History of the PSR Scheme

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The PSR Scheme was established in July 1994 to protect the integrity of Medicare and the PBS.

Part VAA of the Health Insurance Act 1973 establishes the PSR Agency and sets out the processes it must follow.

Since inception, the PSR Scheme has been subjected to a high level of litigation. As a result, the law has been amended several times to strengthen and clarify the scheme. Changes were made in 1997, 1999, 2002 and 2006, and comprehensive reviews were conducted in 1999 and 2006. A Senate Inquiry in 2011 made further recommendations to improve the scheme’s effectiveness and transparency.

The evolution of the scheme and legislative amendments since 1994 are described below.

  • 2022 – Compliance and other measures
  • 2019 – Enabling data matching and other services
  • 2018 – Extending coverage of PSR Scheme
  • 2012 – Updating PSR practitioners
  • 2011 – Senate Inquiry into the PSR Scheme
  • 2006 – Refining the PSR Scheme
  • 2002 – Clarifying PSR Scheme objectives
  • 1999 – Reviewing the PSR Scheme
  • 1997 – Strengthening the PSR Scheme
  • 1994 Act – Introducing the PSR Scheme
     

2022 – Amendments – Expanding persons who may enter into agreements and increase to compliance powers

In 2022, amendments were made to:

  • allow section 92 agreements to be entered into by persons under review other than practitioners (including corporate entities)
  • allow section 92 agreements to include additional forms of specified action, being:
    • counselling, and
    • where the agreement is with a corporate entity and services were provided by associated persons, the provisions of specified information to associated persons about the appropriate provision of services
  • set out a process following which the Director can publish particulars of persons under review who fail to comply with the terms of a section 92 agreement
  • enable Committees to require executive officers of corporate entities to attend Committee hearings
  • differentiate the rights of natural persons and corporate entities before Committees
  • introduce new offence and civil penalty provisions for failure to produce documents or give information in response to a notice issued by the Director or a Committee
  • enable the Federal Court of Australia, upon notification by the Director, to inquire into failures by a corporate entity to produce documents or give information and make orders to comply.

Relevant law

Health Legislation Amendment (Medicare Compliance and Other Measures) Act 2022

 

2019 – Amendments – Enabling data matching and other services

In 2019, several amendments were made to:

  • authorise data matching of Medicare information
  • include services provided under veterans’ affairs legislation to be considered within the PSR Scheme.

Relevant law

Health Legislation Amendment (Data-matching and Other Matters) Act 2019

 

2018 – Amendments – Extending coverage of PSR Scheme

In 2018, several amendments were made to:

  • include practitioners engaged by a corporate entity (in addition to those employed by the entity) in the PSR Scheme
  • allow PSR to refer to a regulatory body any practitioner who provides services (not merely those under review).

Relevant law

Health Legislation Amendment (Improved Medicare Compliance and Other Measures) Act 2018

 

2012 – Amendments – Updating PSR procedures

Amendments to the Act were introduced in 2012, including:

  • requiring the Chief Executive Medicare to refer practitioners to PSR whenever their services constitute a prescribed pattern of services
  • authorising the Minister to determine that certain health professionals are practitioners and certain vocations are professions
  • clarifying the authority of a PSR Committee to investigate Medicare services that have been initiated but not rendered
  • allowing the Director to give the Determining Authority relevant information about a person under review before it makes its draft determination
  • extending the time for a PSR Committee to make its final report and for the Determining Authority to make its determination when there is a delay in certain circumstances
  • allowing a PSR Committee or the Determining Authority to dismiss a case if they are satisfied that it is impossible to do a proper investigation, make a proper determination or for a section 92 action to take effect
  • providing for a final determination to take effect 7 days after certain events, such as appeals being withdrawn, dismissed, determined or discontinued
  • removing the need for the Director to refer a person who practised inappropriately on 2 or more occasions to a Medicare Participation Review Committee
  • allowing PSR to disqualify a person for up to 5 years where they have previously been found to have practised inappropriately
  • requiring the Director to refer a person under review to a regulatory body at any stage of the PSR process if their conduct poses a significant threat to the life or health of patients or does not meet professional standards.

Relevant law

Health Insurance Amendment (Professional Services Review) Act 2012

 

2011 – Senate Inquiry into the PSR Scheme

In September 2011 the Senate Standing Committee on Community Affairs conducted an inquiry into:

  • the structure and composition of the scheme
  • the selection criteria for the executive and panel members, including their experience in administrative review proceedings
  • the role of specialist health professionals in cases where members do not have relevant expertise
  • the accountability of everyone appointed to the PSR
  • the procedures used to guide Committees when reviewing cases
  • the procedures for investigating alleged breaches under the Act by practitioners
  • the pathways available to practitioners under review to respond to alleged breaches
  • the appropriateness of the appeals process.

In its Review of the PSR Scheme report, the Senate Standing Committee made 7 recommendations and endorsed peer review as the underlying principle of the PSR Scheme.

 

2006 – Refining the PSR Scheme

The PSR Scheme was refined in 2006 following a review. Changes to the 1999 Regulation included:

  • expanding the list of professional services that could be reviewed for inappropriate practice to include all the medical services that had been added to the Medicare Benefits Schedule since 1999
  • introducing a new sampling methodology for Committees
  • specifying which bodies a practitioner must be referred to if they have failed to comply with their professional standards.

Relevant legislation

 

2002 – Clarifying PSR Scheme objectives

The government made further changes in 2002 to:

  • clarify the review process
  • address issues raised by the Federal Court decision in the Pradhan case.

These changes were consistent with the 1999 review, and were authorised by amendments to the Act. The main changes were:

  • emphasising that the objective of the PSR Scheme is to protect the public
  • replacing the investigative referral process with a new process that considers a practitioner’s conduct over a period of time, giving the agency access to a larger set of patient records
  • validating previous referrals potentially affected by the Pradhan decision
  • enhancing procedural fairness at various stages of the review process.

Relevant law

Health Insurance Amendment (Professional Services Review and Other Matters) Act 2002

 

1999 – Reviewing the PSR Scheme

A comprehensive review of the PSR Scheme was done in 1999 in response to the Federal Court and Full Federal Court decisions in the Yung case (1997 and 1998 respectively). This review significantly affected the administration of the scheme, and was authorised by amendments to the Act.

The amendments improved scheme administration by:

  • increasing the Director’s power to investigate, prepare cases and negotiate
  • allowing PSR Committees to access legal support
  • allowing greater legal support to practitioners under review
  • replacing the Determining Officer with a Determining Authority
  • removing the PSR tribunals while retaining the practitioner’s right of review on points of law.

New methods for assessing inappropriate practice were also introduced, including:

  • deeming provisions – when a practitioner exceeds a specified number of services, it will be deemed inappropriate unless they can satisfy a PSR Committee that there were exceptional circumstances
  • extrapolating sampling results – PSR Committees can infer results about one type of service based on results for similar services
  • making generic findings – Committees can make a non-specific finding of inappropriate practice if records are missing or incomplete and it cannot use deeming provisions or sampling methods.

Other changes included:

  • allowing details of inappropriate practice findings to be published once the determination is final, including the practitioner’s name
  • requiring Committees to consider a practitioner’s medical records when assessing inappropriate practice
  • allowing the PSR review process to continue when fraud is suspected and has been referred to the Health Insurance Commission
  • allowing penalties to be applied if a practitioner or other person under review fails to produce documents.

Relevant legislation

 

1997 – Strengthening the PSR Scheme

In 1997, the PSR Scheme was strengthened by:

  • introducing penalties for contempt of a Committee
  • increasing the maximum period for full disqualification from 6 months to 3 years
  • increasing the maximum period for partial disqualification from one year to 3 years.

The amendments also clarified the review process by:

  • requiring people to produce documents before a Committee hearing
  • repealing cumbersome and unworkable statistical sampling provisions
  • providing a clearer method for calculating the Medicare benefits to be repaid.

Relevant law

Health Insurance Amendment Act (No. 1) 1997

 

1994 – Introducing the PSR Scheme

In 1992–1993, the Australian National Audit Office (ANAO) reviewed the Medical Services Committees of Inquiry (MSCI). These were standing Committees appointed by the Minister to deal with over-servicing by medical practitioners.

In its report, Medifraud and Excessive Servicing: Health Insurance Commission, ANAO found that MSCI did not deal with over-servicing effectively and should be reviewed. Key concerns were that the MSCI did not discourage over- servicing and that the payments recovered from practitioners were smaller than the total payments made to doctors who over-serviced.

The report recommended:

  • increasing repayments and penalties to better reflect the amount of money defrauded from Medicare
  • giving the MSCI power to access the medical records of practitioners referred to them
  • appointing more Committees to reduce delays
  • follow-up counselling of practitioners
  • appointing a full-time manager to oversee MSCI operations.

In 1994, in response to the report and in consultation with the medical profession, the government abolished MSCI and replaced it with the PSR Scheme.

The scheme introduced PSR Committees, which include members with professional experience relevant to the practitioner they review. It also established the concept of ‘inappropriate practice’. This increased the medical profession’s autonomy while still ensuring natural justice for the practitioner under review.

The PSR Scheme was originally designed to:

  • recover money and set sanctions appropriate to the nature and extent of the inappropriate practice
  • deal with cases faster by setting timeframes for the review process and limiting the role of lawyers
  • combine the activity of existing Committees that were dealing separately with medical services and the prescription of medicines.

Relevant legislation

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