, lessee or sub-lessee".
This item repeals this subsection and replaces it with a new one which also enables the
Minister to grant an approval where the approved pathology authority is otherwise entitled to
occupy the premises (for example, otherwise has legal authority to occupy the premises).
This addresses the concern raised by approved pathology authorities that not all eligible
collection centres are on premises that are owned or leased by the approved pathology
authority.
Item 26
Section 23DNK of the HIA currently provides that the approved pathology authority
operating an approved collection centre must:
· ensure that at all times there is on display in a prominent place at the centre a notice that
lets the public know that the centre is approved; and
· ensure that the notice is clearly visible from outside the centre when the centre is closed.
This provision leads to practical difficulties for centres that are, for example, part of larger
shopping complexes. In this case, while the sign may be visible when the shopping centre is
open (because it will be on the window of the collection centre) it will not be able to be seen
when the shopping complex is shut. It is not the policy intent that a sign would also have to
be on the outside of the shopping complex.
This item therefore repeals subsections 23DNK(1) and (2) and replaces them with a new
subsection 23DNK(1) which provides that the approved pathology authority operating an
approved collection centre must ensure that at all times there is on display in a prominent
place at the centre a notice that lets the public know that the centre is approved. The penalty
for non-compliance with this provision is 10 penalty units which equates to $1,100 for an
individual and $5,500 for a corporation.
Item 27
This item repeals subsections 23DO(2A) and (2B) of the HIA. These subsections relate to
subsections 23DNA(4) and (5), and as these subsections are repealed by item 24, subsections
23DO(2A) and (2B) are no longer necessary.
Item 28
Subsection 23DO(3) of the HIA cross-references subsection 23DO(2B). As subsection
23DO(2B) is repealed by item 27, this item removes the reference to this subsection within
subsection 23DO(3).
22
Item 29
This item amends paragraph 23DO(5)(c) of the HIA by deleting the reference to subsection
23DO(2B) which has been repealed by item 27.
Item 30
Subsection 23DP(3) of the HIA currently provides that an approved pathology practitioner or
an approved pathology authority shall not provide (whether directly or indirectly) to a
practitioner a pathology request form that is not in accordance with the approved form.
This item removes the reference to an approved form and replaces it with a requirement that
the request form must be in accordance with regulations made for the purposes of this
subsection.
This provides greater flexibility by enabling regulations to detail the essential components of
an approved form rather than having to precisely prescribe the form that must be used.
Item 31
This item amends paragraphs 23DZC(1)(c) and (1A)(c) of the HIA to change section cross-
referencing within the paragraphs (to reflect other changes that have been made to section
124F of the HIA). Section 23DZC deals with revocation of remote area exemptions in
relation to diagnostic imaging services.
Item 32
This item repeals Division 3 of Part IIB of the HIA. This Division currently deals with
prohibited diagnostic imaging services. The new prohibitions in relation to diagnostic
imaging services will be contained in the new Part IIBA (Prohibited practices in relation to
pathology services and diagnostic imaging services).
Item 33
Section 23DZK of the HIA provides that the Minister must keep a Diagnostic Imaging
Register. Currently one of the purposes for which such a register is kept is for assisting in
identifying whether prohibited diagnostic imaging practices are taking place (paragraph
23DZK(2)(d)). This item amends this paragraph by replacing the reference to "prohibited
diagnostic imaging practices" with a reference to "contraventions of Part IIBA in relation to
diagnostic imaging". This updates the provision to reflect the changes to the prohibitions.
Item 34
This item inserts a new part in the HIA. The new Part is entitled "Part IIBA--Prohibited
practices in relation to pathology services and diagnostic imaging services". This Part
contains the new prohibitions in relation to pathology and diagnostic imaging services.
Part IIBA--Prohibited practices in relation to pathology services and diagnostic
imaging services
Division 1--Preliminary
Section 23DZZIA (Objects of Part)
This section describes the objects of the Part. The objects are:
· to prevent requesters of pathology services and diagnostic imaging services from (either
directly or indirectly) accepting, or being offered or provided, any benefits (other than
23
permitted benefits) in order to induce the requesters to request the services from providers
of those services; and
· to protect requesters of pathology services and diagnostic imaging services from (either
directly or indirectly) being threatened in order to induce the requesters to request the
services from providers of those services.
The section also clarifies that the Division is not intended to prohibit legitimate commercial
transactions based on quality and cost of the services which providers give to requesters and
to the requester's patients.
Section 23DZZIB (Simplified outline)
This section provides a summary of the Part. The section notes that the Part creates both civil
penalty provisions and offences involving benefits and threats related to requests for
pathology and diagnostic imaging services.
The civil penalty provisions and offences apply to benefits and threats involving the
following persons):
· requesters of pathology or diagnostic imaging services;
· providers of pathology or diagnostic imaging services;
· in the case of the civil penalty provisions--persons who are connected to requesters or
providers; and
· in the case of the offences--any persons, if the benefits or threats are intended to induce
requesters to request pathology or diagnostic imaging services from providers.
An executive officer of a body corporate might also infringe the legislation if the body
corporate commits an offence, or contravenes a civil penalty provision, under this Part.
Section 23DZZIC (Crown to be bound)
Consistent with the recommendations of the Phillips Fox review, this section ensures that all
of the new prohibitions also bind the Crown.
Currently, some entities which are involved in requesting and/or providing pathology or
diagnostic imaging services may be within the shield of the Crown in right of a State or
Territory. For example, if a hospital is run as part of the executive government of a State,
without being incorporated, the hospital may be part of the Crown in right of the State and, as
such, would not be subject to offence provisions in the HIA.
Similarly, if a hospital has been incorporated but is closely connected with the Crown, then
the hospital may be within the shield of the Crown and therefore not subject to HIA offence
provisions.
This section indicates that the new provisions bind the Crown in all its capacities--
Commonwealth, State and Territory. However, consistent with legislative convention, the
new provisions do not impose offence liability (or liability for the payment of a civil penalty)
on the Crown in any capacity.
However, if the Commonwealth, a State or a Territory breaches the legislation then an
injunction could be sought to restrain the Crown in right of the Commonwealth, a State or a
24
Territory from engaging in conduct that contravenes the new Part. The matter may also be
referred to a Medicare Participation Review Committee.
Section 23DZZID (Definitions)
This section sets out the definitions that are used in the new Part.
The key definitions are:
· benefit--this includes money, property or services, or any other benefit accepted, offered
or provided in any form, and an actual or a potential benefit.
· connected--this has the meaning given by section 23DZZIJ.
· permitted benefit which has the meaning given by subsection 23DZZIF(1).
· provider--this has the meaning given by subsections 23DZZIE(3) and (4).
· requester--this has the meaning given by subsections 23DZZIE(1) and (2).
· relative of a person--this means:
(a) the spouse of the person; or
(b) a parent or remoter lineal ancestor of the person or of the person's spouse; or
(c) a child or remoter lineal descendant of the person or of the person's spouse; or
(d) a brother or sister of the person or of the person's spouse; or
(e) an uncle, aunt, nephew or niece of the person or of the person's spouse; or
(f) the spouse of a person specified in paragraph (b), (c), (d) or (e).
Section 23DZZIE (Meaning of requester and provider)
This section defines a "requester" and a "provider" in relation to both a kind of pathology
service and a kind of diagnostic imaging service.
A requester of a pathology service means:
· a practitioner--a practitioner is defined in subsection 3(1) of the HIA as 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).
A requester of a diagnostic imaging service means:
· a medical practitioner;
· 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 (these
practitioners can request limited ranges of diagnostic imaging services as prescribed in
the regulations); or
· in any case, a person who employs, or engages under a contract for services, one of the
people specified above, or a person who exercises control or direction over one of the
people specified above (in his or her professional capacity).
A provider of a kind of pathology service or diagnostic imaging service means:
· a person who renders that kind of service;
· a person who carries on a business of rendering that kind of service;
25
· a person who employs, or engages under a contract for services, one of the people
specified above;
· a person who exercises control or direction over a person who renders that kind of service
or a person who carries on a business of rendering that kind of service;
· an approved pathology practitioner; or
· an approved pathology authority.
Subsection 23DZZIE(4) clarifies that a person is a provider if they render one or more
different types of pathology or diagnostic imaging services.
Section 23DZZIF (Meaning of 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).
It is not, however, intended that the legislation capture or prohibit legitimate commercial
transactions. Section 23DZZIF therefore describes what is, and is not, a permitted benefit. In
general terms the following benefits are permitted benefits:
· the distribution of profits or shares from the operation of a business that renders
pathology or diagnostic imaging services, provided that the amount of the benefit is
proportionate to the interest that the beneficiary holds in the body corporate, trust,
partnership or other body that carries on the business--subsection (2);
· remuneration (whether salary, wages, commission, allowances or bonuses) provided that
the amount of the remuneration is not substantially different from the usual remuneration
paid to persons engaged in similar employment or under similar contract--subsection (3).
· a payment for property, goods or services that are shared where the amount of the benefit
is proportionate to the person's share of the cost of the property, goods or services--
subsection (4). This subsection also provides that if a pathology provider leases premises,
they must establish an approved collection centre or accredited pathology laboratory
within 60 days of entering into the lease, or render professional services in the relevant
part of the premises. This picks up existing provision subsection 129AAA(3A), but now
allows 60 days for a collection centre or pathology laboratory to be established rather than
30 days. This period is regarded as being a reasonable time to allow the premises to be
fitted out as a collection centre or pathology laboratory.
· a payment property, goods or services that are not shared between the requester and
provider where the amount of the payment is not substantially different from the market
value of the property, goods or services--subsection (5). It is proposed that regulations
made under the HIA will prescribe a method of working out whether the amount of a
payment is substantially different from the market value of a specified class of property,
goods or services. The capacity to make such regulations is detailed in subsection
23DZZIF(9). This subsection also provides that if the benefit relates to a payment for the
use or occupation of a space by a provider of pathology services, the provider must
establish an approved collection centre or an accredited pathology laboratory within 60
days of entering into the lease or render professional services in the premises; and
· the provision of property, goods or services where the benefit is provided for
consideration that is not substantially different from the market value of the property,
goods or services--subsection (6). This includes `payments in kind'. As noted above,
regulations will prescribe a method of working out whether the amount of a payment is
26
substantially different from the market value of a specified class of property, goods or
services.
Subsection 23DZZIF(7) sets out overarching exclusions to the permitted benefits outlined
above. A benefit is not a permitted benefit if:
· the benefit is related to the number, kind or value of requests for pathology services or
diagnostic imaging services made by the requester. Subsection 23DZZIF(8) clarifies that
a benefit is related to the number of requests for pathology or diagnostic imaging services
made by a requester if the provision of the benefit is dependent on the requester
requesting all, or a proportion of, the requests for one or more kinds of services that the
requester makes from a particular provider; or
· the benefit consists of the provision of staff or equipment at premises of the beneficiary
for the purposes of providing pathology or diagnostic imaging services. Such a benefit is
prohibited regardless of whether: the staff are stationed at the premises full-time or part-
time, or simply visiting; or the equipment is brought to the premises from time to time.
Some examples of permitted and prohibited benefits are as follows:
· if a requester owns a pathology service (or owns shares in a pathology service), then they
can share in the legitimate profits of that business (in proportion to their share of
ownership). However, it is prohibited for them to receive payments based directly on the
number of requests that they make to the business;
· requesters and providers may share rented premises provided that they each pay the
appropriate rent based on the space used by them. A provider may not, however, station
staff or equipment at a requester's premises;
· if the spouse of a requester (or a person with a relevant connection to the requester) works
for a provider then the provider may pay the person a salary, provided that:
- the salary is reasonable, that is, similar to that paid to others carrying out similar
work; and
- no element of the salary is linked to the number of pathology requests made by the
requester; and
· if a requester and a provider share premises and the premises are owned by the requester,
then the provider may make payments to the requester to cover the provider's legitimate
share of the total costs. The payments can not be greater than the value of the provider's
proportionate share of the costs and can not be linked to the requesting of services.
Section 23DZZIG (Ministerial determinations of permitted benefits)
Section 23DZZIG will provide a power for the Minister to make a determination that a
certain type of benefit is a permitted benefit. It is proposed that the Minister could do this on
either his or her own volition, or on request from a provider or requester.
For example, it is intended that determinations will be made in respect of benefits such as
gifts, education, hospitality and consumables, and that reasonable limits will be prescribed for
such benefits.
The Minister would make separate determinations for pathology and diagnostic imaging as
the types of benefits to be exempted are likely to be different in those industries.
27
The list of benefits will be developed in association with pathology and diagnostic imaging
stakeholders.
Section 23DZZIH (Establishing whether an executive officer took reasonable steps to
prevent commission of offence or contravention of civil penalty)
This section provides that for the purposes of sections 23DZZIN and 23DZZIT (dealing with
the accountability of executive officers when a body corporate breaches the prohibited
practice provisions), a court is to have regard to the following conduct in determining
whether an executive officer of a body corporate failed to take all reasonable steps to prevent
the body corporate committing the offence or the contravening a civil penalty provision:
· what action (if any) the officer took towards ensuring that the body's employees, agents
and contractors have a reasonable knowledge and understanding of the requirements to
comply with the new Part IIBA and the regulations, in so far as those requirements affect
the employees, agents or contractors concerned; and
· what action (if any) the officer took when he or she became aware that the body was
committing an offence against, or otherwise contravening, Part IIBA.
Subsection (2) clarifies that this section does not in any way limit the generality of section
23DZZIN or 23DZZIT.
Division 2--Civil penalty provisions involving requesters, providers and connected
persons
Subdivision A--Preliminary
Section 23DZZII (Simplified outline)
This section provides a summary of Division 2. In summary, the following conduct
potentially gives rise to civil penalties:
· if a requester asks for or accepts a pathology or diagnostic imaging service-related benefit
(other than a permitted benefit) from a provider or a person connected to a provider;
· if a provider offers or provides such a benefit to a requester or a person connected to a
requester; or
· if a provider makes a pathology or diagnostic imaging service-related threat to a requester
or a person connected to a requester.
If the requester or provider knows that a person connected to the requester or provider has
asked for, accepted, offered or provided such a benefit (or made such a threat) then the
requester or provider can avoid contravening a civil penalty provision by reporting the person
to Medicare Australia. A person is connected to a requester or provider if the person has one
of the personal or business relationships, set out in section 23DZZIJ, with the requester or
provider.
A benefit is prohibited if it is not a "permitted benefit".
An executive officer of a body corporate might also be in contravention of the legislation if
the body corporate contravenes a civil penalty provision under this Part.
28
Section 23DZZIJ (Meaning of connected)
The new prohibitions address one of the concerns raised by the Phillips Fox review regarding
the existing legislation. Recommendation 12 of the review suggests that the offences be
extended to persons who have a "relevant connection" with requesters and providers. The
new provisions introduce the concept of persons who are "connected to" a requester or
provider. This ensures that a requester or provider cannot avoid the offence and civil penalty
provisions simply because a third person such as a relative of the requester or provider is
offering or accepting a prohibited benefit or making a threat.
The new provisions define those people who are "connected to" a requester or provider and
then provide that if a benefit is offered, or accepted, by a person connected to a provider or a
requester then the requester or provider (as the case may be) may still be breaching the
legislation irrespective of whether they had directly offered or received the prohibited benefit.
This applies equally to cases where threats have been made.
Section 23DZZIJ defines a person as being "connected to" a requester or provider if the
person has one of the personal or business relationships with the requester or provider as set
out in the section.
A person (the first person) is connected to another person if:
· the first person is a relative of the other person--paragraph (a). (A relative is defined in
subsection 23DZZID(1) and broadly captures, for example, spouses, parents, lineal
descendents and step-children); or
· the first person is a body corporate and the other person is a director, secretary, chief
executive officer or any other executive officer of that body corporate--paragraph (b); or
· the other person is a body corporate and the first person is a director, secretary, chief
executive officer or any other executive officer of that body corporate--paragraph (c) or
· the first person is a body corporate and the other person is a body corporate that is related
to that body corporate--paragraph (d). The question of whether a body corporate is
related to another body corporate is determined in the same manner as that question is
determined for the purposes of the Corporations Act 2001--subsection (2); or
· the first person, or a relative of the first person, is a beneficiary under a trust and the other
person is a trustee of that trust--paragraph (e); or
· the first person is a trustee of a trust and the other person, or a relative of the other person,
is a beneficiary under that trust--paragraph (f); or
· the first person, or a relative of the first person, is a member of a partnership and the other
person is also a member of that partnership--paragraph (g); or
· the first person is a member of a partnership and a relative of the other person is also a
member of that partnership--paragraph (h); or
· the first person employs or engages the other person--paragraph (i); or
· the other person employs or engages the first person--paragraph (j).
Subsection 23DZZIJ(3) clarifies that this section does not affect the law on agency.
29
Subdivision B--Civil penalty provisions
Section 23DZZIK (Requester civil penalty provisions--asking for or accepting
prohibited benefits)
This section describes two types of actions that are subject to civil penalties:
· where a requester asks for or accepts a prohibited benefit; and
· where a requester knows that a person connected to a requester asks for or accepts a
prohibited benefit.
This section should also be read in conjunction with the new section 125C . Section 125C
provides that a person must not aid, abet, counsel or procure the contravention of a civil
penalty provision. Nor must they induce a contravention of, or conspire to contravene, a civil
penalty provision. If a person engages in any of the activities prescribed in section 125C, that
person is taken to have contravened a civil penalty provision.
Requester asks for or accepts a prohibited benefit
In summary, if a requester (of either pathology or diagnostic imaging services) asks for or
accepts a benefit, then the requester will contravene section 23DZZIK if:
· the benefit has come from a provider or a person connected to a provider (section
23DZZIJ provides the meaning of "connected to"). It is important to note that in
circumstances where the civil contravention is in relation to a requester merely asking for
a prohibited benefit then it is not necessary to show that the benefit actually ever
eventuated or was provided. It is sufficient to show that the requester asked for the
prohibited benefit; and
· the benefit:
- would be reasonably likely to induce a requester to request any of those kinds of
services from the provider. It should be noted that this test is intended to apply to any
requester and not just the particular requester in question. That is, it will only be
necessary to demonstrate that the benefit would be reasonably likely to induce any
requester to request services and not the particular requester in question. Any unique
circumstances of the particular requester that might, for example, demonstrate that
while others may have been induced by the benefit the particular requester was not,
will not be taken into account; or
- is related to the business of rendering pathology services or diagnostic imaging
services, as the case requires. As noted in the Phillips Fox review report, it can
sometimes be difficult to establish whether a benefit is reasonably likely to induce a
requester to request services. Therefore, as an alternative, it may simply be
established that the benefit was connected to the pathology or diagnostic services
business. This could, for example, be established based on bank records and records
of transfers between the pathology business and the requester; and
· the benefit is not a permitted benefit. If the benefit is not on the list of permitted benefits
in section 23DZZIF (and has not been included in a determination made by the Minister)
then the benefit is not permitted. In addition, if a benefit is related to the number, kind or
value of requests for pathology or diagnostic imaging services made by a requester then it
is automatically a benefit that is not a permitted benefit (regardless of whether it is also on
the list of permitted benefits).
30
A contravention of this provision may give rise to a civil penalty of up to 600 penalty units
for an individual and 6,000 penalty units for a corporation. Currently, this equates to $66,000
for an individual and $660,000 for a corporation.
Requester knows that a person connected to a requester asks for or accepts a prohibited
benefit
A requester may also infringe the legislation if a person connected to the requester accepts a
prohibited benefit, the requester knows that this has occurred and the requester has not alerted
Medicare Australia.
The purpose of new subsections 23DZZIK(2) and (3) is to ensure that requesters are still
liable for a civil penalty even if a benefit is not paid directly to them--for example, if the
benefit is paid to their spouse or business partner.
However, where the benefit is paid to a person connected to the requester (rather than directly
to the requester), then the requester, if they become aware that the prohibited benefit has been
paid to the person who is connected to them, has an opportunity to report this to the
authorities. If they do so, they will not be subject to a civil penalty.
This ensures that requesters are not subject to a penalty merely because a prohibited benefit
has been accepted by a family member without the requester's knowledge. In this case, the
provider who made the payment may be subject to a penalty but the requester would not be.
In terms of public policy, the new provision reflects the assumption that if a requester does
not know that a benefit has been paid to a person who is connected to them, then it is highly
unlikely that the payment of the benefit is influencing the requester to request services from a
particular provider.
In summary, subsections 23DZZIK(2) and (3) provide that a requester of either pathology or
diagnostic imaging services (the first person)may be subject to a civil penalty if:
· a person connected to the requester (the second person) asks for or accepts a benefit from
either a provider or a person connected to a provider (the third person); and
· the benefit:
- would be reasonably likely to induce the first person to request services from a third
person; or
- is related to the business of rendering pathology services or diagnostic imaging
services, as the case requires; and
· the requester knows (either at the time of asking for or accepting the benefit or at any
later time) that:
- the second person asked for or accepted the benefit; and
- the benefit was asked for, or accepted from, the third person; and
· the benefit is not a permitted benefit.
Subsection 23DZZIK(3) provides that subsection 23DZZIK(2) does not apply to a requester
if the requester reports the benefit to the CEO of Medicare Australia, in writing, within 30
days after the requester first becomes aware of the asking for, or accepting of, the benefit.
31
Section 23DZZIL (Provider civil penalty provisions--offering or providing prohibited
benefits)
This section is intended to mirror section 23DZZIK, but in relation to providers.
Where a provider offers or provides a prohibited benefit
In summary, if a provider of either pathology or diagnostic imaging services (the first person)
offers or provides a benefit, then the provider will contravene section 23DZZIL(1) if:
· the benefit is offered or provided to a requester or a person connected to a requester (the
second person) ; and
· the benefit:
- would be reasonably likely to induce a requester to request any of those kinds of
services from a provider; or
- is related to the business of rendering pathology services or diagnostic imaging
services, as the case requires; and
· the benefit is not a permitted benefit.
A contravention of this provision may give rise to a civil penalty of up to 600 penalty units
for an individual and 6,000 penalty units for a corporation. Currently, this equates to $66,000
for an individual and $660,000 for a corporation.
A person will also contravene the provision if they aid, abet, counsel or procure the
contravention of this provision, or they induce a contravention of, or conspire to contravene,
the provision - see section 125C.
Where a provider knows that a person connected to a provider offers or provides a
prohibited benefit
Subsections 23DZZIL(2) and (3) provide that a provider of either pathology or diagnostic
imaging services (the first person) may be subject to a civil penalty if:
· a person connected to the provider (the second person)offers or provides a benefit to
either a requester or a person connected to a requester (the third person); and
· the provider knows (at the time of the offer or provision of the benefit or at any later time)
that:
- the second person offered or provided the benefit; and
- the offer or provision of the benefit was made to a third person; and
· the benefit:
- would be reasonably likely to induce a requester to request services from a provider;
or
- is related to the business of rendering pathology services or diagnostic imaging
services, as the case requires; and
· the benefit is not a permitted benefit;
Subsection 23DZZIL(3) provides that subsection 23DZZIL(2) will not apply if the provider
reports the benefit to the Medicare Australia CEO, in writing, within 30 days of first
becoming aware that the person connected to the provider offered or provided the benefit,
and the offer or provision of the benefit was to a requester or a person connected to a
requester.
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Section 23DZZIM (Provider civil penalty provisions--making threats)
Subsection 23DZZIM(1) specifies that a provider contravenes the section if:
· the provider makes a threat to a requester or a person connected to a requester and the
threat either:
- would be reasonably likely to induce a requester to request services from the provider;
or
- is related to the business of rendering pathology or diagnostic imaging services (as the
case requires).
A contravention of this provision may give rise to a civil penalty of up to 600 penalty units
for an individual and 6,000 penalty units for a corporation. Currently, this equates to $66,000
for an individual and $660,000 for a corporation.
Subsection 23DZZIM(2) specifies that a provider also contravenes the section if:
· the provider knows that a person connected to them has made a threat to a requester or a
person connected to a requester; and
· the threat is either:
- reasonably likely to induce a requester to request services from a provider; or
- related to the business of rendering pathology or diagnostic imaging services; and
However, subsection 23DZZIM(3) provides that subsection 23DZZIM(2) will not apply if the
provider has reported the threat to the Medicare Australia CEO, in writing, within 30 days of
finding out about the threat.
No equivalent provisions are included in the legislation for requesters making threats because
they are captured through the operation of section 125C which provides that a person will
contravene a civil penalty provision if they aid, abet, counsel or procure the contravention of
the provision or they induce a contravention of, or conspire to contravene, the provision.
For example, if a requester threatened a provider by saying that they would not request
services from the provider unless the provider gave them a prohibited benefit then the
requester would be inducing (by threat) a contravention of the provision banning the offering
or provision of prohibited benefits (section 23DZZIL) and the requester would be taken to
have contravened the provision.
Section 23DZZIN (Application of this Division to an executive officer of a body
corporate)
This section is intended to apply to executive officers (a term which is defined in subsection
23DZZID(1) - see below), such as managing directors or Chief Executive Officers, who are
directly involved in or participate in the management of a body corporate, and who should be
made accountable for the actions of the body where such officers are in a position to
influence the body and are aware of breaches by the body of the HIA or regulations but fail to
take all reasonable action to prevent the breaches.
Subsection 23DZZID(1) defines executive officer of a body corporate to mean a person, by
whatever name called and whether or not a director of the body, who is concerned in, or takes
part in, the management of the body.
33
In summary, subsection 23DZZIN(1) provides that an executive officer of a body corporate
contravenes the subsection if:
· the body corporate contravenes a civil penalty provision in Division 2 (paragraph
23DZZIN(1)(a)); and
· the executive officer knew that the contravention would occur (paragraph
23DZZIN(1)(b)); and
· the executive officer was in a position to influence the conduct of the body in relation to
the contravention (paragraph 23DZZIN(1)(c)); and
· the executive officer failed to take all reasonable steps to prevent the contravention
(paragraph 23DZZIN(1)(d)).
In making a determination for the purposes of paragraph 23DZZIN(1)(d), a court has regard
to the matters set out in section 23ZZIH. This includes:
- what action (if any) the executive officer took towards ensuring that the body's
employees, agents and contractors have a reasonable knowledge and understanding of
the requirements to comply with Part IIBA of the HIA and the regulations, in so far as
those requirements affect the employees, agents or contractors concerned; and
- what action (if any) the officer took when he or she became aware that the body was
committing an offence against, or otherwise contravening, the Part.
Subsection 23DZZIN(2) provides that the maximum civil penalty for a contravention of
subsection 23DZZIN(1) is the maximum civil penalty that a Court could impose in respect of
an individual for the civil penalty provision contravened by the body corporate. For example,
if the body corporate contravened a civil penalty provision which prohibits the offering of a
prohibited benefit (section 23DZZIL) and is subject to a penalty of 6,000 penalty units, then
the maximum penalty that would apply to the executive officer would be 600 penalty units
(which is the penalty for the same civil contravention when the contravention is by an
individual).
The provisions relating to liability by executive officers have been based on section 54B of
the Therapeutic Goods Act 1989.
Division 3--Offences involving requesters, providers and others
Section 23DZZIO (Simplified outline)
The section provides a simplified outline of Division 3. Division 3 applies to benefits (other
than permitted benefits) and threats that are intended to induce a requester to request
pathology or diagnostic imaging services from a provider.
In summary, the requester must not ask for or accept such a benefit, a person must not offer
or provide such a benefit and a person must not make such a threat.
Division 3 also imposes reporting obligations on the requester or the provider if he or she
knows that a person has asked for, accepted, offered or provided such a benefit or made such
a threat.
An executive officer of a body corporate might also commit an offence if the body corporate
commits an offence under this Part.
34
Section 23DZZIP (Extended geographical jurisdiction - category A)
This section provides that section 15.1 of the Criminal Code (extended geographical
jurisdiction--category A) applies to offences against Division 3.
The standard geographical jurisdiction that applies to offences is that if any part of the
conduct constituting an offence occurs in Australia or on an Australian aircraft or ship, the
offence applies. The offence also applies if any part of the result of the conduct constituting
the offence occurs in Australia or on an Australian aircraft or ship.
Generally speaking it is also a defence where the offence is committed outside Australia and
there is no equivalent offence under the law of the local jurisdiction.
However, in the case of the types of offences describe in this Bill, it would theoretically be
quite possible for all of the prohibited conduct to occur offshore. For example, where a
requester and a provider go to a conference overseas and a prohibited benefit is provided to
the requester at that conference. If the standard geographical jurisdiction applied, this
conduct would not constitute an offence against the new prohibitions.
In order to ensure that the offence can be prosecuted regardless of where the prohibited
benefit is paid, it is considered appropriate for the offences described in this Bill to carry
extended extraterritorial application.
This section therefore makes express reference to Category A extraterritorial operation
applying to the offences in the Bill. This provides for an offence to extend to conduct by an
Australian citizen or body corporate outside Australia. Also, for an Australian citizen or
body corporate, it is not a defence that there is no equivalent offence under the law of the
local jurisdiction.
This means that the following types of conduct that may occur overseas could be in
contravention of the new offences described in this Bill:
· if a provider provides funds for a bank based in Hong Kong to issue credit cards to
Australian requesters, who agree to direct their requests to that provider;
· if a requesting doctor opens a bank account in Hawaii and a provider makes payments
into the account, in return for the doctor directing pathology requests; and
· if cash or jewellery or any other prohibited benefit is handed to a requester by a provider
in a location outside Australia, for example at an overseas conference.
Section 23DZZIQ (Requester offences--asking for or accepting prohibited benefits)
This section describes two sets of offences:
· where a requester asks for or accepts a prohibited benefit (subsections 23DZZIQ(1) and
(2)); and
· 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 (subsections 23DZZIQ
(4), (5) and (7)).
35
Requester asks for or accepts prohibited benefit
In summary, a requester of one or more kinds of pathology services or diagnostic imaging
services commits an offence under subsection 23DZZIQ(1) if:
· the requester accepts a benefit from any person (noting that it is not essential that the
person who asks for the benefit actually receives it in order for the offence to be
established); and
· the person who provided the benefit intended that the benefit would induce the requester
to request services from a particular provider (subsection 23DZZIQ(3) clarifies that this
can be any provider and does not need to be the same person who provided the benefit);
and
· the requester knows (either at the time of the acceptance of the benefit or at any later
time) that the person who provided the benefit had that intention; and
· the benefit is not a permitted benefit.
A requester of one or more kinds of pathology services or diagnostic imaging services
commits an offence under subsection 23DZZIQ(2) if:
· the requester asks for or accepts a benefit from any person (again noting that it is not
essential that the person who asks for the benefit actually receives it in order for the
offence to be established); and
· the requester intends to request any of those kinds of services from a particular provider
as a result of being provided the benefit (again, subsection (3) clarifies that this can be
any provider and does not need to be the same person who provided the benefit); and
· the benefit is not a permitted benefit.
The offence in subsection 23DZZIQ(1) and the offence in subsection 23DZZIQ(2) both
attract a maximum penalty of imprisonment for 5 years.
Requester knows that another person asks for or accepts prohibited benefit
In summary, a requester of one or more kinds of pathology or diagnostic imaging services
commits an offence under subsection 23DZZIQ(4) if:
· a second person accepts a benefit from a third person who intends that the benefit will
induce the requester to request services from a particular provider (subsection
23DZZIQ(6) clarifies that this can be any provider and does not need to be the same
person who gave the benefit); and
· the requester knows (either at the time of the acceptance of the benefit or at any later
time) that (i) the second person accepted a benefit from the third person; and (ii) the third
person had that intention; and
· the benefit is not a permitted benefit.
However, subsection 23DZZIQ(7) provides that the offence in subsection 23DZZIQ(4) will
not apply if the requester has, within 30 days after the requester first becomes aware of the
circumstances, reported the benefit to the Medicare Australia CEO, in writing. The requester
(defendant) bears the evidential burden in relation to proving the matters in subsection
23DZZIQ(7).
A requester of one or more kinds of pathology or diagnostic imaging services also commits
an offence under subsection 23DZZIQ(5) if:
36
· a second person asks for, or accepts, a benefit from a third person; and
· as a result of the second person being provided the benefit, the requester intends to
request any of those kinds of services from a particular provider; and
· the benefit is not a permitted benefit.
The offence in subsection 23DZZIQ(4) and the offence in subsection 23DZZIQ(5) both
attract a maximum penalty of imprisonment for 5 years.
Section 23DZZIR (General and provider offences--offering or providing prohibited
benefits)
This section mirrors the offences in section 23DZZIQ for people who offer or provide
prohibited benefits.
In summary, a person commits an offence under subsection 23DZZIR(1) if:
· a person (the first person) offers or provides a benefit (other than a permitted benefit) to a
second person intending that the benefit will induce a requester of pathology services or
diagnostic imaging services to request services from a particular provider. In this
circumstance, the requester may or may not be the second person and the provider may or
may not be the first person (subsection 23DZZIR(2)).
A person who is a provider will commit an offence under subsection 23DZZIR(3) if:
· a second person offers or provides a benefit to a third person intending that the benefit
will induce a requester of pathology or diagnostic imaging services to request services
from the provider (the requester may or may not be the person to whom the benefit is
offered or provided); and
· the provider knows (either at the time of the offer or provision of the benefit or at any
later time) that (i) the second person offers or provides the benefit to the third person; and
(ii) the second person has that intention; and
· the benefit is not a permitted benefit.
However, subsection 23DZZIR(5) provides that the offence in subsection 23DZZIR(3) will
not apply if the provider reports the benefit to the Medicare Australia CEO, in writing, within
30 days after first becoming aware that (i) the second person offered or provided the benefit
to the third person and (ii) the second person intended that the benefit would induce a
requester to request services from the provider. The provider (defendant) bears the evidential
burden in relation to proving the matters in subsection 23DZZIR(5).
The offence in subsection 23DZZIR(1) and the offence in subsection 23DZZIR(3) both
attract a maximum penalty of imprisonment for 5 years.
Section 23DZZIS (General and provider offences--making threats)
Subsection 23DZZIS(1) provides that a person 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.
In these circumstances, subsection 23DZZIS(2) clarifies that the requester may or may not be
the person to whom the threat is made and the provider may or may not be the person who
37
makes the threat. In other words, any person can be guilty of this offence, regardless of
whether or not they are a provider - any person who makes threats to any other person
(intending that such a threat induces the requesting of services from a particular provider)
will be guilty of an offence. Similarly if a provider makes the threat, but the threat is
intended to induce the requesting of services from a different provider, then an offence will
still be committed.
Under subsection 23DZZIS(3), a person who is a provider commits an offence if:
· a second person threatens a third person intending that the threat will induce a requester
of one or more kinds of pathology services or diagnostic imaging services to request any
of those kinds of services from the provider; and
· the provider knows (either at the time of the threat or at any later time) that the threat has
been made and that the person making the threat (the second person) had that intention.
Again, the requester may or may not be the person to whom the threat is made (see
subsection 23DZZIS(4)). In other words the provider will still commit the offence whether
or not the threat was made to a requester or to another person (for example, a colleague or
friend of a requester).
However, subsection 23DZZIS(5) provides that the offence in subsection 23DZZIS(3) will
not apply if the provider has reported the threat to the CEO of Medicare Australia, in writing,
within 30 days after first becoming aware that (i) the threat was made; and (ii) that the person
making the threat had the intention of inducing a requester to request services from the
provider. If a provider maintains that they made a report to the CEO of Medicare Australia
about each of the matters mentioned above, they bear the evidential burden of proving this in
Court.
As for each of the other offences, the maximum penalty for the offence in subsection
23DZZIS(1) and the offence in 23DZZIS(3) is 5 years imprisonment.
Section 23DZZIT (Application of this Division to an executive officer of a body
corporate
This is a mirror provision of section 23DZZIN, but concerns the application of the offences in
Division 3 to an executive officer of a body corporate..
In summary, subsection 23DZZIT(1) provides that an executive officer of a body corporate
(see the definition of executive officer in subsection 23DZZID(1)) commits an offence if:
· the body corporate commits an offence against Division 2 (paragraph 23DZZIT(1)(a));
and
· the executive officer knew that the offence would be committed (paragraph
23DZZIT(1)(b)); and
· the executive officer was in a position to influence the conduct of the body in relation to
the commission of the offence (paragraph 23DZZIT(1)(c)); and
· the executive officer failed to take all reasonable steps to prevent the commission of the
offence (paragraph 23DZZIT(1)(d)).
38
In making a determination for the purposes of paragraph 23DZZIT(1)(d), a court has regard
to the matters set out in section 23ZZIH. This includes:
- what action (if any) the executive officer took towards ensuring that the body's
employees, agents and contractors have a reasonable knowledge and understanding of
the requirements to comply with Part IIBA of the HIA and the regulations, in so far as
those requirements affect the employees, agents or contractors concerned; and
- what action (if any) the officer took when he or she became aware that the body was
committing an offence against, or otherwise contravening, the Part.
Subsection 23DZZIT(2) provides that the maximum penalty for an offence against subsection
23DZZIT(1) is the maximum penalty that a Court could impose in respect of an individual
for the offence committed by the body corporate, i.e. 5 years imprisonment in relation to each
offence.
The provisions relating to liability by executive officers have been based on section 54B of
the Therapeutic Goods Act 1989.
Section 23DZZIU (Division not limited by Division 2)
This section clarifies that, for the purposes of Division 3, a person:
· who asks for or accepts a benefit; or
· to whom a benefit is offered or provided; or
· to whom a threat is made;
may or may not be connected to the relevant requester.
The section further clarifies that a person:
· from whom a benefit is requested or accepted; or
· who offers or provides a benefit; or
· who makes a threat;
may or may not be connected to the relevant provider.
What this means is that the person requesting, accepting, offering or providing a non-
permitted benefit can be someone other than the requester or provider or persons connected to
the requester or provider. For example, the benefit may be paid by the provider to a friend of
the requester, with the intent of that friend inducing the requester to order services from the
provider.
Items 35 to 38
These items make minor technical amendments to subsections 89A(1) and 106N(1) to reflect
the inclusion of the new civil penalty provisions in the HIA.
Currently, sections 89A and 106N enable the referral of certain material by the Director of
Professional Services Review or a Professional Services Review Committee to the Medicare
Australia CEO, being material gathered in the course of reviewing the provision of services
by a person (who may be a practitioner) to determine whether that person has engaged in
inappropriate practice.
Sections 89A and 106N provide that the material that may be referred to the Medicare
Australia CEO is material that indicates that the person under review may have "committed
an offence that is a relevant offence within the meaning of section 124B".
39
These sections currently refer to section 124B, which is being amended to include a reference
to relevant civil contravention for the purposes of the Medicare Participation Review
Committee arrangements (see item 40 below).
Item 35 also includes a note which clarifies that the heading to section 89A is altered.
Items 39 to 47
These items amend section 124B, which contains the definitions and other interpretive
provisions for Part VB of the HIA. This part contains the Medicare Participation Review
Committee arrangements.
Item 39 amends the definition of determination within subsection 124B(1) to change section
referencing that has resulted from this package of amendments. The reference to subsection
124F(2) is replaced with a reference to subsections "124F(1), (2) or (6)". Section 124F deals
with determinations made by Medicare Participation Review Committees.
Item 40 inserts a definition of `relevant civil contravention' for the purpose of the Medicare
Participation Review Committee arrangements. A Medicare Participation Review Committee
can deal with persons who have contravened civil penalty provisions like they currently can
for the offence provisions.
Item 41 amends subsection 124B(1) (paragraph (a) of the definition of relevant offence) to
remove the reference to section 129AAA which is being repealed.
Item 42 amends the definition of relevant offence within subsection 124B(1) to include an
offence against new Division 3 of Part IIBA. It is a consequential amendment only to cater
for the new prohibited practice offences for pathology and diagnostic imaging introduced by
Item 34 above.
Item 43 amends subsection 124B(1), subparagraph (c)(iiia) of the definition of relevant
offence to cross-reference the insertion of the paragraph (ac) as described at item 42.
Items 44 to 47 amend the following provisions to reflect the inclusion of the new civil penalty
provisions in the HIA: subsection 124B(3); paragraph 124B(3)(a); and paragraph 124B(3)(c).
Item 48
This item inserts a new section 124BA of the HIA.
Section 124BA (Application of Part to providers who are not practitioners)
This section provides that this Part (i.e. Part VB) applies to a provider (who is not a
practitioner) of pathology or diagnostic imaging services as if a reference in Part VB to a
practitioner were a reference to the provider.
The section provides that when Part VB is applied to a provider, subsections 124F(2) and
124FF(2) should apply as if the following paragraph were added at the end of the
subsections:
(g) in relation to a provider (who is not a practitioner) of one or more kinds of
pathology services or diagnostic imaging services--medicare benefits are not payable,
during the period specified in the determination (being a period ending no later than
5 years after the day on which the determination takes effect), in respect of kinds of
40
pathology services or diagnostic imaging services that are specified in the
determination and rendered by or on behalf of the provider.
Item 49
This item inserts a new subsection 124D(1A) of the HIA which provides that section 124D,
under which the Chairperson of a Medicare Participation Review Committee is to be notified
if a practitioner convicted of relevant offence, also applies in relation to a pecuniary penalty
order made against a practitioner if:
· the order was made in respect of a relevant civil contravention; and
· all the rights of the practitioner to appeal against the order (other than the right to apply
for an extension of the time for instituting such an appeal) have been exhausted or have
expired; and
· the order has not been wholly set aside.
Item 49 also includes a note which clarifies that the heading to section 124D is also altered.
Items 50 to 53
These items amend the following provisions to reflect the inclusion of the new civil penalty
provisions in the HIA: subsection 124D(2); paragraph 124E(1)(a); and paragraph 124E(1)(b).
Section 124E essentially requires the Chairperson to establish a Medicare Participation
Review Committee following receipt of a notice under section 124D that a person has been
convicted of a relevant offence or subject to an order in respect of a relevant civil
contravention.
Item 54
This item repeals subsection 124E(4) of the HIA. This subsection currently references
subsection 23DZJ(1) which is being repealed through the amendments in this Bill.
Item 55
This item amends subsection 124E(5) of the HIA by removing the reference to 23DZJ(1)
which is being repealed.
Item 56
This item amends subsections 124E(5) and 124EA(1) of the HIA to remove the cross-
reference to subsection 124E(4) which is being repealed by item 54.
Section 124EA deals with the constitution of Medicare Participation Review Committees.
Item 57
This item repeals paragraphs 124EA(1)(b) and (c) of the HIA and replaces them with new
paragraphs, The changes are consequential only, and reflect the repeal of subsection 124E(4)
and the amalgamation of the prohibited pathology and diagnostic imaging practices
provisions.
Item 58
This item amends subsection 124EB(2) of the HIA by omitting the reference to subsection
(3), which is being repealed by item 60.
41
Item 59
This item amends subsection 124EB(2) of the HIA and provides that if a Medicare
Participation Review Committee is convened in relation to an approved pathology
practitioner or an approved pathology authority, then one of the persons selected by the
Chairperson to sit on the Committee pursuant to paragraphs 124EA(1)(b) and (c) must be an
approved pathology practitioner. If the Committee is convened in relation to a provider of a
kind of diagnostic imaging service (within the meaning of section 23DZZID), then the
Chairperson must appoint at least one medical practitioner experienced in the rendering of
diagnostic imaging services to the Committee.
This changes the existing requirement in relation to Committees convened in relation to
diagnostic imaging matters (subsection 124EB(4) - which is repealed by item 60 below)
whereby all members appointed to the Committee by the Chairperson must be medical
practitioners experienced in the rendering of diagnostic imaging services. This amendment
has been made because of the amalgamation of the pathology and diagnostic imaging
provisions.
Item 60
This item repeals subsections 124EB(3) and (4) of the HIA. These subsections refer to
subsection 124E(4) which is being repealed.
Item 61
Section 124F of the HIA deals with determinations by a Medicare Participation Review
Committee when a person has been convicted of a relevant offence. Item 61 amends
subsection 124F(1) to reflect the inclusion of the new civil penalty provisions in the HIA.
Items 62 to 66
These items make amendments to the current provisions relating to determinations by
Medicare Participation Review Committees to reflect the amalgamation of the pathology and
diagnostic imaging prohibited practice provisions and the introduction of the new civil
penalty provisions. They reflect existing provisions for pathology and diagnostic imaging
(the diagnostic imaging provisions were contained in section 124FF discussed under items 73
to 77 below).
Under the current provisions, breaches of the diagnostic imaging provisions were decided by
a Medicare Participation Review Committee, rather than through the courts like pathology
breaches. Once dealt with by the courts, pathology breaches are then referred to a MPRC.
Breaches for diagnostic imaging will now be dealt with by the courts first, and then referred
to a Medicare Participation Review Committee.
These amendments combine pathology and diagnostic imaging breaches under the same
Medicare Participation Review Committee provisions.
Item 63 adds a new paragraph to subsection 124F(2) to the HIA. The new paragraph requires
that a Medicare Participation Review Committee, in making a determination, determine that:
· the practitioner is disqualified; or
· in the case of a relevant offence or a relevant civil contravention that relates to pathology
services or diagnostic imaging services:
- any other practitioner who is employed, or engaged under a contract for services, by
the practitioner is taken to be disqualified while so employed or so engaged; or
42
- if the practitioner is an officer of a body corporate - any other practitioner who is
employed, or engaged under a contract for services, by the body corporate is taken to
be disqualified while so employed or so engaged and while the first-mentioned
practitioner is an officer of the corporation.
These changes ensure that a Medicare Participation Review Committee can appropriately
deal with the associates of practitioners who have committed relevant offences or civil
contraventions.
Item 64
This item inserts a new sub-paragraph 124F(3)(a)(iii) into the HIA which provides that in
making a determination under subsection 124F(2), a Medicare Participation Review
Committee shall, have regard to the nature of, and the circumstances concerning the
commission of, each relevant civil contravention for which a pecuniary penalty order has
been made against the practitioner.
Item 65
This item inserts a new subsection 124F(4A) into the HIA after subsection 124F(4) relating to
disqualification. In summary, the new subsection provides that if a Medicare Practitioner
Review Committee determines that a practitioner is, or is taken to be, disqualified, it must
specify in the determination whether the practitioner is fully disqualified or disqualified in
respect of one or more of the following:
· the provision of specified professional services, or the provision of professional services
other than specified professional services;
· the provision of professional services to a specified class of persons, or the provision of
professional services to persons other than a specified class of persons;
· the provision of professional services within a specified location, or the provision of
professional services otherwise than within a specified location.
Item 66
This item inserts two new subsections at the end of section 124F of the HIA.
In summary, the new subsection 124F(6) provides that if, in making a determination under
subsection 124F(2) in relation to a practitioner, a Medicare Practitioner Review Committee is
satisfied that the practitioner engaged in a relevant offence or a relevant civil contravention
(under Division 2 or 3 of Part IIBA) and determines that pathology or diagnostic imaging
services were rendered as a result of the relevant offence or civil contravention, then the
Committee must, in its determination:
· identify the services; and
· if Medicare benefit has been paid, or is payable, in respect of the services--determine
that:
- if the Medicare benefit is payable to the practitioner, but has not been paid--the
Medicare benefit or a specified part of it ceases to be payable; or
- if the Medicare benefit has been paid to the practitioner, or has been paid or is payable
to a person other than the practitioner--the Medicare benefit or a specified part of it
be payable by the practitioner to the Commonwealth.
The item also inserts a new subsection 124F(7) into section 124F which relates to remote area
exemptions. The new subsection provides that if the Medicare Practitioner Review
43
Committee determines that a medical practitioner, who has been granted a remote area
exemption (under section 23DX or 23DXA) that is in force, has engaged in a relevant offence
or a relevant civil contravention in relation to diagnostic imaging services, then the
Committee must include in its determination under subsection 124F(2) an advice to the
Minister as to whether the remote area exemption should be revoked. The Committee must
also include its reasons for so advising. This provision is currently contained in subsection
124FF(6) (which currently concerns prohibited diagnostic imaging services).
Items 67 to 72
These items make amendments throughout section 124FE of the HIA. Section 124FE
currently provides that under certain circumstances a Medicare Participation Review
Committee can add parties to the proceedings in relation to prohibited diagnostic imaging
services. The amendments to section 124FE ensure that the section applies to all relevant
offences or relevant civil contraventions under the new Divisions 2 and 3 of Part IIBA of the
HIA. In other words, the scope of this provision will expand to apply to pathology and
diagnostic imaging offences and contraventions.
Items 73 to 77
Section 124FF of the HIA currently provides that a Medicare Participation Review
Committee must make certain determinations in relation to whether a person engaged in a
prohibited diagnostic imaging practice or caused or permitted a prohibited diagnostic imaging
practice to be engaged in by another person.
The making of a determination as to whether a person engaged in a prohibited diagnostic
imaging practice will now be covered by section 124F, as amended by items 63 to 66.
Under the amendments in items 73-77, section 124FF will now apply in relation to the
making of a determination in respect of a person who permitted or caused another person to
engage in any relevant offence or relevant civil contravention (i.e. it is no longer restricted to
prohibited diagnostic imaging practices) under the new Divisions 2 and 3 of Part IIBA of the
HIA.
Item 78
Section 124H(7) of the HIA defines a `relevant determination' for the purpose of the
Minister making guidelines to be applied by a Medicare Participation Review Committee in
relation to the making of such determinations.
Item 78 inserts references to subsections 124F(1) and (6) in subsection 124H(7). This
amendment reflects the fact that section 124F, as amended by item 66, enables the making of
a determination by a Medicare Participation Review Committee under subsection 124F(6).
This amendment extends subsection 124H(7) to enable the Minister to make guidelines in
relation to the making of determinations under subsection 124F(1) and 124F(6).
Item 79
Section 124J of the HIA deals with procedures relating to hearings by a Medicare
Participation Review Committee.
Paragraph 124J(5A)(b) currently allows a Medicare Participation Review Committee to
simultaneously hear suspected prohibited diagnostic imaging breaches (subsection 23DZJ(1))
and add third parties to proceedings.
44
Item 79 amends paragraph 124J(5A)(b) by replacing the reference to 23DZJ(1) with a
reference to subsection 124D(2). The amendment is a consequence of combining the
diagnostic imaging and pathology prohibited practice provisions, now described as a
`relevant offence or relevant civil contravention under subsection 124D(2).
Items 80 to 82
These items make amendments to various cross-references currently in section 124J of the
HIA, to other subsections of the HIA, in order to reflect the changes that have been made
within these other subsections as a result of the amalgamation of the pathology and diagnostic
imaging prohibited practice provisions and the introduction of the new civil penalty
provisions.
Items 83 and 84
Section 124T of the HIA concerns the dissolving of Medicare Participation Review
Committees.
Items 83 and 84 amend paragraphs 124T(1)(a) and (b) of the HIA to ensure that section 124T
applies in relation to both the conviction of a practitioner and the making of a pecuniary
penalty order against a practitioner. This reflects the inclusion of the new civil penalty
provisions in the HIA.
Item 85
This item inserts a new Part VIA--Civil penalties into the HIA.
Part VIA--Civil penalties
Division 1--Obtaining an order for a civil penalty
Section 125A (Federal Court may order person to pay pecuniary penalty for
contravening civil penalty provision)
Section 125A addresses five issues:
· applications for orders (subsection 125A(1));
· the power of the Court to order a wrongdoer to pay a pecuniary penalty (subsection
125A(2));
· the matters that the Court must have regard to in determining the amount of a pecuniary
penalty (subsection 125A(3));
· the requirement for the Court to apply civil evidence and procedure rules when hearing
and determining an application for an order (subsection 125A(4)); and
· the rules that apply if there has been a contravention of more than one civil penalty
provision (subsection 125A(5)).
In summary:
· within 6 years of a person (the wrongdoer) contravening a civil penalty provision, the
Medicare Australia CEO may (on the Commonwealth's behalf,) apply to the Federal
Court of Australia for an order that the wrongdoer pay the Commonwealth a pecuniary
penalty (subsection 125A(1));
· if satisfied that the wrongdoer has contravened a civil penalty provision, the Court may
order the wrongdoer to pay the pecuniary penalty that the Court determines is appropriate
45
(but not more than the maximum amount specified for the provision) (subsection
125A(2));
· in determining the pecuniary penalty, the Court must have regard to all relevant matters,
including, for example: the nature and extent of (i) the contravention and (ii) the loss or
damage suffered as a result of the contravention; the circumstances in which the
contravention took place; and whether the Court has, in proceedings under the HIA,
previously found the person to have engaged in any similar conduct (subsection
125A(3));
· the Court must apply the rules of evidence and procedure for civil matters when hearing
and determining an application for an order and the standard of proof in civil proceedings
is the balance of probabilities (subsection 125A(4)); and
· if an act or omission constitutes a contravention of 2 or more civil penalty provisions,
then proceedings may be instituted in relation to any one or more of those provisions.
However, the person is not liable to more than one pecuniary penalty in respect of the
same act or omission (subsection 125A(5)).
Section 125B (What is a civil penalty provision?)
This section clarifies that a section (or subsection) is a civil penalty provision if the words
"civil penalty" and one or more amounts in penalty units are set out at the foot of the section
(or subsection).
Section 125C (Persons involved in contravening civil penalty provision)
Subsection 125C(1) provides that a person must not:
· aid, abet, counsel or procure a contravention of a civil penalty provision; or
· induce (by threats, promises or otherwise) a contravention of a civil penalty provision; or
· conspire to contravene a civil penalty provision.
If a person does any of these things in relation to a civil penalty provision then they are taken
to have contravened the civil penalty provision (subsection 125C(2)).
For example, if a company director instructs the business manager of a company who
provides pathology services to offer a prohibited benefit to a requester then the company
director will also be liable for a civil penalty because they procured the contravention of a
civil penalty. Similarly if the owner of a GP practice (who is not themselves a requester of
services) encourages one of the GPs to accept a benefit from a provider then the owner of the
GP practice will be liable for a civil penalty because they counselled the contravention of a
civil penalty provision.
Section 125D (Recovery of a pecuniary penalty)
This section provides that if the Federal Court of Australia orders a person to pay a pecuniary
penalty then the penalty is payable to the Commonwealth, and the Medicare Australia CEO
may enforce the order as if it were a judgment of the Court.
46
Division 2--Civil penalty proceedings and criminal proceedings
Section 125E (Civil proceedings after criminal proceedings)
This section provides that the Federal Court of Australia must not make a pecuniary penalty
order against a person for a contravention of a civil penalty provision if the person has been
convicted of an offence relating to conduct that is substantially the same as the conduct
relating to the contravention.
Section 125F (Criminal proceedings during civil proceedings)
This section provides that proceedings for a pecuniary penalty order against a person for a
contravention of a civil penalty provision are stayed if:
· criminal proceedings are started or have already been started against the person for an
offence; and
· the offence is in relation to conduct that is substantially the same as the conduct alleged to
constitute the contravention.
The section further provides that the proceedings for the order may be resumed if the person
is not convicted of the offence (otherwise, the proceedings for the order are dismissed).
Section 125G (Criminal proceedings after civil proceedings)
This section provides that criminal proceedings may not be started against a person for
conduct that is substantially the same as conduct constituting a contravention of a civil
penalty provision if a pecuniary penalty order has been made against the person in respect of
that conduct.
Section 125H (Evidence given in proceedings for civil penalty not admissible in criminal
proceedings)
This section provides that evidence of information given or evidence of production of
documents by an individual is not admissible in criminal proceedings against the individual
if:
· the individual previously gave the evidence or produced the documents in proceedings for
a pecuniary penalty order against the individual for a contravention of a civil penalty
provision (whether or not the order was made); and
· the conduct alleged to constitute the offence is substantially the same as the conduct that
was claimed to constitute the contravention.
The section makes it clear that this does not apply to a criminal proceeding in respect of the
falsity of the evidence given by the individual in the proceedings for the pecuniary penalty
order.
Item 86
This section repeals subsection 129AA(1) of the HIA. This subsection is replaced by the new
offence and civil penalty provisions in the new Part IIBA of the HIA.
47
Item 87
This item repeals the definition of pathology service within subsection 129AA of the HIA.
This is a consequential amendment flowing from the repeal of subsection 129AA(1).
Item 88
This item repeals section 129AAA of the HIA. This section currently describes the
prohibited practices in relation to the rendering of pathology services. These prohibited
practices are being replaced with the new prohibited practices included in new Part IIBA
(Prohibited practices in relation to pathology services and diagnostic imaging services).
Item 89
This item amends subsection 129AAC(1) of the HIA by omitting the reference to "for the
prosecution of the practitioner for a relevant offence" and replacing it with a reference to
"against the practitioner for a relevant offence or relevant civil contravention". This reflects
the inclusion of new civil penalty provisions in the HIA. Section 129AAC deals with
statements made in certain circumstances that are inadmissible in proceedings for relevant
offences.
Item 90
This item amends subsection 129AAC(2) to reflect the inclusion of the new civil penalty
provisions in the HIA.
Item 91
This item amends section 129AD of the HIA by updating the references to subsections to
reflect the addition of subsection (6) to section 124F as described in Item 66. Section 129AD
deals with recovery of amounts paid.
Items 92 to 96
Section 130 of the HIA deals with requirements for officers to observe privacy. Subsection
(6) describes the circumstances in which the Secretary or the CEO of Medicare Australia may
divulge certain information to certain people.
Item 93 amends subsection (6) to provide that an additional circumstance in which such
information may be divulged is if a pecuniary penalty order has been made against a person
in respect of a contravention of a new civil penalty provision in Division 2 of Part IIBA of the
HIA.
Items 92, 95 and 96 are amended to add the contravention of a civil penalty provision as
providing the Minister with the reasonable grounds to certify that information should be
divulged in pursuance of subsection (6) or (7).
Item 97
This item amends subsection 130AA(1) of the HIA by omitting the reference to section
129AAA and replacing it with a reference to the new provisions in Division 2 of Part IIBA.
Medicare Australia Act 1973
Item 98
Section 3 of the Medicare Australia Act 1973 defines evidential material. This item amends
that definition to reflect the inclusion of new civil penalty provisions in the HIA. The
48
reference to "relevant offence" within the definition is changed to "relevant offence or
relevant civil contravention".
Item 99
This item inserts within section 3 Medicare Australia Act 1973 a statement that clarifies that
"relevant civil contravention" has the same meaning as in subsection 124B(1) of the HIA.
Item 100
Section 3A of the Medicare Australia Act 1973 defines relevant offences. Paragraphs (2)(a)
and (2A)(a) of section 3A reference the existing pathology-related offences including section
129AAA of the HIA which is being repealed. This item amends section 3A to update the
references and reflect the new offences and civil penalty provisions in Division 3 of Part IIB
of the HIA.
Items 101 and 102
The items amend paragraph 8P(1)(a) and (b) of the Medicare Australia Act 1973 so that the
provision references offences and relevant civil contraventions (consistent with the
introduction of new civil penalty provisions in the HIA).
Items 103 to 109
Items 103 to 109 amend provisions in Part IID of the Medicare Australia Act 1973 to add
references to civil contraventions in addition to the existing offences. Part IID sets out the
investigative powers of the Chief Executive Officer of Medicare Australia
Item 103 repeals the existing heading for Division 3 of Part IID and replaces it with a new
heading "Division 3--Searches in relation to possible relevant offences and relevant civil
contraventions".
Item 104 amends subsection 8U(1) of the Medicare Australia Act 1973 to reflect the
inclusion of new civil penalty provisions in the HIA. The reference to "relevant offence"
(wherever occurring) is supplemented by a reference to "relevant civil contravention".
Item 105 amends subsections 8U(4) and 8V(1) and (2) of the Medicare Australia Act 1973 to
reflect the inclusion of new civil penalty provisions in the HIA. The reference to "relevant
offence" (wherever occurring) is supplemented by a reference to "relevant civil
contravention". The heading to section 8X is also altered by omitting "Offence" and
substituting "Relevant offence and relevant civil contravention".
Items 106 to 108 amend paragraph 8Y(5)(a), subparagraph 8ZI(a)(i) and subparagraph
8ZI(a)(ii) of the Medicare Australia Act 1973 to reflect the inclusion of new civil penalty
provisions in the HIA. The reference to "offence" is replaced by a reference to "relevant
offence or relevant civil contravention".
Item 109 amends paragraph 8ZI(b) of the Medicare Australia Act 1973 to reflect the
inclusion of new civil penalty provisions in the HIA. The words "offence or the other
relevant offence", are replaced with the words "relevant offence or relevant civil
contravention or the other relevant offence or relevant civil contravention".
49
Veterans' Entitlements Act 1986
Item 110
This item repeals the definition of approved pathology practitioner that appears in subsection
93E(9) of the Veterans' Entitlements Act 1986 and replaces it with the following meaning:
· an approved pathology practitioner (within the meaning of the HIA); or
· an approved pathology authority (within the meaning of that Act) (other than a State, the
Northern Territory or a public authority within the meaning of section 23DF of the HIA).
The amendment has been made because section 129AAA of the HIA (that is currently
referred to in the definition within the Veterans' Entitlements Act 1986) has been repealed.
The amendment to subsection 93E(9) has no substantive affect on the definition.
Item 111 (Application, saving and transitional provisions)
This item sets out the application, savings and transitional provisions relevant to the Bill.
The item provides that the amendments of the HIA made by this Schedule do not apply in
relation to:
· prohibited diagnostic imaging practices engaged in before the commencement of this
item; or
· notices given under section 23DZH or 23DZJ that are in force immediately before the
commencement of this item, that is, notices regarding prohibited diagnostic imaging
practices; or
· determinations made under section 124F, 124FE or 124FF that are in force immediately
before the commencement of this item (that is, determinations by a Medicare
Participation Review Committee in respect of prohibited pathology and diagnostic
imaging practices.
In order to avoid doubt, the item provides that the Act (as in force immediately before that
commencement) continues to apply in relation to those practices, notices and determinations.
The item further provides that:
· the amendments of the HIA made by items 5 and 6 apply to pathology services rendered
after the commencement of this item;
· the amendment of the HIA made by item 15 applies to undertakings given to the Minister
under section 23DC of that Act after the commencement of this item;
· the amendment made by item 25 does not affect the continuity of approvals made under
subsection 23DNBA(1) of the HIA that are in force immediately before the
commencement of this item;
· the amendment made by item 30 applies to pathology request forms provided after the
commencement of this item; and
· the amendments of the HIA made by items 41, 92 and 97 do not apply to an offence
against section 129AA or 129AAA of the HIA committed before the commencement of
this item.
50
SCHEDULE 2--AMENDMENTS RELATING TO THE FORM OF PATHOLOGY
REQUESTS
In accordance with section 2 of this Bill, the items in Schedule 2 commence on the day on
which the Act receives Royal Assent (by contrast, the amendments detailed in Schedule 1
take effect on 1 March 2008).
Part 1--Amendment of the Health Insurance Act 1973
Item 1
This item repeals subsection 16A(4) of the HIA and replaces it with a new subsection 16A(4).
The only substantive change is that the new provision provides that any request to or by an
approved pathology practitioner must be in accordance with the regulations (if any).
Part 2--Provisions dealing with the effect of the Health Insurance (Pathology Services)
Regulations 1989
Item 2 (Definitions)
This item provides that, for the purposes of this Part, the word "amend" includes repeal and
the term "the original Regulations" means the Health Insurance (Pathology Services)
Regulations 1989 purportedly made by Statutory Rules 1989, No. 75.
Item 3 (Effect of the original Regulations before the commencement of this Schedule)
Subitem (1) provides that, subject to subitem (2), the rights and liabilities of all persons are,
declared to be, and always to have been, the same as if:
· the amendment made by item 1 of this Schedule had been in force during the period
starting immediately before the time when the original Regulations purported to
commence and ending on the commencement of this item; and
· Regulations had been in force during that period that were in the same terms as the
original Regulations, as purportedly amended from time to time during that period.
Subitem (2) provides that this item does not affect the rights and liabilities arising between
parties to a proceeding heard and finally determined by a court before the commencement of
this Schedule, to the extent that those rights and liabilities arose from, or were affected by,
the original Regulations (as purportedly amended).
Item 4 (Effect of the Health Insurance (Pathology Services) Regulations 1989 on and
after the commencement of this Schedule)
Subitem (1) provides that the original Regulations, as purportedly in force up to the
commencement of this item, have effect on and after that commencement as if the
amendment made by item 1 of this Schedule had been in force during the period starting
immediately before the time when the original Regulations purported to commence and
ending on the commencement of this item.
Subitem (2) provides that Regulations made under section 133 of the HIA may deal with
matters of a transitional, application or saving nature relating to the fact that the original
Regulations (as purportedly in force as mentioned in subitem (1)) are taken to have effect as
provided in subitem (1).
51
Attachment A--Summary of new offence and civil penalty provisions
Table 1:
Summary of provisions relating to asking for or accepting prohibited benefits
(sections 23DZZIK and 23DZZIQ of the Bill)
Who accepts the Requester of pathology or DI services asks A person who is connected to a Another person asks for or
benefit? for, or accepts, a benefit requester asks for or accepts a accepts a benefit
benefit
Type of benefit Benefit is not a permitted benefit Benefit is not a permitted Benefit is not a permitted
benefit benefit
Who is the benefit Benefit is from a Benefit is from Benefit is from a provider or a Benefit is from anyone
from? provider or a anyone person connected to a provider
person connected
to a provider
What is the The benefit: (a) The person The benefit: (a) The person providing the
nature of the (a) would be providing the benefit (a) would be reasonably likely benefit intends that the
benefit? reasonably likely to intends that the to induce the requester to benefit will induce the requester
induce the benefit will induce the request services from the to request services from a
requester to request requester to request provider particular provider
services from the services from a
provider particular provider; OR AND
OR AND (b) is related to the business of The requester knows that the
rendering pathology or DI person who paid the benefit has
(b) is related to the The requester knows services that intention
business of that the person who
rendering paid the benefit has
pathology or DI that intention. OR
services
OR (b) The requester intends to
request services from a
(b) The requester particular provider as the result
intends to request of the person being provided the
services from a benefit
particular provider as
the result of being
provided the benefit
What knowledge N/A Refer above Requester knows that the Refer above
is required? person asked for, or accepted,
the benefit, that the person is
connected to them and that the
benefit came from or was
sought from a provider or a
person connected to the
provider
Who is potentially Requester subject Requester commits a Requester subject to civil Requester commits a criminal
liable? to civil penalty criminal offence penalty unless requester offence unless requester
reported benefit to the Medicare reported benefit to the Medicare
Civil penalty or Provider may also Australia CEO within 30 days Australia CEO within 30 days
criminal offence? be subject to civil after the requester becomes after the requester becomes
penalty - refer aware of the benefit aware of the payment
Table 2
Provider may also be subject to
civil penalty
52
Table 2:
Summary of provisions relating to offering or providing benefits
(sections 23DZZIL and 23DZZIR of the Bill)
Who offers or Provider of pathology or DI services offers A person who is connected to a Any person (including a
provides the or provides a benefit provider offers or provides a provider) offers or provides a
benefit? benefit benefit
Type of benefit Benefit is not a permitted benefit Benefit is not a permitted Benefit is not a permitted
benefit benefit
Who is the benefit A requester or a Anyone A requester or a person Anyone
offered or person connected connected to a requester
provided to to a requester
What is the The benefit: The person providing The benefit: The person providing the
nature of the (a) would be the benefit intends (a) would be reasonably likely benefit intends that the
benefit? reasonably likely to that the benefit will to induce the requester to benefit will induce a requester
induce the induce the requester request services from the to request services from a
requester to request to request services provider particular provider
services from the from a particular
provider provider OR
OR (b) is related to the business of
rendering pathology or DI
(b) is related to the services
business of
rendering
pathology or DI
services
What knowledge N/A The provider knows Provider knows that: Refer below
is required? that the person who (a) the person connected to the
paid the benefit has provider offered or provided the
that intention benefit; and
(b) that the person who offered
or provided the benefit is
connected to them; and
(c) the person to whom the
benefit was offered is a
requester or is connected to a
requester
Who is potentially Provider subject to Provider commits a Provider subject to a civil The person who offered or
liable? civil penalty criminal offence penalty unless provider has provided the benefit commits a
Civil penalty or reported benefit to the Medicare criminal offence
criminal offence? Requester may Australia CEO within 30 days
also be subject to after the provider becomes AND
civil penalty - refer aware of the benefit
Table 1 If the provider knew that the
Requester may also be subject person who offered or provided
to civil penalty - refer Table 1 the benefit had the intention to
induce, then the provider also
commits a criminal offence
unless provider has reported the
benefit to the Medicare
Australia CEO within 30 days
after the provider becomes
aware of the payment
53
Table 3:
Summary of provisions relating to making threats
(sections 23DZZIM and 23DZZIS of the Bill)
Who makes the Provider of pathology or DI Person connected to provider Any person makes a threat
threat? services makes a threat
Who is the A requester or a person connected A requester or a person connected Anyone
threat made to a requester to a requester
to?
What is the The threat: The threat is: The person making the threat
nature of the (a) would be reasonably likely to (a) reasonably likely to induce the intends that the
threat? induce the requester to request requester to request services from threat will induce a requester to
services from the provider the provider request services from a particular
provider
OR OR
(b) is related to the business of (b) related to the business of
rendering pathology or DI services rendering pathology or DI
services
What N/A Provider knows that: Refer below
knowledge is (a) the person who made the
required? threat is connected to the
provider; and
(b) the person to whom the threat
was made is a requester or is
connected to a requester
Who is Provider subject to civil penalty Provider subject to civil penalty The person who made the threat is
potentially unless provider has reported guilty of a criminal offence
liable? threat to the Medicare Australia
Civil penalty or CEO within 30 days after the AND
criminal provider becomes aware of the
offence? threat The provider is guilty of a criminal
offence if the provider:
(a) knows that the person made the
threat;
(b) knows that the person who
made the threat had the intention of
inducing a requester to request
services from the provider
(c) has not reported the threat to the
Medicare Australia CEO in writing
within 30 days after the provider
becomes aware of the threat
54
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