Outsourcing Medicare payments to private sector “beggars belief”: expert

The idea of outsourcing the notoriously complex Medicare payments system to a private or overseas vendor with no experience of what has been labelled its “labyrinthine” structures beggars belief, one of Australia's leading authorities on Medicare billings says.

Margaret Faux, founder and principal of Synapse Medical Services, which provides medical administration and billing services to all levels of healthcare, said the complexities of the Medicare system meant there was no private company that could handle its procedures better than the Department of Human Services can.

“Without a deep understanding of the underlying legal structure of Medicare, managing its complex billing procedures would not be within the grasp of any of the named private sector organisations,” Ms Faux said.

“Australians should be very concerned because the potential impacts of this on both increasing the incidence of non-compliance as well as increasing gaps for patients are significant.

“On the ‘go live’ date of any new system, if it doesn’t work perfectly, doctors will quickly adopt alternative billing methods such as requiring patients to pay full fees up front for everything.”

The West Australian's Andrew Probyn revealed on Monday that plans were well advanced to outsource back-office operations and the technologies that handle tens of billion of dollars in claims and payments through the MBS and PBS and to aged care providers.

Health Minister Sussan Ley defended the plan, saying Medicare had not kept up with new technologies like 'tap and go' payment systems or apps to make payments.

However, she provided no evidence that consumers were demanding better payment options. Most interactions in the healthcare industry are with GPs and pharmacists, the vast majority of which use EFTPOS machines or integrated Tyro terminals or claim rebates on behalf of patients that are deposited into bank accounts electronically.

Ms Faux agreed, saying she doubted consumers had any problems with the current arrangements. “Some would have had less than optimal experiences with hospital bills occasionally, but overall the experience would usually feel quite simple and straightforward for most Australians,” she said.

The very complexities of the system are why companies such as Synapse are in business, she said. It is the underlying complexities rather than the technologies on top that will make it almost impossible for a new organisation to handle.

“Organisations like ours exist because we have spent decades developing systems, processes and a deep understanding of the labyrinthine structure that lies beneath the Tyro machines out there,” Ms Faux said.

“The idea of handing something so vast, so complex and so important to any organisation who is starting from a zero knowledge base beggars belief. Medicare claiming is not something one can learn in weeks or months. I’ve been doing this for 30 years and am doing a PhD on the topic, and yet still I feel that my knowledge of the area is incomplete.

“You can’t just read the MBS and then think ‘right, got it, now I’ll go programme some software to do it’.”

AMA and Labor opposed

The proposal has also been met with alarm by Labor, doctors' groups and the aged care industry, which have all raised concerns over the safety of private health data and the potential loss of expertise from DHS, which administers Medicare on behalf of the Department of Health.

The AMA said the proposal was “another sign that [the government was] retreating from core health responsibilities” and that the government had failed to consult with doctors.

Labor said it was deeply alarmed at the plan, labelling it as a “disgrace” and “lazy policy” which could jeopardise the patient data of every Australian and the jobs of 1400 staff at centres all around the country.

“We are hugely concerned the government has highly progressed plans to privatise the delivery of vital government services like Medicare,” shadow health minister Catherine King said.

“This idea, from the failed Commission of Audit Report, would mean that these important functions would be being delivered for profit, not with the best interests of patients in mind.”

Shadow minister for human services Doug Cameron said it was critical that private health details stay in Australia.

“This is a disgrace,” he said. “This is lazy policy from the Liberals. Nowhere else in the world are these services privatised.”

Aged care reaction

In addition to MBS and PBS claiming and payments, the government also seems intent on including the aged care payments system in the new plan.

As opposed to the wider healthcare sector, the aged care sector has been vocal in its calls for improvements to DHS payment systems, ramping up the lobbying as constant breakdowns in electronic claiming systems left providers out of pocket by up to $3 million in some cases.

Last year, the two peak organisations for aged care took the extraordinary step of calling for an apology from the then Minister for Human Services, Marise Payne, and financial restitution from DHS for home care providers hit with repeated failures.

Leading Age Services Australia (LASA) CEO Patrick Reid said at the time that system failures of a similar scale would not be tolerated in any other industry and that the absence of an apology from the minister to both providers and their clients was “further proof that aged care does not rank highly in this government’s priorities”.

However, Mr Reid said privatising Medicare would further fragment the system.

"There remain multiple issues with the current systems managed by DHS for aged care providers,” Mr Reid said.

“While a great deal of time and money has gone into rectifying some of these issues, focus remains on the system itself and not on the end user experience.

“We should be at a point where all government systems seamlessly integrate to enable real-time claiming, assessment and payment to aged care providers based on each individual client and their particular circumstances.”

This will require planning and policy cohesion across government departments and also far tighter integration with other systems such as aged care assessment teams, the Australian Tax Office, the My Aged Care system, Centrelink and Medicare.

“While privatising Medicare payments might result in some improved efficiencies it is just one piece of a very complex puzzle that is aged care access and operations,” he said.

“Isolating Medicare further from these other systems could make it impossible to ever connect all the puzzle pieces required to achieve seamless integration."

Loss of DHS and DoH expertise

AMA vice-president Stephen Parnis told the ABC that the organisation was concerned that the levels of expertise that exists within the Department of Health could be outsourced, saying that by outsourcing it, the government runs the risk of losing that expertise.

“There are concerns raised about the way that the administrators of these programs would handle confidential medical data; how their input may influence or undermine the doctor-patient relationship in terms of its funding,” Dr Parnis said.

He also raised the question of accountability. “[A] Medicare benefit item might be administered or potentially even refused by someone who isn't necessarily accountable to government,” he said.

Ms Faux also doubted that claiming processes could be done any more efficiently by an outsourced provider rather than DHS itself, and said it could end up costing more.

“The Department of Health seems to be of the view that the large numbers of public servants currently doing the back office work will no longer be required thus saving the country millions,” she said.

“I would suggest that the number of more expensive, private sector employees who will do the very same work if this goes ahead, will be at least double, because they won’t know what they are doing. It won’t take long for the new vendor to understand that it takes an army of human beings to correctly process Medicare claims.

“Software alone will never be a complete solution and its actually in the government's interests to keep it that way because slowing payments down can sometimes be a good thing.

“And despite Minister Ley’s comments about ‘tap and go’ payments, there is a strong case to be made that such a high level of automation is not particularly suited to this environment because these are not credit card purchases. They are taxpayer dollars.”

The Medical Software Industry Association (MSIA) did not respond to a request for comment.

Posted in Australian eHealth

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