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Abbott’s Medicare reforms – today’s crime is tomorrow’s co-payment

(Note from Croakey: A correction to this post was made on July 22; correcting mention of “Justice Murphy” to “Justice Kirby” in the 2nd last paragraph.)

The GP co-payment remains a hot topic. This week ABC news online flagged that the legal process for introducing the $7 GP copayment may not be straight forward, and that,  in fact, elements of the policy may be able to bypass the senate. For those who wish to understand exactly what is required, Amanda Biggs from the  parliamentary library provides an excellent guide to the legislative changes required to implement the co-payment here.

In this third article in a series about Medicare, Margaret Faux provides her take on an interesting legal angle of the GP co-payment.

Margaret Faux writes:

The Government might have wished for something a lot easier to legalise that co-payments – like abolishing the declaration of political donations! There are significant legal challenges to allowing doctors to collect co-payments and if not legislated correctly, a costly High Court challenge may result.

The foundation of the Medicare benefits scheme is Section 51(xxiiiA) of The Constitution which was inserted following the 1946 referendum. At the behest of the then leader of the opposition, Robert Menzies (who opposed the socialisation of medicine), the words but not so as to authorise any form of civil conscription” were inserted into the new grant of power. These much deliberated words have preserved the freedoms that Australian doctors and patients have come to expect and enjoy. We are free to choose our doctors and doctors are free to set their fees as they see fit.

These words also lead to Medicare’s enabling legislation – the Health Insurance Act (the Act) – being structured to ensure that the patient sits between the flow of the money from the Federal Government to the doctor. It creates a contractual relationship between a privately practising doctor and a patient and a relationship in which the doctor has no right or entitlement to the Medicare rebate, which is the ‘property’ of the patient. Any other structure would offend Section 51(xxiiiA) by creating a situation where doctors are paid directly by Medicare, leading to a form of conscription to the Federal Government.

It is therefore Section 51(xxiiiA) that explains why the recommendation contained in the National Commission of Audit Report, that co-payments be mandatory, was not adopted in the Abbott plan. If it had, a legal compulsion imposed on doctors to collect money for the Government would have resulted and would almost certainly have crossed the ‘civil conscription’ line sending the Government back to the High Court.

In the legal sense, co-payments therefore do not currently exist (except for some inpatient claims) and are illegal. It is the use of the word ‘co-payment’ that is the issue because it suggests that the doctor is paid by Medicare and then receives a co-payment from the patient to make up the balance, but in fact the system does not operate in this way.

Medicare does not ‘pay’ doctors, it instead subsidises patients, who usually pay all or nothing depending on the choice made by the doctor. If the patient has paid the full fee, they can claim back their rebate from Medicare. If the doctor has chosen to bulk bill, the patient pays nothing and instead assigns or ‘gives’ their Medicare rebate to the doctor, who is prevented from charging any additional amount.

In 2006 a doctor was found guilty  by a jury of 96 counts of criminal fraud in circumstances where she had been bulk billing and also receiving cash co-payments from patients. She had dishonestly obtained a financial benefit by deception contrary to s134.2 of the Criminal Code Act 1995 (Cth).

Throughout the trial the doctor maintained that she did not know that what she was doing was wrong and substantial evidence was lead in support of this position.  Prosecution evidence included the fact that the doctor had a copy of the Medicare Benefits Schedule (MBS) book on the desk in her practice, had read the relevant sections of it and the section she breached was straight forward enough – when you bulk bill you cannot charge a co-payment, ever.

The case brought into sharp focus the difficulties faced by doctors when navigating the Medicare scheme and the problems inherent in a system where the law and the document doctors refer to  are two separate things. The law is contained in the Act, whereas doctors are advised to use the MBS which is a departmental interpretation of the Act. The two documents often provide conflicting or inconsistent information and in criticising the confusing language of both, one judge made this comment:

“This, however, is merely a function of the lack of clarity of the language of the Act. No entirely satisfactory interpretation of the Act is as it seems to me, available”.

If the Abbott co-payment plan is introduced, at some point there will have to be another test case similar to this one, as it will be the only way to protect patients from soaring gaps and preserve the integrity of the Medicare scheme. But this time, when the doctors’ defence is ‘I didn’t know, I thought it was now legal to bulk bill and charge gaps of $7 or more’ the Governments’ work will be harder.

There is now judicial comment that the language of the Act is confusing and there is no satisfactory interpretation of it (meaning the MBS), doctors do not read the Act anyway (nor would we expect them to), the MBS is often inconsistent with the Act, the new co-payment instructions in the MBS will require considerable detail which doctors are unlikely to read, and the printed version will not be found on the doctors’ desk this time as hard copy distribution ceased years ago. So when this comes around again, the Crown Prosecutors will have their work cut out in trying to disprove the no doubt incredulous doctor, and establishing their case beyond a reasonable doubt.

But criminal consequences aside, there remains the constitutional question. Is it possible that the manner in which the Government plans to effectively reduced GP incomes by up to 30% could render the entire scheme constitutionally invalid?

In 1949 when the High Court first considered the issue it had this to say:

“To require a person to do something which he may lawfully decline to do but only at the sacrifice of the whole or a substantial part of the means of his livelihood would, I think, be to subject him to practical compulsion amounting to conscription in the case of services required by Parliament to be rendered to the people. If Parliament cannot lawfully do this directly by legal means it cannot lawfully do it indirectly by creating a situation, as distinct from merely taking advantage of one, in which the individual is left no real choice but compliance.”

More recently the High Court has accepted that practical compulsion is sufficient to impinge the constitutional guarantee and Justice Kirby commented that the civil conscription caveat was designed to impose a check on excessive bureaucratic intrusion into the private contractual relationship between doctors and patients.

Whether the current co-payment plan, if implemented, intrudes impermissibly into the doctor patient relationship will ultimately be a matter for constitutional lawyers. But it wouldn’t be a very good start if all that money being put aside for the Medical Research Future Fund, was instead spent defending a High Court challenge.

Read Margaret’s previous articles here and here.

Related Posts

Comments 5

  1. a commentator from earth says:

    You said inserted by bob menzies. I think the then British Medical Association Australia branch, now the AMA, may have had some hand or part in that manoeuvre. My understanding was that this was some form of proxy fight related to the british National Health Service, which was also a hot topic in the late 1940s.

    How poignant that the spirit of Sir Bob may prevent his acolytes nowadays from achieving their desires.

  2. David Green says:

    This article is not up to the usual standard.

    First, and most improtantly, the author seems entirely unaware of the arrangements that obtain in the Pharmaceutical Benefits Scheme, which is enacted under the same constituional provision.

    The PBS has a clear co-payment arrangement that has survived the test of time. It is pasing strange that the author thinks that the same arrangements could not apply to the MBS.

    On a more minor note, the author spends some time discusing a case in whcih a Dr was convicted over charging patients for whom they had bulk billed. The author then asserts that there ar emany cases where the Act and the Department’s interperative materials conflict. Clearly this is not such a case. If it was, then the court would have found for the plaintiff. The net effect – a few wasted paragraphs inserted for some rhetorical effect.

  3. a commentator from earth says:

    Regarding David Green’s comments. The phrase regarding the ban on civil conscription would seem to apply only to medical or dental services, and not to the other benefits,allowances and pensions in the relevant subsection. So even tho pharmaceutical benefits are in the same subsection they do not face the same constraint as medical and dental services. It’s a matter of where the commas (and the parentheses) are.

  4. Margaret Faux says:

    Thanks to both for excellent comments in response to my article, both of which confirm the complexity of Medicare claiming and the operation of the scheme in general.
    In response to the comments concerning the introduction of the civil conscription clause, an excellent summary can be found in Danuta Mendelson’s paper titled ‘Devaluation of a constitutional guarantee: the history of section 51(xxiiiA) of the Commonwealth Constitution’. My reading of the this and various other historical records is that the BMA had the ear of Robert Menzies, who proposed the insertion of the civil conscription caveat, which was accepted by Doc Evatt (the then Attorney General) on behalf of Ben Chifley’s labour government before being put to the people in the referendum.
    The PBS argument is interesting though I’m not sure it holds up given the PBS does not relate to the remuneration of doctors, and the current position is that the civil conscription clause relates to ‘medical and dental’ services only and not pharmaceuticals, as the other commentator has said. But David your point is well made and is interesting given that in the more recent case of Wong v Commonwealth, when the proceedings were before the Full Court, an argument was flagged concerning whether the civil conscription caveat applied to the whole of section 51(xxiiiA) or just medical and dental services. However, it ultimately wasn’t determined when the matter was before the High Court.
    As to the doctor found guilty of bulk billing and also charging co-payments, it was not as simple as you suggest and in fact presented a very clear example of the inconsistencies between the Act and the MBS and the very serious consequences that can result.
    The 2005 version of the MBS said this:
    7.5.2 If a medical practitioner direct-bills, he/she undertakes to accept the relevant Medicare benefit as full payment for the service. Additional charges for that service (irrespective of the purpose or title of the charge) cannot be raised against the patient, with the exception of certain vaccines (see paragraph 7.5.4).
    The Act said:
    (b) the practitioner accepts the assignment in full payment of the medical expenses incurred in respect of the professional service by the first-mentioned eligible person.
    The case turned on the interpretation of the three ubiquitous words in the Act – ‘in respect of’ – which the doctor had never read in relation to Medicare claiming prior to her trial, as they did not appear in the relevant section of the MBS. She asserted that the additional fees she charged were not fees ‘in respect of’ the professional service in question, but related to another service that she also provided on the same day. And there was no dispute that she did provide an additional service on the same day each time. When the matter was heard in the NSW Court of Criminal Appeal three judges did not agree on the interpretation of those words and one commented that the doctor had made a ‘not unreasonable’ interpretation of the relevant provisions and should not have been rendered criminally liable as a result. If three judges found it complex, I’m not sure how one could have expected the doctor to not also have found it so.

  5. David Green says:

    Climbing down off my high horse into the manure I left last time, I’d like to thank both Margaret and a commentator for their thoughtful and measured comments.

    I confess that I had not previously turned my attention sufficiently fully to the scope of the conscription constraint and I am now persuaded that any reasonable person would probably interpret it as only applying to medical and dental benefits.

    I say any reasonable person and probably deliberately given the details Margaret has given us of the Bulk Billing case. It seems strange to me that there could be a doubt in the judges’ minds as to whether “medical expenses incurred in respect of the professional service” and “that service” (the one covered by the full payment) are not on all fours with each other.

    Or perhaps Margaret’s point is not that they are not on all fours but that the judges found neither statement of the principle sufficiently clear.

    I find this particularly interesting as Drs are now able to be paid more than one benefit in respect of what seems a single service – for example, the benefit and the bulk billing incentive. I suspect that for that to be possible the Act would require two services at the same time and admitting that possibility surely reopens the can of worms.

    All I know is I’m paying cash and what the Dr claims is between them and Medicare (I hope).

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