Medical lobby set to lose veto power over who runs key regulator

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Australia’s peak medical lobby group is set to lose its veto power over who runs a key regulator as part of efforts to restore public confidence in the integrity of Medicare following a landmark review of non-compliance and fraud in the $38 billion system.

The federal government introduced legislation in parliament this week that would strip the Australian Medical Association – a union that represents about a third of the country’s doctors – of its say over who is appointed as director of the Professional Services Review (PSR).

Assistant Health Minister Ged Kearney said the AMA’s veto power was inconsistent with public expectations and undermined confidence in the regulator’s independence.Credit: Alex Ellinghausen

The PSR is responsible for reviewing the Medicare billing practices of 150,000 health professionals. However, it examines only about 100 cases of fraud and inappropriate billing every 12 months – just shy of 0.07 per cent of those it monitors.

When introducing the bill, Assistant Health Minister Ged Kearney said the AMA’s veto power was inconsistent with public expectations and undermined confidence in the regulator’s independence.

“This veto power has also never been exercised, raising further questions of the need for this requirement,” she said.

“Given the potential conflict between the PSR’s objective to safeguard Medicare and the AMA’s role in representing the interests of medical practitioners who may be subject to PSR review, it is appropriate for the veto power to be removed.”

The bill acts on the recommendation of health economist Pradeep Philip, whose review of the Medicare system was published last month following reports in this masthead that billions of dollars were leaking from the system each year due to non-compliance, errors and fraud.

Philip found Medicare was so poorly structured and loosely scrutinised that it was no longer fit for purpose, was haemorrhaging up to $3 billion a year in waste, and had left “the gate wide open” to fraud.

He recommended the government invest in a continuous monitoring system that could detect non-compliant payments in real-time to restore Medicare’s integrity.

He also said the AMA’s ability to veto who was appointed as the regulator’s director was an “anachronism” that should be removed as part of modernising the system.

“The positioning of the AMA as a professional body who can veto the appointment of a PSR director no longer reflects the fact that there are a range of professionals who will be referred to PSR. Either all professions should be engaged and involved in director appointment decisions, or no professional bodies should be involved,” Philip said in his report.

“Notwithstanding the views of the AMA, I suggest this is a power that won’t be missed (as it has never been exercised, to date, as confirmed by the AMA).”

AMA president Professor Steve Robson said he was disappointed at the proposed removal of the group’s power.

“The AMA’s role has been widely seen as essential in the past, particularly in helping to ensure confidence in the PSR among the profession, and the Philip review found no evidence that the involvement of the AMA in relation to PSR appointments has in any way interfered with its independence or impacted on its decision-making,” he said.

“The reality is that it never vetoed any selections. The AMA has worked collaboratively with the Department of Health and the PSR to ensure that it has the right expertise and fair and equitable processes to ensure that medical practitioners get a fair and just hearing.”

Robson said unless there was strong consultation with doctors about the PSR’s operations, it would “become just another regulator with little regard for the peer-review process”.

But Philip’s review said the decision could enhance the sector’s perception of the PSR. He also suggested a second-in-charge associate director role should be introduced to manage any conflicts of interest and workloads.

Kearney said this week that the PSR had an important role in protecting the integrity of both Medicare and patients in the community.

The government also plans to remove a legislated requirement for the PSR to engage with stakeholder groups before issuing a notice to produce documents during an audit.

“While the Philip review found that most health professionals are well-meaning and protective of the health system, it also noted that changes are needed to modernise the compliance system underpinning Medicare to ensure it remains rigorous and effective,” she said.

“These changes will remove potential conflicts of interest to enhance public perceptions of the PSR scheme and ensure the PSR process can operate with impartiality and independence.”

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