Shared debt recovery scheme - fact sheet

The Shared Debt Recovery Scheme applies when the Department of Health conducts post-payment Medicare compliance audits.

Page last updated: 30 May 2019

The Shared Debt Recovery Scheme (the Scheme) commences under the Health Insurance Act 1973 (Health Insurance Act) on 1 July 2019. The Scheme enables the Commonwealth to hold both a practitioner (primary debtor) and another party (secondary debtor) responsible for repayment of compliance debts, arising as a result of incorrectly claiming Medicare benefits, through the making of a shared debt determination.

Primary responsibility for correct claiming appropriately rests with the health practitioner providing the Medicare service. The practitioner is the only person who can determine that a Medicare service has been delivered in accordance with the requirements of the Medicare Benefits Schedule (MBS). A practitioner is granted a provider number to allow their patients to access these benefits on the expectation that these services are billed correctly to Medicare.

The Scheme was introduced because Medicare billing is often delegated to non-practitioners, administered through centralised billing areas and can be influenced by organisational processes and policies. In some instances this has led to incorrect billing practices.

Organisations submitting claims, directly or indirectly receiving Medicare benefits and undertaking administrative duties related to Medicare claiming, also have an obligation to ensure that claims which are submitted are not false or misleading, based on the information they have available.

The Scheme is designed to encourage practitioners and organisations to work together to minimise incorrect billing, respond to Medicare audits and promptly repay debts arising from incorrect Medicare billing.

How does the Scheme work?

The Shared Debt Recovery Scheme applies when the Department of Health (the Department) conducts post-payment Medicare compliance audits.

The Department’s audit process is an evidence-based assessment of a provider’s compliance with relevant requirements in relation to the payment of a Medicare benefit and is conducted in accordance with the Health Insurance Act. Audits are not undertaken to determine the clinical appropriateness of the service delivered to the patient.

In most cases audits are conducted to determine whether all elements of an MBS item for which benefits have been paid, have been met.

Formal audit processes are commenced with a request for documents related to specified services. The Department may also issue a notice to produce documents where further information is required.

If a practitioner under audit informs the Department that they are in an employment, contractual or other relevant relationship with another party (the potential secondary debtor) and requests consideration of a shared debt, the audit officer will contact the other party and notify them that they are a potential secondary debtor. The audit officer may request documents from both parties in relation to the debt, the contractual arrangement and other documents relevant to determining whether to share a potential debt.

Before making a shared debt determination, the Department must first provide written notice that they are considering making a shared debt determination, including the amount of the debt, the proportion of the debt that will be recovered from each party and the reasons, and share any documents provided in relation to the debt. Each party will have the opportunity to make submissions on whether the debt should be shared and the percentage of debt that should be applied to each party.

After considering all the information received, the Department may make a shared debt determination.

In what circumstances will the Scheme apply?

In order for a shared debt determination to be made, the following three criteria must apply:
  1. There is a recoverable amount (a debt) as a result of the making of a false or misleading statement
  2. There is a relationship between the primary (practitioner) and secondary (organisation) debtor; and
  3. The secondary debtor could have controlled or influenced the making of the false or misleading statement, obtained a direct or indirect financial benefit from the making of the false or misleading statement, and/or there are other factors that make it fair and reasonable for a shared debt determination to be made.
The Scheme will not apply to:
  • claims adjustments that occur routinely as part of health practice, where a practitioner alerts the Department of Human Services to an error to correct the claims record;
  • a voluntary acknowledgement by a practitioner of incorrect payments such as after receiving a letter asking them to review their billing or following a targeted campaign;
  • debts arising as a result of inappropriate practice following referral to the Professional Services Review;
  • debts arising as a result of a false or misleading statement which can be shown to have been made by someone other than the practitioner; or
  • debts arising where one party has, without knowledge of the other, engaged in criminal conduct (fraud) in relation to Medicare claims or billing.

How is the debt shared?

The Minister for Health has prescribed, in a legislative instrument, a default percentage that may be applied to the primary debtor (65 per cent) and secondary debtor (35 per cent).

The Department must also consider whether it would be fair and reasonable to set a different percentage to the default. In making this decision the decision-maker may consider:
  • whether there were any arrangements between the parties for apportioning the benefits paid; and if so, what proportion of the benefits paid for the services were received by the primary debtor and the secondary debtor; and
  • what influence or control the secondary debtor may have had over the billing for the services under audit.

Legislation governing the Scheme

  • Health Insurance Act 1973
  • Health Insurance (Medicare Compliance Shared Debt) Instrument 2019
If you have any questions or queries about the scheme please refer to the Frequently Asked Questions.

If you require further assistance please contact the Department of Health at HC.consultation@health.gov.au.

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