Medicare-annual-report-0506 - Services Australia · Web viewfor potential recovery action totalling $4.85 million and reviewed the practice profiles of over 500medical practitioners

Medicare Australia Annual Report 2005 – 2006Prepared by: Media, Communication and Government Relations Branch

Edited by: Puddingburn Publishing Services

Designed by: Cre8ive

Printed by: National Capital Print

Audited by: Australian National Audit Office

Contact: Kirk Coningham, Manager Media, Communication and Government Relations Branch

Address: Medicare Australia

134 Reed Street

Tuggeranong ACT 2901

Phone: (02) 6124 7829

Fax: (02) 6124 7416

Website: www.medicareaustralia.gov.au>About Medicare Australia>Media room>

Publications>Annual Report

© Commonwealth of Australia 2006

ISSN 0313 1041

This work is copyright protected. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without the written permission of the Medicare Australia.

Requests and enquiries about reproduction and rights should be addressed to the Manager, Media, Communications and Government Relations Branch, at our postal address:

Medicare Australia

PO Box 1001

Tuggeranong DC ACT 2901

ABN 75 174 030 967

Section 01IntroductionLetter of transmittalThe Hon Joe Hockey MP

Minister for Human Services

Parliament House

CANBERRA ACT 2600

Dear Minister

It is my pleasure to present to you Medicare Australia’s Annual Report for 2005–06 as required by section 70(1) of the Public Service Act 1999 for your tabling in Parliament.

This report has been prepared in accordance with the Requirements for Annual Reports, approved on behalf of the Parliament of the Joint Committee of Public Accounts and Audit as required in section70(2) of the Public Service Act 1999.

Yours sincerely

Catherine Argall PSM

11 September 2006

Chief Executive Officer’s ReviewThe 2005–06 financial years was one of the most challenging in our 30 year history. It was a year of transition that has seen us emerge leaner, more focused and better equipped than ever to deliver current and future government services to the Australian people.

The shift from the Health Insurance Commission (HIC) to Medicare Australia in October last year introduced significant changes to our governance arrangements:

from answering directly to a board to answering to the Minister through the Secretary of Human Services

from the accountability framework of the Commonwealth Authorities and Companies Act 1997 (CAC Act) to the Financial Management and Accountability Act 1997 (FMA Act) and

from being employed under the (then) Health Insurance Commission Act 1973 (HIC Act)to employment under the Public Service Act 1999.

While effecting this major transition seamlessly, with no interruption to services, we also faced several other considerable challenges, many of which were outlined in Minister Hockey’s Statement of Expectations delivered to me at the end of October last year.

Our major challenges for the year were to:

live within our means and invest in growth and future service development.

Our overarching purpose has remained constant – improving Australia’s health through payments and information – but this year the Minister also required that we maintain a high level of awareness of the government’s broader reform agenda and ‘be in a position to respond fully to government policy directions and objectives’.

Responding to these policy directions while maintaining Medicare Australia’s enviable reputation for great service delivery has been a key focus.

Managing within our meansWe restructured our national operations to ensure we were operating within agreed budget limits. The budget situation was such that large staff cuts were as necessary as they were painful. To ensure uninterrupted services to Australians, staffing levels in the states were maintained while we shed nearly 400 positions from our national office. The reduction in positions was carefully managed, with

most ongoing employees voluntarily transferring to other areas within Medicare Australia or the wider Australian Public Service (APS). Only 40 redundancies were required.

We also enhanced our budget monitoring systems and revised project governance and internal costing procedures. The governance arrangements and the tough budget decisions delivered immediate results. The Department of Finance and Administration had approved a loss of $19.7 million for this financial year. With strong financial management we reduced this to a once-off loss of $6.78 million.

Improving the customer experienceWhilst getting our budget under control, we also rose to the challenges outlined by the Minister, enhancing the services we provide to the Australian people and reducing the times they need to spend in our offices.

Specifically, the Minister asked us to reduce the number of times Australians needed to visit Medicare offices, to reduce waiting time and improve online options while maintaining privacy and security.

We responded to these customer expectations by revising our Service Charter. This Charter builds on our focus of delivering great service to the Australian people – whether they are the general public, health professionals or our colleagues within Medicare Australia and more broadly, the APS. Our promises to the public reflect what they have told us is important to them. It is also what we expect from one another in the workplace: ‘make it easy for me’, ‘get it right’, ‘be genuinely interested in me’, and ‘respect my rights’. To keep us honest, our promise to deliver was linked to a new telephone feedback line and a set of strong performance indicators which we made available to the public.

The revised charter complemented changes to corporate branding, signage and Medicare office design, presenting a new look Medicare and introducing Family Assistance services.

The office makeovers include comfortable seating, better queue management systems and focus on sit-down client interaction which is more comfortable and personal. Our promise to serve the public more quickly was achieved with 98.6 per cent of customers served in less than 10 minutes with an average queue wait time of 1 minute and 57 seconds.

New services provide more choice and flexibility for families who can now access Family Assistance services, including maternity payment and family tax benefit, at their local Medicare office.

As at 30 June 190 offices had rolled out Family Assistance services with the remaining 48 due to be rolled out by the end of 2006. The roll out is part of the Department of Human Services’ (DHS) ambition to incorporate a whole-of-government approach in the delivery of services across the country.

We have also addressed the Minister’s focus on better serving Indigenous Australians. For example, we opened a new and improved regional office in the Northern Territory, which is now supported by 15 staff. Where Indigenous Australians couldn’t come to us, we went to them. Medicare staff, in close cooperation with territory health and other DHS agencies, travelled to remote communities to promote better health and the use of Medicare. Medicare services are now also provided through 49 Centrelink sites throughout the Northern Territory, Western Australia and Queensland. These efforts have built on recent years’ success, with approximately 98 per cent of Indigenous people in the Northern Territory now enrolled in Medicare; including an average of one hundred Indigenous babies a month.

During the year we also worked with the Australian Tax Office (ATO) on a joint online initiative to make the Medicare tax statement available as an ‘on-demand’ service for all users of the Tax Office’s e-tax application. Each year more than 380,000 letters are generated through requests for the

Medicare tax statement. This new service requires no paper or postal services and delivers the tax statement directly into the tax payer’s returns.

We expect our national network and reputation will also be a major asset in the roll out of the health and social services access card. The access card will enhance the customer experience in many ways, including consolidating and replacing 17 different cards currently in government service. We have worked closely with our colleagues in DHS to help prepare the way for the new card. Our smartcard rollout in Tasmania provided vital information that will be applied in the national rollout. We have also been closely involved in advising the Minister on a broad range of issues relating to the card.

Aged CareAs an indication of our growing reputation for the management of health payments, Medicare Australia assumed responsibility for the aged care payments function from the Department of Health and Ageing (DoHA) in October 2005. In the 2005/06 financial year, 32,891 aged care claims were processed, resulting in a total of $3.9 billion in payments.

During the transition process, approximately 120 staff transferred to Medicare Australia from DoHA. An independent review conducted by Price water house Coopers found that full business continuity was maintained, with no disruption of services to aged care providers.

Forms & lettersAnother key area of concern for the Minister was in improving our communication with the public, particularly through forms and letters. Our audit of forms and letters showed annual volumes of about 17 million forms and more than 20 million letters. While the overhaul task is daunting, we made good progress through the year:

we worked with Centrelink to introduce a vastly simplified new born enrolment form, removing duplication of 250,000 forms and relieving some of the administrative stress on new parents

we also combined seven dental provider application forms into one, extracting red tape from some 250,000 annual applications

the introduction of new online capacity for card replacements and address change requests has the potential to remove three million hard copy forms per year.

Our attack on the red tape addresses the first promise in our new service charter, ‘make it easy for me’.

Another change to our forms was designed to save lives rather than trees.

All Medicare claim forms now incorporate organ donor registration options.

Online servicesAnother means via which we are delivering better service, and reducing the amount of time Australians need to spend in our offices, is through better use of online technology.

The 05-06 financial years saw some major advances in the Medicare Australia services people could access online. As at 30 June a range of Medicare services, including the capacity to check safety net balances, organ donor registration details and children’s immunisation history, could be accessed through the Internet 24 hours a day, seven days a week.

Better use of emerging technology has also allowed us to expand the Medicare services available online to doctors. Almost 19 per cent of services were claimed online — up from 7.4 per cent last year.

Significant improvement has been made to our online claiming service for pharmacists. We are expecting steady growth in 2006-07 with 500 pharmacists already indicating their interest in registering.

Program integrityThis year we delivered $17 billion in payments through Medicare and the Pharmaceutical Benefits Scheme (up 5.7 per cent from the previous year) and over $26.5 billion in total benefit payments. While the majority of health service providers and the public are honest, any percentage of fraud represents an unacceptable loss to the Australian taxpayer.

We have a significant educational emphasis in place to support voluntary compliance. For the small number of people who attempt to defraud their fellow Australians, we have strategies to detect, investigate and refer for criminal prosecution.

This year we increased new investigation cases by 68 per cent and identified 5,288 cases (including 1,137 medical practitioners, 49 pharmacists/suppliers, and 297 members of the public) for potential recovery action totalling $4.85 million and reviewed the practice profiles of over 500medical practitioners.

Planning for the futureMedicare Australia is changing as the range of services we deliver continues to evolve. We will continue to focus on delivering payments and information services to the public; however, our reputation and our national network ensure we are well placed to broaden the range of services we deliver. We have seen this with the roll out of Family Assistance and new functions such as Aged Care. We look forward to continuing to play this role on behalf of government into the future.

To prepare ourselves to meet these challenges we started work in May on an important organisational project that will consider our approach to managing change. While we can never be fully certain about the challenges we are likely to face, we do know that the range of services we deliver are likely to increase, and that some of our current services will be offered in different ways. We also know that to continue our strong reputation for customer service, our staff will require training and support to meet these challenges, and that extra demands will be placed on our infrastructure in our branches, contact centres and in national office.

This work will continue into 2006-07 and will result in a business transition program for Medicare Australia aimed at ensuring we are prepared to meet the new demands of government. The program will also help us clearly define the future capabilities we need to continue to deliver great service, and enable Medicare Australia to be adaptable and responsive to new priorities.

Catherine Argall PSMChief Executive Officer

Section 02About Medicare AustraliaOur organisationMedicare Australia plays an integral role in the Australian health sector by administering a wide range of health-related programs, including Medicare, the PBS, Family Assistance and the Australian Organ Donor Register, on behalf of the Australian Government.

Medicare Australia processes more than 450 million transactions each year and is responsible for paying over$26.5 billion worth of benefits to the Australian public and health care providers.

Medicare Australia is committed to providing great service to all Australians and to improving access to health programs.

We maintain the highest privacy and security standards as well as a world class program that detects and prevents fraud and inappropriate standards.

Our people shape our destiny. Planning and investing in building our capabilities is critical for our organisation to grow and be recognised as a great service provider. Medicare Australia’s number one priority is to deliver great service to all Australians, health professionals, private health bodies, state and territory health bodies and other Australian Government departments and agencies.

As one of the largest and most efficient health benefit and information processing agencies in the world, Medicare Australia has a connection with every Australian resident, doctor, pharmacist, and members of the health sectors.

Our purposeOur purpose remains as ‘working together to improve the health and well-being of Australians by delivering information and payment services’.

To achieve our purpose, we work collaboratively with our Department of Human Service (DHS) partner agencies, our external stakeholders, health services peak bodies and health practitioners.

The establishment of Medicare AustraliaOn 1 October 2005, the Human Services Legislation Amendment Act 2005 commenced. Along with resultant amendments to other legislation, such as the HIC Act becoming the Medicare Australia Act 1973, the HIC became Medicare Australia.

As the HIC, we operated as a statutory authority under the CAC Act. We had our own governance board, employment framework and a legal identity that was distinct from the Commonwealth.

As Medicare Australia we became a prescribed agency under the FMA Act, and a statutory agency under the Public Service Act 1999.This essentially meant that we moved closer to government to ensure that our daily operations delivered the outcomes that the government and people of Australia expect.

The board of the HIC was dissolved and Medicare Australia’s CEO became directly responsible to the Minister for Human Services, through the Secretary to the DHS, for ensuring the proper and effective performance of Medicare Australia’s statutory functions which remained largely unchanged.

The change was achieved within six months of the Minister for Human Services’ announcement on 20 April 2005of the government’s decision, which was in response to the recommendations of the review by John Unrigs AC into governance arrangements for statutory authorities and government business enterprises. In the lead up to 1October 2005, the HIC worked in partnership with the DHS to effect the change through:

the introduction and passage of legislative amendments the enhancement of financial systems to ensure MA Act compliance a restructure of human resources systems to effect the transition to the Public Service Act 1999 corporate governance changes the redesign of signage, our website and documents to reflect the name change to Medicare

Australia and a communication program that had a particular focus on internal staff information and training.

A comprehensive consultation process took place with the DHS, the APS Commission, the Department of Employment and Workplace Relations, and the Department of Finance and Administration with the aim of minimising disruption to service delivery.

A project-management approach was adapted to work through the change with a project team established to manage and coordinate the transition and assess its impact. The success of this approach was highlighted by the fact that the change took place without negative impact on our service delivery.

The Department of Human Services (DHS)OverviewThe Department of Human Services (part of the Finance and Administration portfolio) was established on 26October 2004 to improve the development and delivery of Australian government social and health-related services to the Australian people.

The department is responsible for ensuring the government is able to get the best value for money in service delivery while emphasising continuous service improvement and a whole-of-government approach.

The MinisterThe Minister for Human Services in the forty-first Parliament is the Hon Joe Hockey MP, Member for North Sydney since 1996.The Minister for Human Services is responsible for the administration of the following legislation:

Australian Hearing Services Act 1991, except to the extent that it is administered by the Minister for Health and Ageing

Child Support (Assessment) Act 1989, insofar as it relates to the exercise of the powers and functions conferred on the Child Support Registrar under the Act

Child Support (Registration and Collection) Act 1988, insofar as it relates to the appointment of the Registrar and the exercise of the powers and functions conferred on the Child Support Registrar under the Act

Commonwealth Services Delivery Agency Act 1997 Health Insurance Commission Act 1973 renamed Medicare Australia Act 1973 on 1 October 2005.

Human ServicesHuman Services comprises the following five entities:

1. The Department of Human Services (DHS), which consists of the core department, the Child Support Agency (CSA) and CRS Australia.

The core department’s role is to direct, coordinate and broker improvements to service delivery through the six Human Services agencies (the Child Support Agency, CRS Australia, Centrelink, Medicare Australia, Australian Hearing and Health Services Australia).

The Child Support Agency’s role is to ensure that children of separated parents receive financial support from both parents.

CRS Australia’s role is to assist people with an injury or a disability to get a job or return to work by providing individualised vocational rehabilitation. CRS Australia also helps employers to keep their workplaces safe.

2. Centrelink, which delivers a range of government payments and services for retirees, families, carers, parents, people with disabilities, Indigenous people, and people from diverse cultural and linguistic backgrounds and provides services at times of major change.

3. Medicare Australia, which administers a range of health and payment programs, including Medicare, the PBS, Family Assistance Office services, the Australian Organ Donor Register, the Australian Childhood Immunisation Register and Aged Care Payments to approved aged care providers.

4. Australian Hearing, which helps people manage their hearing impairment so they have a better quality of life. Australian Hearing provides a full range of hearing services for children and young people up to the age of 21, eligible adults and aged pensioners, and war veterans.

5. Health Services Australia, which is a government business enterprise established in 1997 focusing primarily on providing occupational health, safety and medical assessments.

Structure of the Department of Human Services, 30 June 2006

Our roleMedicare Australia administers a range of health and payment programs on behalf of the Department of Health and Ageing (DoHA), the Department of Veterans’ Affairs (DVA),the Department of Families and Community Services and Indigenous Affairs (FaCSIA), and the Department of Health Western Australia (DoHWA).

We manage claims processing and arrange for the payment of benefits for Medicare, which incorporates Medicare Australia Special Assistance, Broadband for Health, Veteran Treatment Accounts, the Visiting Medical Practitioner Program, the PBS and the Repatriation Pharmaceutical Benefits Scheme (RPBS).

We are responsible for maintaining the Australian Organ Donor Register, the Australian Childhood Immunisation Register and the National Bowel Cancer Screening Register.

There are a range of programs that relate to general practice that we manage including the General Practice Immunisation Incentives Scheme, the Practice Incentives Program, the Rural Retention Program, the General Practice Registrars’ Rural Incentive Payments Scheme and the Training for Rural and Remote Procedural GPs Program.

In addition we look after the Compensation Recovery Program, the Hearing Services Program (for the Office of Hearing Services) as well as facilitating Family Assistance payments in partnership with Centrelink, the ATO and FaCSIA.

We also administer community rebate and reimbursement schemes such as the Higher Education Contribution Scheme (HECS) Reimbursement Scheme and the government’s30% Rebate on Private Health Insurance.

Further information about the role and performance of each of these programs can be found in Section 4 of this annual report.

Program integrity and assurance and promoting complianceOne of Medicare Australia’s major objectives is to ensure that the benefits that we pay on behalf of the government are correct and that the health services supplied are appropriate.

Our program review function is responsible for preventing, detecting and investigating fraud and inappropriate practice. It does this by balancing education and compliance strategies aimed at service providers and members of the public who use Medicare Australia’s programs.

Information targeted at areas of known non-compliance is provided through face-to-face contact with program users, a range of information sheets and feedback letters to medical practitioners and pharmacists.

More general information designed to prevent fraud and inappropriate practice is provided through Forum (a magazine for medical practitioners) and Bulletin Board (a magazine for pharmacists). These quarterly publications, produced by Medicare Australia, are supported by other activities such as regular advertising and information provided online at Medicare Australia’s website.

Further information about Medicare Australia’s program review role and performance can be found in Section 4

Education and communication roleMedicare Australia has a range of communication tools to inform the public, customers and stakeholders about our services and programs.

Medicare offices provide a key venue for communicating with the Australian public. This is achieved through printed material such as posters, brochures and flyers, and information received from face-to-face interaction with our customer services officers. Media liaison and paid media advertising are used to communicate specific programs and services as the need arises.

In addition to Forum and Bulletin Board, which are designed to provide up-to-date information about our health programs, Medicare Australia also produces Mediguide, a yearly publication that contains detailed information for doctors about how to use Medicare Australia’s programs and services.

Direct mailing is also used to inform customers of changes to programs and services and the Internet remains a vital communication tool for both providers and consumers who are being encouraged to do more business with Medicare Australia online.

Our structureIn July 2005, our national office consisted of seven divisions, each headed by a general manager. A restructure was undertaken in November 2005to align the business with meeting its future challenges as an FMA Agency and to meet the Minister’s expectations.

Two deputy Chief Executive Officer (CEO) positions were filled and the five divisions remaining after their structures were placed in two main groups: the Finance, Governance and Customer Service Group and the Government Relations and Program Integrity Group.

In May 2006 a further alignment of the structure reintroduced a Program Management Division, giving focus to the management of Medicare Australia’s major programs. As at 30 June 2006, a general manager had not been appointed to the Program Management Division, thus the structures continue operated as detailed below:

Financial Management Group — Craig Dalzell Chief Finance Officer Budgeting and financial analysis Reporting Financial systems Policies and procedures Treasury Taxation Property and office services Security Purchasing Records management

The key outcomes for this financial year included introducing and advising on the governance changes necessary for Medicare Australia to operate under the FMA Act, improving the budgeting and forecasting systems to support the financial management improvements required, and finalising HIC records.

Program Management Division and Government Relations and Program Integrity GroupThe Program Management Division and Government Relations and Program Integrity Group comprised:

Medicare and DVA Branch Pharmaceutical Benefits Branch Associate Government Programs Branch Legal, Privacy and Information Services Branch and Media, Communication and Government Relations Branch.

The group managed Medicare, the PBS and other health and allied programs administered by Medicare Australia. The group monitored the performance of each program and developed administrative policy for existing programs and proposed Australian Government initiatives. It provided communications expertise covering all aspects of Medicare Australia business, as well as providing parliamentary support to the organisation. The group supported the organisation through the provision of legal advice on Medicare Australia programs, projects and human resource management issues. It also assisted Medicare Australia to maintain best practice standards of privacy and to comply with relevant privacy legislation. The group also collected, analysed and distributed statistical information relating to the programs administered.

Customer Services Division —Ellen Dunne, General ManagerCustomer Services Division was established in 2005 to support the core business of making payments and collecting and providing information. Through the states, this division is Medicare Australia’s gateway to the Australian public. Services and products delivered by the division support our customer service officers in Medicare offices across Australia. The division provided mainframe and other business system support, training and information tools. The state infrastructure that is part of the division creates the operational structure and environment through which service delivery occurs.

The division also has two service and support branches in the national office: the Channel Support and Development Branch and the Customer Service Support Branch.

Information Technology Services Division —Nic van den Berg, General ManagerInformation Technology Services Division provided and managed information technology services, including system applications, and worked closely with all areas to maximise Medicare Australia’s internal and outsourced information technology resources.

eBusiness and Development Division — David Trabinger, General ManagereBusiness and Development Division was established to strategically focus on improving the effectiveness of service delivery through eBusiness and online services. The division had responsibility for the development and delivery of Medicare Australia’s eBusiness initiatives.

Program Review Division (PRD) — Colin Bridge, General ManagerThe PRD was established to protect the public purse from fraudulent or inappropriate claims. This division worked to make the health care dollar go further by cooperating with medical professionals and the health industry to help them to interpret the Medicare and PBS schedules correctly and thus claim for their services appropriately.

Human Resources Branch— Carl Murphy, ManagerThe HR Branch worked closely with the Executive and other key stakeholders to develop and implement quality people management practices and initiatives. These enabled Medicare Australia to deliver the outcomes expected by government.

Audit and Risk Assurance Services Branch —Chris Byrne, ManagerThe Audit and Risk Assurance Services Branch (ARAS) provided independent and objective assurance on the adequacy and effectiveness of Medicare Australia’s internal control framework. ARAS also supported the Audit Committee’s review of Medicare Australia’s risk management and fraud control activities and the implementation of audit recommendations by management.

Business Strategy and Development Branch —Mark Garrity, ManagerThis branch was recently established to draw together the main business planning and business development areas of Medicare Australia. Its main roles are the strategic review, identification and development of new business opportunities for Medicare Australia (both in Australia and overseas) as well as the organisation’s governance, strategic planning functions and the financial and organisational modelling of new and current business. The branch will also provide assistance to Medicare Australia’s Executive on issues relating to longer-term planning, change implementation and new business opportunities.

State officesTo cater for Australia’s highly dispersed population; each state has a headquarters responsible for day-to-day operations, including the Medicare offices and contact centres.

During 2005–06, the state managers were:

New South Wales — Ralph Watzlaff Victoria — Greg Johnson Queensland — Sue Harrop Western Australia — Sandy Mamo South Australia and Northern Territory — Peter Altree Tasmania — Dr Peter Sexton.

Our senior executive top structure at 30 June 2006 appears on the following page.

Our relationship with other agenciesFrom 1 July 2005 to 30 September 2005 the HIC continued to focus on the delivery of services on behalf of the DoHA, DVA and FaCSIA.

Since the organisation became a statutory agency, under the umbrella of DHS, Medicare Australia has remained focused on the delivery of services to all Australians on behalf of its external stake holders. The organisation consults with industry peak bodies and health practitioners to ensure that the government’s policy objectives are effectively realised, while also considering the needs of health practitioners and customers.

Medicare Australia also embraced the opportunity to work closely with the DHS and its agencies to seek synergies, where possible, and achieve the most cost effective outcomes.

All of our activities are conducted within the Australian Government policy framework set by legislation and administered by the DoHA, DVA, and FaCSIA.

We actively contribute to policy development by providing information and feedback from our day-to-day operations.

Our funding arrangementsMedicare Australia reports to the Minister for Human Services within the Finance and Administration Portfolio.

Medicare Australia is primarily funded by direct appropriation through the annual budget cycle. Medicare Australia performs a number of services by agreement with other Commonwealth agencies and is funded for these activities according to an agreed pricing arrangement.

Medicare Australia is also funded for services performed under contract with non-Commonwealth Government entities including the Western Australian State Government and some services in countries on the behalf of the World Bank.

Direct appropriation (health and ageing outputs)Our relationship with DoHA is underpinned by a Service Level Agreement — the Strategic Partnership Agreement — and by a funding agreement — the Output Pricing Agreement.

This arrangement will be superseded with a Memorandum of Understanding (MoU) currently being developed between Medicare Australia and DoHA. The MoU will reflect the new working relationship Medicare Australia has with DoHA, now we are no longer operating under the Health and Ageing Portfolio.

Funding for health and ageing outputs, which represent a significant portion of Medicare Australia’s operations, is by direct appropriation. Our funding agreement with the government includes both fixed and variable amounts. The variable component is determined by the number of services and payments processed in any financial year. The revenue to be paid to Medicare Australia under this

arrangement is estimated to be $569.9 million in 2006–07, which is slightly higher than the $524.6 million received in2005–06. The estimate may change as a result of significant volume changes or new policy proposals approved in the budget context.

DVAMedicare Australia provides services to the DVA through the Service Level Agreement. The services provided are for the processing of claims for veterans’ treatments, including medical, hospital and allied health services. As with health and ageing outputs, the pricing structure for DVA services is based on a variable price per processed service, with fixed revenue covering related infrastructure costs. The estimated revenue to Medicare Australia under the Service Level Agreement for 2006–07 will be $16.0 million, which is slightly higher than the revenue received in 2005–06of $15.8 million.

FaCSIAMedicare Australia provides Family Assistance services through the Medicare branch office network on behalf of FaCSIA. Revenue associated with this program is an amalgam including a fixed amount from FaCSIA, and a variable amount based on the level of processing undertaken by Medicare Australia offices paid by Centrelink. The revenue Medicare Australia received for the provision of Family Assistance services under this arrangement in 2005–06was $8.6 million. Funding for2006–07 is also estimated at$8.6 million.

DoHWAThrough an agreement with the DoHWA, Medicare Australia has had a visiting medical practitioner fee-for-service payment and information system in place since April2000. This system provides public non-teaching hospitals in Western Australia with an intranet processing system to assess and pay invoices submitted by visiting medical practitioners providing services to public patients. Under the agreement, funding for 2005–06 and 2006–07 is estimated at $1.2 million per annum.

Other sources of fundingIn addition to service agreements, Medicare Australia also receives revenue through cost recovery arrangements and the provision of services to agencies mentioned above and other external sources. Medicare Australia received$18.6m in 2005–06 and is expected to receive $30.3m in revenue in 2006–07 from DoHA. The bulk of this funding relates to the delivery of the aged care payments function on behalf of DoHA which is covered under a Business Partnership Agreement. Medicare Australia also provides additional Family Assistance services on behalf of Centrelink. Funding for2005–06 was $2.9m and is estimated to be $13.1m in2006–07.

The chart below illustrates the main sources of funding for Medicare Australia in 2005–06.

The year in summaryKey achievementsThe rollout of extended Family Assistance services delivered through Medicare offices commenced in July 2005. At 30June 2006 extended services were available in 190 Medicare offices. The rollout is scheduled for completion to all 238 offices by December 2006. Further information on Family Assistance services can be found in Section 4 of this report.

In conjunction with the new Family Assistance services, Medicare Australia has implemented a new, exciting and modern design for Medicare offices. The new design incorporates a range of exciting features, including: electronic queue systems with comfortable seating arrangements for customer’s waiting, sit-down customer service delivery, refreshed corporate branding, cross-agency promotional capability and a self-service zone.

Customers in rural and remote communities in Northern Australia can now access Medicare Australia information and support via selected Centrelink Customer Service Centres and agencies. Under this initiative, complex enquiries are transferred to Medicare Australia’s 1800 Indigenous Access line by Centrelink staff. Further information about our Indigenous Access Program can be found in Section 3.

Medicare Australia implemented new flexible business hours during July and September 2006. In all, 193 offices now offer extended business hours in our CBD’s, large metropolitan and regional locations. This initiative builds on our move to Saturday business hours introduced in 114 locations across the country in August 2004. Medicare Australia customers now enjoy greater choice in convenience when accessing a Medicare office.

On 1 August 2005, Medicare Australia successfully implemented a new system to cater for Special Patient Contributions. This initiative resulted from an agreement between the government and the pharmaceutical industry that new generic medicines entering the PBS after 1 August 2005would be listed at 12.5 percent below the current benchmark price.

On 20 October 2005, Medicare Australia assumed responsibility for the aged care payments function. All transferring DoHA payments staff (approximately120 people) became Medicare Australia employees.

Since October 2005, people have been able to view their Medicare Safety Net balance, their children’s immunisation history statements and their organ donor details online. By 30 June 2006 consumers could also view and update their Medicare card details, order a replacement or a duplicate Medicare card and provide a preferred email address and banking details.

On 1 January 2006, Medicare Australia successfully implemented the new budget measure known as the ‘PBS Safety Net 20 day rule’. This measure has resulted in specific medicines being excluded from the PBS safety net entitlements where they have been dispensed within20 days of a previous supply under the ‘immediate supply’ provisions.

Medicare Australia modified the Medicare claim form to give consumers the opportunity to register as an organ donor when completing the form.

Through a combination of compliance activities, we have reinforced compliant behaviour amongst service providers thereby ensuring that appropriate payments under the MBS and PBS are made.

Key business results at a glanceMedicare

Persons enrolled in Medic area 20.74 million

Active Medicare cards 11.6 million

Bulk billed services 177.2 million

Patient claimed services 70.2 million

Total services processed 247.4 million

Percentage of services bulk billed 71.6%

Total benefits paid $10.9 billion

Medicare smartcard registrations 4,397

(a) Includes some people who are not Australian residents (such as long-term visitors for more than six months and eligible short-term visitors).The figure is the 2006 snap shot of the Medicare population taken at 30 June 2006.

Note that the Statistical Table 20 of the Medicare component of the annual report also quotes a different figure of 20,617,542 as the Medicare population. This figure refers to the number of people eligible for Medicare benefits from 1 July 2004 to 30 June 2005.

Veterans’ Treatment Accounts (DVA)

STEC, PTEC and RPBC Cards produced 75,503

Provider cards produced 2,158

Services processed 21.5 million


Prior to the financial year 2004–05, Medicare Australia’s funding for the processing of DVA services was allocated based on the number of lines processed. The Output Pricing Agreement has since changed, and Medicare Australia’s funding is now allocated based on the number of DVA services processed. Care should be taken when comparing the statistics on the table above with those of the earlier years, which used lines instead of services.

Service and benefit figures include incentive items.

PBS and RPBS (Payments to veterans processed by Medicare Australia on behalf of the DVA)

PBS services processed (including stoma) 168.2 million

RPBS services processed 15.2 million

Total services processed (including stoma) 183.3 million

PBS benefits paid $5.8 billion

RPBS benefits paid $469.7 million


Authority prescriptions authorised 6.7 million

Aged Care

Residential claims processed 23,691

Community aged care packages (CACP) claims processed 8,014

Flexible care claims processed 1,186

Total claims processed 32,891

Total amount paid $3.9 billion

Australian Organ Donor RegisterNumber of consent registrations (Including the intent of 16-17 year olds)

791,320

Australian Childhood Immunisation Register

Valid immunisation episodes recorded 4.0 million

Children (under 7) registered 1.9 million

Total amount paid to immunisation providers

Children registered with appropriate immunisation coverage

$8.3 million

aged 12–15 months 90.7%



General Practice Immunisation Incentive Scheme

Number of practices registered 5,491

Total payments* $35.2 million

* Includes Service Incentive Payments and Outcomes payments

Practice Incentives Program

Participating practices 4,745

Total amount paid $261.8 million

Rural Retention Program

Number of providers paid 2,021

Number of payments made 2,071


General Practice Registrars’ Rural Incentive Payments Scheme

Medical practitioners paid 426

Number of Payments made 786


Training for Rural and Remote Procedural GPs Program

Number of registered providers 1,323

Number of providers paid 767

Number of payments made 1,514


Compensation Recovery Program

Number of cases finalised 49,232

Total amount of benefits recovered $31.3 million

HECS Reimbursement Scheme

Eligible medical graduates participating 421

Medical graduates paid 272

Number of payments made 440


Family Assistance

Total number of Medicare Offices offering full service

190

Total number of customer accessing extended Family Assistance services

129,025

Hearing Services Program

Services processed 898,483


Medical Indemnity — Incurred But Not Reported (IBNR) Claims

Claims received 375

Total number of claims paid 344

Total benefits paid $14.8 million

Medical Indemnity — Premium Support Scheme (PSS)

Total members (doctors) 4,139

PSS subsidies paid to medical indemnity insurers $17.1 million

Medical Indemnity — UMP Support Payment

Number of members invoiced 10,131

Total amount invoiced $13.7 million

Medical Indemnity — Competitive Payments received

Total number of invoices 1

Total amount paid $56 million

30% Rebate on Private Health Insurance

Memberships registered 4.84 million

Total paid in cash claims $2.14 million

Total paid to health funds $3 billion

Medicare Australia Online Claiming

Increase in registered sites 2,133

Increase in registered sites transmitting via online claiming

2,054

Bulk bill services submitted via online claiming 43.8 million

Patient claimed services submitted via online claiming

2.9 million

Simplified Billing

Simplified billing services lodged via ECLIPSE* 70,926

Registered sites transmitting in-patient claims via ECLIPSE 94

* Eclipse — Electronic Claim Lodgement and Information Processing Service Environment.

Challenges for the futureMedicare Australia will be working towards enhancing online services for all our customers by:

working with the DHS on the health and social services access card providing online claiming functionality for aged care service providers and Making it easier for Australians to do business with Medicare Australia.

Recommendations emanating from the Urbis Keys Young Market Research into improving Aboriginal and Torres Strait Islander people’s access to Medicare Australia’s programs including Medicare and PBS will be implemented.

Our information systems and telephony services will be consolidated in order to improve customer service and to enable a single interface to future initiatives such as the health and social services access card database.

A population health screening register will be developed to support the commencement of National Bowel Cancer Screening Program invitations from August 2006 and to provide a high level of customer service supporting the ongoing administrative role of the register.

One of the most significant human resource challenges Medicare Australia faces is identifying the capabilities we will require in our future work force.

Intimately linked to this are the additional challenges of developing our existing staff helping them to acquire those capabilities and recruiting new people who posses those skills. Given the ageing nature of the Australian workforce and the increasingly tight labour market, well-targeted and high-quality recruitment and development programs will be vital if Medicare Australia is to meet this challenge.

The implementation of initiatives under the Fourth Community Pharmacy Agreement will be continued. This includes the delivery of an enhanced Residential Medication Management Review program that will provide incentive payments to pharmacies and other business entities providing medication review services in government-funded aged care facilities

Medicare Australia will continue to facilitate the increased uptake by pharmacists of online claiming for PBS, as well as the implementation of other key eBusiness initiatives.

Section 03 Management and accountabilityCorporate governance —before 1 October, 2005HIC — Board of commissioners 1 July 2005 – 30September 2005 Up to 1 October 2005, the HIC operated as a Commonwealth Statutory Authority under the CAC Act. This Act provided the general governance, reporting and accountability framework for the organisation and imposed a regime for the conduct of its officers.

The HIC Act stipulated that the HIC have a chair, a managing director and other members. Commissioners were appointed by the Governor-General for up to five years with provision for reappointment. The commissioners, including the chair, were appointed to part-time positions. The

managing director, who was a full-time appointee, was the commission’s only executive director and managed the HIC’s operations as directed by the commissioners. With the creation of the DHS in October 2004, the managing director was responsible to the board of commissioners and to the Secretary of DHS for the management and operation of the HIC and reported through the Secretary of DHS to the Minister for Human Services.

Commissioners were required to disclose any pecuniary interests that would conflict with matters being considered by the commission in session. Meetings were presided over by the chair. Commission decisions were by majority vote, with the chair having a casting vote. In the absence of the chair, the commissioners present could vote to elect a person to preside at a commission meeting. The managing director was not eligible for election.

From 1 July 2005 to 30September 2006 the board of commissioners was as follows:

Members of the Board of Commissioners to 30 September 2006Peter Brunskill, B.Pharm, was appointed commissioner on 20 May 2004.

His term expired on 30 September 2005.

Peter D Bunting, LLB, FCA, FAICD, was appointed commissioner on 23 December 1997.

He was appointed as chair on 25 May 2000, and reappointed on 22 December 2002. His term expired on 30 September 2005.

Robert J Collins, BSc, FAICD, FAIM, was appointed commissioner on 5 July 2000. His term expired on 4 July 2005.

Sister Maria Cunningham, FCNA, MAICD, was appointed commissioner on 5 July 2000.

Her current term expired on 4 July 2005.

Jane Halton, BA (Hons), PSM, FAIM, was appointed commissioner on 18 January 2002.

Her term expired on 30 September 2005.

Eric Paul McClintock, BA, LLB, was appointed commissioner on 20 May 2004.

His term expired on 30 September 2005.

Bryce M Phillips, AO, MBBS, FAMA, was initially appointed commissioner on 28 August 1996 and reappointed on 1 September 2001. His term expired on 30 September 2005.

Sally G Warneford, BSc (Hons) PhD, was appointed commissioner on 1 September 2001.

Her term expired on 30 September 2005.

Catherine Argall PSM was appointed managing director on 10 December 2004. Her term on the board expired on 30 September 2005. From 1 October 2005, Ms Argall became the CEO of Medicare Australia as part of the transition from HIC to Medicare Australia.

Board membership and meeting attendance

Commissioner Appointment expiry date

Meetings eligible to attend Meetings attended

Ms Catherine Argall 30 September 2005 3 2

Mr Peter Brunskill 30 September 2005 3 3

Mr Peter Bunting, chair 30 September 2005 3 2

Mr Robert Collins 4 July 2005 0 0

Sister Maria Cunningham 4 July 2005 0 0

Ms Jane Halton 30 September 2005 3 2

Mr Paul McClintock 30 September 2005 3 3

Dr Bryce Phillips 30 September 2005 3 3

Dr Sally Warneford 30 September 2005 3 2

Committees — HIC

Corporate Management Committee (CMC)The CMC was the HIC’s main decision-making body and a key part of internal governance arrangements. The CMC considered issues that had impact across the whole organisation and provided advice and assistance to the managing director. Four subcommittees supported the CMC:

Customer Service

Finance

eBusiness and Technology and

People.

Audit CommitteeThe Audit Committee held its final meeting on 25 August 2005. The broad objectives of the committee were to:

ensure the HIC met its strategic objectives

promote accountability to the Minister, the parliament and the community

support measures to improve management performance and internal controls

oversee the Audit and Risk Assurance Services Branch function and

Ensure effective liaison between senior management, internal auditand external audit functions.

Audit committee membership and meeting attendance 1 July – 30 September 2005

Member Member eligible to attend Meetings attended

Paul McClintock, chair 2 2

Peter Bunting 2 2

Corporate governance —after 1 October, 2005With the commencement of the Human Services Legislation Amendment Act 2005, Medicare Australia was established on 1 October 2005as a prescribed agency under the FMA Act and a statutory agency under the Public Service Act 1999.

The CEO of Medicare Australia reports to the Minister for Human Services through the Secretary of DHS. Section8AB of the Medicare Australia Act 1973 states that the CEO is, under the Minister, responsible for:

deciding the objectives, strategies, policies and priorities of Medicare Australia managing Medicare Australia and ensuring that Medicare Australia performs its functions in a proper, efficient and effective manner.

In doing so the CEO is supported and advised by an executive management team, consisting of two deputy CEOs, six general managers and six state managers.

In line with the recommendations of the Uhrig report which sought to improve corporate governance and accountability arrangements, the Minister for Human Services issued the CEO of Medicare Australia with a Statement of Expectations for the period 1 October 2005to 30 September 2006. The statement sets out the Minister’s priorities and includes key deliverables around our strategic themes of service delivery (for payments and information) and program integrity.

The CEO formally responded to the Minister with a Statement of Intent outlining Medicare Australia’s key commitments in meeting the Minister’s expectations. Both these documents are available to the public to view through the Medicare Australia website.

Directors’ and officers’ liability insuranceDirectors’ and officers’ liability insurance is an element of Medicare Australia’s Insured Schedule of Cover. The class of insurance provides related liability protection to a limit as noted on the Schedule of Cover. A separate Schedule of Cover is in place for the former Commissioners of HIC.

Internal governance arrangements —Medicare AustraliaRefinement of internal governance arrangements was undertaken in August 2005, to ensure that they were robust and met the requirements of the FMA Act. Arrangements were put in place to establish an Audit Committee with an independent chair early October 2005. The Audit Committee met for the first time on 15 December 2005.In recognition of the importance of program integrity issues in Medicare Australia, a separate Program Integrity Committee was also established with two independent members. Both of these committees report directly to the CEO.

Formal reporting arrangements with the Secretary of DHS were established in October 2005. The CEO and other key members of the executive management team meet with the Secretary DHS and other key DHS staff on a monthly basis to formally report on progress with regard to priority activities.

CMC — Medicare AustraliaIn preparation for the transition to Medicare Australia, the role, membership and purpose of the CMC was reviewed. The CMC is the primary management committee within Medicare Australia. It provides strategic advice to the CEO. Its objectives are to assist the CEO in discharging his or her obligations in ensuring that Medicare Australia:

has appropriate governance frameworks in place conforms with all legislative requirements operates effectively to deliver the government’s service delivery objectives and is strategically positioned to meet future requirements.

Five subcommittees support the CMC:

Customer Service Finance eBusiness and Technology People and Security.

Corporate governance information for staffMedicare Australia has corporate governance information on its intranet to guide the day-to-day work of staff. This information includes the CEOs instructions, finance policies, human resource management policies and audit policies/charters.

Transition to the FMA ActA challenge for the organisation in 2005–06 was the transition from being a statutory authority under the CAC Act to an FMA agency. Considerable effort went into ensuring a smooth transition from an external governance board and audit committee to an executive management governance model under the FMA Act. Critical to this was the establishment of the Audit Committee which provides independent assurance and assistance to the CEO (and the CMC) in relation to Medicare Australia’s risk, control and compliance framework, and its external accountability obligations.

Medicare Australia continues to strengthen its financial management framework to improve the management of resources and ensure it discharges its governance and accountability obligations under the FMA Act.

Delegations (post 1 October 2005)Medicare Australia operates its business in accordance with a number of instruments of delegation. These include financial and human resource delegations made under a range of legislation including the FMA Act and the Public Service Act 1999. In addition, delegations are also made under the Medicare Australia Act 1973 and other relevant health legislation including, but not limited to:

Health Insurance Act 1973 (HIA) National Health Act 1953 (NHA) Health and other Services(Compensation) Act 1995(HOSC Act) Private Health Insurance Incentives Act 1998 Medical Indemnity Act 2002 and Aged Care Act 1997.

Instruments of delegation specific to Medicare Australia officers have been made by the CEO in respect of statutory powers that are directly held, and in respect of statutory powers that are performed on behalf of the Minister for Health and Ageing and the Secretaryto DoHA.

Committees —Medicare Australia

Audit CommitteeThe Medicare Australia Audit Committee held its inaugural meeting on 15 December 2005.The Audit Committee provides independent assurance and assistance to the CEO in relation to Medicare Australia’s risk, control and compliance framework as well as its external accountability obligations. In particular, the Committee oversees:

the effectiveness of Medicare Australia’s internal control framework the internal audit program which reviews the adequacy and effectiveness of Medicare Australia

operations Medicare Australia’s corporate risk management and planning activities and The manner in which Medicare Australia complies with its external accountabilities and

obligations, including the preparation of its annual financial statements.

The committee comprises five members: two external members, Mr Bruce Jones and Ms Meryl Stanton, Medicare Australia’s Deputy CEO, Corporate and Strategy, one state manager and one branch manager. Mr Jones chairs the committee.

The Audit Committee meets at least six times a year. For the period 1 October 2005 to 30 June 2006 the committee met four times.

Since commencement, the committee has:

developed the Audit Committee Charter — during the process of which consideration was given to the Australian National Audit Office Better Practice Guidelines on Public Sector Audit Committees 2005

developed an Audit Committee annual work plan and Placed a greater emphasis on monitoring the implementation of internal and external audit

recommendations.

Representatives from the Australian National Audit Office and DHS are invited to attend Medicare Australia’s Audit Committee meetings.

Financial frameworkThe transition to becoming a statutory agency necessitated an overhaul of Medicare Australia’s financial framework during the financial year. Anew set of Chief Executive Instructions were developed, all financial and personnel delegations were reviewed and revised, supporting procedural statements were revised, and organisation-wide training in tasks relating to financial activities were implemented.

Financial performance is regularly reviewed both within Medicare Australia, and by the DHS and the Department of Finance and Administration. Internal to Medicare Australia, budget and resourcing decisions are considered by the Finance Subcommittee that reports to the Corporate Management Committee. During 2005–06Medicare Australia continued to implement a budget management system and further refine activity-based management systems, facilitate transparency indecision-making processes and disseminate information relating to funding sources within the organisation. These systems also support enhanced business modelling and costing capability.

Program integrity assuranceMedicare Australia is responsible for payments for Medicare services and supplies of PBS medicines to the Australian population and overseas visitors (from countries that have reciprocal health agreements with Australia).

To ensure the integrity of Medicare and PBS payments, Medicare Australia implemented a compliance program ensuring that Medicare services are provided and PBS scripts are supplied properly. In2005–06, the Program Review

Division (PRD) administered this compliance program. Unlike other social security or labour market programs, Medicare and PBS related payments are made by Medicare Australia to medical practitioners, patients and pharmacists for services rendered. Therefore, in this unique environment, there are four possible groups that can independently, or in combination, pose potential risks to the integrity of the MBS and PBS schemes:

medical practitioners —these are mainly doctors who are eligible to provide medical services through Medicare, and to prescribe medicines under the PBS

pharmacists and suppliers— these are mainly pharmacists who are eligible to supply medicines under the PBS; this group also includes public hospitals, run by the state and territory governments, which supply PBS medicines

patients and consumers —these are mainly Australian residents and overseas visitors who require medical treatments under Medicare or use PBS listed medicines and

Members of the public —these also include medical office staff.

In 2005–06, PRD undertook a number of compliance activities to detect, prevent, and correct inappropriate and fraudulent practices, by the four groups above, as part of a broader effort to ensure payments of benefits are correctly made for services properly rendered or supplied. Further details of PRD’s activities can be found in Section 4.

External and internal scrutinyExternal scrutinyThe Audit and Risk Assurance Services Branch (ARAS)is responsible for liaison between the Australian National Audit Office (ANAO)and HIC/Medicare Australia and for providing coordinated responses to draft audit findings and recommendations. Details of ANAO reports affecting HIC/Medicare Australia are provided below.

ANAODuring 2005–06, the ANAO tabled in parliament a number of reports on audits involving HIC/Medicare Australia. These reports consisted of:

cross-agency audits where HIC/Medicare Australia was involved an audit of another agency that involved consultation with HIC/ Medicare Australia and Other audits where HIC/ Medicare Australia was not directly involved but where recommendations

were targeted at all agencies.

Cross-agency audits where HIC/Medicare Australia was involved Audit Report No. 21 2005–2006

Audit of Financial Statements of Australian Government Entities for the Period Ended 30 June 2005(tabled 21 December 2005)

Audit Report No. 22 2005–2006

Cross Portfolio Audit of Green Office Procurement (tabled 22 December 2005)


Forms for Individual Service Delivery (tabled 25 January 2006)


Administration of the 30Per Cent Private Health Insurance Rebate Follow-up Audit (tabled 25 May 2006)


Internet Security in Australian Government Agencies (tabled 13 June 2006)

An audit of another agency that involved consultation with HIC/Medicare Australia

Audit Report No. 44 2005–2006 Selected Measures for Managing Subsidised Drug Use in the Pharmaceutical Benefits Scheme

(tabled 1 June 2006)

Other audits where HIC/ Medicare Australia was not directly involved but where recommendations were relevant to all agencies Audit Report No. 11 2005–2006

The Senate Order for Departmental and Agency Contacts (Calendar Year2004 Compliance) (tabled29 September 2005)


The Management and Processing of Leave (tabled 17 November 2005)


IT Security Management (tabled 22 December 2005)


Reporting of Expenditure on Consultants (tabled 30 January 2006)


Management of Net Appropriation Agreements (tabled 31 January 2006)

-- Audit Report No. 37 2005–2006

The Management of Infrastructure, Plant and Equipment Assets (tabled 3 May 2006)

Audits in progress

An ANAO performance audit of FTB debt involving Medicare Australia was in progress at 30 June 2006. This is across-agency audit and will examine the effectiveness and efficiency of the Family Assistance procedures to manage customer debt within the FTB program. Medicare Australia provides limited Family Assistance services through its Medicare offices. The ANAO expects to table this report in December 2006.

Medicare Australia’s Audit Committee maintains scrutiny over the implementation of ANAO recommendations where they are applicable to Medicare Australia.

Internal scrutinyThe ARAS operates under the authority of a Chief Executive Instruction and the Audit and Risk Assurance Services Charter. It is directly accountable to the CEO and Medicare Australia’s Audit Committee. ARAS is responsible for:

the planning and delivery of a risk-based annual internal audit work program to evaluate and provide assurance on the effectiveness, efficiency and ethical performance of Medicare Australia’s activities and

Providing advice and assistance on risk management and fraud control, including the development of policies and procedures and the Corporate Risk Management and Corporate Fraud Control Plans.

Internal control frameworkInternal audit evaluates and reports on the performance of management in maintaining our strategic direction, achieving our operational objectives, and ensuring appropriate standards of probity and accountability. There is a focus on improving the overall management control framework.

The 2005–06 annual audit work program was developed following consultation with senior management and was based on:

current assessment of risks and effectiveness of risk management and control processes current issues relating to governance, particularly the transition to an FMA Act agency major changes in business, operations, programs, systems and controls opportunities to achieve operating benefits dates and results of previous audits and Requests by the Audit Committee or the Executive.

Other major activities include:

monitoring the progress on the implementation of audit recommendations, through the development and maintenance of an audit monitoring database and

Providing advice to management and staff.

Risk managementMedicare Australia has an integrated risk management framework that includes a Chief Executive Instruction, policies, guidelines, a planning handbook and reporting templates. These are accessible to staff via the intranet and risk management advisers are available to facilitate risk management education, workshops and report preparation.

ARAS is responsible for preparing and facilitating the monitoring by the Executive of the Corporate Risk Management Plan. The corporate and lower level plans are subject to quarterly review and updates to ensure the momentum for implementing control activities is maintained and potential or emerging risks are identified and monitored.

Our framework is consistently reviewed and revised, and work has commenced to amalgamate the business planning and risk management templates. Thus both the business planning and risk management business units will be able to promote embedding risk awareness indecision making at all levels of business planning and program management processes.

The risk management unit reports to the Audit Committee and the management of risk across the organisation is also monitored through the internal audit program.

In June 2006 our organisation achieved a score of eight in the Com cover Risk Management Benchmarking Survey. Our achievement entitled us to an 8 per cent discount on our Com cover insurance premium.

Fraud controlMedicare Australia’s fraud prevention and control activities range from education to control, planning, detection and investigation. Our learning and development team is currently reviewing and revising our fraud awareness training package.

Medicare Australia completed its 2006 – 08 Fraud Control Plan during the year. A thorough fraud risk assessment across the organisation was undertaken and the Fraud Control Plan prepared to reflect that assessment. The plan is based on the results of fraud risk assessment and interviews with senior management and staff. The plan conforms to the Commonwealth Fraud Control Guidelines 2002produced by the Attorney-General’s Department and is available via the intranet. It complements Chief Executive Instruction 7.2 on fraud prevention and control.

Balanced scorecardThe review of the balanced scorecard was suspended during the transition to Medicare Australia and recommenced in December 2005.

Medicare Australia has since developed an extensive list of key performance indicators that allow the organisation to monitor a wide range of financial and non-financial functions against internal targets and benchmarks. These measures are categorised under six perspectives:

Finance Service (Public and Government) Internal Processes Development and Growth People and Social and Environmental

The process of redeveloping the balanced scorecard involved defining key performance indicators and setting targets across the organisation in consultation with relevant work areas involved in the key business processes. These measures will be further reviewed and refined to deliver a high level overview of the organisation’s performance under the six perspectives.

A summary of some of these measures is reported below:

Medicare Australia balanced scorecard

Actual

2003-04

Actual

2004-05

Actual

2005-06

Actual

2005-06

Financial management Revenue

$537.5m $596.1m $578.m $577.6m

Operating expense $531.8m $593.0m $585.4m $584.5m

Net profit $5.7m $3.1m $(6.7)m $(6.8)m

Stakeholder

Community satisfaction 93% 90% 91% 93%

Medical practitioner satisfaction

79% 85% 70% 71%

Practice manager satisfaction 90% 90% 85% 86%

Pharmacist satisfaction 91% 85% 90% 92%

Internal business processes

Call centre response time 91% 93% 90% 91.46%

Percentage of Medicare payments within time commitments

89% 90%Refer

Appendix E

Refer

Appendix E

Claim processing accuracy 98% 98% 99% 97.8%

Growth and development

Online claiming take-up —Medicare Bulk Bill

3.24% 9.93% 23.05% 24.69%

Online claiming take-up — Medicare Patient Claim

0.65% 1.8% 4.35% 5.12%

Social

Overall staff satisfaction 73% 62% ≥71% 71%

Customer satisfaction with range of options available to claim

n/a 87% 85% 86%

a Medicare refund

Environmental

Energy usage per employee (MJ) 6200 6077 ≤10,000 3,905 kwh

Corporate business continuityBusiness disruption could damage Medicare Australia’s reputation if the speed or scale of an emergency were to overwhelm our operations and management systems. Medicare Australia uses business continuity principles to ensure we are prepared to control emergencies when they occur. As part of this preparation, our divisions and state offices maintain business continuity plans to ensure effective interim operating arrangements can be put in place to support critical business processes and resources. Medicare Australia regularly tests its business continuity plans and also incorporates experience gained from real emergencies such as Cyclone Larry to ensure our business continuity plans are effective.

Medicare Australia has been preparing business continuity plans that will cater for events of varying severity, from local issues to wide spread pandemic issues. This planning involves focus on two areas: customers and personnel. For customers, Medicare Australia will categorise business processes and identify policies to be used during an event. For personnel, Medicare Australia is developing policies and procedures to be used during an event. Medicare Australia plans to publish these frameworks in a simple, readable format so that they can be used in operational areas with a minimum of effort.

Our stakeholdersStakeholder satisfactionSatisfaction research has been undertaken by Medicare Australia annually for consumers (since 1984) and medical professionals (since 1991). The research results and recommendations have been used over the years to inform Medicare Australia in terms of priorities, service delivery and channel management.

In 2006, satisfaction research surveys were conducted with the community, practitioners (general practitioners, pathologists, imaging specialists, other specialists, optometrists and ancillary immunisation providers), practice managers, pharmacists and aged care providers. As part of the research, feedback was specifically obtained on how Medicare Australia is performing against its service charter promises.

Aged care provider satisfaction surveys were conducted for the first time in 2005–06 due to the transition of aged care services to Medicare Australia. The result of 97 per cent satisfaction in 2005–06 establishes our benchmark for future years.

The apparent fall in practitioner satisfaction is the result of an increase of 13 per cent in ‘don’t know’ responses from doctors and is due to the growing role of practice managers in dealing with Medicare Australia. When ‘don’t know’ responses are removed, practitioner satisfaction levels are the same as 2004-05.

Overall key performance indicators

2004-05 actual 2005-06 target 2005-06 actual

Community satisfaction with Medicare 90% ≥ 91% 96%

Practitioner satisfaction 85% ≥ 70% 71%

Practice manager satisfaction 90% ≥ 85% 86%

Pharmacist satisfaction 85% ≥ 90% 92%

Stake holder consultation

Stake holder Consultative GroupIn May 2006 Medicare Australia amalgamated its three key stakeholder groups: the Stakeholder Advisory Committee, the Doctors’ Communication Group, and the Pharmacists Communication Group, into one overarching group, known as the Stakeholder Consultative Group. The amalgamation will provide a better opportunity for key stakeholders to discuss and influence Medicare Australia’s business activities at a strategic level. The group will meet 2–3times a year.

During 2005–06 the Stakeholder Advisory Committee met in July2005 and May 2006.

Consumer Communication GroupMedicare Australia has an established consumer stakeholder group — the Consumer Communication Group — that meets 2–3 times a year. Members provide input on issues, discuss the potential impact to services and products, and provide advice on how Medicare Australia can add further value in the delivery of services to the Australian public.

Representatives from various organisations and community groups attend the Consumer Communication Group, such as: Health Consumers Rural and Remote Australia, Chronic Illness Australia, Carers Australia and Australian Federation of Disability Organisations.

Service charter

Our promises to youWe completed a review to align Medicare Australia’s service charter with best practice principles. We improved the charter’s promises and format, and repositioned it as an internal driver for customer service delivery. Extensive consultation took place with internal and external stakeholders.

The revised service charter has four statements that are based on what the Australian public and stakeholders have been telling us — the service experience that they really want from Medicare Australia:

‘Make it easy for me’ ‘Get it right’ ‘Be genuinely interested in me’ and ‘Respect my rights’.

Medicare Australia is committed to delivering great service to all Australians. To ensure that we deliver against these statements, the service charter also:

makes specific promises in relation to each statement, outlining specific service standards provides measures —such as key performance indicators (KPIs) — that show how well we are

doing on each promise incorporates staff behaviours and values that support the delivery of the service charter promises

in daily work practices and Links the customer service focus directly to each individual performance agreement.

Medicare Australia will measure each of our promises and publish the measures and outcomes on our website.

You said…. We will…. Key behaviours

“Make it easy for me”

Improve convenience and access for all Australians by providing a range of service options, including online

Stay open longer in our busiest branches

Keep queue times in Medicare offices to a minimum

Answer the phone quickly Increase awareness of our

services amongst Indigenous Australians

Help you access other agencies in the Department of Human Services

Teamwork (find solutions not problems and work within and across teams and with the public to get the right result)

Initiative (be proactive, look for improvements; follow through)

Ownership (take responsibility for resolving issues)

Empathy (be friendly, open and honest; put yourself in the public’s shoes)

Communication (keep it simple and clear)

Keep our promises (do what you say you will)

“Get it right”

Make accurate and timely payments

Give you clear and accurate information

Give you consistent advice

“Be genuinely interested in me”

Provide service with a smile Listen to your feedback and

be responsive to your needs Respond to your complaints

promptly Treat you with respect and

Courtesy

“Respect my rights”

Respect the privacy and confidentiality of your personal information

Respect your rights to seek a review of our decisions

Refer to Appendix E for a complete report of measures against the service charter.

FeedbackImprovements have been made to the way we record and report on feedback from the Australian public. We have established a dedicated complaints and feedback number – 1800 465 717 – to assist Medicare Australia to fulfil the service charter promises. The public can also provide feedback online or through customer service officers in Medicare offices. We have also established customer service managers in each state to analyse complaints and to ensure problems are resolved and feedback is reflected in business practices. All complaints are now categorised according to the service charter promises to assist analysis and identify trends.

International Customer Service StandardMedicare Australia is the first government agency to achieve certification against the International Customer Service Standard (ICSS) awarded by the Customer Service Institute of Australia (CSIA). Our initial certification occurred in 2004and we have been awarded with recertification in 2005 with an improved rating.

The ICSS applies to private enterprise, government and not-for-profit businesses. As the name suggests, it is an internationally recognised standard.

Recertification is an acknowledgment of Medicare Australia’s achievements and improvements during the past 12 months. It provides us with recognition of our service excellence.

National Service Excellence AwardsMedicare Australia’s service excellence was recognised by the CSIA this year with a national service excellence award in the Government Contact Centre category. The CSIA also gave state awards to three of our contact centres in Victoria, Queensland and Western Australia. Medicare Australia was judged on arrange of criteria including management and leadership, innovation and improvement, and responsiveness. Winning these awards recognises our service improvement effort and illustrates our commitment to customer service excellence.

Local Liaison Officer (LLO) InitiativeThroughout 2005–06 the LLO program has continued to provide a channel through which Members of Parliament and Senators can receive advice in response to constituent concerns raised in relation to any DHS agency. The program aims to make Medicare Australia and all DHS agencies more responsive to information requests and complaints that come directly through Ministers, other members of Parliament, Senators and their staff.

Medicare Australia currently has 16 LLOs supporting16 of the 150 Members of Parliament, and 17 LLOs supporting 22 of the 76senators. The remaining Members of Parliament and Senators are supported by LLOs from other DHS agencies. To ensure all LLO referrals are acknowledged within 48 hours, a network of back-up LLO staff and contact officers has also been established.

In 2005–06 a total of 4,580LLO referrals were received throughout DHS, with 83(1.8 per cent) relating to Medicare Australia.

People with disabilitiesDuring 2005–06 Medicare Australia continued to respond to the Commonwealth Disability Strategy with arrange of activities guided by the principles of equity, inclusion, participation and access and accountability. Information about Medicare Australia programs is available in Braille, large-print and

audio formats — these information kits are available from Medicare offices and Medicare Australia contact centres. The large-print information is also available from the Medicare Australia website.

Medicare Australia provides access to the Telephone Typewriter Service and the National Relay Service for people with hearing or speech impairments.

Physical access issues are being addressed as Medicare offices are refurbished with the installation of automatic doors, sit-down counters and sloped writing surfaces for public use.

The new design incorporates combination of modular and standard seating arrangements designed to suit different people’s requirements. This seating, along with the introduction of electronic queue ticket systems in our busiest offices, provides customers with the convenience of comfortable sit-down customer waiting.

Some Medicare offices have counter hearing systems to provide better access to services for people with hearing disabilities.

Cross-agency initiativesMedicare Australia undertook several cross-agency initiatives with other DHS agencies during 2005–06. These included:

Family Assistance 2005; Local Liaison Officer Program Feb 2005 DHS Agency collaboration meetings on Absenteeism and Training — 2005 Indigenous Message Stick — Centrelink to Medicare Australia — 2006.

The Melbourne 2006Commonwealth GamesThe Federal Government committed $294m in funding to support the Melbourne2006 Commonwealth Games. This was primarily to support the Queen’s Baton Relay, Elite Athletes with a Disability and the Opening and Closing Ceremonies. As a result, the DHS Melbourne 2006 Commonwealth Games Strategy was officially launched on 19 October 2005 by Minister Hockey at the Melbourne Cricket Ground.

In Victoria, we worked behind the scenes to ensure that we utilised this major event to strengthen our relationship with the community and also our sister agencies within DHS.

Cross-agency committees’ were formed and highlights included:

Queen’s Baton Relay — promoted community engagement as Medicare office staff nationwide supported local activities in towns where the baton passed through

job expos — Medicare office staff participated in the eight expos held across metropolitan and regional Victoria by answering queries regarding access to our services and promoting the Australian Organ Donor Register (AODR)

Adopt a Second Nation — this local government initiative was supported throughout Victoria by offices supporting various competing nations with displays relating to that nation and

DHS online demonstration site — Medicare Australia was represented at the site for the duration of the Games with a display stand showcasing our brochures and services.

Special assistance hotlinesDuring 2006, in addition to the Bali med Line and Bali2005, the customer service department added Tsunami Assist, London Assist and Egypt Bombing Healthcare Costs Assistance to their hotlines to assist Australians impacted directly by these events. The services included registering eligible people,

processing claims (out-of-pocket expenses),telephone enquiries and general liaison with patients and health care providers.

Indigenous peopleWhat we know about Australia’s Indigenous populationThe Australian Bureau of Statistics’ latest (2001) data reveals that Indigenous people make up 2.2 per cent of Australia’s population, which equates to around 410,000people. Most Indigenous people live in New South Wales and Queensland, followed by Western Australia and the Northern Territory. The Australian Capital Territory has the smallest population of Indigenous people, with around3,500 people.

Indigenous Access ProgramMedicare Australia’s Indigenous Access Program (IAP) was established in 2000 to improve Aboriginal and Torres Strait Islander people’s access to Medicare Australia programs. The IAP supports health service providers and Aboriginal and Torres Strait Islander people to fully utilise these programs, and ultimately to improve their health outcomes.

Key roles and responsibilitiesThe IAP is led by a team within the national office and is responsible for setting the strategic direction for the development of initiatives and policies relating to Indigenous service delivery. This includes the management and coordination of key activities of the national network of Medicare liaison officers for Indigenous Access.

Medicare liaison officers operate out of each of the states and territories, and have a diverse range of culturally appropriate skills and expertise. They work closely with Aboriginal and Torres Strait Islander Medical Services and other health service providers nationally to promote and support the use of Medicare Australia programs.

The network enables improved access to and enrolment in Medicare Australia services. It increases the provision of systematic and dedicated support and outreach services to Aboriginal and Torres Strait Islander people and their communities across the rural and remote areas of Australia. The key responsibilities of the Medicare liaison officers are to:

provide Medicare education and training to Aboriginal and Torres Strait Islander Health Service (ATSIHS) staff to increase enrolments in Medicare and to ensure correct Medicare benefits are claimed, resulting in increased Medicare revenue for ATSIHS

provide support and expert advice to health service staff and providers when new Medicare initiatives are released

undertake field trips and visits to health services, local communities, prisons and schools to address issues and

represent and promote Medicare Australia programs and services at local Indigenous forums and events.

Medicare Australia also has a dedicated telephone service to assist health service providers and Aboriginal and Torres Strait Islander customers with enquiries. The Aboriginal and Torres Strait Islander Access line — 1800 556 955— receives approximately 4,000 calls per month and is supported by Medicare liaison officers in each of our state headquarters.

Stakeholder engagement activitiesMedicare Australia is represented on the Cross Agency Indigenous Servicing Taskforce, formed to enhance collaboration between DHS agencies in order to improve service delivery to Aboriginal and Torres Strait Islanders. Since its inception, the taskforce has overseen the implementation of a range of DHS partnering initiatives, which have extended access to Medicare services.

Medicare Australia also works with industry groups, such as the National Aboriginal Community Controlled Health Organisation, to develop culturally appropriate education materials and policies for ATSIHS staff.

Business Practice Agreements have been established to define the arrangements and obligations that have been agreed between Medicare Australia and DoHA’s Office of Aboriginal and Torres Strait Islander Health (OATSIH), including the funding for additional Medicare liaison officers for Indigenous Access, and other strategic initiatives.

Medicare Australia and Centrelink have agreed to the provision of basic Medicare services via the Centrelink Remote Area Service Centre network and some small customer service centres and agent sites throughout Northern Australia.

Services offered from these sites include:

Medicare enrolments updating customer contact details manual collection of Medicare claims ordering new or replacement Medicare cards and General enquiries.

Customers in Northern Australia can now access Medicare Australia information and support via the Centrelink Indigenous Call Centre network. Under this initiative, customer calls are transferred directly to Medicare Australia’s Aboriginal and Torres Strait Islander Access line by Centrelink staff.

Joint field trips are scheduled and undertaken by DHS agencies where appropriate. The field trips increase the breadth of community access, and foster networking between agencies and communities.

Medicare Australia also continues to work with health authorities, medical practitioners and communities to improve the accuracy of immunisation data for Indigenous children.

Key activitiesKey activities of the Aboriginal and Torres Strait Islander Access Program include:

the undertaking of are search project that has been jointly commissioned by Medicare Australia and OATSIH to further improve access to medical services by Indigenous Australians — the focus of this research is to assess the effectiveness of major health programs in supporting Indigenous access to and utilisation of health services and build on the improvements made as a result of previous research conducted in 1997

the development of a Voluntary Indigenous Identifier Communication and Education Strategy to improve the management of information about Indigenous people and allow better health policy and initiatives to be developed

offering basic Medicare services from 49 Centrelink sites, with further sites identified and continued provision and support of the 1800 free call Aboriginal and Torres Strait Islander Access

line.

Collection of health service informationMedicare Australia collects information on medical practitioners providing services at ATSIHS registered under section 19(2) of the HIA.

The Minister for Health and Ageing, the Hon Tony Abbott MP, has directed (in accordance with existing section 19(2) orders) that Medicare benefits be paid to these health services. Medicare benefits are not payable where a health service is funded from another source, unless the Minister so directs.

The information collected by Medicare Australia enables the identification of Medicare payments provided to these health services, and subsequently used to improve Indigenous health.

Cultural diversityIn line with the Charter of Public Service in a Culturally Diverse Society endorsed by the Council of Australian Governments, Medicare Australia offers a number of services and activities to assist people from culturally and linguistically diverse backgrounds. For example:

translated information about Medicare and other programs that we administer is available in 18 community languages — these information kits are available from Medicare offices, call centres and our website

Medicare Australia receives eligibility information relating to migrants and applicants for permanent residency electronically from the Department of Immigration and Multicultural Affairs (DIMA) — this data transfer helps to streamline enrolment processing of new arrivals

customers can access more than 100 languages through the telephone interpreter service and speak to a qualified interpreter over the telephone, or at a face-to-face interview and

Many Medicare Australia employees are bilingual and wherever possible use their language skills to make communication easier and more effective.

Staff mattersAs part of the transition to Medicare Australia in October2005, staff came under the provisions of the Public Service Act 1999. The Department of Employment and Workplace Relations and the APS Commission provided advice and support in managing the human resource implications of the change. Important elements of this were the negotiation of a new certified agreement (that came into effect in December 2005) consistent with the requirements of the APS, and a review of Australian Workplace Agreements. There was also a comprehensive education program for managers and employees on how the move would affect them, particularly in the areas of recruitment, transfers across the APS, and reviews of action. A major initiative was also launched to educate staff about APS Values and the Code of Conduct, given that prior to joining the APS; Medicare Australia had its own values and code. That education campaign continues.

Given its national presence and responsibilities, Medicare Australia has sought to position itself as an employer of choice across Australia. Fundamental to this is fostering a culture that emphasises teamwork and values its people. Medicare Australia has worked hard to develop and retain a friendly atmosphere where job satisfaction is high. Given the increasingly tight labour market, if Medicare Australia is going to attract and retain enthusiastic and capable people, it is vital that it remains a great place to work.

Perhaps the most significant challenge to face is identifying the capabilities we will require in our future workforce.

Intimately linked to this are the additional challenges of developing our existing staffs, helping them to acquire those capabilities,while also recruiting new people. With the ageing of the Australian

workforce and the tight labour market, well-targeted and high quality recruitment and development programs are crucial for Medicare Australia.

Ethical standards and code of conductThe Code of Conduct that was contained in the HIC Corporate Governance Charter set out the principles that guided the former commissioners in adopting the highest ethical and professional standards when carrying out their governance roles. All employees of the HIC were required to sign the Code of Conduct, which included specific reference to the secrecy provisions in the HIA and the NHA 1953.

On 1 October 2005, the CEO signed instruments of delegation in respect to the Medicare Australia Act 1973, the FMA Act, and the Public Service Act 1999. These instruments applied to all ongoing employees of Medicare Australia as at 1 October 2005.

Since 1 October 2005, all new employees of Medicare Australia are required to sign undertakings and acknowledgements recognising their obligations in relation to:

access to information acquired in the course of official duties, including the secrecy provisions of section 130 of the HIA and section 135A of the NHA

the APS Code of Conduct, APS Values and related Medicare Australia policies and guidelines (fraud, conflict of interest, use of email and Internet, soliciting and acceptance of gifts, outside employment and workplace harassment) and

Other relevant legislation, the FMA Act, the HIA, the NHA and the Medicare Australia Act 1973.

Certified agreementDuring 2004–05 and into 2005–06, negotiations were held between Medicare Australia management, staff representatives and the Community and Public Sector Union for a new certified agreement. As Medicare Australia became part of the APS in October 2005, significant changes to the preceding agreement were necessary. In addition, the new agreement established for the first time a clear link between salary increases and performance. A key element of the agreement is that half of the annual four per cent pay increase in 2006 and 2007 is dependent on organisational goals being met, and individual performance of a satisfactory or higher standard.

Of the four per cent annual increase payable in 2006and 2007, one percent was dependent on Medicare Australia meeting organisational goals, and a further one percent was dependent on individuals achieving a rating of ‘fully effective’ or higher in their performance assessment. The agreement was supported by over 75per cent of employees who cast a vote, and certified on 5 December 2005.

With the move to Public Service Act 1999 coverage, it was necessary for Medicare Australia to comply with APS classification rules and to reflect APS values in its agreement. Full compliance with the Act and the government’s Policy Parameters on Agreement Making was achieved and is reflected in the 2005–08Certified Agreement (CA).As at 30 June 2006, 5,108 staff were covered by that agreement.

Australian Workplace Agreements (AWAs)As at 30 June 2006, 242 non senior executive staff and 43 senior executive staff were covered by AWAs. AWAs were used to reward high performing staff, attract quality recruits, and to recognise leadership in the organisation.

Considerable work was undertaken in 2005–06 to develop guidelines for managers and staff aimed at supporting a regime of greater access to AWAs. A revised AWA template was developed to reflect the introduction of the Work Choices legislation in March 2006.

Senior executive remunerationSenior executive remuneration is offered as a package through an AWA. AWA remuneration levels are subject to approval by the CEO and are based on work value, individual capability and contribution, performance and relevant market considerations. Notional salary ranges for each classification level are set with reference to relevant market comparisons.

These have regarded to:

the annual survey of APS SES remuneration commissioned by the Department of Employment and Workplace Relations

general economic conditions and Medicare Australia sustaining a high level of performance.

Senior executive remuneration is reviewed annually by the CEO at the end of the annual performance cycle with regard to the organisational performance of Medicare Australia, individual performance and relevant remuneration data.

Performance managementUnder Medicare Australia’s Performance Support Program in 2005–06, all employees were required to enter into a Performance Support Agreement with their manager.

All staff, whether SES or non-SES, on AWAs or covered by the CA, participate in the Performance Support Program. The program links directly with the business planning process so employees can understand how their work connects with the objectives of the wider organisation. Performance reviews were undertaken in the mid-term review in December and the annual assessment in June/July. In addition, managers and staff were encouraged to undertake quarterly reviews in September and March. A five-point rating scale is used to assess employees under their Performance Support Agreement and it is expected that managers will recognise gradations of performance against this scale.

As noted above, under the2005–08 CA one per cent of the four per cent December increase each year and annual pay point advancement is conditional on staff receiving at least a rating of ‘fully effective’ (Medicare Australia’s performance standard).

Performance payAll staff that are on AWAs are eligible for performance bonuses. Staff are assessed each June and, where applicable, paid in September.

Learning and developmentMedicare Australia developed, delivered and evaluated learning and development initiatives to provide staff with the capabilities required to meet current and future business objectives. In particular, during2005–06 the Learning and Development area of the organisation supported the roll out of Family Assistance payments in conjunction with Centrelink, with training for all customer service officers in Medicare offices to be completed by December 2006.

Other key learning and development strategies developed and implemented during the year were:

identified key capabilities (core skills) to support performance a nationally consistent induction program the Knowing the Business, Frontline and Corporate programs

technical program training customer service officer training a senior manager consultancy service APS Values and Code of Conduct training 360 degree feedback for all senior managers customer service skills training and a ministerial writing program.

LeadershipMedicare Australia’s Leadership for Change Strategy provides the framework for our integrated approach to leadership development within the organisation. This strategy is being revised and will be incorporated into an organisation-wide capability review.

As part of the strategy, Medicare Australia continued to deliver Leadership Capability Framework modules to middle and frontline managers during the year. In the national office a consultancy service for senior executive development was established, with a particular focus on development that was targeted to the needs of the individual. A commencement protocol for new SES was implemented to complement the induction process, and ensure quick alignment with the organisation.

With the move into the APS, Medicare Australia is covered by the APS Values and Code of Conduct. Training programs to ensure understanding of both have been developed for all staff. Managers will undergo face-to-face training, and then deliver modularised training to their staff.

Core skillsEach employee’s Performance Support Agreement has a learning and development plan, and from these, core skills training needs are assessed, and targeted programs delivered. High-priority areas include project management, writing, interpersonal communication, information technology use and time management. As part of the core skills program, Medicare Australia continues to deliver several blended learning programs utilising the Harvard Manage Mentor Plus online learning resource.

Medicare Australia also expanded its suite of core skills programs as a response to gaps identified by senior managers.

InductionConsistent with Medicare Australia’s commitment to providing the best start for new staff members, a national induction program was implemented during 2005–06. This program provides nationally consistent information for all new starters. Delivery format varies to meet local needs across Medicare Australia’s offices.

Knowing the Business ProgramThe Medicare Australia Knowing the Business Program continued through the year. This program allows national office staff to visit state localities to work on the frontline and gain an understanding of the pressures and challenges experienced in Medicare offices and call and processing centres. In addition, state based staffs visit the national office, for up to three days, in order to better understand the operation of national programs, and to gain a deeper understanding of specific areas of interest. Feedback indicated high levels of staff support for this program, and a greater appreciation for the breadth and complexity of our activities.

Customer service skillsProviding timely and targeted training and development for our frontline staff is a key focus of the human resources team. The key element of this is the customer service officer program, which provides a structured environment for staff to learn how to provide great customer service. Significant

work has been undertaken to ensure alignment of the customer service officer competency framework with the changing business structure.

In addition, several new eLearning modules addressing corporate and operational needs were released. These covered Medicare operations, the Consumer Directory Management System, finance systems, OH&S induction, equity and diversity, fraud and privacy, security, human resource reports and APS values.

Equity and diversityMedicare Australia’s Equity and Diversity Plan 2004–07entered its second year ofoperation amid an environment of organisational change.

To ensure consistency of understanding amidst that change, Medicare Australia introduced an equity and diversity eLearning module in July 2005 as part of its National Induction Program. This module provided all new employees with an understanding of what equity and diversity means in Medicare Australia, outlining the equity and diversity principles, roles and responsibilities.

In March 2006 all staffs were given direct access to their online equity and diversity data in order to update it themselves. This will help better ensure Medicare Australia has an accurate reflection of its workforce profile as it changes.

Medicare Australia identified a need to increase the number of Aboriginal and Torres Strait Islander employees to two percent of its staff by the end of 2008. As at June 2006, Medicare Australia had just over one per cent of staff that identified themselves as Aboriginal and/or Torres Strait Islanders. The 2006 Action Plan for advancing the recruitment, development and retention of Aboriginal and Torres Strait Islander employees within Medicare Australia identified a range of strategies to help achieve this aim.

Medicare Australia launch edits first Statement of Commitment to Reconciliation on Tuesday 30 May 2006.The Minister, CEO and the Chief Executive of Reconciliation Australia co-signed the statement, which is displayed across the organisation as a statement of Medicare Australia’s ongoing commitment to improved service delivery to, and increased recruitment of, Indigenous Australians.

Occupational health and safetyMedicare Australia is committed to securing the health and safety of all its employees at work, in accordance with the requirements of the Occupational Health and Safety (Commonwealth Employment) Act 1991. An Occupational Health and Safety (OH&S) Policy and OH&S Agreement are in place and are available to all employees through the Medicare Australia OH&S intranet site.

The Medicare Australia OH&S Agreement provides a framework for the establishment of an OH&S Committee in each state and the national office to promote and support initiatives aimed at improving the health, safety and wellbeing of employees. The OH&S Agreement also provides for Health and Safety Representatives (HSRs) and deputy HSRs to be selected by employees to represent each designated work group.

The Safety Management Unit, located in the national office, provides a strategic focus on the development of preventative strategies, with a view to reducing the number and severity of workplace injuries. National office and each state headquarters have a designated position responsible for the day-to-day operation of OH&S, rehabilitation and compensation programs and initiatives.

Significant achievements in 2005–06As highlighted by the Com care Injury Management scorecard, Medicare Australia continued to improve return-to-work case management practices, resulting in the containment of average claim costs and a reduction in the time taken to initiate rehabilitation intervention after injury.

DHS agencies worked together to share OH&S policies and procedures and develop a common health and safety representative training package, via quarterly meetings hosted by Medicare Australia.

OH&S activities during 2005–06Coordination of activities across Medicare Australia remained a high priority. The Safety Management Unit provided quarterly reports to state managers on their compensation and injury management performance. These reports provided information on how each state’s performance contributed to meeting Com care health, safety and rehabilitation targets. Quarterly teleconferences were held with each state manager, HR manager and OH&S case manager to assist states achieve targets.

Monthly teleconferences were conducted with all state and national office OH&S case managers. The teleconferences assisted OH&S case managers to keep abreast of the latest OH&S and compensation issues as well as initiatives within Medicare Australia, and provide advice and support on specific cases.

During July and August2005 Com care conducted risk management training for managers in all states. In October, November and December 2005 Com care conducted a manual-handling audit as part of its Manual Handling Targeted Investigation Program. Com care is yet to provide a report on each site investigated and a whole-of agency report.

Medicare Australia actively participated in a number of OH&S conferences, forums and strategies during2005–06 including:

managing OH&S in ‘Times of Change’ conference in November World Day for Safety and Health at Work in April with various activities conducted including

education and awareness sessions on good posture, back care, healthy breakfasts and lunches, OH&S quizzes and daily emails on various OH&S topics

‘Accident Investigation and Complex Cases’ forum in May and Continued participation in the interagency job placement program. This strategy was developed by

Com care to assist agencies to address the economic and social losses that occur when an employee on workers compensation is unable to return to their original place of work following an injury.

The statutory report required under section 74 of the Occupational Health and Safety (Commonwealth Employment) Act 1991 is included in Appendix A.

Access to personal informationPersonal information held by Medicare Australia is protected by legislation and there are penalties for employees who improperly use or disclose personal information. Medicare Australia only holds the personal information it needs for programs it administers and to meet audit and post-payment review requirements.

Requests for release of personal information are processed in accordance with the relevant legislation, for example: the HIA, the NHA, the Privacy Act 1988, and the Freedom of Information Act 1982 (FOI Act). Appendix B contains a detailed report on the release of information under the FOI Act.

Medicare Australia’s computer systems can provide an audit trail of operator access that enables detection of possible inappropriate use of data. Our staff are regularly reminded of their obligations regarding the use of personal information and automatic warning notices on computer screens are a further reminder whenever staff access electronic data.

Medicare Australia complies with the Privacy Commissioner’s guidelines on data matching and the storage and destruction of personal information. We can provide de-identified statistical information in accordance with the relevant legislation to help research projects that have the potential to improve the health and well-being of Australians.

Policies and standards set out in the Commonwealth Protective Security Manual are observed and security controls are in place to ensure a high level of protection for the data stored in Medicare Australia records.

Privacy trainingThe Privacy Section of the Legal, Privacy and Information Services Branch plays a fundamental role in raising awareness of privacy issues through training, participation in various privacy forums and expert advices provided to internal and external stakeholders.

Medicare Australia has developed Privacy Impact Assessment (PIA) guidelines and a checklist to assist managers to identify whether a PIA is necessary for their project. PIAs are an analysis of personal information flows and potential privacy risks and impacts of a project.

The purpose of conducting a PIA is to mitigate privacy risks and impacts, ensure compliance with legal obligations and build best privacy practice into projects.

Medicare Australia aims to implement PIAs across the organisation for all new programs or existing programs that anticipate significant changes to their current systems. Medicare Australia meets its legislated training responsibilities by ensuring that all employees, ongoing and non-ongoing (including contractors and consultants) complete the National Privacy and Security Training Module. This training module includes the Medicare Australia privacy awareness raising video Minding Your Business, which is a part of the Medicare Australia Privacy Training Kit.

An eLearning version of the training module is currently being developed and will be implemented in 2006–07.

External stakeholders have benefited from high quality products developed by the Information and Access Delivery Section. These include a series of manuals for use by Information Release staff as well as forms tailored for most customers to assist in streamlining the processes for requesting information and assistance from Medicare Australia.

The Australian public and employees can access a wide range of privacy related information from the Medicare Australia Internet and intranet.

ConsultanciesWe engage consultancies when we do not have sufficient specialist expertise available or when we consider that independent assessment is desirable. Consultancies have covered such matters as advice on:

the appropriateness of senior executive classification levels within Medicare Australia prior to transition into the APS

the customization of the product to deliver the Stakeholder Management System reporting on the annual financial statements’ processes to effectively meet mandated

requirements and

reporting on the costal location process to clarify the processing costs associated with Family Assistance.

During 2005–06, 25 new or extended consultancy contracts were entered into involving total expenditure of $3.48 million.

Consultants or consulting firms who were paid $10,000 or more during 2005–06 are listed in Appendix D.

National procurementThe main focus in this area over the past 12 months has been the transition to Medicare Australia from 1 October 2005 as a statutory agency under the FMA Act.

All procurement policies and procedures were reviewed and rewritten to accord with the legislative and government requirements. They now provide detailed operational guidance to Medicare Australia’s officials/delegates on financial management, including procurement. In addition Medicare Australia’s Chief Executive Instructions were overhauled to align them with our revised purchasing procedures and guidelines.

One of the four principles issued by the DHS articulates the requirement for its agencies to combine their requirements wherever practicable to maximize combined purchasing power. As a consequence Medicare Australia has offered to be the lead agency for the procurement process so secure an Employee Assistance Program Provider Panel. The process requires Medicare Australia to:

coordinate the seven agencies’ detailed input develop and finalize a transparent approach to the market and Develop a fair and ethical selection process and result within a reasonable timeframe.

National propertyThe NSW State Headquarters was successfully relocated from 150 George Street to130 George Street following the end of the lease term. The fit out of this office incorporates the latest design features for office accommodation including open plan layouts, ample meeting rooms and no offices.

The relocation of the Victorian state headquarters to new premises will be completed during the financial year. This will result in better amenities for staff and provide a more efficient work place in an open plan configuration.

Family Assistance services started rolling out to the Medicare branch offices. This incorporated a new look and feel for these offices and included new signage and co-branding. The new fit out was trialed successfully and is being rolled out to all offices following the introduction of the Family Assistance services from the branch office. This work is scheduled for completion before the end of the 2006.

A fit out manual for the office accommodation will be developed. This will ensure that a consistent design is maintained across office environments and that designs will meet business needs and ergonomic design principles.

The Environmental Management System (EMS) will begin implementation of various business practices and properties following endorsement of the EMS policy and operational framework.

A major consolidation program was undertaken following the reduction in staff numbers in the national office. This exercise reduced the leased area required to accommodate staff numbers and therefore allowed the removal of two buildings totaling 3,775 square meters from the leased property portfolio.

The consolidation of Medicare Australia’s accommodation in the Tuggeranong area will continue in the 2006–07financial year. Investigations will continue into available accommodation options that will address Medicare Australia future accommodation needs.

Records managementWith the move into the APS, the issue of appropriate record management has received considerable attention. Key activities undertaken during the year have been:

intensive records management awareness training in state offices and national office an eLearning package on records management awareness, creation of corporate files and the

classification of records — this will be released to all staff in July 2006 and a commitment by Medicare Australia to fully implementing an Electronic Documents and Records

Management System (EDRMS) in national and state offices.

The framework for implementing records management within Medicare Australia has been developed. The principal challenge facing us in 2006–07 is managing the change agenda for this activity with the plan to transfer to using an EDRMS.

Assets managementNew non-financial measures have been identified to ensure the efficient and effective management of property assets. These measures will be included in the balanced scorecard from June 2006. Financial performance measures will be identified and included in the scorecard by September 2006.

Environmental sustainabilityMedicare Australia has embraced sustainable environmental practices for many years and is continually building on these practices. Aligning these with sound sustainable environmental principles under an Environmental Management System (EMS) will bring about further improvement in the current practices.

Medicare Australia continues to implement the following measures to improve its performance:

maintaining energy consumption below the benchmarks set for Commonwealth operations taking into consideration the Australian Building Green Rating when leasing office accommodation recycling 100 percent of used toner cartridges providing collection facilities for paper recycling and other recyclable material transitioning the national fleet of motor vehicles to vehicles with higher green vehicle scores and complying with local government water conservation regulations and encouraging staff to reduce

water usage.

Medicare Australia has developed an EMS framework to further these measures in line with the international standard for EMS. The EMS plan will identify and set targets in 2006–07 and will be put into operation utilizing the additional resources and documentation developed this financial year.

In addition, Medicare Australia introduced the following measures in 2005–06 to enhance its environmental performance:

funding identified to implement the plan as per the framework environmental policy statement developed and continuing improvements made to the National Fleet to better the green vehicle rating including

encouraging the use of Eco fuel.

Section 04 ProgramsMedicare Medicare Australia’s universal health insurance scheme was established in 1984 to ensure all Australians contribute towards the cost of health care according to their ability to pay.

This entitles them to receive:

free treatment as a public patient in a public hospital and Free or subsidized treatments by general practitioners (GPs) and specialists, as well as some

optometry, dental and allied health treatment.

As part of the policy announcements made during the 2004 election campaign, the Australian Government strengthened Medicare by making GP services more affordable and accessible to all Australians.

Key business resultsWe processed 247.4 million services, representing almost$11 billion in Medicare benefits. The figures in the following tables are adjusted on an accrual accounting basis.

Medicare expenditure

2004-05 2005-06 % Change

Radiation oncology health program grants paid

$36.0 million $36.9 million +2.5%

Total benefits paid $10.1 billion $10.93 billion +8.2%

Enrolments

Persons enrolled a 20.5 million 20.7 million +1.0%

Active cards 11.4 million 11.6 million +1.8%

Claims

Medicare bulk billed services 166.0 million 177.2 million +6.7%

Patient claimed services 70.4 million 70.2 million -0.3%

Total services processed 236.3 million 247.4 million +4.7%

Benefits

Average benefit per service $41.99 $44.37 +5.7%

Average period service to lodgement b 14.2 days 13.5 days -4.9%

Average period lodgement to processing c

4.7 days 3.9 days -17.0%

a. Persons enrolled include some people who are not Australian residents, such as visitors from countries that have reciprocal health care agreements with Australia, and people covered under ministerial orders.

b. Time between date of a medical service and lodgment of a Medicare claim.c. Time between date of lodgment and processing of a Medicare claim.

Medicare claimingThe 247.4 million services were processed by cheque, cash and electronic funds transfer for paid accounts. Unpaid accounts were paid by cheques issued to the provider via the claimant.

Medicare services by bill type

2004–05 % 2005–06 % Change

Cheque paid to claimant 4.6 million 1.9 4.5 million 1.8

Cheque paid to practitioner via claimant

16.1 million 6.8 14.6 million 5.9

Cash—paid via Medicare offices 34.7 million 14.7 34.5 million 14.0

Bulk Bill—benefit assigned to practitioner by claimant

166 million 70.3 177.2 million 71.6

Simplified Bill—in-hospital claimsLodged electronically

11.8 million 5 13.1 million 5.3

Electronic funds transfer 3.1 million 1.3 3.5 million 1.4

Total 236.3 million 100% 247.4 million 100%

Online claimingOnline claiming enables providers to make claims over the Internet including Medicare bulk bill, patient claiming and DVA claiming. It also enables providers to submit information to the Australian Childhood Immunization Register.

Online patient claiming has continued to be disappointing, resulting in a major review of this claiming channel in2005–06.

Medicare Australia online

2004-05 2005-06 % Change

Number of sites transmitting online 3,315 5,369 + 62.0%

Number of bulk bill services processed using online claiming

16.5 million 43.8 million +165.5 %

Number of patient services

processed using online claiming

1 million 2.9 million +190.0%

Education and communicationMedicare Australia uses a range of communication channels and tools to let the Australian public knows about Medicare. These activities include displaying brochures, posters and fact sheets in Medicare offices and at Easy claim booths, inserting fliers with direct mail activities, and posting information on our website. Our brochures are also available from doctors’ surgeries and pharmacies.

Medicare safety netThe Medicare safety net is designed to help protect Australians and their families from high medical costs for out of-hospital medical services. There are three safety net thresholds:

The concessional and Family Tax Benefit (FTB)(A) threshold applies to concession cardholders and families eligible for FTB(A). Medicare will pay 80 per cent of the out-of-pocket cost for medical services provided out of hospital, after a threshold of $500 is reached, per registered family or individual per calendar year.

Note: An out-of-pocket cost is the difference between the provider’s charge and the Medicare benefit paid for that service.

The general threshold applies to all Medicare cardholders. Medicare will pay 80 per cent of the out of- pocket cost for medical services provided out of hospital, after a threshold of $1000 is reached, per registered family or individual per calendar year.

The gap threshold applies to all Medicare cardholders and is based on the difference between the Medicare Benefits Schedule fee and the Medicare benefit paid for out-of hospital services. Medicare will pay the full 100 per cent of the Medicare Benefits Schedule fee after the gap threshold of $345.50 is reached, per registered family or individual per calendar year.

Medicare eligibilityPeople who reside in Australia are eligible for Medicare benefits if they:

hold Australian citizenship have been issued with a permanent visa hold New Zealand citizenship or

Have applied for a permanent visa (restrictions apply to people who have applied for a parent visa — other requirements apply).

Australian citizens who have resided overseas for more than five years, and permanent resident visa holders who have resided overseas for more than12 months, are required to demonstrate their intention to permanently reside in Australia before a Medicare card can be issued to them.

Medicare cards and Medicare levy exemptions

Medicare 2004-05 2005-06 % Change

Cards

Total cards issued a 3,276,204 3,354,997 +2.4

Total applications 22,907 26,342 +15.0

Accepted applications 22,119 25,580 +15.6

Rejected applications 788 762 -3.3

a Includes health care cards issued under reciprocal health care agreements.

Eligible visitors to AustraliaThe Australian Government has signed reciprocal healthcare agreements with some countries, which entitle residents of those countries to restricted access to health cover while visiting Australia. Currently, these countries are Finland, Ireland, Italy, Malta, New Zealand, Sweden, Norway, the Netherlands, and the United Kingdom.

Improved services for migrants and conditional migrantsDuring 2005–06, Medicare Australia and the Department of Immigration and Multicultural Affairs (DIMA) continued to work together, through the electronic transmission of information, to:

improve service delivery for people who have applied for, or who have been granted, permanent residency status in Australia

reduce administrative burdens associated with establishing Medicare eligibility and Simplify Medicare enrolment.

Staff at Medicare Australia also worked closely with migrant resource centers and volunteer groups dealing with migrants to provide information regarding Medicare requirements.

Medicare cardsMedicare cards are issued to eligible people to make it easy for them to access Medicare benefits. There are four different Medicare cards, designed to visually indicate to medical professionals and their staff the person’s level of Medicare eligibility.

A Green Medicare card is issued to Australian citizens and permanent residents and is an indication that the eligible consumer has access to all eligible Medicare services.

A Blue Interim Medicare Card is issued to consumers who are granted eligibility to Medicare while their application for Australian permanent residency is under consideration — the interim card is an indication to medical professionals and their staff that the eligible person has time-limited access to all Medicare eligible services.

A Yellow Medicare Reciprocal Health Care Card is issued to visitors to Australia who are residents of countries with which Australia has reciprocal health care agreements — their access to Medicare services is time limited and does not cover treatment as a private patient in a public or private hospital and

A Green Medicare Smartcard is issued to Australian citizens and permanent residents who live in Tasmania and is an indication that the eligible person has access to all eligible Medicare services.

Allied health and dental care initiativeThe Medicare allied health and dental care initiative allows a chronically ill person who is being managed by their GP under an enhanced primary care (EPC) plan to access Medicare rebates for allied health and dental services.

From 1 January 2006, the methodology for counting patient eligibility for Medicare rebates for eligible allied health and dental care services changed to ‘a calendar year’ instead of ‘a 12 month period’ (counted from the date patients have their first allied health and dental care service). That is, eligible patients are able to access rebates for five allied health and three dental care services between 1 January and 31 December each year where these services are recommended in their EPC plan.

Patients under an EPC plan who have dental problems that are significantly adding to the seriousness of a chronic condition can access three consultations for dental treatment with a maximum rebate of $229.05 a year.

From 1 January 2006, exercise physiology services were included under the Medicare allied health and dental care initiative. Exercise physiologists must be registered with Medicare Australia to provide these services.

The following allied health professionals can participate in the initiative:

Aboriginal health workers

exercise physiologists

osteopaths

audiologists

diabetes educators

physiotherapists

chiropodists

dieticians

podiatrists

chiropractors

mental health workers

psychologists

dental practitioners/specialists

occupational therapists

speech pathologists

Other paymentsMedicare also provides a number of other payments for individuals and families who may need assistance because of high medical expenses.

Medicare Australia Special AssistanceSpecial Assistance encompasses schemes that have been developed in response to natural and human caused disasters that result in Australians requiring assistance with health care. The Special Assistance system was developed to provide a platform for processing registrations and claims following disasters, and currently includes Balimed, Tsunami, London Assist and Egypt Bombing Healthcare Costs Assistance.

Note: Each special assistance scheme has categories that determine the eligibility criteria. These categories can differ under each scheme.

BalimedIn recognition of the extreme difficulties faced by survivors of the bombings that occurred in Bali, Indonesia, on 12 October 2002, the Balimed scheme was established. The scheme assists Australian residents and eligible overseas nationals with all out-of-pocket health care expenses incurred in Australia to treat survivors’ injuries. Balimed also covers the costs of counselling, psychological and/or psychiatric treatment. This is extended to family members and friends of survivors of the Bali bombing who may require care as a result of their relationship with the survivor.

Tsunami Healthcare AssistanceTsunami Healthcare Assistance (THA) was established in recognition of the extreme difficulties faced by survivors of the tsunamis in the Indian Ocean on 26 December 2004. THA covers all reasonable out of-pocket health care expenses incurred in Australia to treat survivors’ injuries. THA also covers the costs of counselling, psychological and psychiatric treatment for family members of people who were injured, lost or killed, who may require care as a result of their relationships with those people.

London AssistLondon Assist was established in response to the London terrorist bombings on 7 July 2005. The Australian Government announced that it would provide assistance for injuries sustained as a direct result of the bombings. The scheme covers out-of-pocket health care expenses incurred to treat survivors’ injuries. It also covers the costs of counselling, psychological and/or psychiatric treatment. This is extended to family members and friends of survivors who may require care as a result of their relationship with the survivor.

Dahab Egypt Bombing Health Care Costs AssistanceIn response to the bombing in Dahab, Egypt on 24 April 2006, the Australian Government has announced that assistance will be provided for injuries sustained as a direct result of the bombing.

The scheme is known as Dahab Egypt Bombing Health Care Costs Assistance Scheme and covers the costs of counselling, psychological and psychiatric treatment for family members of people who were injured, lost or killed, who may require care as a result of their relationships with those people.

Veterans’ Affairs activities

2004-05 2005-06 % ChangeProvider cards produced 64,492 75,503 +17.1%

Services processed 21.54 million 21.52 million -0.1%

Total benefits paid $1.75 billion $1.82 billion +4.0 %

Veterans’ Affairs processingMedicare Australia processes medical, hospital and allied health services claims for veterans on behalf of the DVA. A service level agreement between Medicare Australia and DVA outlines the services, service standards and financial arrangements.

Key business results We processed 21.52 million services, totaling over $1.8 billion.

Broadband for HealthThe Australian Government’s Broadband for Health initiative supports the use of broadband Internet services by general practices, Aboriginal community controlled health services and community pharmacies.

The Government subsidies the up take of Broadband for Health Qualified Services by eligible locations. The subsidy is set at a level sufficient to meet the full installation and 12 months usage of a least one broadband qualified service.

Visiting Medical Practitioners ProgramThrough an agreement with the Health Department in Western Australia, Medicare Australia offers a visiting medical practitioner fee for-service payment and information system. The system provides public non-teaching hospitals in Western Australian with an intranet processing system (in real time) to access and pay invoices submitted by visiting medical practitioners for services to public patients.

The agreement has been in place since April 2000.

Key business results Medicare Australia has assessed invoices valued at approximately $67.9 million for around 354,375 lines processed.

Medicare office network

New flexible business hoursTo provide increased access to Medicare Australia services, we introduced a flexible approach to Medicare office opening hours during 2005. A total of 193 Medicare offices across Australia are now open longer Monday to Friday. In July 2005, 54 of these Medicare offices introduced extended evening hours on Thursday or Friday evenings. These additional hours of business, in conjunction with the 115 Medicare offices that are open on Saturday morning, enable Medicare Australia to provide an enhanced level of service, convenience and greater choice for customers accessing Medicare Australia services.

Medicare Australia conducted a survey in all Medicare offices to gather feedback on the changes to office opening hours. The following statements summarize the feedback:

‘Opening hours that help full-time workers would be great.’

‘Always friendly service, but Saturday mornings or late Thursday shopping opening hours would be very desirable.’

‘It would be useful for full-time workers to have access outside of normal opening hours.’

‘Open for late night shopping in the suburbs would be good.’

In addition to the survey, we completed a review of uptake of the new business hours to evaluate the effectiveness of each office in meeting the service demands of the community within current business hours.

Our findings indicate that whilst people visited Medicare offices for a range of services during the new business hours, demand for cash claims was the highest.

Medicare office designWe have developed a new ‘Medicare office of the future’ design and are progressively introducing it as we relocate or refurbish offices. The new design provides a modern, customer-friendly space with convenient access to Medicare Australia services including Family Assistance.

To enable people to sit during their interaction with our staff, we have introduced ergonomic low counters. An increased public space incorporates a combination of modular and standard seating arrangements designed to suit different people’s requirements.

We responded to customer requests by providing seating that, along with the introduction of electronic queue ticket systems in our offices, provides the convenience of comfortable sit-down waiting.

We surveyed the Australian public to assess their acceptance of the new office design initiatives and they told us:

‘Airy and open spaces but privacy while doing business’

‘Better than standing in a queue — less congestion’

‘New store layout is great’

‘Delighted with new ticketing system, hope other office layouts can change’

‘Modern and very efficient’

‘More visually appealing and comfortable’‘

‘Much nicer than any Medicare office I have been in before’

‘Everything is user friendly and comfortable’

‘Light and airy design and color scheme’

‘The comfortable seating while waiting and the fairness of the queue system, the whole system is great!’

Enhancing the total customer experience in the Medicare office was part of the core strategy for implementing the new technology. The queue management systems have assisted in achieving this outcome by improving the management of customer flows to better meet expectations and drive workforce-planning improvements.

The latest Medicare office design will also include a ‘self-help’ service zone that is easily accessible to customers. The zone contains a ‘drop-off’ box that allows customers to lodge claims and forms without the need to queue, a dedicated telephone line with direct access to our Information Centre staff and a personal computer that provides online access to all DHS websites through the DHS portal.

Medicare Australia Access PointsAcross Australia there is a network of over 1,000 Medicare Australia Access Points providing easy access to Medicare claiming and information. These outlets are self-service telephone booths located in rural transaction centers, state government agencies and shop fronts, post offices, pharmacies and many other shops and service outlets.

Many things people do in a Medicare office can also be done at a Medicare Australia Access Point. As well as claiming a Medicare benefit, a person can request tax statements from Medicare, update their Medicare details and sign up for the Australian Organ Donor Register. The booths also provide information about the PBS and the Australian Childhood Immunization Register.

The locations of Medicare Australia Access Points are available on Medicare Australia’s website.

Pharmaceutical Benefits SchemeThe Pharmaceutical Benefits Scheme (PBS) gives all Australian residents and eligible overseas visitors access to prescription medicines in a way that is affordable, reliable and timely. Through the PBS, the Australian Government subsidizes the cost of listed prescription medicines, making them more affordable for all Australians.

DoHA is responsible for program policy development and the overall management of the PBS, including the Schedule of Pharmaceutical Benefits, and DVA is responsible for the overall policy for the RPBS. In the following report, unless otherwise noted, ‘PBS’ indicates both the PBS and the RPBS.

Our responsibilitiesWe are responsible for the operation of the PBS, which involves:

processing pharmacists’ claims

administering safety net arrangements

approving authority prescriptions

approving pharmacists (and certain doctors) to supply PBS medicines and

approving private hospitals (and participating public hospitals) to supply PBS medicines to their eligible patients.

We make payments under section 100 of the NHA to:

pharmaceutical companies, for the supply of in-vitro fertilization hormones, fertility drugs and botulinum toxin and

fund medications under the Highly Specialized Drugs Program.

We make payments to colostomy and ileostomy associations for ostomy supplies. We also make payments under a program separate from the PBS to fund the use of Herceptin for the treatment of patients with metastatic breast cancer.

PBS eligibilityThere are two levels of eligibility for the PBS — general and concession. A general person pays up to $29.50 for their prescription medicine, and a concession person pays up to $4.70 for their prescription medicine. These figures are adjusted annually in line with the CPI and do not cover additional costs on more expensive brands of medicines.

To receive subsidized medicines through the PBS, each time a person gets a prescription filled they must show their pharmacist a current:

Medicare card

concession card from Centrelink and/or DvA if applicable or

A PBS safety net entitlement or concession card if applicable.

This ensures subsidized medicines are only provided to those who are eligible to receive them, and the person pays the appropriate amount dependent on their level of eligibility.

PBS safety netThe PBS safety net helps protect individuals and families who spend a lot of money on prescription medicines in a calendar year. Each year the government sets a general and concession safety net threshold. The 2006 safety net threshold is $960.10 for the general threshold and $253.80 for people holding concession cards from Centrelink or the DVA.

Once the relevant safety net threshold has been reached, customers can apply for a safety net card and PBS medicines will be cheaper or free for the rest of the calendar year.

Any additional costs on more expensive brands of medicines do not count towards the safety net threshold.

To qualify for the PBS safety net, people need to keep a record of all PBS medicines supplied to them or their families. They can either ask their pharmacist for a prescription record form or hand this form in whenever they have a prescription filled or, if they frequent the same pharmacy, they can ask the pharmacist to keep an electronic record.

PBS safety net 20 day ruleOn 1 January 2006, Medicare Australia implemented the new budget measure known as the ‘PBS Safety Net 20 day rule’. This measure has resulted in specific medicines being excluded from the PBS safety net entitlements where they have been dispensed within 20 days of a previous supply under the ‘immediate supply’ provisions.

This means that:

the cost will not count towards a person’s safety net threshold and

If the safety net threshold has been reached, the charge will be the person’s usual PBS contribution not the reduced safety net amount.

The new rule encourages responsible use of the PBS. The change supports good practice for safe use of medicines and will help to make best use of funding for the PBS.

The rule only applies to certain PBS medicines for long-term therapy and only when the next supply is obtained within 20 days. It does not apply to any medicines for acute conditions or short-term use such as antibiotics. More information about which medicines are affected can be found at www.health.gov.au/pbs.

Key business resultsWe processed 183.3 million services, representing $6.2 billion in benefits paid under the PBS and the RPBS, collectively called the PBS.

PBS expenditure

2004–05 2005–06 % change

PBS benefits paid (including Stoma)

$5.7 billion $5.8 billion +1.8%

RPBS benefits paid $475 million $469.7 million -1.1%

Total amount paid $6.2 billion $6.3 billion +1.6%

PBS services processed

169.6 million 168.2 million -0.8%

RPBS services processed


Stoma services (incl. ostomy preparation and appliances)

570,904 593,147 +3.9%

Total services processed

185.9 million 183.3 million -1.4 %

Online claiming for PBSOnline claiming for PBS was developed in response to pharmacies’ requests for better and faster ways to claim PBS benefits. As a result of feedback from the pilot of online claiming for PBS (conducted in 2004–05) Medicare Australia and pharmacy software vendors have worked together to address a number of major issues identified.

The main areas of focus in 2005–06 were:

the provision of additional functionality in both Medicare Australia and dispensing software systems to assist with the payment reconciliation process

the implementation of improved help desk arrangements, whereby pharmacies only need to use a single telephone number to contact Medicare Australia for all PBS services and

The review of reason code wording for pharmacies to ensure reason codes and associated details are clear and informative.

Medicare Australia is working closely with the Pharmacy Guild of Australia (the Guild) and software vendors to discuss and resolve their issues and concerns. A fortnightly Implementation Working Group has been set up with the Guild and the software vendor industry for this purpose. In addition, monthly forums are held with all pharmacy software vendors to discuss operational and technical issues. The Guild also attends these forums.

As a result of the improvements made in the 2005–06 financial year, it is anticipated that the uptake of online claiming for PBS by the broader pharmacy community will greatly increase in 2006–07.

Medicare Australia continues to work closely with the Guild and software vendors regarding the future roll out of online claiming for PBS to ensure that the product meets the needs of pharmacies.

Education and communicationMedicare Australia uses a range of communication channels and tools to let consumers and pharmacists know about the PBS.

The How to save money on medicines brochure is a key communication tool to inform consumers about the PBS safety net, less expensive brands of medicines, and ways of using medicines wisely. This information is available from Medicare offices and our website as well as from pharmacies and some doctors’ surgeries.

One of the key ways we provide information to pharmacists is through a quarterly Medicare Australia publication, Bulletin Board, which provides information on a range of administrative and topical issues related to the PBS.

Concessional Entitlement validationThe Concessional Entitlement validation (CEV) initiative was announced in the 2003–04 federal Budget. The main business objectives of the initiative were to:

improve concession data quality with Centrelink;

implement an online capability for pharmacies to check a customer’s concession status; and

reduce the number of inappropriate concessional claims and ensure only those that are eligible access the PBS at the concessional level of subsidy.

As part of the CEV initiative, improvements have been made in both Medicare Australia and Centrelink systems that have allowed Medicare Australia to move forward in implementing improved checking to ensure only those people eligible access the PBS at the concessional level of subsidy.

In December 2004, monthly PBS statements were updated to include warning details of PBS medicines dispensed at concessional rates to customers without concessional entitlement on the date of service. As a result of this, a reduction of one per cent in the rate of inappropriately supplied prescriptions has occurred.

Online claiming for PBS enables pharmacists to conduct an on-the-spot check of a customer’s concessional status. Online pharmacies are notified of a customer’s concessional status when dispensing PBS medicines. This allows the pharmacist to make an informed decision regarding the level of copayment to charge to the customer.

Throughout 2005–06 Medicare Australia has continued to work with Centrelink to ensure the objectives of the initiative are achieved. In addition, Medicare Australia has closely monitored the results of CEV checking for both offline and online pharmacies to identify further areas of improvement and ensure only those who are eligible access the PBS.

Approval of authority prescriptionsAuthority medications are limited to use for specific conditions and medical practitioners must obtain prior approval from Medicare Australia before issuing any PBS authority prescriptions. Of the 1,578 PBS items listed, 926 are restricted to use for a particular condition or purpose. Of these 926 items,

429 are subject to criteria set by the Pharmaceutical Benefits Advisory Committee, which limits medical practitioners to supply by authority prescription.

Medical practitioners may also write an authority prescription if they need an increased supply to treat an individual patient.

In 2005–06, 6.7 million authority prescriptions were approved, with 5.8 million of these being handled by telephone through our 1800 service which operates 24 hours a day, seven days a week.

Approval to supply PBS medicinesSection 90 of the NHA enables us to grant approval to a pharmacist to supply PBS medicines. We received 356 applications for new or relocated pharmacies. These were referred to the Australian Community Pharmacy Authority and 264 pharmacies were recommended for approval. Of the remainder, 50 were not recommended and 42 were withdrawn.

We granted approval to:

859 community pharmacies to supply PBS medicines to the community under section 90 of the NHA (including 605 change of ownership and 254 relocations/new approvals)

21 medical practitioners to supply PBS medicines to rural/remote communities under section 92 of the Act

18 hospital authorities to supply PBS medicines to hospital patients under section 94 of the Act (6 private hospitals and 12 public hospitals participating in the pharmaceutical reforms).

This brings the total number of approvals at 30 June 2006 to:

4,973 section 90 approved community pharmacies

81 section 92 approved medical practitioners

176 section 94 approved hospitals (58 private hospitals and 118 public hospitals participating in the pharmaceutical reforms).

Fourth Community Pharmacy AgreementThe Fourth Community Pharmacy Agreement between the Australian Government and the Pharmacy Guild of Australia has been in place since 1 December 2005. Under the agreement we are responsible for making the various payments described below.

Payment types covered by the Fourth Community Pharmacy Agreement

Payment type Description

Aboriginal Health Services — Pharmacy Support Payment

A financial incentive for pharmacy proprietors to provide support services to Aboriginal health services in rural and remote locations in Australia.

Barcode Reader Costs Reimbursement A financial incentive that allowed approved pharmacies to claim reimbursement for the costs incurred in installing barcode readers between 1 January 2003 and 31 December


2005 to facilitate the correct dispensing of prescribed medication.

Broadband for Health/Pharmacy — Disaster Recovery Payment

A financial incentive, available for a limited time, that is payable to pharmacies to assist them in upgrading their personal computer systems to facilitate the satisfactory use of broadband.

Home Medicines Review Designed to allow patients’ medication regimes to be reviewed on the request of the patient, medical practitioner or carer.

Home Medicines Review — Rural Loading Payment

Designed to reimburse pharmacies in rural and remote areas of Australia for travel costs incurred when conducting home medicines reviews.

Improved Monitoring of Entitlement Medicare Number Allowance Payments

A payment to approved pharmacies for the residual administration costs of recording Medicare numbers on PBS prescriptions This payment was incorporated into the pharmacy dispensing fee from 1 December 2005.

Medicines Information to Consumers Participation Allowance

A payment, made every two months, to pharmacies that provide consumer medicine information. This payment was incorporated into the pharmacy dispensing fee from 1 December 2005.

Quality Care Pharmacy Program Payments for approved activities to embody the professional practice standards of the Pharmaceutical Society of Australia and to encourage community pharmacies to achieve and maintain accreditation.

Rural Pharmacy Maintenance Allowance A financial incentive to encourage pharmacy proprietors to remain in designated rural and remote locations in Australia.

Start-up Allowance A payment, staggered over two years, to encourage the establishment of new pharmacies in designated rural or remote locations.

Succession Allowance A payment, staggered over two years, to encourage pharmacists who want to purchase an existing pharmacy in an identified area of


need.

Training Incentive Payment for Pharmacy Assistants

A financial incentive to encourage pharmacy assistants to undertake the Certificate III in Community Pharmacy.

PaymentsThere were 64,663 payments made under Third and Fourth Community Pharmacy Agreement initiatives in 2005–06 totalling over $40 million. Pharmacies can obtain further information about payments under the agreement via Medicare Australia’s website.

Indigenous people’s access to the PBSDuring 2005–06, Medicare Australia continued to administer the PBS arrangements that make prescription medicines accessible in remote Indigenous and Torres Strait Islander communities.

We continued to pay pharmacists for the bulk supply of PBS medicines to remote Indigenous and Torres Strait Islander communities via the Aboriginal and Torres Strait Islander Health Service (ATSIHS), and some state funded health services.

These arrangements are enabled under section 100 of the NHA and currently make prescription medicines accessible to patients receiving treatment at over 165 remote area ATSIHS across the Northern Territory, Queensland, South Australia, Western Australia and Tasmania.

Pharmaceutical reforms in public hospitalsUnder the Australian Health Care Agreements, the Australian Government, states and territories are reforming the supply of pharmaceuticals to patients in public hospitals. Key features of the reform are to extend the PBS to admit patients on discharge and to outpatients, and to provide access to chemotherapy drugs for day patients of public hospitals.

Participating hospitals are required to adopt the Australian Pharmaceutical Advisory Council guidelines on the continuum of pharmaceutical care between the hospital and the community.

The pharmaceutical reforms are being gradually implemented across Queensland, Victoria and Western Australia. Doctors in approved public hospitals in those states can prescribe PBS items to non-admitted patients (outpatients) and admitted patients on discharge. The medication may be supplied from the approved public hospital pharmacy or from an approved community pharmacy.

DVA beneficiaries are included in the pharmaceutical reforms, and the same rules apply to RPBS benefits.

The Australian Government will continue to liaise with other states and territories, seeking agreement to implement the reforms.

At 30 June 2006, we had approved 118 public hospitals under these arrangements — 62 in Queensland, 51 in Victoria and 5 in Western Australia — and paid benefits of more than $90 million.

RPBS processingA project was undertaken to upgrade the DVA RPBS authority processing system. Phases 1 and 2 of the project were implemented during 2004–05 and delivered functionality to extend the recording of compliance information and improve system usability.

Phase 3 of the project was conducted during the 2005–06 financial year and included a range of system developments aimed at providing DVA with more complete, timely and accurate data relating to the RPBS program.

Australian Organ Donor RegisterThe Australian Organ Donor Register is administered by Medicare Australia and provides a simple way for people to record their consent (or objection) to becoming organ and/or tissue donors.

The register ensures that an individual’s consent (or objection) to donating organs and/or tissue for transplantation can be verified by authorised personnel 24 hours a day, seven days a week anywhere in Australia. In the event of a registered person’s death, information about their decision will be accessed from the donor register and provided to their family.

From July 2005 the register became operational as a consent register, recording a person’s legally valid consent to donate organs. Prior to this only a person’s intention to donate was registered. The details of those people who had previously recorded their intention to donate will be retained on the register until they complete a ‘consent’ registration form.

During the year the wide distribution of the organ donation brochure and registration form, through Medicare offices and state based organ donor agencies, also created awareness and increased general registrations. Promotion also occurred through doctors’ surgeries and the Medicare Australia website.

Medicare Australia also supported Australian Organ Donor Awareness Week in February 2006 with targeted promotions in Medicare offices, on Medicare Australia’s website and through the Good Health TV network available in some doctors’ surgeries. The key message for Australian Organ Donor Awareness Week was ‘organ donors save lives’.

Key resultsThe new Medicare claim form that was introduced in February 2006 now includes the option of registering as an organ and/or tissue donor. Minister Hockey promoted the new claim form at the launch of Australian Organ Donor Awareness Week on 19 February 2006. The number of registrations through Medicare claim forms between that time and 30 June 2006 was 1,525.

Access to view current registrations in the Australian Organ Donor Register became available through Customer Online Services on 1 October 2005.

There are now 791,320 individuals who have registered their consent to organ and/or tissue donation (this includes the ‘intent’ registrations of 16–17 year olds) on the Australian Organ Donor Register.

WebsiteThe donor register website encourages people to ‘sign on to save lives’ by registering online and provides general information about:

organ and tissue donation for transplantation

statistics on the numbers of registered organ and tissue donors and

An online registration mechanism.

Authorised medical personnel, who have signed confidentiality agreements covering the access and use of personal information, can access information recorded on the donor register via a secure Internet site. They are authorised by a management committee comprising representatives from Medicare Australia, DoHA and state organ donation agencies.

Australian Organ Donor Register

2004–05 2005–06 % change

Number of consent registrations (including the intent of 16–17 year olds)

N/A 791,320 N/A

Number of registrations of potential organ donors*

5,234,703 4,823,095 -7.9%

Number of serviced calls to enquiry line

53,643 40,585 -24.3%

* Potential organ donors refer to those people who had previously registered their intent on the organ donor register and have not updated this to consent to donate.

Australian Childhood Immunization RegisterThe Australian Childhood Immunization Register is a national database that was established in January 1996. The aim of the Immunization Register is to improve the rate of age appropriate immunization and to support parents and providers through the provision of information about a child’s immunization status.

Details of vaccinations given to children under seven years in Australia are recorded on the Immunization Register and are available on request to immunization providers and each child’s parent or guardian. Medicare Australia has a secure area on our website that provides a channel for authorized immunization providers to access information and updates a child’s immunization details on the Immunization Register.

Information for parents about the Immunization Register was published in a number of parent and family magazines and outlets including a special feature in our Indigenous magazine, Well and Good. Over the past year a revised brochure for parents about the Immunization Register was also distributed through Medicare offices and immunization providers. Medicare Australia participated in baby expos and health information days providing further education and promotion of the Immunization Register.

Information for providers about the National varicella vaccination Program, the new combination vaccines and updated forms were available via the Medicare Forum magazine. Updated and enhanced guides and publications were also produced to help providers access the secure pages of

the website. A number of conferences for immunization provider groups were also held throughout the year.

How the Immunization Register data is usedHealth professions use the Immunization Register to monitor immunization coverage levels and service delivery, and to identify regions at risk during disease outbreaks.

Immunization Register data also:

enables immunization providers and parents to check on the immunization status of an individual child, regardless of where the child was immunized

forms the basis of an optional immunization history statement that informs parents and guardians of their child’s recorded immunization history

provides information about a child’s immunization status to help determine eligibility for the Child Care Benefit and the Maternity Immunization Allowance family assistance payments

provides a measure of immunization coverage at the local, state/territory and national level

provides information for the delivery of feedback reports and incentive payments to eligible immunization providers and

provides reporting mechanisms to assist the Australian Government’s monitoring of national immunization programs.

Key resultsImmunization history statements are sent to parents as their child turns one, two and five years of age, and at any other time upon request. Statements were available via Medicare Australia’s Online Services facility from October 2005. In December 2005, statements became available from Medicare offices. Parents thus have immediate access to the statements when they require information for school and childcare Centre enrolment, and to assist with eligibility for some family assistance payments.

As at 30 June 2006, 14,036 child history statements had been viewed online and 25,572 had been received immediately over the counter from Medicare offices.

In November 2005 varicella (chicken pox) vaccination at 18 months of age was added to the routine schedule of vaccines provided free under the National Immunization Program. Several new combination vaccines were also introduced, reducing the number of vaccinations a child needs to have at the one time. These changes also included amendments to the manual forms and secure online facility used to report vaccinations to the Immunization Register.

The 10-year anniversary of the Immunization Register was celebrated on 1 January 2006. Since commencement of the register, the nationally reported immunization coverage rates have increased from 53 per cent to levels now consistently above 90 per cent. The Minister for Human Services conducted a celebration to mark this occasion at a Victorian Child Care Centre, with community groups and state/ Federal Government departments, MPs and Senators attending.

At 30 June 2006, 1.9 million children under seven years of age were included on the Immunization Register.

A total of $8.3 million was paid to immunization providers, and 4.0 million valid immunizations were recorded on the Immunization Register during 2005–06.

Immunisation rates of children in Australia

2004–05 2005–06 % change

Children under 7 years registered at 30 June

1.8 million 1.9 million +5.6%

Valid immunisation episodes recorded at 30 June


Children aged 12–15 months appropriately immunised at 30 June

91.0% 90.7% -0.3%


91.7% 92.4% +0.8%


83.2% 83.9% +0.8%

Total amount paid to immunisation providers

$8.7 million $8.3 million -4.6%

General Practice Immunization Incentives SchemeThe General Practice Immunization Incentives (GPII) Scheme provides financial incentives to GPs who monitor, promote and provide immunization services to children under the age of seven years.

The overall aim of the scheme is to encourage at least 90 per cent of practices to achieve 90 per cent proportions of full immunization.

Providers are kept up to date on changes to the GPII scheme by:

content on our website, which includes a quarterly information sheet, statistics, general program information and downloadable forms for providers and Divisions of General Practice

representation at various professional conferences and

ACIR field officers in each state and territory who provide support to practices and providers via the GPII enquiry line.

Key business resultsData from the May 2006 calculation shows that the GPII scheme had 5,491 registered practices. The average immunization coverage rate for practices was calculated at 91.41 per cent for 2005–06, with 76.3 per cent of participating practices achieving rates of 90 per cent or higher.

General Practice Immunization Incentives scheme

2004–05 2004–05 % change

Practices registered 5,480 5,491 +0.2%

Service incentive payments


Outcome payments $15.4 million $14.7 million -4.5%

Adjustment outcomes payments


Total outcomes payments


Highest quarterly outcomes payment

$10,358.60 $10,301.20 -0.6%

Average outcomes payment

$985.05 $994.51 +1.0.%

Total Payments (SIP + Outcomes)


Payments and informationThe GPII scheme is made up of three components:

a Service Incentive Payment — an $18.50 payment to GPs and other medical practitioners who notify the ACIR of a vaccination that completes an immunization schedule

an Outcomes Payment — a financial reward for practices that achieve 90 per cent or greater proportions of full immunization and

Immunization Infrastructure Funding — funds provided to Divisions of General Practice, state-based organizations and the National GP Immunization Coordinator, to improve the proportion of children who are immunized at local, state and national levels. DoHA administers this component.

Practice Incentives ProgramThe Practice Incentives Program (PIP) provides a number of incentives that aim to help general practices improve the quality of care provided to patients. Practices must be accredited or working towards accreditation against the Royal Australian College of General Practitioners Standards for General Practices. The PIP is part of a blended payment approach for general practices. Payments made through the program are in addition to other income earned by the GPs and the practice, such as patient payments and Medicare rebates.

Medicare Australia assesses all applications from general practices and administers the program on a day-to-day basis. DoHA has overall policy responsibility for the PIP, including the determination of eligibility criteria.

On 23 November 2005, the Minister for Health and Ageing, the Hon Tony Abbott MP announced changes to the PIP to simplify and improve the program. A change was made to the PIP after hours

incentive to enable some smaller practices (with less than 2,000 Standardized Whole Patient Equivalents) to be eligible for after-hours tier two. Further changes to other elements will be implemented in the next financial year.

The News Update, a quarterly information sheet about current and future program activities and incentives keeps providers up to date on changes to the PIP. This is posted to practices and is also accessible on the Medicare Australia website.

The Medicare Australia website also displays statistics and general program information which can be downloaded by providers and divisions of general practice.

Types of paymentsThere are eleven PIP components, as described in the table below and practices may qualify for any or all of them.

Payment types covered by the PIP


Information management/Information technology Payments to practices for providing data to the Australian Government, using electronic prescribing software to generate the majority of scripts, and having the capacity to send and receive data electronically

After-hours care Payments to practices to ensure that patients have access to 24-hour care, including afterhours home visits where necessary

Teaching Payments to practices for teaching medical students

Quality Prescribing Initiative Payments to practices that participate in the quality use of medicines program endorsed by the National Prescribing Service

Practice nurses/Allied health worker Payments to practices in eligible rural, remote or urban areas of workforce shortage and payments to Aboriginal medical services, to assist them to employ or retain the services of a practice nurse, Aboriginal health worker and/ or allied health worker

Cervical screening Payments to practices that achieve targets in cervical screening, and payments to GPs who screen women aged 20–69 years who have not had a Pap smear for four years or more

Diabetes Payments to practices that achieve targets in providing care for their patients with diabetes,


and payments to GPs for providing diabetes care according to best practice guidelines

Asthma Payments to practices for providing the Asthma 3+ program, and payments to GPs who complete an Asthma 3+ plan for patients with moderate to severe asthma

Mental health Payments to GPs for using the Three-step Mental Health Process with their patients

Procedural GP payment Payments to practices to support the provision of procedures such as surgery, anaesthetics and obstetrics in rural and remote areas

Rurality A rural loading applied to the PIP payments of practices where the main location is outside a capital city or other major metropolitan area

* Provision of at least 10 hours care from the practice commenced in May 2006.

Key business resultsAt 30 June 2006, 4,745 practices were registered as participating in the PIP and a total of over $261.8 million worth of incentive payments were made.

Services provided under the PIP

2004–05 2005–06 % change

Number of practices participating at 30 June

4,681 4,745 +1.4%

Provision of data to the Commonwealth

4,681 4,745 +1.4%

Electronic prescribing 4,307 4,417 +2.6%

Capacity for electronic transfer

4,364 4,480 +2.7%

After-hours care

Ensuring patients have access to 24-hour care

4,554 4,601 +1.0%

2004–05 2005–06 % change

Provision of at least 15 hours care from the practice

3,116 2,858 -8.3%

Provision of at least 10 hours care from the practice *

262

Provision of all after-hours care for practice patients

1,357 1,296 -4.5%

Teaching

Number of teaching sessions

78,114 83,496 +6.9%

Targeted incentives

Quality Prescribing Initiatives

1,201 1,203 +0.2%

Procedural GP 340 337 -0.9%

Practice nurse and/or allied health workers

1,617 1,756 +8.6%

Cervical screening 3,103 3,187 +2.7%

Diabetes 1,920 2,023 +5.4%

Total amount paid $253 million $261.8 million +3.5%

Rural Retention ProgramThe Rural Retention Program (RRP) aims to improve health care for people in rural and remote areas of Australia through a system of incentive payments to medical practitioners practicing in these areas. It encourages medical practitioners to remain in rural and remote practices beyond the current average period of two years, and rewards those who do. This is expected to result in improved access to primary health care, greater stability and continuity in medical services, and improved health outcomes for Australians living in these areas. There are two components of the program:

The Central Payments System — administered by Medicare Australia since December 1999. This system seeks to recognize general practitioners’ contributions in rural and remote locations, based on their Medicare service data over a number of years.

The Flexible Payments System (FPS) — administered by state based and territory-based rural workforce agencies since December 2000. This system recognizes long-serving general

practitioners who do not receive an equitable level of support under the Central Payments System because Medicare does not capture their services or their locations are not adequately taken into account.

Key business resultsWe made 2,071 payments totaling $20.3 million to 2,021 providers participating in the RRP during 2005–06.

Medical practitioner participation in the RRP

2004–05 2005–06 % change

Number of CPS payments made

1,908 1,939 +1.6%

Total CPS amount paid $18.4 million $18.6 million +1.1%

CPS percentage paid 98.5 % 98.6% +0.1%

Number of FPS payments made

161 132 -18.0%

Total FPS amount paid $2.03 million $1.7 million -16.3%

FPS percentage paid 98.8 % 98.5% -0.3%

Total amount paid $20.4 million $20.3 million +0.5%

CPS=Central Payments System, FPS=Flexible Payments System

General Practice Registrars’ Rural Incentive Payments SchemeSince 2000, funds totaling over $100 million have been used to boost general practice training in rural and remote areas through the dedicated 200 place Rural Training Pathway, which operates alongside the (primarily urban) General Training Pathway.

To be eligible for rural training incentive payments, registrars must be formally registered in the Rural Training Pathway. Registrars will qualify by completing a period of service in one or more of the four categories of eligible rural and remote locations. However, exceptions apply for registrars undertaking Advanced Rural Skills Posts, procedural, special skills and mandatory elective training.

The rural, remote and metropolitan area location categories are:

1. capital city2. other metropolitan Centre3. larger rural Centre4. small rural Centre5. other rural area

6. remote Centre7. other remote area8. Offshore island.

Financial incentives are offered to medical practitioners who undertake training in the Rural Training Pathway in practices located in rural, remote and metropolitan areas that can particularly benefit from the scheme, as determined under an eight-part location classification system (for more information about the system visit www.health.gov.au). Up to $60,000 is available per registrar over the three years of general practice training (incentive payments are not available to registrars undertaking their mandatory hospital training).

Key business resultsWe made payments totaling $6.7 million to 426 medical practitioners participating in the General

Practice Registrars’ Rural Incentive Payments Scheme in 2005–06.

General Practice Registrars’ Rural Incentive Payments Scheme

2004–05 2005–06 % change

Number of medical practitioners paid

444 426 -4.1%

Number of payments made

814 786 -3.4%

Total amount paid $6.7 million $6.7 million 0%

Training for Rural and Remote Procedural GPs ProgramThe objective of the program is help general practitioners in rural and remote areas to attend relevant training, upskilling and skills maintenance activities. The program has two components:

a grant for the cost of up to two weeks training, including the cost of locum relief to a maximum of $15,000 per general practitioner per financial year for procedural general practitioners practicing in surgery anesthetics or obstetrics in rural and remote areas (RRMA 3-7) and

a grant for the cost of up to two training sessions, to a maximum of $3,000 per general practitioner per financial year for general practitioners practicing emergency medicine in rural and remote areas (RRMA 4–7) to attend approved skills maintenance and upskilling activities.

Key business resultsThe expansion of the program to include the emergency medicine component was introduced on 1 February 2006 and payments may be backdated to include activities undertaken from 1 January 2006.

Training for Rural and Remote Procedural GPs

2004–05 2005–2006 % change

Number of registered providers

723 1,323 +83.0%

Number of providers paid

639 767 +20%


946 1,514 +60%

Total amount of payments


Compensation Recovery ProgramThe Compensation Recovery Program, which began in February 1996, aims to prevent ‘double dipping’ in Medicare benefits, nursing home benefits or residential care subsidies paid by the government in relation to an injury or illness, where a person receives compensation.

Medicare Australia administers the program under the provisions of the HOSC Act on behalf of the DoHA.

Eligible people who are claiming compensation can claim Medicare and/or nursing home benefits and/or residential care subsidies from the date of their injury or illness to the date of judgment or settlement of their cases.

However, once a case reaches judgment or settlement, the HOSC Act requires insurers or other compensation payers to advise Medicare Australia of claims for compensation where the amount of compensation provided is more than $5,000, inclusive of all costs.

The process begins with a Notice to Claimant, including a Medicare history from the date of injury. The claimant is required to identify Medicare, nursing home or residential care services, which relate to the compensable injury and return this to Medicare Australia. From this list, Medicare Australia determines the amount of benefits and/or subsidies, if any, that have been paid for treating the compensable condition. Under the HOSC Act, Medicare Australia is required to recover this amount on behalf of government.

The HOSC Act has been modified on a number of occasions since its inception, the most recent being in 2001 and 2006. The latest changes in 2006 were mostly technical, with one repealing a sunset clause on the advance payment option (APO). Many insurers and claimants favors the APO as it provides for the release of 90 per cent of the compensation to the claimant, with 10 per cent being forwarded to Medicare Australia. Any debt is deducted from the advance payment with any excess being refunded to the claimant. If the advance payment does not cover the debt, the claimant is required to make up the difference.

Key business resultsThis year Medicare Australia experienced a slight, but anticipated, increase in both the volume of cases finalized and the value of recoveries made.

Compensation recovery cases and benefits

2004–05 2005–06 % change

Cases finalised 47,365 49,232 + 3.9%

Total amount of benefits recovered


HECS Reimbursement SchemeThe HECS Reimbursement Scheme was announced in the 2000 Budget as part of the regional health strategy known as more doctors, better health services. This initiative aims to promote careers in rural medicine and increase the number of doctors in rural and regional areas.

Participants who undertake training or provide medical services in rural and remote areas of Australia have one-fifth of their HECS debt reimbursed for each year of service. Through the scheme, as more doctors move to work in rural areas, communities gain improved access to health services and benefit from better general health levels over the longer term.

Key business resultsDuring 2005–06 we made payments totaling $2.1 million to 272 medical graduates participating in the HECS Reimbursement Scheme.

HECS Reimbursement Scheme

2004–05 2005–06 % change

Number of eligible medical graduates participating

300 421 +40.3%

Number of medical graduates paid

218 272 +24.8%


378 440 +16.4%

Total amount paid $1.7 million $2.1 million +23.5%

Family AssistanceFamily Assistance aims to give Australian families better access to a range of government payments and services. It operates in over 550 offices throughout Australia; in Medicare offices, Centrelink customer service Centre’s and ATO shop fronts.

The main payments and services provided by Family Assistance include:

Family Tax Benefit (A) which provides help with the cost of raising children

Family Tax Benefit (B) which provides extra help for families with one main income, including sole parents

Child Care Benefit (CCB) which offsets the cost of long and part-day child care

Maternity Payment which helps with the extra costs of a new baby and

maternity Immunization Allowance which is a separate payment for children who have been fully immunized.

Since the commencement of the Family Assistance in July 2000, customers have been able to access limited Family Assistance services at Medicare offices.

Currently, at all Medicare offices, Family Assistance customers can:

make enquiries

lodge forms for payments and

notify a change of their circumstances.

As agencies under the DHS tasked with improving services to our customers, Medicare Australia and Centrelink have been working together to progressively deliver extended Family Assistance services from Medicare offices. These extended services include claims processing and handling of all levels of customer enquiries. A phased implementation commenced on 1 July 2005 and is scheduled for completion by all 238 offices by December 2006. The number of Medicare offices able to offer customers extended Family Assistance services is ahead of schedule. As at 30 June 2006, the extended services were available at 190 Medicare offices throughout Australia. The roll out has been completed in Western Australia, the Northern Territory, South Australia, the Australian Capital Territory and Tasmania.

With the extension of Family Assistance services, customers can now have their claims for Maternity Payment, Maternity Immunization Allowance, Child Care Benefit (CCB) and FTB processed when they visit one of the 190 fully Family Assistance enabled Medicare offices. They can also change their income estimate, method of payment and their contact details.

As at 30 June 2006 nearly 130,000 Australians have accessed extended Family Assistance services in Medicare offices since the roll out commenced. Customer satisfaction with the provision of extended Family Assistance services has been independently measured. Results show strong support from customers accessing the extended services, both with the level of service received at Medicare offices and in the greater choice given to customers in where they can access Family Assistance products and services. visit www.familyassist.gov.au for more information about the Family Assistance.

Key business resultsFamily Assistance services

2004–05 2005–06 % change

Total services* provided to families

304,674 380,405 +24.9%

Medicare offices offering access to extended Family Assistance services

N/A 190 N/A

Total number of customers accessing extended Family Assistance services

N/A 129,025 N/A

* Total services include the number of forms submitted for payment and number of enquiries to Medicare offices.

Hearing Services ProgramThe Australian Government provides hearing services and products to eligible people under the Hearing Services Program, which is administered by the Office of Hearing Services in the DoHA. While the Office of Hearing Services manages all policy and eligibility aspects of the program, Medicare Australia processes and pays claims to accredited hearing service contractors on their behalf.

Key business resultsThis year we processed 898,483 services and made payments totalling $203 million to accredited hearing service contractors. Approximately 95 per cent of all claims are submitted via electronic data interchange.

Hearing Services Program services and payments

2004–05 2004–05 % change

Services processed a 870,365 898,483 +3.2%

Total amount paid b $194 million $203.1 million +4.7%

a Service provided to individualsb Payments made to hearing contractors

National Bowel Cancer Screening ProgramFollowing the success of the Bowel Cancer Screening Pilot Program and as part of its Strengthening Cancer Care initiative in the 2005–06 Federal Budget, the Australian Government allocated $43.4 million over three years for the phased introduction of a national bowel cancer screening program.

This program will reduce the number of people who die from bowel cancer which is the most common internal cancer affecting Australians and the second-highest cause of cancer-related deaths, behind lung cancer. Early diagnosis of bowel cancer or pre-cancerous abnormalities has been shown to increase the chances of survival. This national program will build on the success of the Bowel Cancer Screening Pilot.

In March 2006 the Minister for Human Services, the Hon Joe Hockey MP, gave approval for the CEO of Medicare Australia to enter into a service arrangement with the Secretary of DoHA under subsection 7(2) of the Medicare Australia Act 1973. The service arrangement allows the CEO to provide Commonwealth services relating to the administration of aspects of the National Bowel Cancer Screening Program including the establishment and maintenance of the register to be known as the National Bowel Cancer Screening Register (and matters incidental to providing these Commonwealth services), subject to conditions specified in the service arrangement.

The challenge has been to develop and implement a population health screening register to support the commencement of National Bowel Cancer Screening Program invitations from August 2006 and provide a high level of customer service supporting the ongoing administrative role of the register.

To administer the National Bowel Cancer Screening Register Medicare Australia will:

identify and invite eligible participants to screen and re-screen at appropriate intervals using Medicare enrolment and DVA enrolment files

provide a system of communication between participants and their medical practitioners to allow for appropriate and timely follow up investigation

record participants’ screening and detection histories and

make payments to medical professionals for services and the transfer of data to the register.

Medical indemnityThe Australian Government’s medical indemnity framework comprises five schemes aimed at strengthening the longer-term viability of the medical insurance industry and creating an environment in which the industry can operate successfully. This is being achieved through the provision of financial support to reduce the impact of large claims and by making medical indemnity insurance more affordable for medical practitioners. Medicare Australia is responsible for the administration of the schemes under the provisions of the Medical Indemnity Act 2002.

Incurred but not Reported (IBNR) Indemnity Claims SchemeUnder this scheme, the government covers the costs of claims from medical defense organizations that do not have adequate reserves to cover their liabilities. To date United Medical Protection Limited (UMP) is the only medical defense organization actively participating in the scheme. This scheme comprises of IBNR indemnity claims and Untied Medical Protection Support Payments (UMP SP). Ongoing costs associated with the scheme are partly funded through a contribution payment (UMP SP) imposed on those people who were members of UMP on 30 June 2000.

Key business resultsIBNR Indemnity Scheme claims processed

2004–05 2005–06 % change

Number of claims received

416 375 -9.9%

Total benefits paid $8.7 million $14.8 million +70.1%

Participation and revenue under the UMPSP arrangements

2004–05 2005–06 % change

Number of members invoiced a UMPSP

18,239 10,131 -44.5%

Total amount invoiced $24.4 million $13.7 million -43.9%

High Cost Claims Scheme (HCCS)Under this scheme, the government funds 50 per cent of the cost of medical indemnity insurance payouts that are greater than the applicable threshold amount, up to the limit of a medical practitioner’s insurance cover. This scheme has three threshold levels which are dependant on the date the claim was first notified to the insurer.

Notification date Threshold amount

1 January 2003 to 21 October 2003 (inclusive) $2,000,000

22 October 2003 to 31 December 2003 (inclusive)

$500,000

On or after 1 January 2004 $300,000

HCCS claims processed

2004–05 2005–06 % change

Total claims received 2 2 0%

Total benefits paid $0.414 million $0.065 million -84.3%

Exceptional Claims SchemeUnder this scheme, medical practitioners are protected against personal liability for eligible claims that exceed the level of their insurance cover. The scheme has two threshold levels which are dependent on the date the claim was first notified to the insurer.

Run-off Cover Scheme (ROCS)Under this scheme, the government will guarantee funding for claims against eligible medical practitioners who have left the private medical workforce and been provided with free run-off cover. A ROCS support payment, paid by medical indemnity insurers to the government since 1 July 2004, will meet the cost of funding claims over time. Under the scheme, medical indemnity insurers will be reimbursed implementation and compliance costs under section 34ZN(1)(c) of the Medical Indemnity Act 2002.

Exceptional Claims Scheme notification date

Notification date Threshold amount

1 January 2003 to 30 June 2003 $15,000,000

On or after 1 July 2003 $20,000,000

Exceptional Claims Scheme claims processed

2004–05 2005–06

Total claims received nil nil

Total benefits paid $nil $nil

ROCS implementation and compliance costs paid

2004–05 2005–06

Total implementation fees paid nil $1.81 million

Total Administration fees paid $nil $2.84 million

Premium Support Scheme (PPS)Under this scheme, eligible medical practitioners receive financial assistance through a subsidized reduction in their insurance premium costs, effective from 1 July 2004. Insurers are then reimbursed the subsidized amount by the government.

The PSS is designed to ensure that if a doctor’s gross medical indemnity costs exceed 7.5 per cent of his or her gross private medical income, he or she will pay twenty cents in the dollar for the cost of the premium beyond that threshold limit.

Competitive Advantage PaymentUnder this scheme, medical indemnity insurers that benefit from the IBNR Indemnity Scheme are required to make a payment to the government that reflects their level of competitive advantage. To

date Australasian Medical Insurance Limited is the only insurer that has made a competitive advantage payment.

Participation and revenue under the PSS

2004–05 2005–06 % change

Total eligible practitioners

4,441 4,139 -6.8%

Total amount paid $24.4 million $17.1 million -29.9%

PSS administration fees

2004–05 2005–06 % change

Total administration fees


Competitive payments received

2005–06

Total number of invoices 1

Total amount paid $56 million

30% Rebate on Private Health InsuranceThe 30% Rebate program (the program) continues to be a major component in the success of the Australian Government’s initiative to encourage an appropriate and viable mix of private and public provision of health services.

While still known as the 30% Rebate program, on 1 April 2005, the Australian Government expanded the program to include a 35 per cent rebate for people aged from 65 to 69 years inclusive, and a 40 per cent rebate for people aged 70 years and older.

During 2005–06, the new rebates have been applied to approximately 518,000 claims per month, resulting in an additional $171.25 million being paid by Medicare Australia.

Medicare Australia administers the program on behalf of the Australian Government and works with DoHA, the ATO, the Private Health Insurance Advisory Council and health funds to further improve the program’s administration.

Key resultsThe number of registered health fund memberships increased by two per cent. This increase coincided with the expansion of the program in 2005.

There was a change in payments in 2005–06, with more customers opting to pay reduced premiums directly to their health insurer, rather than paying a full premium and claiming the rebate back at a Medicare office. In 2005–06, cash claims paid direct to individuals decreased to $2.14 million and health fund payments increased to $3.05 billion.

30% Rebate on Private Health Insurance

2004–05 2005–06 % Change

Number of memberships registered

4.73 million 4.84 million +2.3%

Total paid in cash claims


Total paid to health funds

$2.7 billion $3.05 billion +13.0%

Program auditAudits of 12 health fund entities that participate in the program via the Private Health Insurance Premium Reduction Scheme were carried out during 2005–06. The purpose of these audits was to identify differences between Medicare Australia and health fund data relating to the registration of people who pay reduced premiums for private health insurance cover. The differences were identified by comparing the registration records at health funds with the registration records at Medicare Australia and measuring the risk associated with Medicare Australia paying a health fund for a policy which is not eligible for the Premium Reduction Scheme.

Medicare Australia also conducted audits of health fund procedures for the identification and processing of dishonored member contributions. These audits were designed to assess the impact on claims under the Premium Reduction Scheme, and the validity and completeness of member applications for the Premium Reduction Scheme retained by health funds.

The health fund procedures audits established the extent to which claims for payment made by health funds:

were accurately calculated

were correct in respect of payments made by the member

were claims for valid participants in the Premium Reduction Scheme and

were supported by member application.

The audits concluded that procedures being applied continued to reduce the risk of incorrect or inappropriate payments being made to health funds. However, recommendations designed to further strengthen and/or improve aspects concerning data completeness or evidence of participant validity were also made and implemented by the health funds audited.

Program risk managementCompliance programMedicare Australia’s compliance program is based on a risk-management approach involving activities to detect, prevent and correct non-compliance. In 2005–06, as well as administering the compliance program, the Program Review Division (PRD) also continued to implement a number of budget initiatives designed to stem rising Medicare and PBS costs and realize savings to the Australian Government in the form of reduction in expenditures on the Medicare and PBS schemes.

The Division’s three major compliance activities are:

1. Detection – via hotlines, data scanning and targeted detection and audit activity2. Prevention – via education programs and information services3. Correction – via feedback to practitioners, recovery of benefits, prosecutions and review of

practices.

1. DetectionMedicare Australia’s compliance program is dependent on intelligence and analysis identifying potential non-compliant behavior by medical practitioners, pharmacists, patients and members of the public. Information subjected to analysis may be obtained from tip-offs, random sampling of claims data, and targeted detection techniques and processes. Audit programs are also carried out to assist in identifying areas of risks while also achieving an administrative purpose of verifying whether claims and payments are made correctly.

1.1 Fraud hotlineThe public can contact Medicare Australia to report potential frauds through the following two hotline numbers:

131 524 — DHS Fraud Tip-Off Service and

1800 202 011 — Medicare Australia’s Report a Fraud Line.

Calls to these numbers are administered by Medicare Australia’s call centre in South Australia. Information received is referred to the state from which the call originated if further assessment is warranted.

PRD, through its national office and state program review branches, also receives tip-offs from the public via facsimile, letter and email. Referrals also come from other areas of Medicare Australia such as reports from staff at Medicare offices when suspicious benefit claiming patterns or behaviour is detected.

In 2005–06, a total of 1,706 calls, tip-offs and referrals were received by PRD.

These comprised:

1,064 calls made by the public to the fraud hot-line numbers and

642 tip-offs from the public or referrals from other areas in Medicare Australia.

Of these, 876 (51 per cent) warranted further assessment and follow-up.

1.2 Data scanning activitiesIn 2005–06, Medicare Australia continually scanned and analyzed Medicare and PBS data to identify potential inappropriate claiming and anomalous behavior to support the design of targeted operations. This detection activity comprises three general parts:

Environmental scanPRD conducted a national workshop — with participants from Medicare Australia national office and state-based compliance personnel, Centrelink, DHS and DoHA — to carry out an environmental scan to support the development of the 2006–07 National Compliance Program.

The workshop and subsequent analysis by PRD identified six Medicare, seven PBS, one associated government program, and three patient/public compliance issues warranting assessment and response under the 2006–07 National Compliance Program.

Random compliance auditsThese are post-payment reviews undertaken annually to provide assurance that Medicare and PBS payments are valid and made in accordance with legislation. These audits are ongoing, with results reported annually. They involve verifying all aspects of the randomly selected Medicare or PBS claims with documents and parties relevant to the transaction.

In 2005–06, Medicare Australia audited randomly selected samples of:

5,294 PBS prescriptions from 127 pharmacies. Of these prescriptions, 708 were confirmed with the prescribing medical practitioners and 498 were confirmed with the patients. This audit found that 99 per cent of the sample were supplied, claimed and paid correctly and

1,470 Medicare services claimed from 723 medical practitioners. Of these services, 955 services were confirmed with the medical practitioners and 524 were confirmed with the patients. This audit found that 99 per cent of the samples were provided, claimed and paid correctly.

Data reviews looking for anomalous behaviorData reviews use sophisticated intelligence and data-mining tools to scan significant cross-sections of the medical practitioner, pharmacist and patient populations.

In 2005–06, risk profiling by Medicare Australia identified 1,875 incidences where practice profiles by medical practitioners warranted further assessment. These practice profiles were referred to state program review branches for review

1.3 Targeted detection activitiesMedicare Australia carries out audits and assessments targeting areas of high risks to the integrity of the Medicare and PBS schemes. Significant targeted detection activities in 2005–06 included:

Analysis of data on people obtaining PBS in excess of medical need: on average, there are more than six million patients who received over 40 million items of PBS medicines each quarter. To efficiently analyze this large amount of data, a quarterly analytical program was implemented.

In 2005–06, Medicare Australia identified 90,974 incidences where patients may have obtained PBS medicines in excess of medical needs. PBS (medicine) histories of these patients were examined and medical practitioners of 4,638 patients were contacted to discuss their patient’s usage of PBS medicine (further information appears later in this section).

Assessments of Medicare claims where data is analyzed to identify medical practitioners with anomalous claiming patterns that may warrant further review by Medicare Australia’s medical advisers.

In 2005–06, Medicare Australia completed 33 assessments with five assessments associated with Medicare benefits worth over $100,000. These assessments are described in the following table.

Assessments of claims by selected Medicare items

Risk Claim periods

(months)

No. of medical

practitioners

Medicare

benefits

Removal of superficial foreign body (risk: potential inappropriate claims using a Medicare item with higher fee)

12 This focused on the amount of benefits and not the number of medical practitioners

$1,253,000

Addition or removal of fluid from long-term implanted reservoir (risk: potential inappropriate claiming of an item associated with long-term implanted reservoir)

12 196 $1,204,000

Small bowel intubation (risk: potential inappropriate claims using a Medicare item with higher fee)

12 61 $403,000

Repeat musculoskeletal ultrasounds occurring on separate days

3 1,795 $192,000

Investigate the utilisation of items 42773 — Diathermy or cryotherapy for detached retina

and 42809 — Retina photocoagulation (risk: item 42773 should not be claimed with item 42809 as the benefit for item 42773 should include the procedures involved in item 42809)

12 65 $118,000

Assessments of selected PBS medicines data is analyzed to identify medical practitioners with anomalous prescribing behavior that may warrant further review by Medicare Australia’s medical advisers and compliance pharmacists. Significant works completed in 2005–06 include assessments on:

Tramadol and Pethidine (for short-term management of acute pain) with 376 prescribers identified and referred to state Program Review Branches for further assessment and

Gabapentin (risk: the medicine may have been prescribed for neuropathic pains), Risperidone (risk: the medicine may have been prescribed to children 12 years and under to control aggression in ADHD), Rituximab (risk: the medicine may have been prescribed for initial therapy instead of relapsed or refractory B-cell nonHodgkin’s lymphoma), Terbinafine (anti-fungal treatment).

These assessments resulted in Medicare Australia sending targeted letters to selected medical practitioners (further information appears later in this section).

Sixteen reports were produced in relation to overseas drug diversion (ODD). Major reports include:

Four reports profiling vietnam, Egypt, Italy and Greece as potential destination points for ODD. These reports were used to inform operations targeting potential drug ‘diverters’, passengers travelling or suspect mail being sent to these countries

Two reports into two patients suspected of overseas diversion of PBS subsidized medicines worth in excess of $65,000. Medicare Australia has referred these cases to the Australian Federal Police for criminal investigation and

One report identifying a family engaging in identity fraud. Subsequent investigation found that the family had falsely acquired an alternative set of Medicare cards with similar identities to Centrelink concession cards. The matter was referred to Centrelink and is now under investigation by a multi-jurisdictional taskforce including Medicare Australia and Centrelink.

1.4 Targeted audit programsIn 2005–06, Medicare Australia completed three targeted audit programs and commenced the fieldwork on a further two.

Multiple Payments: 247 pharmacies were audited for having received two or more payments for the one prescribed supply of a PBS medicine. Of these, 231 pharmacies were subjected to counselling and/or recovery action with $890,000 of PBS benefits being recovered. Eight pharmacies were referred for criminal investigation.

Electronic (Medicare) Bulk Billing: 8,795 claims by 143 practitioners were audited. The audit found the level of non-compliance is low:

two per cent of the audited claims did not have forms that were signed by patients and

1.8 per cent of the audited claims did not have original forms.

A number of recommendations were made in light of the audit results. This includes re-running the audit in 2006-07 with more patient contacts (to verify the services) and an education program to improve medical practitioners’ awareness of compliance requirements associated with Electronic Bulk Billing.

Glycosylayted Haemoglobin (appropriate usage of diabetes tests): 73 medical practitioners were audited. The audit has been completed with results to be reported in August 2006.

Broadband for Health initiative: 150 medical practices were selected for this audit. As at July 2006, 107 of the practices have returned the audit forms. It is anticipated that results of this audit will be reported in August 2006.

Practice Incentive Payment: 245 practices (with 1,344 medical practitioners) were audited. 39 practices (16 per cent) were found to be non-compliant with $590,000 of incentive payments identified for potential recovery.

2.0 PreventionEducation and communication play an important role in Medicare Australia’s approach to managing program integrity. The focus of the education and communication compliance activities is to promote compliance by explaining Medicare and PBS requirements to medical practitioners, pharmacists and patients (including members of the public).

In 2005–06, Medicare Australia completed the following prevention activities:

2.1 New medical practitionersMedicare Australia offers a face-to-face briefing to medical practitioners new to prescribing under the PBS or providing Medicare services. New medical practitioners include recent medical graduates, medical interns, experienced medical practitioners new to the Australian health system, and registered medical officers working in public hospitals.

In 2005–06, Medicare Australia provided face-to-face briefings to 1,931 new medical practitioners. (Note: in 2005–06, approximately 3,600 medical practitioners received a new prescriber and/or provider number from Medicare Australia. Of these, 52 per cent completed their training overseas).

2.2 PBS education To improve access to PBS education, Medicare Australia developed a CD-ROM entitled PBS and You containing 33 essential units on the PBS and prescribing of PBS medicines. The CD is now available to all medical practitioners attending briefing sessions by Medicare Australia. The CD is also sent to medical practitioners who are unable to attend. An online application of the CD is now being developed. In 2005–06, Medicare Australia distributed 3,082 CDs.

2.3 Experienced medical practitionersThe Prescription Shopping Information ServiceSince 31 January 2005, Medicare Australia has operated a 24-hour telephone enquiry line, 1800 631 181, for registered medical practitioners to obtain selected information on patients they suspect are obtaining PBS medicine in excess of medical need. As at 30 June 2006, there were 11,757 medical practitioners registered with the service.

The following table presents monthly number of calls to the service and the number of patient reports sent to medical practitioners by Medicare Australia.

In 2005–06, Medicare Australia received 15,790 calls to the service and sent 3,127 patient reports to medical practitioners regarding patients identified as potentially obtaining PBS medicine in excess of medical need.

In addition to the information provided to medical practitioners via the service, Medicare Australia also distributed, on request, 20,929 brochures titled Getting more medicine than you need to members of the public via medical practices, pharmacies, travel agencies and Medicare offices.

Medicare Australia also published articles in Forum and Bulletin Board, and advertised in print media and prescribing software to help promote awareness of the service.

Restricted medicine and the PBS In 2005–06, Medicare Australia offered a PBS education program to 174 medical practitioners in selected Divisions of General Practice.

This program was developed in conjunction with medical practitioners and provided specific information on the PBS restriction criteria when prescribing Proton Pump Inhibitors (used for the treatment of peptic ulcers and gastric oesophageal reflux disease), Selective Serotonin Reuptake Inhibitors (used for the treatment of major depressive disorders), and Serum Lipid Reducing Agents (cholesterol lowering medicine).

Since April 2006, Medicare Australia has been offering education on the PBS restrictions that may apply when prescribing medicine used for the treatment of asthma to 68 medical practitioners in selected Divisions of General Practice. This education, delivered via Continuing Professional Development events, comprises a presentation and case discussion supported by education materials produced by Medicare Australia. This education will continue through 2006-07. Communication on PBS restricted and authority required medicine.

In 2005–06, articles and information sheets were published in Forum and Bulletin Board on the prescribing of PBS restricted and authority required medicine. Topics included writing non-PBS prescriptions, and prescribing of Gabapentin, Terbinafine, Bone drugs and Selective Serotonin Reuptake Inhibitors. In 2005–06, Medicare Australia also placed advertisements in print and prescribing software to promote medical practitioners’ awareness of when to write a non-PBS prescription and of Medicare Australia’s role in monitoring PBS prescribing. Pads of explanatory notes about non PBS prescriptions were also sent to 161 medical practices.

Other face-to-face education Medicare Australia also provided general education to medical practitioners and medical practices on a variety of Medicare or PBS topics. The presentations and group discussion took place through continuing professional development events and conferences. Approximately1,200 medical practitioners attended these sessions.

Medicare Australia also provided general education to other professional audiences, including practice staff, pharmacy assistants/dispensary technicians, allied health care workers dentists, Aboriginal Medical Service workers as well as from Division of General Practice staff, NSW Refugee Health, and Work Cover. In 2005–06, around 900 health professionals participated in these education sessions.

Online PBS educationMedicare Australia currently supports an online PBS education program via the Med-E-Serv PriMeD website which is a company that delivers electronically based information and education services to health professionals in Australia. This free service provides 23 interactive learning units on the PBS which are designed to refresh and enhance medical practitioners’ knowledge of the PBS, in particular understanding of the requirements and responsibilities when prescribing PBS subsidized medicine.

The education is accredited with the RACGP and ACRRM for continuing professional development points.

In 2005–06, 696 health professionals completed 1,698 units. Of these, nearly 94 per cent (655) of users were registered medical practitioners.

Pharmacy educationMedicare Australia delivers face-to-face education or provides input into university or other educational institutions’ curricula for new pharmacists (including pharmacy undergraduates, immediate pharmacy postgraduates, those who trained overseas and those who are re-entering

pharmacy). In 2005–06, the number of new pharmacists receiving PBS education was approximately 1,900.

Medicare Australia also provided face-to-face education on specific PBS topics in selected community pharmacies and public hospitals. This education is designed to assist pharmacists to supply and claim on the PBS in accordance with the relevant PBS legislation. In 2005–06, approximately 300 experienced pharmacists received PBS education.

Articles on a range of PBS topics were published in the in Bulletin Board including: discounted PBS medicine, the Prescription Shopping program, a Home Medicines Review Audit, and multiple payments.

Taking or sending PBS medicine overseas To reinforce awareness of the legalities of sending or carrying PBS subsidized medicine overseas, Medicare Australia:

published articles in the Forum and Bulletin Board

advertised key messages to consumers (radio, press and electronic media) and to prescribers and pharmacists (print and electronic media)

set up promotions in Medicare offices, at airports and in travel agencies and

provided education materials to the public via medical practices, pharmacies, travel agencies and Medicare offices.

In 2005–06, as part of an ongoing communication campaign and as requested by medical practices, pharmacies and travel agencies, Medicare Australia sent out 37,939 printed material items (including brochure and information sheets in 18 languages) on taking or sending PBS medicine overseas.

Medicare Australia continued to provide, via the Travelling with PBS Medicine enquiry line, a national, free information service for consumers on their rights and responsibilities when sending or taking PBS medicine overseas.

In 2005–06, Medicare Australia received 10,575 calls to the enquiry line. The following table shows the monthly numbers of calls since July 2002. The numbers of calls have increased significantly since the start of the first communication program in December 2003.

Improving Medicare Compliance through EducationIn September 2005, Medicare Australia sponsored independent market research on how to standardize and strengthen education about Medicare to ensure that medical practitioners and their staff are informed to comply with legislative and regulatory requirements.

In May 2006, the Australian Government announced a new budget measure Improving Medicare Compliance through Education. The measure includes providing medical practitioners and practice managers with educational materials on the use of Medicare item numbers (when providing Medicare services) and providing targeted feedback over three years commencing in 2007 to approximately 10,000 medical practitioners with anomalous Medicare servicing patterns.

Fraud awareness training for Medicare Australia staffMedicare Australia is also providing training, through our State Program Review Branches, on fraud awareness to new staff as part of their induction or to existing staff in Medicare offices to maintain their level of awareness of fraud issues. In 2005–06, Medicare Australia conducted 149 fraud awareness training sessions in state offices.

3. Correction The objective of this area of compliance activity is to intervene in and correct non-compliant behavior by medical practitioners, pharmacists, patients and members of the public. Depending on the nature and significance of the non-compliance, Medicare Australia may:

provide feedback in the form of letters to individuals to inform them of the behavior observed

interview the person to seek more information

recover benefits paid incorrectly

for medical practitioners, review their practice profiles and, if inappropriate practices are found and continue after an intervention, refer them to the Director of Professional Services Review and

Investigate and refer cases to the CDPP where fraud is detected.

3.1 Feedback to patients and medical practitioners through the Prescription Shopping ProgramThe Prescription Shopping Program aims to protect the legitimacy of patient demands on the PBS by focusing on patients who may be obtaining medicine in excess of medical need.

As shown in the following table, in 2005–06, Medicare Australia sent letters to or met with 9,988 medical practitioners discussing 4,638 patients who were suspected of obtaining PBS medicines in excess of medical need.

3.2 Seizures of PBS medicines being illegal exportedA total of 27 cases of potential illegal exports of PBS medicine were detected in 2005–06. The majority of the PBS medicines detained were earmarked for destruction and the exporters issued with warning letters. Thirteen cases are being assessed for possible referral for criminal investigation.

3.3 PBS targeted feedbackSince 2004, as part of the implementation of the budget measure sustaining the Pharmaceutical Benefits Scheme – Reinforcing the Commitment to Evidence Based Medicine announced in the 2002-03 Budget, Medicare Australia has been implementing a targeted feedback program to medical practitioners on the requirements when prescribing PBS medicine.

In 2005–06, Medicare Australia sent letters to selected medical practitioners to remind them of the requirement when prescribing under the PBS and/or how to write a private prescription where patients are not eligible for PBS subsidy. Major targeted feedback activities include sending letters to:

1,328 medical practitioners who were at risk of prescribing Gabapentin outside of the PBS criteria

51 or top two per cent of medical practitioners who prescribed Risperidone

557 medical practitioners who prescribed Rituximab in the most recent claims period and

33 medical practitioners who prescribed Terbinafine with no record of a related Medicare record for pathology within 12 months of the date of prescribing.

3.4 Recovery of benefits incorrectly paidIn 2005–06, Medicare Australia identified 5,288 persons who were the recipients of incorrect benefit payments. The total amount identified for recovery was $4.65 million.

The following table shows the breakdown by medical practitioners, pharmacists and members of the public.

Recovery data by number of people

Groups Sep 05 Dec 05 Mar 06 Jun 06 Yearly total

Medical practitioners

561 439 665 1,137 2,802

Pharmacists 33 55 19 49 156

Member of the public

288 331 226 297 1,142

Others 294 351 242 301 1,188

Total 1,176 1,176 1,152 1,784 5,288

3.5 Criminal investigation and prosecutionCriminal investigation, and subsequent prosecution by the Commonwealth Director of Public Prosecutions (CDPP), is one of the most powerful tools that Medicare Australia has in its effort to reduce the incidence of fraud in the programs it administers.

Number of new investigation cases in 2005–06 was 377. This is 153 cases (or 68 per cent) higher than 2004–05.

Number of referrals to the CDPP in 2005–06 was 65. This is 14 cases (or 27 per cent) higher than 2004–05.

Number of successful criminal prosecutions was down from 42 in 2004–05 to 32 in 2005–06. Prosecution rates were down due to court delays and priorities. Medicare Australia has been discussing these issues with the CDPP.

The following table compares Medicare Australia’s investigation effort in 2004–05 and 2005–06.

Investigation related data

Investigations Groups 2004–05 2005–06

New cases Medical practitioners 92 186

Pharmacists 27 32

Public 105 159

Total 224 377

Closed cases Medical practitioners 99 172

Investigations Groups 2004–05 2005–06

Pharmacists 24 68

Public 187 129

Total 250 369

Open cases (cases still under investigation)

Medical practitioners 92 124

Pharmacists 34 30

Public 134 172

Total 260 326

Referral to CDPP Medical practitioners 7 6

Pharmacists 1 4

Public 43 55

Total 51 65

Successful criminal prosecutions

Medical practitioners 6 3

Pharmacists 1 2

Public 35 27

Total 42 32

3.6. Practice Profile Review Process (PPRP)Medicare Australia identifies and reviews medical practitioners whose Medicare or PBS data indicates that their rendering, initiating or prescribing practice profiles appear different when compared with their peers. This activity forms part of the national compliance program and may lead to medical practitioners entering the PPRP.

Where the issue identified is not one of inappropriate practice but may constitute fraud (i.e. claims of benefits for service not rendered), medical practitioners can be referred to criminal investigation and/or prosecution.

The PPRP consists of:

the first stage (completed by Medicare Australia): a process of education and information gathering and period of review and

the second stage (completed by Medicare Australia): interview and period of review and assessment of behavior by medical practitioners’ following the first stage; and, with review by Medical Director if concerns are not addressed.

The Medical Director may request the Director of the Professional Services Review (DPSR) to review the provision of services by medical practitioners if there is a concern of possible inappropriate practices.

The following table contains the PPRP statistics for 2005–06:

PPRP statistics in 2005–06

Types of Activity Sep 05 Dec 05 Mar 06 Jun 06 Yearly Total

A. Medical practitioners commenced through the PPRP

Number referred to first stage of PPRP

131 145 142 133 551

80 82 79 83 324

B. Medical practitioners reviewed in the first stage of the PPRP

Number referred to second stage of PPRP

114 61 50 106 331

32 28 10 31 101

C. Medical practitioners reviewed in the second stage of the PPRP

Request to DPSR

7 2 9 6 24

1 1 2 4 8

Total (A+B+C+D) 253 209 203 249 914

In 2005–06, there were 914 incidences where Medicare Australia reviewed medical practitioners through the PPRP. Of these:

551 incidences (60 per cent) were medical practitioners at the start of the PPRP

331 incidences (36 per cent) were medical practitioners in the first stage of the PPRP

24 incidences (3 per cent) incidences were medical practitioners in the second stage of the PPRP and

In eight incidences (1 per cent), Medicare Australia referred medical practitioners to the DPSR.

DPSR statistics in 2005–06

Types of Activity

Sep 05 Dec 05 Mar 06 Jun 06 Yearly Total

Findings of inappropriate practice by DPSR

3 4 7 0 14

In 2005–06, the DPSR made 14 findings of inappropriate practices. The amount of benefits identified for recovery through these processes was $1,041,000 (pursuant to agreements and final determinations made under the PSR Scheme).

3.7 Medicare Participation Review CommitteesMedical practitioners convicted of relevant offences against Medicare are referred to a Medicare Participation Review Committee (MPRC) for review of their entitlement to provide Medicare services. Practitioners with two findings of inappropriate practice by the DPSR are also referred to the MPRC.

The MPRC is an independent statutory body whose chair is appointed by the Minister for Health and Ageing. An MPRC determination can result in up to five years of total disqualification from participation in the Medicare and PBS schemes. Further disciplinary actions by state and territory (professional) registration bodies are also possible.

In 2005–06, four cases were referred to the MPRC (see below) and the MPRC made determinations on six cases (see below).

Cases referred to the MPRC in 2005–06

Type of practice Number Reason

Optometrist 3 Conviction for committing fraud against the Commonwealth

General practitioner 1 Two findings by the DPSR of inappropriate practice

Determinations by the MPRC in 2005–06

Type of determination Number

Full disqualification from Medicare 3

Partial disqualification from Medicare 1

No further action 2

3.8 Suspension or revocation of approval of a pharmacist to supply under the PBSFollowing a charge or conviction for an offence related to the supply of pharmaceutical benefits, section 133 of the NHA allows the Minister for Health and Ageing to revoke the approval of a pharmacist, or for the Secretary to DoHA to suspend the approval of a pharmacist to supply pharmaceutical benefits.

In 2005–06, action under section 133 of the NHA was considered in respect of approvals involving three pharmacists:

one was suspended (from supplying under the PBS) pending trial

one was suspended for eight and a half months and

one was suspended for one month.

Online claimingMedicare online claimingMedicare Australia’s online claiming channel was introduced in 2002 to enable medical providers to lodge claims, including Medicare bulk bill, private patient and DVA claims over the Internet, and to submit information to the Australian Childhood Immunization Register.

Medicare Australia has been working closely with providers to implement online claiming and seek feedback about its use. Practices are continuing to register at the rate of 150–200 per month. While uptake of patient claiming for paid accounts has been lower than anticipated, bulk billing continues to increase with 42.94 per cent of GP bulk bill claims submitted online. Eighteen case studies gathered from practices around Australia currently using online claiming have highlighted the positive reception of online claiming services. Comments from participants included:

‘It has made payments a lot quicker. We’re only a small practice but it means we can now process every day’; and

‘It’s convenient, easy to follow and the backup services provided by the Medicare Australia are fantastic.’

The significant benefit for the Australian public is the ability to lodge claims direct from the medical practice following the consultation, thus eliminating the need to visit a Medicare office. In addition, if the account has been paid, patients can choose to have their benefit paid directly into their nominated bank account.

During 2005–06 online claiming was promoted through:

a series of road shows to doctors around Australia

engagement with the Association of Australian Practice Managers

continued support for and engagement of business development representatives across Australia

education of the public through posters and brochures about the convenience of online claiming and

Advertising in professional publications, mail-outs, brochures, media releases, electronic newsletters and information sheets.

Online patient claiming has continued to be disappointing, resulting in a major review of this claiming channel in 2005-06.

Key business results

2004–05 2005–06

Number of registered sites a 3,815 5,948

Number of transmitting sites b 3,315 5,369

Number of bulk bill services transmitted

16.5 million 43.8 million

Percentage of all bulk bill services

9.93% 24.69%

Providers transmitting bulk bill services

11,905 20,186

Private patient claim services transmitted


Percentage of all private patient claim services

transmitted

1.80% 5.12%

Providers transmitting patient claim services

3,360 6,475

a Site that has registered to use online claiming and ECLIPSE. Registration is required as part of the public key infrastructure security process. b Site that has transmitted a claim during the past two months.

ECLIPSE (Electronic Claim Lodgment and Information Processing Service Environment)Consultation with government and stakeholders within the private health sector identified a need for an industry-wide, seamless eBusiness solution for streamlining the billing and claiming process for in-

hospital episodes of care. The current manual simplified billing process for billing and claiming for in-hospital services was considered to be complex, inconvenient for patients and expensive.

In the 2004–05 Federal Budget, the Australian Government provided funding of $54.6 million over four years to enable Medicare Australia, in collaboration with industry, to develop and roll out infrastructure for secure electronic connectivity between private health funds, hospitals, doctors and Medicare Australia. The ECLIPSE governance board, made up of representatives from participating sectors and government, meets regularly to provide advice on the project.

ECLIPSE uses secure Internet connections between Registered Health Benefit Organizations (RHBOs), medical practitioners, hospitals, billing agents and Medicare Australia to assist patients with the lodgment of claims and the subsequent payment of accounts.

In July 2004, as a means of enhancing an enhancement to its online solutions, Medicare Australia released the first stages of ECLIPSE to industry. During 2005–06, Medicare Australia delivered further business functionality in Release 5 to allow medical Medicare online eligibility checking, DvA paperless and pathology claiming and two-way agency claiming. Two way agency claiming allows the patient the option of lodging their health fund claim at a Medicare Office or their Medicare claim at their health fund office, for in-hospital services. Medicare Australia is working on Release 6 that will deliver hospital claiming, hospital online eligibility checking and overseas claiming. A decision to concentrate on ensuring all delivered functionality has been successfully bedded down has resulted in the suspension of efforts to include ancillary claiming through Release 7.

Key business results

2004–05 2005–06

No of transmitting sites a 27 94

No of simplified billing services transmitted

13,335 70,926

Percentage of all simplified billing services

0.11% 0.54%

Providers transmitting simplified billing services

202 513

Online patient verifications transmitted


RHBOs connected to ECLIPSE 15 23

Percentage of privately insured population represented by RHBOs connected to ECLIPSE

29% 79.12%

a Site that has transmitted a claim during the past two months.

ECLIPSE services transmission history, July 2004 to June 2006

Online Customer ServicesMedicare smartcard — TasmaniaThe Minister for Health and Ageing launched the Medicare smartcard in Tasmania in July 2004 as part of the Australian Government’s national Health Connect initiative. The Medicare smartcard was introduced as a possible access key for Health Connect. Research carried out before the launch clearly showed that customers were interested in the future possibilities presented by the card. In particular customers liked the idea of being able to choose to store emergency contact information on the chip.

The Medicare smartcard is an optional replacement for the standard Medicare card and is used in the same way to facilitate the claiming process. Customers can also choose to include their photograph on the chip.

Tasmanian residents whose existing Medicare card was due to expire were invited to register for a Medicare smartcard. A total of 17,813 invitations were sent during the 2005–06 financial year. As at 30 June 2006, there were 4,397 registrations for the Medicare smartcard.

On 26 April 2006, the Australian Government announced the introduction of a health and social services access card. The access card will use smartcard technology to improve the access to, and delivery of, health and social services benefits. It will replace 17 health and social services cards, including the Medicare smartcard. The access card will be phased in over a two year registration period beginning in 2008.

Medicare Australia has provided significant input, through learnings gained from the Medicare smartcard rollout in Tasmania, into the business case for the health and social services access card.

Online ServicesMedicare Australia is progressively delivering improved customer access to information and services via the Internet to provide an additional, efficient way of interacting with Medicare Australia.

The Online Services facility was made available from 1 October 2005. Services available to Australians from this date included a new registration facility and services for customers to view their Medicare safety net balance; view their child’s immunization history statement; and view their organ donor donation decision.

From June 2006 a new suite of services became available for Australians to view and update selected personal information and request a replacement and/or duplicate Medicare card.

Medicare Australia regularly undertakes market research to identify our customer’s requirements for adding services to the online channel. These requirements, along with our organization’s priorities, are incorporated into the online strategic plan.

Medicare Australia’s Online Services is actively promoted through both Medicare branch offices and the Medicare call centers, along with various media channels.

Promotional material has included:

posters and flyers in Medicare offices

message printed on the back of thermal printed receipts in Medicare offices

articles in weekend newspapers

online advertising and

Good Health TV, an infomercial that screens in selected GP rooms and pharmacies across Australia.

During the period October 2005 to June 2006, an average of 125 Australians a day registered for Online Services. As at 30 June 2006, approximately 33,700 Australians had registered for access to Medicare Australia Online Services.

eTax 2006From July 2006, tax return lodgers will be able to automatically retrieve their Medicare Financial Tax Statement through the eTax lodgment process. For those customers who choose to lodge the tax return electronically and would normally complete the Medical Expenses section of their personal tax return, this service will remove the need to phone or visit a Medicare office to request their Medicare Financial Tax Statement. This streamlined process has been made possible through close collaboration between Medicare Australia and the ATO.

Web servicesThe Medicare Australia website www.medicareaustralia.gov au had a total of 2.5 million visitors to the site accessing both information and Online Services. These visits resulted in an overall 99.1 million hits to the website. There has been a 30 per cent increase in website visitors in the 12 month period of this report.

In March 2006, Medicare Australia designed and launched a new website www.jca.gov.au for the Job Capacity Assessment Program on behalf of the DHS. Job Capacity Assessment is part of the government’s wider Welfare to Work initiative. Medicare Australia also supports the DHS website.

Aged careThe Aged Care Payments function is managed by Medicare Australia on behalf of the DoHA. The function makes payments to approved aged care providers, to assist them financially in the provision of quality and cost effective care for frail, older people, and support for their careers.

DoHA is responsible for administering the policy under the Aged Care Act 1997, which provides for the payment of subsidies and supplements to approved aged care providers.

Transfer of the Aged Care Payments FunctionThe decision to transfer responsibility of the Aged Care Payments function from DoHA to Medicare Australia was made by the Prime Minister in May 2005.

On 20 October 2005, Medicare Australia assumed responsibility for the aged care payments function and all transferring DoHA payments staff (approximately 120 staff) became Medicare Australia employees.

Full business continuity was maintained throughout the transfer process. Price water house Coopers was engaged to conduct an independent post- implementation review on the transfer process, which was completed in May 2006. Their review indicated that the transfer was a resounding success, noting:

‘It is a good example of how to implement the Australian Government’s strategy of separating policy development from service delivery. It was also consistent with the Uhrig Review’s recommendations

on governance and compliance. Business processes and change management were managed very well.’

Our responsibilitiesMedicare Australia’s role is to provide timely and accurate payments to approved providers for the provision of aged care to eligible care recipients, with a focus on customer service and administrative efficiency. On any given day about one in every 100 Australians receives care in a residential care service or through a community care program.

Medicare Australia administered $3.9 billion worth of aged care payments in 2005–06 to providers across a range of residential, community, and flexible aged care programs. Our aged care payment responsibilities include the processing and payment to approved providers of:

residential aged care subsidies and associated supplements for provision of high-level and low-level residential care to recipients

residential respite care subsidies and associated supplements for provision of short term high-level and low-level residential care to provide careers with relief from their caring role

Community Aged Care Package (CACP) subsidies for provision of support to people with low level complex health needs; and their careers, to enable them to remain at home and

Flexible Aged Care subsidies including:

extended aged care at home (EACH) subsidies for provision of support to people with high-level complex health needs, and their careers, to enable them to remain at home

EACH dementia subsidies for provision of dementia specific support to people with high-level complex health needs, and their careers, to enable them to remain at home and

Transition care subsidies for provision of short-term rehabilitation care to recipients after care in hospital, pending access to longer term care.

Key business resultsSince October 2005, we have processed 23,691 residential claims, 8,014 CACP claims and 1,186 of Flexible Care claims. These represent $3.9 billion in Aged Care Benefits

Key business results for 2005–06

2005–06

Number of residential claims processed 23,691

Number of CACP claims processed 8,014

Flexible care claims:

EACH (including dementia specific EACH) 1,130

Transition care 56

Total flexible care claims processed 1,186

Total claims processed 32,891

Total amount paid $3.9 billion

Number of Residential Aged Care Services (Aged Care Homes)

2,931

Number of CACP Services (Facilities providing CACPs)

1,012

Number of Flexible Care Services (Facilities providing EACH and Transition Care)

227

Number of active services transmitting (eBusiness)

27

WebsiteGeneral information on the Aged Care Payments function is available on our Health Care Providers’ web pages. The Aged Care page provides an overview of Medicare Australia’s role, with sub-menus and links to downloadable Aged Care forms, and the Aged Care eBusiness website.

CommunicationWe provide updates on business processes to approved providers through the Payment Essentials monthly magazine, and to aged care assessment teams (ACATs) through the monthly edition of ACAT Chat, both coordinated through DoHA.

Aged care eBusiness Medicare Australia is introducing eBusiness capability to the aged care sector. The eBusiness solution will seamlessly integrate with the normal operating environment of aged care providers and state government ACATs, and will enable the aged care sector to replace paper forms-based processing with electronic data lodgment and real time validation.

The Aged Care eBusiness solution is being developed in collaboration with DoHA, according to the requirements outlined by aged care providers and their software vendors. An industry working group, which meets quarterly, has been established for the purpose of capturing these requirements.

Release 1 of the solution, which enabled the electronic lodgment of selected forms, was delivered in January 2005. Releases 2a was delivered in June 2006, and a business to business channel enabling aged care providers to seamlessly forward payment information to Medicare Australia via the Internet.

Release 2b will be delivered in August 2006, and will enable the capacity for ACATs to lodge client records electronically. Release 3, which will provide full claiming functionality, will be available to the sector in late 2006.

New Payments System ProjectThe establishment of an aged care New Payment System (NPS) was announced in the 2004–05 Budget, as part of ‘Investing in Australia’s Aged Care – streamlining administration for better care’. Medicare Australia has been commissioned by DoHA to design, develop and implement the NPS to replace the existing aged care payment systems. NPS will seamlessly integrate with Medicare Australia’s eBusiness solution and will enable real time validation and recording of payment data.

NPS is a claims assessing and payment system to facilitate the processing of data from aged care providers and will be developed in two phases:

design phase

develop detailed business requirements, business rules, interfaces, detailed costs estimates and a development schedule and

development and implementation phase

development, testing and implementation of the NPS.

It is anticipated that the NPS will be implemented in mid-2007.

Health eSignature Authority (HeSA)On 1 October 2005, the Health eSignature Authority (HeSA) was deregistered as a subsidiary company of the HIC and incorporated into Medicare Australia as a distinct unit within the Online Customer Strategy Branch.

HeSA provides electronic registration services for the Australian health sector. Services include:

registration for and distribution of digital keys and certificates

business registration services and

identity validation — both at individual and location levels.

HeSA also undertakes a range of other initiatives that are designed to support the integrity, validity and usability of all of its registration services, including ongoing consultation with the sector to stay abreast of changing business needs and

During 2005–06, HeSA maintained a strong customer and business enhancement focus. Key priorities included:

facilitating the take-up and use of digital certificates across the health sector

anticipating, and effectively responding to, the increasing demand for digital certificates

promoting the seamless integration of public key infrastructure certificates into technical and business processes and

ensuring that HeSA’s registration processes and associated services are timely and aligned with the business needs of the health sector.

Take-up of digital certificates continued to increase during 2005–06, with HeSA processing 8,170 registrations for Medicare online claiming and 527 registrations for PBS online, taking the total number of ‘live’ digital certificates to 19,849 as at 30 June 2006.

Certificates are considered ‘live’ while they remain current in the health sector.

Live digital certificates

As at 30 June 06

Individual certificates issued 8,981

Location certificates issued 10,868

Total certificates issued 19,849

HeSA is continuing to streamline the registration processes for those health care professionals wanting to do business electronically with Medicare Australia.

Information technology services (ITS)Information technology now provides a major medium of communication with our consumers, providers, business partners, all business groups within Medicare Australia and other agencies. From an Information, Communications and Technology (ICT) perspective, the business operations of Medicare Australia are today critically dependent on:

secure and responsive information communications and technology

well-defined and administered policies and procedures and

skilled staff that can leverage the technology.

Key achievementsThe key achievements of the ITS division includes:

development of a comprehensive ICT strategic plan

electronic re-branding of HIC to Medicare Australia

improved reliability and availability of our information technology systems

transfer of the Aged Care functions to Medicare Australia and transition of Aged Care claims to an eBusiness delivery channel

rollout of Family Assistance services to 190 Medicare offices nationally

consolidation of multiple data sources into a single Enterprise Data warehouse

extended the hours of operation for Medicare on weekends

improved sourcing and financial management resulting in substantial cost reductions and

Negotiation of large tenders for essential printing services and Medicare and Veterans’ card production services resulting in improved services at lower costs to Medicare Australia.

ICT strategic planThe Medicare Australia ICT strategic plan was released in January 2006 and outlines our technology strategies for the coming three years.

The Medicare Australia plan has three elements to help us achieve our aims. These are:

ICT Business Solutions - how we will partner with other government agencies, particularly those within DHS, to maintain and develop our business information and infrastructure system portfolios into the future based on the Medicare Australia Business Plan and priorities

ICT Operational Service Delivery – how we will ensure the ongoing delivery of reliable, cost effective technology services in daily business operations and

ICT Governance – how we govern and manage the delivery and development of technology in Medicare Australia and work with business groups and other agencies.

Priority areas reflected in the Information, Communication and Technology (ICT) Strategic PlanOur first priority is to ensure that our technical infrastructure is secure, robust and reliable, thereby assuring high availability for our frontline business groups and confidence in the underpinning technology and service delivery as we move into an era where our system will need to be available 24 hours a day, seven days a week.

Our next priority is to ensure that our business application portfolio is capable of supporting current health services as it faces the challenges of expanding online delivery channels and increased integration across health care agencies.

We have an objective to deliver ICT services at a reduced cost that provides value for money for Medicare Australia and its stakeholders. To achieve this we will select the best path to achieve our goals, maximize return on investment, and assure success.

IT Services Division supports Medicare Australia to ‘live within our means’; it assists the business to deliver outcomes by being more accountable for estimates, operating budgets and overall financial management.

The ICT strategy and plan is aligned with the Medicare Australia Business Plan and provides a roadmap that allows delivery of the technology services that support Medicare Australia in achieving its objectives in a coordinated and consistent approach, one that maximizes return on investment in technology.

What we achieved in 2005–06

ICT Business Solutions — how we service business requirements Electronic re-branding of HIC to Medicare Australia so that our new identity is consistently

presented to our customers and stakeholders.

Implementation and stabilization of the Business Improvement (BI) program applications as the program transitioned to business as usual. These assets include:

IT Enterprise Architecture to support the eBusiness environment based on a Services Oriented Architecture (SOA) approach

a consistent Consumer and Provider Directory and management system that will serve as the basis for future development

ECLIPSE to support secure eBusiness connections between practices, public and private billing agents, Medicare and DVA and health funds and

The piloting of the Medicare smartcard technologies and concepts in Tasmania to leverage smart technologies and allow completion of transactions at the point of service.

Medicare Australia Online Services (available via Medicare Australia’s website) covering:

safety net – consumers are able to view their Medicare safety net balances

organ donor – consumers can check their status on the Organ donor register

Immunization – customers can request immunization statements for dependent children.

Transfer of the Aged Care functions to Medicare Australia.

Transition of Aged Care claims to an eBusiness delivery channel.

Rollout of Family Assistance services to 190 Medicare offices nationally.

Introduction of eTax so that members of the public can obtain their Medicare tax statement information electronically, either through the Medicare website or through the ATO eTax system.

Maintenance of the Medicare, PBS and other programs.

ICT Operational Service Delivery – how we manage our service delivery Addressing the stability, performance and availability of PBS online so that it is positioned to

support improved uptake of the service by pharmacies.

Optimization of production capacity and performance, providing significant cost savings and capacity to the organization.

Ongoing consolidation and transition of multiple data sources into a single enterprise data warehouse based on mid-range technology.

Implementation of an ITSD Service Desk to provide a single point of contact for the business to ITSD.

Extension of the hours of operation for Medicare on weekends.

ICT Governance – how we ensure we are professional, productive and align with the business needs: Implementation of improved sourcing and financial management resulting in:

substantial cost reductions to date in operating expenses providing the basis for ongoing operational cost management

improved sourcing arrangements with major suppliers including IBM, Optus, Microsoft and SAS and

Alignment of the sourcing strategy with the Commonwealth Procurement Guidelines (CPGs), which requires greater transparency of sourcing processes. This has resulted in:

the development of an Annual Procurement Plan– tendering with adequate notice for complying with Free Trade agreements

establishment of specific panels and leveraging of DHS panels for procurement with CPG financial guidelines and

Gazette of awarded tenders.

Negotiation of large tenders for:

essential printing services (including options for electronic services such as SMS and email) and

Medicare and Veterans’ card production services.

Both negotiations resulted in improved services at lower costs to Medicare Australia.

Implementation of a business demand management process that provides high-level estimates, detailed quotations and fixed-price costing for new business requirements to allow the business to priorities requirements based on accurate quotations and estimates.

Establishment of a rigorous project gating process that ensures that all new business requirements and enhancements are consistent with the Medicare Australia enterprise architecture and have agreement from the ITSD branch managers.

Introduction of a project based organization structure and philosophy that includes the establishment of a program office that tracks and reports on the status of all projects in ITSD.

Establishment of an IT operational governance improvement program that is aligned with the industry standard AS8018/ITIL framework.

This has resulted in:

the implementation of a Change Calendar to improve the quality of changes to the production environments

the development of a framework for defining and monitoring service levels with the business and

a framework that will provide the basis for business aligned IT continuity, development of business focused service levels and improved asset and configuration management.

Improvement of our delivery productivity through consolidation of system delivery tools and a program of certification of project managers.

Establishment of Centres of Excellence in the areas of

authentication

integration

quality management and

Data administration.

Implementation of all IBRS Health Check report recommendations

Completion of an independent financial audit of the division with no major audit findings.

Outlook for 2006-07The division’s targets and areas of focus for 2006-07 are:

living within our means

maximizing opportunities created last year in procuring goods and services using the departmental procurement guidelines and arrangements

successful continued rollout of online products for medical practitioners, pharmacists, hospitals and the Australian public

successful completion of the Aged Care project

continued rationalization of various systems and databases to reduce them to an acceptable number (the consolidation project)

continuation of the data management and quality review (the data warehouse and data quality projects)

consolidation of information systems and telephony services in order to improve customer service and to enable a single interface to new initiatives such as the Health and Social Services Access Card database

the introduction of improved on-line work tools for our Customer Support Officers and

Completion of management plans for pandemic events.

Section 05 Financial StatementsSection 06 AppendicesAppendix AAppendix A — Reports required by legislation — 1 July 2005 to 30 September 2005Prior to its transition to Medicare Australia on 1 October 2005, the HIC was subject to the provisions of the CAC Act. Section 9 of that Act and the Commonwealth Authorities and Companies (Report of Operations) Orders 2005 set out certain annual reporting requirements for CAC Act bodies, this section satisfies those requirements for the period from 1 July 2005 to 30 September 2005 (the relevant period).

Enabling legislationDuring the relevant period, the HIC was a statutory authority established by the HIC Act.

Responsible MinisterDuring the relevant period, the responsible Minister was the Minister for Human Services, the Hon Joe Hockey MP.

Ministerial directionsDuring the relevant period section 8J of the HIC Act empowered the Minister to give the HIC written directions. This power was not exercised during the relevant period.

Judicial decisions and reviewsJudicial decisions that had (or may have) significant effects on the operations of Medicare Australia include:

Ultrarad and Anor v Health Insurance Commission (HIC)As reported in the 2004–05 Annual Report, on 11 October 2004, Ultrarad Pty Ltd and Queensland X-Ray Pty Ltd (QXR) filed an application in the Federal Court for the review of a decision made by HIC (as it then was) to reject a claim for a Medicare benefit in respect of an MRI service rendered to a patient at Mater Private Hospital, Pimlico, Queensland. The dispute concerned whether or not the MRI equipment used to render that service was eligible to render Medicare services under the applicable legislation.

On 20 June 2005, French J of the Federal Court handed down his decision in which he found in favour of the HIC. French J held that QXR did not have a ‘contract, in writing’ by the date specified in

the legislation, and that, in any event, QXR failed to comply with statutory requirements in relation to the furnishing of any such contract to the HIC.

Clare v Health Insurance Commission (HIC)As reported in the 2004–05 Annual Report, on 19 December 2002, Dr Clare and others commenced proceedings against the HIC in the Federal Court. The proceedings concerned the eligibility of MRI equipment operated by Dr Clare and others at premises in Bundoora, Victoria.

This matter was settled in September 2005.

Secrecy provisions and privacy legislationSecrecy provisionsThe secrecy provisions are contained in section 130 of the HIA and section 135A of the NHA. These provisions provide for the confidentiality of information that is obtained by Medicare Australia in the performance of its functions.

The secrecy provisions make it an offence for a Medicare Australia officer to disclose information about a person to a third party, unless one of the specified exceptions or release provisions applies. For example, information may be released to state health regulatory authorities, such as medical and pharmaceutical boards, in relation to matters affecting the registration of professional health providers.

There is also provision under section 130(3) of the HIA and section 135A(3) of the NHA for the Minister for Health and Ageing, or an officer to whom this authority is delegated, to certify that it is in the public interest for information to be released.

Section 135AA of the NHA, and associated guidelines issued by the Privacy Commissioner, regulates the maintenance and storage of claims information and requires the separation of Medicare and PBS databases.

Privacy ActMedicare Australia is subject to the Privacy Act 1988, (Privacy Act) which regulates the way most Australian Government agencies collect, handle, use and disclose personal information.

We received 25 complaints about the use and disclosure of personal information we hold. Of these complaints, 10 were found to be unsubstantiated, 15 were substantiated and the appropriate action was taken. One complaint was originally lodged with the Privacy Commissioner, who referred it to Medicare Australia for action.

In accordance with the Privacy Act, Medicare Australia submits an annual report to the Privacy Commissioner (Personal Information Digest) listing the types and use of information we hold.

OmbudsmanBetween 1 July 2005 and 30 June 2006, the Commonwealth Ombudsman received 157 complaints about Medicare Australia. This represents a decrease of 12 per cent from the previous year.

Issues identified by the Commonwealth Ombudsman in 2005–06

Number

Total number of complaints/approaches to the Ombudsman

157

Number of approaches/complaints investigated by the Ombudsman

52

Number of approaches/complaints requiring no further investigation

103

Total number of complaints finalised 155

Occupational Health and Safety Report Medicare Australia is required under section 74 of the Occupational Health and Safety (Commonwealth Employment) Act 1991 to provide a report on occupational health and safety activities and statistics on notifiable accidents, dangerous occurrences, investigations and notices under section 68 that occurred during the year.

Statutory report under section 74 of the Occupational Health and Safety (Commonwealth Employment) Act 1991

Action Number

Deaths that required notice under section 68 0

Accidents that required notice under section 68 6

Dangerous occurrences that required notice under section 68

22

Investigations conducted under Part 4 5

Tests on plant, substance, or thing in the course of investigations considered

0

Directions given to Medicare Australia under section 45 (that the workplace etc not be disturbed)

0

Notices given to Medicare Australia under section 30 (requests from health and safety representatives)

0

Notices given to Medicare Australia under section 46 (prohibition notice)

0

Notices given to Medicare Australia under section 47 (improvement notice)

1

Appendix BAppendix B — Freedom of informationMedicare Australia is a prescribed authority under the FOI Act and is required to publish information about the way it is organized, its functions and powers, the categories of documents held by Medicare Australia and how the public can access them. Also included in this report are FOI statistics for the financial year 2005–06.

Organization, function and powersOur organization structure chart appears in Section 2 – About Medicare Australia.

A description of Medicare Australia’s functions and powers as required by section 8 of the FOI Act is detailed in Appendix A.

List of documents held by Medicare AustraliaBrochures explaining the Medicare program, the PBS, the Australian Childhood Immunization Register, the Compensation Recovery Program, the Federal Government 30% Rebate on Private

Health Insurance, the Australian Organ Donor Register and Family Assistance are available free of charge from Medicare offices.

Medicare Australia’s website www.medicareaustralia.gov.au features publicly available publications and forms that can be viewed or downloaded.

Medicare Australia’s section 9 statement was updated in January 2006 and is also available on the National Archives of Australia website at www.naa.gov.au. In accordance with section 9 of the FOI Act, the following types of documents are held by Medicare Australia. These are available subject to the exemption provisions of the FOI Act:

administration and policy files

agendas, minutes and records of meetings of various internal and external committees and tribunals

agendas, minutes and submissions for commission meetings

applications for approval as an accredited orthodontist

applications for approval as a dentist or dental practitioner

applications for recognition as a specialist or consultation physician

applications for recognition as vocationally registered GP

brochures relating to Medicare Australia operations

committee and tribunal files created as a result of a specific inquiry or hearing

committee and tribunal member appointed papers

computer records relating to all Medicare Australia operations

financial budgetary Documents

internal audit terms of reference, reports and files

legal advice and opinions

legislative documents in the form of Acts, regulations and interruptions

listings of approved Medicare practitioners, and laboratories

listings of certified patients for the cleft lip and palate scheme

listings of participating Medicare medical practitioners, dentists and optometrists

listings of pathology licensed collection centres and accredited pathology laboratories

listings of PBS approval people and pharmaceutical prescribers

MBS item rulings and interpretations

ministerial, Commonwealth ombudsman and general correspondence

ministerial submissions

operational instructions, circulars and directives relating to Medicare, the PBS, Australian Childhood Immunization Register, PIP, Compensation Management System, 30% Rebate on Private Health Insurance, Veterans’ Treatment Accounts, Australian Organ Donor Register, Hearing Service Payment and Health Research and Coordinated Care Trials

personal records

processed enrolment, registration, withdrawal forms and claims documentation relating to Medicare Australia operations

property documents, including leases, tenders and maintenance agreements

records created as a result of a specific complaint, inquiry or review

records in relation to the regulatory functions of Pathology Licensed Collection Centre and Accredited Pathology Laboratories

records of contact between medical advisers and medical practitioners

statistical reports and analyses and

undertakings for participating optometrists.

Procedures and initial contact pointsA formal request under the FOI Act for access to Medicare Australia documents should be made in writing, accompanied by a $30.00 application fee made payable to Medicare Australia, and sent to:

Freedom of Information Officer Medicare Australia

PO Box 1001

Tuggeranong DC ACT 2901

Telephone: (02) 6124 7914

Fax: (02) 6124 6935

Remission of the application fee may be sought. Applicants may be liable to pay charges for costs associated with processing a request and providing access to documents.

Freedom of Information reportThe following table sets out the reportable freedom of information matters for Medicare Australia in 2005–06.

Reportable Freedom of Information Statistics 2005–06

Requests No of or $ Amount

On hand 30 June 2005 1

Received 19

Resolved by being:

Withdrawn (following consultation) 0

Granted in full 0

Granted in part 15

Denied in full 4

Outstanding at 30 June 2006 1

Requests No of or $ Amount

Finalised in:

0-30 days 13

31-60 days 6

61-90 days 0

91 days or more 0

Fees and levies charged

Application fees received $550.00

Charges notified $1706.90

Charges collected $1161.90

Internal reviews

Received 4

Finalised 4

Administrative Appeals Tribunal Appeals

Received 0

Outstanding at 30 June 2006 0

Freedom of Information standards

Standard Performance 2004–05 Performance 2005–06

We will acknowledge your request under the Freedom of Information Act 1982 within 14 days of receipt and respond within 30 days of receiving your request. If other parties need to be consulted, the law provides for another 30 days for a decision to be made.

One request was carried over and 21 requests were received in 2004–05. Of these, 18 decisions were made, three were withdrawn and one was carried through to 2005–06. All were acknowledged within 14 days of receipt. Of 18 decisions, 18 were responded to within the legislated timeframes.

One request was carried over and 19 requests were received in 2005–06. Of these, 19 decisions were made and one was carried through to 2006-07.

All were acknowledged within 14 days of receipt. Of the 19 decisions, 19 were responded to within the legislative timeframes.

Appendix CAppendix C — Staffing

Staffing statisticsMedicare Australia has staff located across Australia, in the national office in Canberra, state headquarters in each state, nine payment processing and call centres and 238 community-based Medicare offices. As at 30 June 2006, 5,393 staffs were employed by Medicare Australia under the Public Service Act 1999.

This reflects an increase of 222 staff or 4.2 per cent since 30 June 2005. Increases have occurred in state networks and are aligned to Family Assistance business growth. Part-time work participation has remained constant and applies to 20 per cent of the workforce.

This is most evident through the Medicare office networks. Women comprised 81 per cent of all staff. All staff figures are based on headcount as at 30 June 2006.

Staff employed by classification and location

Classification National Office NSW QLD SA TAS VIC WA Total

CEO 1 0 0 0 0 0 0 1

SES Band 3 2 0 0 0 0 0 0 2

SES Band 2 5 1 0 0 0 0 0 7

SES Band 1 29 0 1 1 1 0 1 33

EL 2* 218 5 4 1 2 4 0 234

EL 1** 381 12 6 12 13 4 6 434

APS 6 274 26 18 12 3 21 9 363

APS 5 158 170 125 50 27 126 53 709

Classification National Office NSW QLD SA TAS VIC WA Total

APS 4 94 64 38 21 13 61 22 313

APS 3 85 660 390 169 88 475 176 2,043

APS 2 6 161 121 41 23 144 69 565

APS 1 2 182 133 60 60 191 61 689

Total 1,255 1,281 836 367 230 1,027 397 5,393

* Executive level 2

** Executive level 1

Ongoing and non-ongoing staffing by classification

Classification Non-ongoing Ongoing Total

CEO 0 1 1

SES Band 3 0 2 2

SES Band 2 0 7 7

SES Band 1 0 33 33

EL 2 including Snr Medical Officers

1 233 234

EL 1 8 426 434

APS 6 14 349 363

APS 5 21 688 709

APS 4 19 294 313

APS 3 36 2.007 2,043

APS 2 22 543 565

APS 1 167 522 689

Total 288 5,105 5,393

Full-time, Part-time staffing by classification

Classification Non-ongoing Ongoing Total

CEO 1 0 1

SES Band 3 2 0 2

SES Band 2 7 0 7

SES Band 1 33 0 33

EL 2 218 16 234

EL 1 397 37 434

APS 6 342 21 363

APS 5 682 27 709

APS 4 296 17 313

APS 3 1,421 622 2,043

APS 2 390 175 565

APS 1 519 170 689

Total 4,308 1,085 5,393

Staff employed by gender and location

State Female Male Total

National Office 701 554 1,255

NSW 1,135 146 1,281

QLD 728 108 836

SA 316 51 367

TAS 200 30 230

VIC 899 128 1,027

WA 345 52 397

Total 4,324 1,069 5,393

Salary ranges for staff covered by the Certified Agreement and AWA’s

Classification Salary Range $

SES Band 3 (a)

SES Band 2 145,600 - 158,000

SES Band 1 110,210 - 138,545

EL 2 81,581- 131,000

EL 1 70,771 - 90,720

APS Level 6 56,700 - 79,870

APS Level 5 52,828 - 59,748

APS Level 4 47,387 - 51,224

APS Level 3 41,206 - 44,472

APS Level 2 37,173 - 40,117

APS Level 1 19,822 - 36,190

(a) SES Band 3 salaries have not been included, as they will enable identification of individual employees’ packages because of the small number of officers at that level.

All SES employees are entitled to the use of private-plated vehicles or cash-out arrangements.

Performance pay

Staff Groups Staff Paid Amount Paid Average Range

Senior Executives (incl CEO) 41 $269,281.33 $6,567.84 $570.00– $16,804.00

Executive Level 2 163 $672,562.37 $4,126.15 $869.00– $9,900.00

Executive Level 1 and below 97 $356,509.00 $3,675.35 $210.00– $8,723.00

Total 301 $1,298,352.70 $4,313.46

Equity and Diversity Groups

Indigenous Disability NESB

Location Ongoing Non-ongoing

Ongoing Non-ongoing

Ongoing Non-ongoing

National Office 2 4 30 0 223 8

NSW 6 1 27 0 336 5

QLD 14 2 16 1 40 0

SA 6 1 8 3 38 3

TAS 5 0 5 2 5 3

VIC 10 0 30 1 165 8

WA 3 0 4 0 43 2

Indigenous Disability NESB

Location Ongoing Non-ongoing

Ongoing Non-ongoing

Ongoing Non-ongoing

Total 46 8 120 7 850 29

NESB – Non-English speaking background

Appendix DAppendix D — Consultancy servicesThe following table lists new and extended consultancy contracts let to the value of $10,000 or more (inclusive of GST) during 2005–06. Included is the name of the consultant, a summary description of the nature and purpose of the consultancy, the contract price for the consultancy, the selection process used (including whether the consultancy was publicly advertised), and the reason for the decision to employ consultancy services for each individual consultancy.

Key

Selection process1. Open tender — a procurement procedure in which a request for tender is published inviting all

businesses that satisfy the conditions for participation to submit tenders.2. Select tender — a procurement procedure in which the procuring agency selects which potential

suppliers are invited to submit tenders in accordance with the mandatory procurement procedures.

3. Direct sourcing — a procurement process, available only under certain defined circumstances, in which an agency may contract a single potential supplier or suppliers of its choice and for which conditions for direct sourcing apply under the mandatory procurement procedures

4. Panel — an arrangement under which a number of suppliers, usually selected through a single procurement process, may each supply property or services to an agency as specified in the panel arrangements.

ReasonA. skills currently unavailable within agency

B. need for specialised or professional skills

C. need for independent research of assessment

Consultancy services provided to Medicare Australia in 2005–06

Company Name Purpose of engagement Price ($) Process Reason

Beames & Associates Review of hard close of the Annual Financial Statement process

30,000.00 3 c

Booz Allen Hamilton Review of the transfer of 265,000.00 4 a/c


Aged Care functions

Booz Allen Hamilton Benchmark the deployment of PBS online to pharmacies

193,000.00 4 a/c

Computer Associates Stakeholder Management System Project

80,000.00 2 a

Ernst & Young Develop a communication strategy and material for use by the Business Pricing Section

22,197.13 3 a/c

Ernst & Young Development of Fraud Control Plan

204,361.05 4 a/c

Excelerated Consulting Enhancements to budget management system (BMS)

19,362.75 3 a/b

HBA Consulting Provide specialist IR advice and representation

23,870.00 3 a

HBA Consulting Review of Senior Executive Positions

16,060.00 3 b

Intelligent Business Research Service

ITSD Health Check 37,246.80 3 B

Lockstep Consulting Pty Ltd Consultancy services for the implementation of Known Customer Certificates

73,556.31 1 b

Lockstep Consulting Pty Ltd Advice on PKI trends overseas

22,840.96 3 b

Price Waterhouse Coopers Define opportunities to transition ownership of ECLIPSE to the private sector

75,000.00 4 a/c

Protiviti Pty Ltd Develop a plan for financial framework

72,879.00 3 a/c

SAP Australia Roadmap Upgrade Assessment

79,750.00 1 a/c


SEM Australia Pty Ltd Development of Medicare Australia’s Activity Based Management Model

81,851.00 2 a/b

Stratsec.Net Pty Ltd Security consultation to scope the handling of In-Confidence documents

22,748.00 2 a

Stratsec.Net Pty Ltd I-RAP Certification 13,516.80 1 b

The Boston Consulting Group Pty Ltd

Review of Medicare Claiming Financial Analysis Project

328,000.00 4 a/c


Development of Family Assistance Office Funding Transfer Model

354,000.00 4 a/c


Business Transition Strategy 1,035,000.00 4 a/c

Uncommon Knowledge Advice on Indigenous Access

20,659.65 3 a

Uncommon Knowledge Indigenous Market Research 28,710.00 3 B

URBIS Social Research Consultancy

351,933.45 1 b

Walter Turnbull Review of Financial Management Function

28,457.00 2 B

$3,479,999.90

Appendix EAppendix E — Service Charter Medicare Australia is one of Australia’s largest service delivery organisations and provides some form of benefit to almost every Australian. Our service charter outlines our obligations and standards of service as well as the benchmarks we use to measure our performance. It also advises what our stakeholders can do to assist us, as well as providing details of our complaints handling processes and how to access our services.

The information in the following tables outlines our service standards and performances for the following services:

claims processing and payments of benefits to the public and to medical providers

telephone enquiries and

Medicare office counter enquires.

Claims processing and payment standards for the public

Service Service standard Performance 2004–05 Performance 2005–06

Medicare—for claims lodged manually

Paid accounts will be reimbursed by cash on the day at a Medicare office (daily limits apply).

100% 100%

Paid accounts will be reimbursed by electronic funds transfer (EFT) to your nominated account (not available for passbook accounts) or by cheque posted to you 10 days after lodgement.

98% 99%

Claims for unpaid general practitioner (GP) accounts will be reimbursed by cheque made out to the doctor. The cheque will be posted to you 16 days after lodgement.

99% 98%

Claims for other unpaid medical provider accounts will be reimbursed by cheque made out to the provider. The cheque will be posted to you 18 days after lodgement.

98% 99%

Medicare—for claims lodged electronically (including via a doctor’s practice)

Paid accounts will be reimbursed by EFT to your nominated account if requested (not available for passbook accounts) or

99% 95%


by cheque posted to you 10 days after lodgement.

Claims for unpaid GP accounts will be reimbursed by cheque made out to the doctor and sent to you 14 days after lodgement.

99% 99%

Claims for other unpaid medical provider accounts will be reimbursed by cheque made out to the provider. The cheque will be posted to you 15 days after lodgement.

100% 99%

Medicare— compensation

A Medicare history statement will be processed within 28 days of a request for a Notice of Past Benefits.

98% 97%

A Notice of Past Benefits will be processed with 28 days of receipt of an accepted Medicare claims history statement.

97% 97%

On receipt of an accepted Medicare claims history statement, refunds from an advance payment will be made within three months of us receiving both the notice of judgement or settlement and the advance payment amount.

98% 98%


Medicare—for bulk billing

Manual bulk bill claims for all services except pathology and GP services will be reimbursed to providers by cheque 15 days after lodgement.

98% 99%

Manual GP claims will be reimbursed to providers by cheque 14 days after lodgement.

96% 98%

Manual pathology claims will be reimbursed to providers by cheque 28 days after lodgement.

99% 99%

Electronically lodged claims for all services except pathology will be reimbursed to providers by cheque or EFT eight days after lodgement.

91% 94%

Electronically lodged pathology claims will be reimbursed to providers by cheque or EFT 28 days after lodgement.

99% 99%

Australian Childhood Immunisation Register

Australian Childhood Immunisation Register notification payments will be made by EFT, and a statement mailed to providers, within seven days of the end of each month.

100% 100%

General Practice Immunisation Incentives

A General Practice Immunisation Incentives outcomes payment calculation will be run quarterly in

100% statements 100% statements


February, May, August and November of each year.

All payments will be made and statements sent within two weeks of the quarterly calculations.

100% payments 100% payments

Service incentive payments

Service incentive payments will be made within five days of the end of each month.

100% 100%

Practice Incentives payments

A Practice Incentives Program payment will be run quarterly in February, May, August and November of each year.

50% statements 50% statements

All payments will be made and statements sent within two weeks of the quarterly calculations.

100% payments 100% payments

Pharmaceutical Benefits Scheme

When correct documentation is provided:

cash payments for claimants of patient refunds will be processed on the day at a Medicare office (daily cash limits apply)

100% 100%

cheque payments for eligible patient refunds will be issued within 28 days of lodgments

92% 94.6%


Claims Transmission System benefits claims will be paid to the pharmacy within 17 days

97% 99.1%

written authority approvals will be provided within three working days from the date of receipt

100% 99.6%

Prescription pad orders will be dispatched within four weeks of receipt.

100% 100%

Veterans’ Treatment Accounts

90% of Medical claims will be reimbursed to medical practitioners within 28 days

99% 100%

90% of hospital claims will be reimbursed to hospitals within 28 days, unless otherwise contracted

99% 100%

90% of ancillary service claims will be reimbursed to providers within 28 days, unless otherwise contracted

99% 100%

Percentage of telephone enquiries answered by an operator within 30 seconds (average across Australia)

Enquiry line Performance 2004–05 Performance 2005–06

Australian Organ Donor Register

94% 98%

Enquiry line Performance 2004–05 Performance 2005–06

Australian Childhood Immunisation Register enquiry line and reports

92% 87%

Australian Childhood Immunisation Register Internet enquiry line

94% 97%

Compensation 95% 93%

Department of Veterans’ Affairs — allied services

98% 99%

Department of Veterans’ Affairs — hospital services

99% 99%

Department of Veterans’ Affairs — medical services

99% 99%

Med claims 92% 92%

Improved Medicare Entitlement Program

92% 93%

Medicare Australia Access Points (previously known as Easy claim)

92% 96%

Medicare provider enquiries 94% 90%

Medicare public enquiries 91% 88%

Optometrist C T-F 93% 94%

PBS authority approvals 89% 93%

PBS general enquiries 95% 91%

PIP payments 99% 99%

Simplified billing 93% 91%

Telephone claiming 94% 90%

Source: Performance Measurement Framework Service level and call volumes summary.

Medicare offices counter enquiry standards

Standard Performance 2004–05 a Performance 2005–06 b

We aim to keep waiting times below 10 minutes

98.77% of customers were served in under 10 minutes

98.6% of customers were served in under 10 minutes

a Based on 31,176 observations conducted in Medicare offices during 2004–05b Based on 79,335 observations conducted in Medicare offices during 2005–06

Customer feedback, as recorded in our customer feedback register

Feedback type Volume 2004–05 Volume 2005–06

Suggestions 63 109

Compliments 289 417

Complaints 469 786

Correspondence b

We will respond to you as quickly as possible within 28 days. If we cannot meet the 28-day standard, within 14 days of receiving your query we will advise you of an expected reply date, and who to contact in the meantime.

13,542 14,233

a A complaint is entered onto the customer feedback register only if it is not satisfactorily resolved by either the staff member initially contacted by the customer or the staff member’s supervisor.b We report on correspondence received and entered into the customer feedback register. However, this does not represent the total correspondence handled by Medicare Australia and does not include professional registrations, objections and decisions.

Appendix F — Advertising and market researchSection 311A of the Commonwealth Electoral Act 1918 requires Australian Government agencies to report all payments of $1,500 or more made to advertising agencies or to organizations carrying out market research, polling, direct mailing or media advertising. The following table outlines the use of such agencies by Medicare Australia in 2005–06

Payee Purpose Amount

Market Research

AC Nielsen Research Pty Ltd Face of Medicare study $29,700.00

Worthington Di Marzio Pty Ltd PBS restricted medicines awareness and compliance

$81,120.41

Cultural Partners Evaluation research on Overseas Drug Diversion

$38,500.00

Wendy Bloom & Associates Pty Ltd

EFTPOS and online services research

$122,578.84

Centrelink-FM&S shared service

PC1 claim form research $4,000.00

Uncommon Knowledge Customer service and Indigenous access research

$177,593.35

Roy Morgan Research Pty Ltd Customer satisfaction research $73,445.68

Measured Insights 2006 Staff survey $116,796.20

Colmar Brunton Social Research

Customer survey, queue system testing

$58,952.00

Carol Davis and Associates Consumer research reports $25,080.00

Polling

No polling undertaking during period

Media advertising

HMA Blaze Pty Ltd To conduct recruitment advertising and standard non-campaign Medicare Australia advertising

$457,175.18

Universal McCann Media Advertising $14,871.09

Cultural Perspectives Pty Ltd Overseas Drug Diversion Program advertising

$46,970.00

Direct mail

National Mailing and Marketing Forum newsletter mailed out to Doctors*

$40,664.64

National Mailing and Marketing Bulletin Board newsletter mailed out to pharmacists*

$3,512.15

DUCOR Group PBS Safety Net Kits $60,877.00

DUCOR Group PBS Doctors bag order books $61,582.00

Australia Mailing Letterbox drop of postcards for $2,311.10

new Medicare Office openings*

* Postage costs not included

Appendix G — Contact detailsOffice locations

National Office

134 Reed Street North

Greenway ACT 2900

Phone: (02) 6124 6333

Fax: (02) 6282 5025

Postal address:

PO Box 1001

TUGGERANONG DC ACT 2901

State offices

New South Wales

130 George Street

Parramatta NSW 2150

Phone: (02) 9895 3333

Fax: (02) 9895 3082

Tasmania

242 Liverpool Street

Hobart TAS 7000

Phone: (03) 6125 5333

Fax: (03) 6125 5700

Queensland

444 Queen Street

Brisbane QLD 4000

Phone: (07) 3004 5333

Fax: (07) 3004 5410

Victoria

460 Bourke Street

Melbourne VIC 3000

Phone: (03) 9605 7333

Fax: (03) 9605 7980

South Australia

209 Greenhill Road

Eastwood SA 5063

Phone: (08) 8274 9333

Fax: (08) 8274 9371

Western Australia

11th Floor, Bankwest Tower

108 St Georges Terrace

Perth WA 6000

Phone: (08) 9214 8333

Fax: (08) 9214 8322

National telephone enquiry service and email contactsPeople can contact Medicare Australia through our national telephone service, using the numbers listed by subject area below. Calls to 1300 numbers cost 25 cents from anywhere within Australia and calls to 1800 numbers are free of charge. Calls from public pay phones or mobile phones may be

charged at higher rates. Further information can be found on Medicare Australia’s website at www.medicareaustralia.gov.au

Alternatively, people can contact Medicare Australia about a range of matters through the Internet, using the email addresses listed by subject area below.

Enquiry lines open 24 hours every day

Australian Childhood Immunisation Register enquiry line and reports

1800 653 809

Australian Childhood Immunisation Register Internet enquiry line

1300 650 039

Australian Organ Donor Register 1800 777 203

Australian Organ Donor Register (Approved Medical Practitioner)

1800 556 455

Customs Prescription Drug Smuggling 1800 032 258

General Practice Immunisation Incentives Scheme enquiries

1800 246 101

PBS authority approvals 1800 888 333

Prescription Shopping Information Service 1800 631 181

Public key infrastructure customer service centre 1300 660 035

Telephone claiming 1300 360 460

Enquiry lines open during business hours

Aboriginal and Torres Strait Islander access line 1800 556 955

Bali special health care benefits hotline 1800 660 026

Compensation 13 21 27

Complaints and feedback line 1800 465 717

Department of Veterans’ Affairs—allied services 1300 550 051

Department of Veterans’ Affairs—hospital services

1300 551 002

Department of Veterans’ Affairs—medical services

1300 550 017

The 30% Rebate on Private Health Insurance 13 62 21

Fraud hotline 1800 202 101

Medicare Australia online claiming 1800 700 199

Improved monitoring of entitlements 1300 302 122

Med claims 1300 788 008

Medical advisory line 1800 800 314

Medicare provider enquiries 13 21 50

Medicare public enquiries 13 20 11

National electronic data interchange help desk 1300 550 115

Opt metrical IVR date-of-service check 1300 652 752

PBS general enquiries 13 22 90

PIP payments 1800 222 032

Rural Retention Program 1800 010 550

Simplified billing 1300 130 043

Source-based audit 1800 675 235

Travelling with PBS Medicine enquiry line 1800 020 613

TTY (Telephone Typewriter for the hearing impaired)

1800 552 152

Email addresses for enquiries

Australian Childhood Immunisation

[email protected]

Australian Organ Donor Register [email protected]

Compensation [email protected]

Feedback reporting facility for providers [email protected]

and specialists

General Practice Immunisation Incentives

[email protected]

GPMOU 90-day scheme [email protected]

Goods and services tax (GST) [email protected]

Medicare Australia general enquiries [email protected]

Medicare Australia online claiming [email protected]

Medicare Australia Media

Communications and [email protected]

Medicare Australia public key

[email protected]

Medicare Australia’s service charter [email protected]

Medicare Australia’s statistics [email protected]

IBNR Indemnity Claims Scheme [email protected]

Medicare provider enquiries [email protected]

Medicare public enquiries [email protected]

Pathology [email protected]

PBS [email protected]

PIP [email protected]

PSS [email protected]

PRD [email protected]

ROCS Support Payments [email protected]

ROCS Support Payments [email protected]

Simplified Billing—national [email protected]

Simplified Billing—New South Wales nsw. [email protected]

Simplified Billing—Queensland [email protected]

Simplified Billing—South Australia [email protected]

Simplified Billing—Tasmania tas [email protected]

Simplified Billing—Victoria [email protected]

Simplified Billing—Western Australia [email protected]

Software vendor account management [email protected]

Software vendor account management [email protected]

Software vendor help desk [email protected]

Software vendor liaison [email protected]

UMPS Payment [email protected]

Victorian EDI helpdesk [email protected]

Glossary and acronymsGlossaryService Generally used to describe a medical service of an individual item number listed

under the Medicare Benefits Schedule or individual prescription medicine listed under the Pharmaceutical Benefits Scheme.

Transaction The act of processing a medical service for rebate, updating patient details, generating an online tax statement, or processing PBS scripts etc. The processor performs a series of actions, including such things as data entering and data checking, which in total completes the transaction.

Claim A statement lodged by a customer or provider relating to a supplied service or multiple services where the expectation is that they will receive a benefit. The way the claim is lodged defines the maximum number of services that can be lodged in a single claim. For example, a bulk bill claim can contain a maximum of 80 vouchers with each voucher allowed 14 service items.

Benefit The amount of rebate paid to a patient or provider for a service.

Out-of-hospital Refers to medical services that are eligible for a Medicare benefit and are not provided in a hospital.

Out-of-pocket The difference between the Medicare benefit and the doctors’ charge.

Gap amount The difference between the Medicare benefit and the schedule fee.

Schedule fee A fee for a service that is set by the government.

Payment Payment of a benefit, incentive or allowance.

AcronymsAAT Administrative Appeals Tribunal

ACAT aged care assessment team

ACRRM Australian College of Rural and Remote Medicine

ANAO Australian National Audit Office

APS Australian Public Service

ARAS Audit and Risk Assurance Services

ATO Australian Tax Office

CDPP Commonwealth Director of Public Prosecutions

CSO customer service officer

DIMA Department of Immigration and Multicultural Affairs

DHS Department of Human Services

DoFA Department of Finance and Administration

DoHA Department of Health and Ageing

DoHWA Department of Health Western Australia

DVA Department of Veterans’ Affairs

ECLIPSE Electronic Claim Lodgment and Information Processing Environment

FaCSIA Department of Family, Community Services and Indigenous Affairs

FAO Family Assistance Office

FOI Act Freedom of Information Act 1982

FTB Family Tax Benefit

GP general practitioner

HECS Higher Education Contribution Scheme

HeSA Health eSignature Authority Pty Ltd

HIA Health Insurance Act 1973

HIC Health Insurance Commission

HIC Act Health Insurance Commission Act 1973

HOSC Act Health and Other Services (Compensation) Act 1995

IAP Indigenous Access Program

IBNR Incurred But Not Reported

MBS Medicare Benefits Schedule

MDO medical defense organization

MPRC Medicare Participation Review Committee

NHA National Health Act 1953

PBS Pharmaceutical Benefits Scheme

PIP Practice Incentives Program

PRD Program Review Division

PSS Premium Support Scheme

RACGP Royal Australian College of General Practitioners

ROCS Run-off Cover Scheme

ROCSSP Run-off Cover Scheme Support Payment

RPBS Repatriation Pharmaceutical Benefits Scheme

RRP Rural Retention Program

SES senior executive staff

THA Tsunami Healthcare Assistance

UMP United Medical Protection

UMPSP United Medical Protection Support Payment