Cost Shifting - Privatised outpatients and ambulatory surgery

March 10, 2006

The AMA has been consistently urging the State Government to ensure that full protections are in place to enable the Ambulatory Surgery Initiative (ASI) and Privately Referred Non Inpatients (PRNI) initiative to proceed without the risk of investigations and / or prosecution of Doctors, shifting risks onto Private MDOs, or imposing on teaching, training or normal clinical arrangements.

The Federal Minister (Tony Abbott) recently responded to AMA (WA) requests for confirmation of the acceptability or otherwise of the State's proposed ASI initiative and advised:

"it is not appropriate for the Australian Government to amend legislation or issue blanket directions under section 19(2) in order to exempt doctors from the provisions of that legislation...

I advised him [Mr McGinty] that the Australian Government was not in a position to endorse his proposals. The decision to introduce an initiative to improve waiting times for elective surgery procedures rests with the Western Australian Government, provided it met its obligations under the 2003-2008 Australian Health Care Agreement (AHCA), particularly in relation to patient election.

The purpose of section 19(2) is to ensure that the Australian Government is not funding the provision of medical services through Medicare, where those services are funded by some other Government mechanism such as the State...

I am advised that, depending on the contractual and protocol provisions in place, it is possible for the initiative in question to operate without breaching section 19(2). Of course, whether the arrangements are operating legally depends on a range of issues and the individual circumstances involved...

If your members are concerned about any arrangements that have been proposed by a public hospital, they should obtain independent legal advice before proceeding."

State Government legal advice, in relation to PRNI states:

"critical to the model's compliance with the Australian Health Care Agreement is, firstly, maintenance of patients' intended unfettered freedom to choose to receive public hospital services as public patients; secondly, a genuine referral of the patient to a named medical specialist; and, thirdly, provision of the service in circumstances such that the specialist is genuinely treating the patient in a private capacity..."

but would not comply "if the circumstances of its provision are such that, when regard is had to not only the form but also the substance of the arrangement and the manner of its operation, the service is, in all the circumstances, in truth being provided by the hospital. Questions of fact and degree may be involved."

Private legal advice states:

"section 19(2) states that 'a Medicare benefit is not payable in respect of a professional service that has been rendered by, or on behalf of, or under an agreement with: (b) a state; (d) an authority established by... a law of a State.'

My interpretation of that section is that if a professional service has been rendered in circumstances where that service is one which the State, or an authority established by a law of the State, was under an obligation to render then a Medicare benefit is not payable. Therefore, if there are professional services for which the State or the hospital is required to render pursuant to the Australian Health Care Agreement then subject only to clause 41 of that agreement, the Medicare benefit is not payable in any circumstance."

Thus there are varying legal opinions and the legitimacy of a particular initiative will depend on strict compliance with appropriate legal principles, protocols and practices.

Further discussion with the Government has also sought to ensure that doctors are also not exposed as a result of poor management of initiatives. As a consequence, some of the protocols have been tightened. Periodic audit will also apply. However, concerns still remain with certain facets. In addition, the scope of the Indemnity offered, which is confined to medical negligence and investigations by Medicare Australia, despite strong representations, does not extend to other investigatory bodies, such as the Parliamentary Public Accounts Committee, Crime and Corruption Commission and the Australian Federal Police. The AMA believes this is a major deficiency.

Further representations have been made and responses from the State Government are awaited.

In the circumstances, whilst the AMA (WA) has been seeking to assist the State appropriately increase its revenue to the benefit of the State and practitioners and improvements have been made, AMA (WA) has not been able to fully satisfy its legal and operational concerns. Previous advice is, therefore, reiterated that if doctors are concerned about any arrangements that have been proposed by a public hospital, they should obtain independent legal advice before considering proceeding.