1994 – Introduction of the PSR Scheme

An ANAO Report in 1992-93, Medifraud and excessive servicing: Health Insurance Commission, found that the Medical Services Committees of Inquiry did not combat over-servicing effectively and should be reviewed.

A key issue of concern was that the mechanisms for dealing with over-servicing did little to discourage the provision or initiation of excessive servicing and the level of benefits recovered from practitioners was eclipsed by the level of over-servicing that actually occurred. The ANAO Report considered that the minimum requirements needed in order to make Medical Services Committees of Inquiry more effective were:

  • increasing the amount of repayments and/or penalties to reflect more closely the amount of money defrauded from Medicare
  • providing the Medical Services Committees of Inquiry with the power to access the medical records of those medical practitioners referred to the Committee/s
  • the appointment of additional Committees to help reduce time delays
  • follow-up counselling to be undertaken by the Chairperson of the relevant Committee and
  • the appointment of a full-time manager to oversee the Committee operations.

In response, and in consultation with the medical profession, the Government agreed to develop new measures to combat over-servicing and these came into effect through the establishment of the PSR Scheme in July 1994. The amending legislation abolished the Medical Services Committees of Inquiry and provided for the establishment of PSR Committees which would provide greater access to relevant experience and improved competency to deal with different types of practitioners.

The legislation also introduced the concept of ‘inappropriate practice,’ which is conduct in connection with rendering or initiating services that a Committee of the practitioner’s peers could reasonably conclude was unacceptable to the general body of their profession. The intention was to increase the autonomy of the medical profession to reach decisions on inappropriate practice while still according natural justice to a practitioner.

The original intention for the PSR Scheme was:

  • to be able to recover amounts of money and set sanctions appropriate to the  nature and extent of the inappropriate practice identified
  • to allow cases to be dealt with more quickly by building specific timeframes for particular steps into the PSR process and limiting the role of lawyers and
  • to consolidate several Committees which were dealing separately with activities relating to the rendering and initiating of services and the prescription of pharmaceuticals

Related Legislation