The information provided below is an outline of the Shared Debt Recovery Scheme process for an audit under the Health Insurance Act 1973, and the decision making steps involved in making a shared debt determination. Practitioners (known as primary debtors) and potential secondary debtors engaged during an audit will be provided with further information at each stage of the process. The Process overview map is a short summary of the process.
Further information can also be found in the health provider compliance audits and review section.
1. Information Gathering
A Medicare audit is undertaken where there is a reasonable concern that amounts paid (i.e. Medicare benefits) with respect to professional services exceeded the amounts (if any), that should have been paid. A Medicare audit starts when a person (usually a practitioner) receives a request from the Chief Executive of Medicare or their Delegate (the Delegate) for documents related to the reasonable concern raised by the Delegate and the professional services under audit. The requested documents help to determine whether the Medicare benefits paid for the professional services should have been paid.
Upon receiving a request for documents relating to the professional services under audit, a practitioner may also tell the Delegate that they are in an employment, contractual or other arrangement with a person or an organisation (known as a potential secondary debtor) to render professional services.
The Department will contact the potential secondary debtor where there is evidence that there is a relationship between the practitioner and the person or organisation in relation to the professional services under audit and issue a request for documents in similar terms to the request to the practitioner. The practitioner and the potential secondary debtor can respond to the request independently or may wish to respond to these requests together. In response to the request for documents, either party can make submissions to the Delegate about whether the Medicare benefits paid in respect of the professional services should have been paid and/or whether a shared debt determination should be made.
Following a request for documents, the Delegate may issue a notice to produce documents. A ‘notice to produce’ is a formal written notice requiring a practitioner or a potential secondary debtor to produce documents to substantiate that the Medicare benefits paid in respect of the professional services, should have been paid.
2. Shared Debt Determination
Having responded to a request and/or notice to produce documents, the practitioner and potential secondary debtor may have addressed the reasonable concerns of the Medicare audit and the Delegate may decide that no further action is necessary.
However, the Delegate may still have reasonable concerns in respect of the professional services and decide to consider making a shared debt determination. Before making a shared debt determination, the Delegate must give notice of its intention to make the shared debt determination to the practitioner and the potential secondary debtor.
Before giving notice of an intention to make a shared debt determination, the Delegate must consider:
- Whether the secondary debtor employed or otherwise engaged the primary debtor to render the professional services, and/or whether they had an arrangement or agreement with the primary debtor relating to the professional services.
- Whether the secondary debtor could have controlled or influenced the circumstances that led to the making of the false or misleading statement to which the debt relates.
- Whether the secondary debtor directly or indirectly obtained a financial benefit from the making of the false or misleading statement.
- Whether any other factors in all the circumstances of the case make it fair and reasonable for the shared debt determination to be made.
The notice of intention to make a shared debt determination will include the amount of the debt, the proportion of the debt that will be recovered from each party and the reasons, and share any documents provided in relation to the debt.
The proportion of the debt recovered from each party is guided by a default percentage that may be applied to the primary debtor and secondary debtor (65 per cent and 35 per cent respectively). This percentage is prescribed in a legislative instrument by the Minister for Health.
The Delegate must also consider whether it would be fair and reasonable to set a different percentage to the default. In making this decision, the Delegate may consider:
- whether there were any arrangements between the parties for apportioning the benefits paid; and if so, what proportion of the benefits paid for the services were received by the primary debtor and the secondary debtor; and
- what influence or control the secondary debtor may have had over the billing for the professional services.
Once a notice of intention to make a shared debt determination is given, the practitioner and secondary debtor then have the opportunity to respond and make submissions about the proposed shared debt determination within 14 days.
Note: If the Delegate decides that the reasonable concerns of the Medicare audit have not been addressed and that the debt should not be shared, the Delegate can continue with the usual audit process and issue a preliminary view of the debt decision to the practitioner. The practitioner will have the opportunity to provide additional information and submissions in response to the preliminary view of the debt decision.
Having considered the submissions and other evidence, the Delegate may decide to make a shared debt determination and will give notice of the shared debt determination to both the practitioner and secondary debtor.
Within 28 days of the shared debt determination decision, both the practitioner and the secondary debtor can apply for a review of the decision.
If either party makes an application for a review of decision, the Delegate will provide written notice of the application and a copy of the application to the other party (either the practitioner or secondary debtor).
Both parties may make written submissions to the Delegate about whether the shared debt determination decision should be confirmed, varied or revoked, and their reasons for taking that position.
The Delegate must review the shared debt determination decision and either confirm, vary or revoke the decision. The Delegate will give the parties written notice of the review decision (known as the reconsidered decision).
4. Debt Decision
If an application for review of the decision is not made within 28 days after receiving notice of the shared debt determination decision, a notice claiming the amount as a debt can be given to the practitioner and the secondary debtor.
After a debt notice is given to the practitioner and the secondary debtor, an invoice will be sent to the parties which outlines how the debt can be paid.