Govt plans 'well advanced' to privatise Medicare, aged care payment systems

The federal government is well advanced in moves to outsource the payment systems for the MBS, PBS and aged care services, with a proof of concept trial to begin next year, according to a report in The West Australian.

The newspaper is reporting that the massive privatisation plans – Medicare administers billions in claims and payments every year – will be a big feature of Treasurer Scott Morrison’s budget in May.

It says consulting firms Ernst & Young, KPMG, PwC, McKinsey, Deloitte and Boston Consulting will lodge bids to design the business case for the potential privatisation in a fortnight.

A spokesperson for the Department of Health told the newspaper that the department had established a Digital Payments Services Taskforce headed by bureaucrat John Cahill to seek a market response for the commercial provision of health and aged care payment services.

The department has issued a request for quotation for the business case but the spokesperson said it “does not pre-empt any decisions by government to deliver Medicare, aged care or other payments services in a particular way”.

Health Minister Sussan Ley issued a statement this morning claiming that Medicare had not kept up with new technologies like 'tap and go' payment systems.

She said consumers expected to use contemporary technologies to manage their everyday payments and “government should be no exception”.

“Between Medicare, aged care and the Pharmaceutical Benefits Scheme, the Commonwealth processes over $42 billion worth of payment transactions every year,” she said.

“Everyday Australians use cards to make ‘tap and go’ payments, and apps to make payments, and yet Medicare has not kept up with these new technologies.

“This is why the Department of Health is investigating ways to digitise its transaction technology for payments to a more consumer-friendly and faster format.

“This work will be undertaken with the assistance of business innovation and technology experts, to determine the best and most-up-to-date payment technologies available on the market for consumers and health and aged care service providers.

“At this stage no decisions have been made, and the work continues.”

The outsourcing proposal was first floated in the May 2014 budget, which allocated $500,000 to DoH to develop a proposal in conjunction with the Department of Human Services (DHS) to market test the delivery of a “commercially integrated health payment system”.

The 2014 budget papers state that expressions of interest “will be sought from commercial providers to gauge interest in the proposal and to identify potential alternative approaches to the delivery of health payments”.

The then health minister, Peter Dutton, said the IT systems that manage the claims and payments processes “are dated and in need of a substantial upgrade”. He did not specify what those IT systems were, but said it was “good process to review and test existing and alternative systems”.

Mr Dutton later told a conference that the government wanted to streamline the way the transfer of payment system between the government and general practice worked.

DHS has a number of different systems it uses for MBS and PBS claims and payments to GPs, pharmacists, pathology and radiology providers, as well as for hospital claims and payments to aged care providers. The vast bulk are online services and are integrated within practice management software systems and hospital billing systems.

Medicare is phasing out rebate cheques to patients and moving to a completely electronic model in which rebates are deposited directly into patients' bank accounts. This capability has been around for a number of years. DHS also offers a Medicare Express app for making claims.

Posted in Australian eHealth

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