Online version of the 2013-14 Department of Health Annual Report

Note 28B: Compliance with Statutory Requirements for Payments from the Consolidated Revenue Fund

Notes to and Forming Part of the Financial Statements

Page last updated: 17 July 2019

Section 83 of the Constitution provides that no amount may be paid out of the Consolidated Revenue Fund except under an appropriation made by law.

The Department has primary responsibility for administering legislation related to health care. Approximately 430 million payments totalling around $38 billion each year are authorised against Special Appropriations by the Department in accordance with a range of frequently complex legislation. Most of the payments are administered by the DHS under the Medicare program, on behalf of the Department. In the vast majority of cases DHS relies on information or estimates provided by customers and medical providers to calculate and pay entitlements. Despite future payments being adjusted to recover any overpayment, a breach of section 83 could nevertheless result.  In addition, simple administrative errors can also lead to breaches of section 83.

Due to the number of payments made, the reliance that must be placed on external control frameworks and the complexities of the legislation governing these payments, the risk of a section 83 breach cannot be fully mitigated.  However, the reported section 83 breaches represent only a very small portion of payments, both in number and in value, and the Department is committed to implementing measures to ensure that the risk of unintentional breaches of section 83 is as low as possible.

The Department has developed an approach for assessing the alignment of payment processes with legislation. This approach is reviewed annually. During 2013-14, the Department:

  • reviewed legislation (including administrative processes) enacted since 1 July 2013 that creates or modifies payment eligibility as to whether processes are in place to minimise the risk of breaches of section 83;
  • received assurance from DHS that action has been undertaken to detect and prevent any potential breaches of section 83;
  • reviewed processes for making payments under the Remuneration Tribunal Act 1973, the Long Service Leave (Commonwealth employees) Act 1976 and the management of Goods and Services Tax (GST) payments made pursuant to the Financial Management and Accountability Act 1997;
  • continued its ongoing reviews of special accounts by internal audit as part of its rolling compliance program;
  • obtained legal advice, as appropriate, to resolve questions of potential non-compliance; and
  • identified legislative/procedural changes to reduce the risk of non-compliance in the future.

Special Accounts

Currently the Department has nine Special Accounts, as per Note 29. Eight are assessed as low risk and one, the Sport and Recreation Special Account, is assessed as medium risk for non-compliance with section 83.

No breaches of section 83 have been identified by the Department during the year in the Special Accounts.

Special Appropriations

The Department administers 16 pieces of legislation, as disclosed in Note 28A Table D, as having Special Appropriations involving statutory requirements for payments. Of these legislations, some payments under the following legislation have been identified as having either actual or potential breaches of section 83 of the constitution.

Health Insurance Act 1973

In 2013-14, there were 13 cases of non-compliance under the Chronic Disease Dental Scheme (CDDS) totalling $316,653.

These breaches have been confirmed by the Australian Government Solicitor (AGS) and the related debts have been waived on the basis that it would be inequitable to recover the debts owed by various patients and providers of medical services, as they received the payments in good faith and would have been eligible for the benefit had the intended amendments to the legislation been correctly implemented. Refer to Note 27: Compensation and Debt Relieffor the amount waived.

Corrective action involving regulatory amendments and the enactment of legislative instruments has been implemented where appropriate.

In addition to the above, DHS has identified overpayments resulting in potential breaches of the Health Insurance Act 1973 of $16,976,351 (or approximately 0.09% of total payments under this Act) that have been recognised for recovery. These in the main reflect debt recovery action following adjustments to data made by customers or medical providers after the initial payment has been made. The potential breaches may not result in a loss to the Commonwealth as they are generally recovered or offset against future payments. Amounts recovered total $8,992,748.

National Health Act 1953

DHS has identified overpayments as part of its compliance process. Debts have been raised due to incorrect concessional status being provided by patients, duplicate claims being made by patients and assessment of Pharmaceutical Benefits Scheme items against eligibility requirements. During 2013-14:

  • potential breaches identified total $1,001,367 (less than 0.01% of total payments under this Act); and
  • amounts recovered total  $565,836.
Medical Indemnity Act 2002

DHS has identified overpayments as part of its compliance process. Debts have been raised for the ineligible portion of payments for legal fees claimed by Guild Insurers. During 2013-14:

  • potential breaches identified total $27,297 (less than 0.06% of total payments under this Act); and
  • there have been no recoveries. DHS will be adjusting future payments to Guild Insurers to recover the amount paid in breach.
Aged Care Act 19971

DHS has identified overpayments occurred for a number of residential aged care facilities due to a system error for the period to 18 September 2013.  During 2013-14:

  • potential breaches identified total $406,723 (0.02% of total payments under this Act); and
  • amounts recovered total  $60,884.

No potential breaches have been identified, as part of the 2013-14 review process, under the remaining Special Appropriations.

Remuneration Tribunal Act 1973

No potential breaches have been identified, as part of the 2013-14 review process, of the Remuneration Tribunal Act 1973

Long Service Leave (Commonwealth employees) Act 1976

The Department has identified three potential section 83 breaches in the overpayment of Long Service Leave, totalling $51,000. These breaches relate to incorrect leave entitlements entered into the system following an internal transfer within Government. At termination of employment a full reconciliation of entitlements occurs. This led to the discovery of the overpayments. Amounts recovered total $51,000.   

Management of Goods and Services Tax Payments  

No potential breaches have been identified, as part of the 2013-14 review process, of the GST payment process.

Continued Focus

The Department will continue to review legislation (including any related administrative processes) that creates or modifies payment eligibility as it is enacted to determine whether process are in place to minimise the risk of breaches of section 83. It will continue with an ongoing review program that involves reviewing legislation, New Policy Proposals, business rules and payment processes. In addition, the Department will continue ongoing reviews of special accounts by internal audit as part of its rolling compliance program.

  1. Administered Arrangements Order, effective 18 September 2014, transferred the Aged Care function to the Department of Social Services. Refer Note 11B: Restructuring.
 
Expenditure in 2013-14
$000
Review complete? 1
(Yes/No)
Breaches identified to date3
Potential breaches yet to be resolved
Yes/No
Remedial action taken or proposed2
Appropriations identified as subject to conditions
Actuals
$000
Potential
$000
Recovered
$000
Special Appropriations              
Aged Care Act 1997
2,343,789
Yes
-
407
61
Yes
DM
Health Insurance Act 1973
19,329,208
Yes
317
16,976
8,993
Yes
LDM
National Health Act 1953
8,422,591
Yes
-
1,001
566
Yes
DM
Medical Indemnity Agreement Act 2002
48,575
Yes
-
27
-
Yes
M
 
30,144,163
 
317
18,411
9,620
   

1 Reviewed legislation (including any administrative processes) enacted since 1 July 2012 that creates or modifies payment eligibility as to whether processes are in place to minimise the risk of breaches of section 83.

2 L=Legislative Change; S=Systems Change; D=Debt Recovery; M=Made; PR=Planned Review.

3 Recoveries can relate to prior periods.

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