An ATO style approach to Medicare compliance?
Dealing with the Australian Taxation Office (ATO) is a part of my everyday life as an accountant and registered tax agent. Over the years I have gotten to know the ATO systems and approach to compliance and debt recovery extremely well.
Whilst I was on vacation this week I took some time to reread the changes to the Health and Medicare compliance measures which began on 1st July 2018. While reading through the material I was struck by the similarity between the ATO compliance and debt program and these new measures aimed at Health Practitioners. I found myself wondering if the policymakers in the Health Department may have taken their lead from their government colleagues at the ATO when forming these legislation changes.
Here is a brief look at the similarities between the Department of Health and the ATO compliance and debt program. (The Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Bill 2018 came into effect on 1st July 2018).
Applicable to Health Practitioners (can include GPs, medical specialists, dentists, pharmacists and allied health providers)Applicable to Australian TaxpayersGarnishee PowersGarnishee notices can be issued in relation to debts, allowing the recovery of funds from a provider’s bank account.Garnishee notices can be issued to 3rd parties such as banks or employers to recover tax debts.Record KeepingPractitioners are required to keep claim and supporting records for at least two years (and up to four years for some dental and other programs).Taxpayers are required to keep records for up to 5 yearsSubstantiationPractitioners must substantiate item numbers claimed if requested by the Department (Notice to Produce Documents).Taxpayers must substantiate their claims if requested by the ATO.PenaltiesAdministrative penalties are applied to debts arising from a failure to substantiate claims. These can be reduced if the practitioner works with the department and provides information in a timely manner. Appeals for penalties can be made to the Administrative Appeals Tribunal.Administrative penalties are applied to taxation debts. These can be reduced if the taxpayer works with the ATO in a timely manner. Appeals for penalties can be made to the Administrative Appeals Tribunal.Offsetting of future payments against debtsFuture Medicare claims payable to a practitioner can be offset to reduce an existing debt.Future payments due to a taxpayer from the ATO (e.g. GST or tax refunds) can be offset to reduce an existing debt.Data collection and data matching potentialApplications for provider numbers now must include details about the employing or contracting organisation of the practitioner. Including ABN, ACN, registered business name, business type, and premises type.The ATO receives data on employees working within a business as well as certain ABN information about contractor arrangements.
Shared Debt Recovery Scheme (SDRS) – from 1 July 2019
As we know, at present an individual medical practitioner is solely responsible for a Medicare debt (except in cases of fraud by associated parties). The application of the Shared Debt Recovery Scheme from 1st July 2019 provides that, where contractual or other arrangements exist between a practitioner and an employer or corporate entity, both may be liable for the repayment of a debt arising from a false or misleading claim.
Of course, one of the outcomes of this scheme is that health practices and corporations should be proactive in taking a higher level of responsibility and interest in billing accuracy, as they may now share some responsibility for liability with the health practitioner. It could be viewed that one of the drivers behind the SDRS is for health practices, employers and corporate entities to help monitor and police compliance by the individual provider.
To me, this is reminiscent of the ATO’s approach with ABN withholding provisions where the contracting party is used in a compliance measure to promote compliance at an individual contractor level (such as a business paying a contract tradesman to complete repair work on their premises).
Measures such as the above, where compliance is aided by associated and often unrelated parties have been ATO policy for several years now and continue to evolve and expand.
The Federal budget delivered in May 2018 allocated a massive $130 million in new funding for ATO compliance activities. The same budget also promised funding, although much less, into compliance and debt recovery measures to target investigations into fraud, inappropriate billing practices and incorrect claiming under the Medicare system.
Personally, I have seen a flurry of activity in the ATO compliance and review space. The increased activity includes expense claim reviews and the expansion of “dob in a tax cheat” type telephone and online systems. Tax agents who administer many claims on behalf of taxpayers are also in the firing line for increased compliance activity.
Is it only a matter of time before we see a similar flurry of activity in Medicare compliance, including wider promotion of anonymous reporting measures for fraudulent claiming?
Is there the potential that billing agents and practice management staff may one day become subject to a compliance scheme such as the Tax Agents Board which monitors tax practitioners (including competence criteria and registration to be able to make a claim on a provider’s behalf)?
Time will tell, but the increased compliance in Health and Medicare is an interesting space reminiscent (to me) of the ATO rulebook.