Medicare Shared Debt Recovery Scheme

April 2019

Did you know that practice owners may be liable for Medicare debts owed by doctors within your practice, under the new debt recovery scheme?

To date the liability for a Medicare debt has been with the individual practitioner, except in cases where another party has engaged in fraud. However, from 1 July, where contractual or other arrangements exist between a practitioner and an employer or corporate entity, both may be held responsible for the repayment of the debt.

The Shared Debt Recovery Scheme will be part of the Medicare audit process. An audit is a factual assessment of whether a claim for a Medicare benefit was correctly made.

When a practitioner is first contacted about an audit, they will be asked if they would like to be considered for a shared debt determination.  This means that the practitioner will be asked to not only produce documents in relation to the services claimed, but also provide information about relevant employment, contractual or other financial arrangements.

A shared debt determination is the decision of the audit officer about whether there is an audit debt, whether it should be shared between the two parties and what the split should be.

The current proposal is that the standard split would be 65% to the practitioner (the primary debtor) and 35% to the practice (the secondary debtor), but this may change.

Cutcher & Neale Advice: What does this mean for you?

Practices, corporate entities and hospitals have an increased role in the billing of Medicare Benefits Scheme (MBS) services on behalf of individual practitioners. Practitioners may have given up control of their Medicare billing and more frequently the billing functions are centralised or delegated to non-health practitioners within organisations.

This can lead to false or misleading statements (Medicare claims) which occur where:

  • Fraud is involved
  • Administrative errors in the billing process occur
  • Poor written and verbal communication occurs between the primary and secondary debtor
  • Poor or non-existent systems and procedures in relation to billing are in place
  • Both the primary and secondary debtors fail to remain up to date in relation to Medicare billing requirements

As practitioners and practices, corporate entities and hospitals (as applicable) have a responsibility to ensure MBS claims are made correctly, it is important that:

  • All parties establish open and transparent communication to ensure billings are claimed correctly
  • Providers ensure clinical notes are adequate to explain the reasons for billing certain items
  • Best practice billing processes are adopted by practice entities
  • All parties remain up to date in relation to Medicare billing requirements
  • Adequate procedure manuals exit that detail the delegated authority to bill Medicare

A key document in medical practices is the Service Agreement between the medical practitioner and the organisation (e.g. medical practice) which details amongst other things responsibilities and obligations of the parties in relation to billing. It would be prudent therefore to review these agreements to consider the potential impact of the Medicare Shared Debt Recovery Scheme.

If you have any further questions about the Medicare Shared Debt Recovery Scheme then feel free to get in touch.

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