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The Shared Debt Recovery Scheme came into effect on July 1, 2019 which prompted health professionals and medical clinics to review their internal Medicare billing procedures as well as their relationships with other stakeholders – namely other health service providers.

The changes have not only adversely affected primary practitioners who bill incorrectly, but also secondary parties involved in unresolved debts.

Why was the new scheme introduced?

The reason why the new scheme was introduced was based on the Department of Health’s findings from post-payment Medicare compliance audits. They must have discovered many non-compliant reports in relation to payment of Medicare benefit.

The responsibility for Medicare billing is often assigned to practice administrators. Medicare billing can also be affected by internal practice processes and policies. Often, this can lead to incorrect reporting of billings.

What is the Shared Debt Recovery Scheme?

The Shared Debt Recovery Scheme comes into play when the Department of Health (the Department) carries out post-payment Medicare compliance audits.      

As stated on, the Department’s audit process is an evidence-based assessment of a provider’s compliance with relevant requirements in relation to the payment of a Medicare benefit and is conducted in accordance with the Health Insurance Act. Audits are not undertaken to determine the clinical appropriateness of the service delivered to the patient.

Before the Shared Debt Recovery Scheme came into effect on July 1, 2019, the liability for a Medicare debt had been with the individual practitioner, except in cases where another party has engaged in fraud. However, with the scheme in place, it depends on whether contractual or other arrangements exist between a practitioner and an employer or corporate entity, as both may be held responsible for the repayment of the debt.

The Scheme authorizes the Government to hold both a practitioner (primary debtor) and another party (secondary debtor) responsible for the repayment of compliance debts, arising as a result of incorrectly claiming Medicare benefits, through the making of a shared debt determination.

Who is responsible for correct reporting of Medicare billings?

The primary responsibility for correct claiming still rests with the practitioner, but the employer is also required to ensure that claims are not false or misleading.

In what situations will the Scheme take effect?

The following conditions must be met for the Department to make a shared debt determination:

  1. If there is an outstanding debt based on false or misleading statements
  2. There is a correlation between the primary (practitioner) and secondary (organisation) debtor; and
  3. The secondary debtor could have controlled or influenced the making of the false or misleading statement, obtained a direct or indirect financial benefit from the making of the false or misleading statement, and/or there are other factors that make it fair and reasonable for a shared debt determination to be made.

For more information, please click here to access the Department’s Shared Debt Recovery Scheme Fact Sheet

How can practice owners protect themselves?

Read our other guest blog article to find out more

Disclaimer: This information should not be interpreted as legal opinion and therefore should not be the basis of decision making without requesting legal advice on your circumstances.  Alecto Consulting Pty Ltd does not carry any responsibility for opinions and statements in any of its website blogs or other information.