Shared Debt Recovery Scheme

August 2019

The Department of Health have introduced the Shared Debt Recovery Scheme which came into effect from 1 July 2019 (for services provided from 1 July 2018).

The Shared Debt Recovery Scheme gives authority to the Department to hold both the primary (practitioner) and secondary (the medical practice) debtor responsible for any repayment to Medicare of debts, as a result of incorrectly claiming Medicare benefits, through the making of a shared debt determination.

Whilst the primary responsibility still rests with the practitioner, the department recognisesthat 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 a medical practice.

How does it work?

The Shared Debt Recovery Scheme applies when the Department of Health conducts post-payment Medicare compliance audits. The purpose is to identify how any Medicare billing discrepancies occurred, and how to share any potential debts between parties. Historically, practitioners would have been pursued for the repayment of debts.

When will it apply?

In order for a shared debt determination to be made, the following three criteria must apply:

  • There is a recoverable amount (a debt) as a result of the making of a false or misleading statement
  • There is a relationship between the primary (practitioner) and secondary (organisation) debtor; and
  • 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?

In the first instance the Department is required to apply the default prescribed percentage (65% applied to the primary debtor and 35% applied to the secondary debtor).

For example; if the default position is applied by the Department for a disputed standard scheduled fee of $38.20, $24.83 would be applied to the practitioner and $13.37 to the medical practice.

It is important to keep in mind that the Department have advised that they may consider differing percentages when making their decision based on; arrangements in place, billings and control/influence from the secondary debtor.

Steps Going Forward

It is crucial to have procedures around billings. Ensuring critical steps are taken to minimise risk and protect practices to ensure the Practitioner plays the role of approving claims within the billing process.

Service fee arrangements should be reviewed and possibly amended to ensure that if an MBS audit occurred and monies had to be repaid then the primary practitioner would remain responsible for repayment of monies where appropriate.

It is also recommended to have clear, documented communications between the practitioner and the secondary debtor, minimising the potential for incorrect billing procedures and possible debts arising.

Cutcher & Neale are reviewing their internal processes and procedures to safeguard practices and the practitioners from bearing undue risk associated with Medicare billings. Please contact our office on (02) 4928 8500 or cnmail@cutcher.com.au for further information.

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Topics: Accounting, Employees, medical accounting, doctor, medicalpractice

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