The federal government should urgently consider options to replace the legacy technology underpinning the Medicare payments system to address fraud and non-compliance by doctors, according to a government-commissioned independent review.
The recommendation is contained in the Independent Review of Medicare Integrity and Compliance, which has conservatively estimated that fraud and non-compliance in the universal health insurance scheme at between $1.5 billion and $3 billion a year.
Led by health economist Pradeep Philip, the review found that limitations with the rules engine used to assess the 500 million Medicare transactions each year is contributing to the billions in losses, though the exact amount is unknown.
Limitations with the 40-year-old system include not allowing for ‘soft blocks’ – effectively controls that prevent inadvertent or accidental non-compliant claiming behaviour by restricting access to Medicare Benefit Schedule (MBS) items – to be applied.
“The engine which sits at the heart of the payment system is old and unable to be property utilised for risk based or continuous monitoring activities,” the Philip Review said.
According to the review, the Medicare Common Assessing Engine is built on an end-of-life mainframe platform that is “not sustainable into the future”, creating “significant risk for the ongoing viability of this critical piece of infrastructure”.
“It comprises over 200 separate applications to form the engine, and given its age, feedback was provided to me during the review that maintenance and updates to the platform require very specific skillset and knowledge based that is not commonly available,” the review said.
The review has recommended that “urgent consideration… be given to options for replacement of the ageing Medicare Common Assessment rules engine to a contemporary technology infrastructure”.
It has also urged the government to “redesign” the existing technology, data and data flows within the payment system to a “level of capability maturity that is commensurate with the size and complexity of the scheme today and into the future”.
“Given the age of the technology platform, there are risks to its ability to perform the critical tasks for the future, and, indeed, whether it can be serviceable in the future as old coding skills become harder to find,” the review said.
The federal government has already sunk hundreds of millions of dollars into uplifting the Medicare payments system since 2018, when it ditched plans to procure a new off-the-shelf payments platform.
The platform was proposed by the former Coalition government in the wake of then-Prime Minister Malcom Turnbull Medicare 2016 decision to call off an attempt to outsource payment processing work.
In its last federal Budget in March 2022, the Coalition set aside $96.8 million to modernise health and aged care payments systems, building on the $211 million that it had provided between 2017 and 2019.
The review, released on Tuesday, has recommended the federal government conduct a “review regarding replacement of legacy Medicare systems, applications and databases… within 12 months”, which the government is now considering.
“A deliberate and strategic overhaul of existing legacy Medicare systems and the myriad of applications and databases that reside on it requires research and consideration,” the review said.
“A decision needs to be made about whether this takes the form of system replacement or consolidation and streamlining of the existing systems.”
It has recommended that any future system should have a ‘brain’ capable of capable of continuous monitoring and that “new controls, in line with a three lines of defence methodology, should be adopted”.
The government is considering the findings of review, but Health and Aged Care minister Mark Butler has already flagged that the health system will be a key element of the Albanese government May Budget.
Earlier this year, the government also acknowledged the need to “rebuild” My Health Record after the Strengthening Medicare Taskforce found not enough health information was being shared between patients and practitioners.
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