Administrative penalties

Under the Health Insurance Act 1973, penalties now apply to incorrect payments or unsubstantiated services for which a MBS benefit has been paid.

Page last updated: 18 January 2016

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Administrative penalties apply to debt relating to payments made for services on or after 9 April 2011 which have been incorrectly paid or not substantiated. You may be liable to pay an administrative penalty if you owe more than $2,500.

Penalties do not apply to debts that became due more than 2 years prior to an audit or to services claimed before 9 April 2011.

Administrative penalties do not apply to dental benefits paid for Child Dental Benefits Schedule services.

An administrative penalty

An administrative penalty is an amount to be paid in addition to the debt owing from incorrectly claimed or unsubstantiated services.

To substantiate that an amount has been paid correctly, we need evidence that the service was provided and that it met the legislative requirements for the item claimed.
To help you substantiate an amount paid for a claimed Medicare Benefits Schedule service, a set of Health Professionals Guidelines have been developed.

Administrative penalty rates

Penalties are an inducement to encourage voluntary compliance with the legislative requirements related to MBS benefits.

The legislation outlines the circumstances under which a penalty can be reduced or increased. Under the legislation penalties can apply to payments made for services claimed incorrectly or not substantiated on or after 9 April 2011.

An administrative penalty is calculated as a percentage of the amount a health professional owes for each incorrect payment or unsubstantiated service.

Reductions in administrative penalties

Depending on when you tell us about an incorrect claim or payment, a reduction in the administrative penalty may apply. The base penalty can be reduced from 20% to:
    • zero, if you tell us about incorrectly claimed benefits or payment, before we contact you
    • 10%, if you tell us about the incorrect claim or payments after we contact you about the claimed services or payments and before you receive a formal Notice to Produce documents
    • 15%, if you tell us about any incorrect claimed benefits or payments after you have received a formal Notice to Produce documents and before the date specified in the notice
The Voluntary acknowledgement of incorrect payments form is available on our website.

Increases in administrative penalties

If you do not respond to the formal Notice to Produce documents before the date specified in the notice the base penalty will increase from:
    • 20% to 25%
If you have received one or more administrative penalty or debt notices in the previous 2 years, and the total recoverable amounts for those services is more than $30,000 the base penalty will increase from:
    • 20% to 30%
Penalties may vary according to individual circumstances. For example, a person may be subject to both a reduction and increase or an increase for failing to comply with a notice and an increase for previous debts of over $30,000.

For more information about administrative penalties see section 129AEB of the Health Insurance Act 1973.

Avoiding an administrative penalty

Penalties are an inducement to encourage voluntary compliance with the legislative requirements related to MBS benefits.

If you voluntarily tell us about services rendered under your provider number which should not have been paid before we contact you, the administrative penalty will not apply for those services.

If we contact you about services you have provided and you tell us that our payments for those services should not have been made, the administrative penalty may be reduced. We will always contact you about Medicare claims in writing.