Report on the regulatory framework for hearing services

Focusing on the regulation

Review of the efficiency and effectiveness of the regulatory framework for hearing services July 2012. The Report was prepared for the Office of Hearing Services by MP Consulting

Page last updated: 28 November 2012

D. Are the regulatory requirements clear?

When asked whether the regulatory requirements are clear, some industry stakeholders advised that the requirements are clear and that service providers have a strong understanding of the requirements. Others commented that providers are aware of the general nature of the requirements but are not aware of the detail. All stakeholders focused on the terms of the contract when discussing the regulatory requirements.

From an external perspective, mpconsulting considers that the regulatory requirements are not clear.

Not only is it difficult to identify all of the legislative and contractual elements of the scheme (as these are not all published or summarised in any single location) but the actual obligations imposed by the regulation are also unclear.

Take, for example, the conditions that apply to service providers when delivering services as part of the hearing services scheme.

In an ideal world:
  • these conditions would be described in one, readily accessible, easily understood document. If conditions were described across multiple documents, the conditions would form a hierarchy, would all be described in consistent terms and would cross-reference related conditions in other documents
  • any changes to conditions would be made through a transparent process and would be communicated to stakeholders in a consistent manner
  • the consequences of non-compliance with the conditions would be clear.

However, in this case:
  • there are over 100 ongoing obligations (i.e. conditions) imposed on service providers along with 30 discrete prohibitions
  • these obligations and prohibitions are spread over 10 different regulatory documents. Most of these documents can be amended ‘from time to time’ by the Commonwealth. In some cases this requires approval by the Minister (i.e. the making of delegated legislation) and in other cases these changes can be made by OHS staff and notified to service providers
  • the obligations are variously described as conditions, standards, requirements, terms of the contract, terms of the Deed, and outcomes
  • there is significant overlap and inconsistency between the obligations and prohibitions (discussed in more detail below)
  • non-compliance with the obligations or prohibitions gives rise to different actions under each of the different regulatory documents.

The consequence of this is that, despite the best intentions of stakeholders, it is unlikely that all 215 service providers and 1660 practitioners have a clear understanding of all of the conditions applicable to them and the consequences of non-compliance.
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E. Is the regulation based on risk and is the regulatory effort appropriately matched to the risk?

As mentioned previously, the clinical risk associated with hearing services is very low and should not, therefore, be a driver for regulation.

When it comes to other risks that the regulation is addressing, these are
not well defined. As a result, the regulatory effort is not well matched to the risk.

For example resources are expended by OHS in examining the financial viability of the service provider as part of the accreditation process. However:
  • the risk of financial failure is small
  • the risk to the Australian Government as the result of failure is low (because only small amounts are paid in advance)
  • the risk to clients is low because if the service provider fails, there are generally alternative providers that can provide the service to the client. This risk also exists if the service provider chooses to stop providing services yet this risk is not one that can be controlled by the Australian Government and this is accepted.

Possibly the most valuable work that could be undertaken following this review is for the OHS to work with stakeholders to clearly articulate the problem or risks that the regulation is attempting to mitigate and whether it is appropriate for government to attempt to manage such risks through regulation. This is discussed in more detail in the following chapter.

F. Does the legislation strike an appropriate balance between principles and outcomes based regulation and prescriptive regulation?

Consistent with the principles of good regulation, regulation should ideally be outcomes focussed. In other words, the Parliament or the regulator sets the outcomes to be achieved and industry determines the most efficient and effective way to achieve those outcomes. The regulator, using a risk-based compliance framework, then audits compliance with the required outcomes.

While this is appropriate in many spheres of regulation, there is also an argument for less outcomes focussed and more prescriptive regulation in domains were the industry is immature and seeks more guidance from government regarding how to meet government’s expectations.

In the case of hearing services, the regulation evolved as a response to the involvement of the private sector in the delivery of services that were previously the exclusive domain of the government.

In 1997, when the regulation was first introduced, the risk to government and to clients was higher because the industry was fragmented and its capacity was unknown. At this point in time, more prescriptive legislation was appropriate.

In the 15 years since the commencement of the scheme, the industry has changed significantly and some theoretical risks have not been realised.

As such, the legislation needs to become less prescriptive and more outcomes focused. To some extent, this is already occurring.

For example, changes that took effect on 1 July 2012:
  • remove a number of the more prescriptive requirements relating to practitioners and place more reliance on professional bodies to oversee qualifications and continuing professional development
  • remove requirements that a service provider seek approval from the OHS for a new site at least 30 working days prior to the provision of services for that site. This has been replaced with a requirement that the service provider notify new sites and site closures to the OHS. This has replaced a more cumbersome approvals process with a simpler notification process.

However, in other areas, outcomes based regulation appears to have been superimposed over existing prescriptive requirements.

For example, the Hearing Rehabilitation Outcomes for Voucher Holders details 9 outcomes to be achieved by service providers yet it still includes 29 detailed results that must be documented. Further, the Hearing Rehabilitation Outcomes for Voucher Holders document exists in parallel with the service provider contract, the schedule of service items and the Rules of Conduct which continue to impose a range of prescriptive conditions.

In summary, there is potential to continue the work that has already commenced by the OHS to replace, where possible, prescriptive requirements with more outcomes focused regulation.
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G. Does the regulatory scheme include any examples of inconsistencies, overlapping regulation, redundancies or excessive regulatory coverage or excessive reporting requirements?

The hearing services scheme includes a number of examples of overlapping, inconsistent, redundant and excessive regulation.

Two examples are described below.

Example A – Records

A significant focus of the regulation is on record keeping by service providers.

The concern is that:
  • it is not always clear why certain records are being required to be created and kept. It is important to understand the reasons for the requirements because many of the records that are required to be kept are for the purposes of the scheme specifically, and would not otherwise form part of the documentation kept by the practitioner in the course of their usual business. Given the administrative burden posed by record keeping requirements, it is therefore important that the purpose and objectives are clear
  • there is no hierarchy of requirements relating to record keeping. It is not clear what records are critical to the scheme (and will be audited by the OHS) and which records are desirable, but subject to clinical judgement and discretion of the practitioner
  • the legal status of the records is not clear nor is the interaction with health records legislation
  • there are varying record keeping requirements characterised in different ways across different pieces of regulation. Some record keeping requirements are expressed as conditions of contract, some are embedded in claiming criteria (in the Schedule Service Items), some form part of the Deed, and some are expressed as ‘results that must be documented’ for the purposes of the Hearing Rehabilitation Outcomes for Voucher Holders.
In addition to the general requirement to keep records, the Rules of Conduct also contain some specific record keeping requirements. For example, the service provider must keep in its records: written evidence that the client has made an informed decision regarding the choice of hearing device; and a copy of the quote signed by the client
  • the contract:
    • defines records as, in summary, any records, information data or documents about clients that is created or maintained for the purposes of the rules of conduct or a contract with the Commonwealth. It is unusual that this identifies records as being created for the purposes of two particular parts of the regulation and not for all of the regulation
    • provides that all intellectual property in the records vests in the Commonwealth. It is not clear why this is necessary or what purpose this serves
    • provides that the service provider must keep all records for 7 years. This is consistent with requirements in relation to health records more broadly but the interaction with health records legislation is unclear.

Overall, there is a complex web of record keeping requirements spread across multiple documents, all of which are subject to change from time to time. There is significant potential to clarify and streamline the record keeping requirements.

Example B – Provision of false and misleading information

One example of overlapping regulation is the requirement that the service provider must not provide false and misleading information to the Commonwealth.

This basic requirement is located (in slightly different terms) in 6 different parts of the regulatory scheme:
  • section 23 of the Hearing Services Administration Act 1997 provides that a payment to a service provider is subject to a condition that a false or misleading statement has not been made by, or on behalf of, the entity in connection with a claim for the payment
  • section 6 of the Hearing Services Providers Accreditation Scheme 1997 provides that a decision to accredit an entity is subject to a condition that the entity must not provide false or misleading information to the Commonwealth in connection with the accreditation scheme or the provision of hearing services to voucher holders.
  • clause 8.1 of the service provider contract requires that the service provider warrants that all information that has been, or will be, provided to the Commonwealth is, or will be, correct, complete and not misleading in any respect
  • clause 14 of the service provider contract provides that the service provider must not provide the Commonwealth with false and/or misleading information (and explains this in some detail)
  • clause 39.4 of the contract provides that the service provider acknowledges that under section 137.1 of the Schedule to the Criminal Code Act 1995 giving false or misleading information to the Commonwealth is a serious offence
  • the instrument of accreditation provides that it is a specified condition of accreditation that the service provider “does not provide false or misleading information to the Commonwealth in connection with the Accreditation Standards Scheme or the provision of hearing services to voucher holders”. This directly duplicates a condition that is imposed through delegated legislation (section 6 of Hearing Service Providers Accreditation Scheme 1997).
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Further, should a service provider breach the requirement not to provide false and misleading information to the Commonwealth, they would at once be breaching:
  • section 6(5) of the Hearing Service Providers Accreditation Scheme 1997
  • three terms of the contract (clauses 8.1, 14 and a condition of accreditation)
  • a condition of accreditation (expressed both directly through the Hearing Services Administration Act 1997 and as a separate discrete condition imposed through the instrument of accreditation)
  • the Criminal Code Act 1995.

The consequences of such non-compliance may be:
  • the Commonwealth conducting an investigation, if the false or misleading information is relevant in relation to accreditation or entry into the contract (as provided for in clause 12 of the contract)
  • cancellation of accreditation
  • termination of the contract (under clause 30 of the contract)
  • reimbursement for any amount paid to the service provider (clause 15 of the contract)
  • prosecution for a criminal offence under the Criminal Code Act 1995.

While a range of regulatory responses to non-compliance is generally a positive aspect of a regulatory scheme, the concern in this instance is that essentially the same conduct is prohibited in slightly differing terms in 5 different instruments, all with different consequences.

In an ideal regulatory environment the prohibited conduct would be comprehensively addressed in one location (i.e. in one instrument, be it delegated legislation or the contract) and a range of regulatory responses would be available under that one instrument.

A very similar situation exists in relation to:
  • professional standards
  • advertising
  • clinical records.

H. Are there transparent and consistent procedures for making decisions under the legislation and for making any delegated legislation?

An unusual aspect of the scheme is the very wide range of points at which regulation can be applied and adjusted.

For example:
  • there is no clear hierarchy of requirements with an associated hierarchy of parliamentary oversight or delegation. The same rule, or ongoing obligation imposed on the provider, could be set through:
    • a delegated instrument that is signed by the Minister and subject to disallowance by Parliament (for example, the Rules of Conduct)
    • included as a condition of accreditation. Conditions of accreditation are at the discretion of the relevant delegate in the OHS and may vary between providers (but in practice do not)
    • included as a condition of the contract or Deed which is developed within OHS in consultation with industry
    • included as a required outcome in the outcomes document (the Hearing Rehabilitation Outcomes for Voucher Holders) which is referenced in the contract and described as a standard but appears to be an administrative document
    • included as an element of a service item which is a schedule to the contract and can be amended and updated by OHS staff from time to time
  • there is no pattern or logic to the associated reconsideration and review rights.
For example, a provider may request reconsideration of a condition of accreditation and may also seek review by the Administrative Appeals Tribunal (AAT). However, the very same condition (when it appears in the contracts – which it does) is obviously not subject to reconsideration or review by the AAT.

The Hearing Services Administration Act 1997 also provides that any decision made by the Minister under the Rules of Conduct is subject to reconsideration by the Minister and review by the AAT (sections 29 and 35). It is not entirely clear which of the Ministerial actions described in the Rules of Conduct are ‘decisions’ for the purposes of reconsideration and review. Top of Page