Audit finds Human Services not tracking Medicare payment costs

Although around 97 percent of Medicare benefits paid were lodged electronically during 2016-17, the Australian National Audit Office has found the Department of Human Services is not tracking the costs of maintaining the claiming channels.

The Department of Human Services (DHS) has been called out by the Australian National Audit Office (ANAO) for not tracking the costs of maintaining the claiming channels used to lodge Medicare benefits in Australia.

The Administration of Medicare Electronic Claiming Arrangements audit revealed that although around 97 percent of all Medicare benefits paid were lodged electronically during 2016-17, DHS did not track the relative costs of the eight electronic claiming channels.

In addition to the eight electronic channels DHS administers, there are six additional digital provider channels for point of service claiming, including via Medicare Online and Bulk Bill Webclaim, and two channels for claiming by patients, the Claiming Medicare Benefits Online platform and the Express Plus Medicare Mobile App, in addition to a handful of manual claiming processes such as by post.

The report [PDF] said that most of the electronic claiming channels were introduced over 10 years ago, which was prior to DHS taking over the Medicare remit in 2011.

Making one recommendation in total, ANAO asked that DHS ensure its electronic claiming channel delivery strategy is supported by clear analysis of the costs and benefits of both establishing and maintaining electronic claiming channels; and maintaining manual Medicare claiming options.

In 2016-17, 24.9 million people were enrolled in Medicare and AU$22.4 billion was paid in benefits for more than 399 million services, the report said, noting also that Medicare accounts for one third of the Commonwealth's health budget, with spending expected to increase from AU$23.7 billion in 2017-18 to AU$27.9 billion in 2020-21.

According to the report, system incidents, including outages and technical problems that prevent providers from lodging claims, and potential security risks have increased over the past 12 months as a result of current systems degradation.

"These incidents highlight a number of system limitations from the old mainframe technology that underpins the current Medicare payment system. Human Services are aware of the need for departmental claims and payments systems remediation, and are currently undertaking a range of activities to maintain minimum standards of compliance, operational stability, and system availability consistent with existing performance measures," ANAO wrote.

The Department of Health published a Request for Information (RFI) in March, seeking advice on replacing its 30-year-old IT payments system that currently supports the operation and delivery of Medicare, the Pharmaceutical Benefits Scheme, aged care, and related veterans payments.

At the time, the IT system used to make payments was labelled obsolete by the government.

"Just as Australian families have upgraded their computers since the 1980s, the time has come for the government's health payments systems to do the same," the government said in a statement.

During his election campaign in June last year, Australian Prime Minister Malcolm Turnbull warned against outsourcing government services, saying a government could find itself without sufficient internal talent as a result.

Facing questions on outsourcing Medicare payments, Turnbull said he had every intention of updating the healthcare service's payments system.

"The Medicare payments system is enormous, obviously, and I believe that we can -- well, it is not a question of belief, there is no doubt that we can -- bring that into the 21st century and do so within government," he said. "But my decision is that this payments system will be upgraded and it will be upgraded within government."

DHS is a few years into its billion-dollar project to overhaul Australia's 30-year-old payment system, which processes over AU$100 billion in Centrelink payments each year.

Labelled the biggest digital transformation the government has embarked on to date by Minister for Human Services cum Minister for Citizenship and Multicultural Affairs Alan Tudge, the Welfare Payment Infrastructure Transformation (WPIT) program is expected to take seven years to complete.

As part of the Cabinet reshuffle announced by Turnbull on Tuesday, Michael Keenan steps into the Human Services portfolio, in addition to being the new minister assisting the prime minister on digital transformation.

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