Inside the race to overhaul Medicare's payments system

Fifteen minutes in the national spotlight hasn’t brought the creaky Medicare payments system any closer to a long-overdue replacement, but Canberra insists it is working on bringing the platform into the modern day.

The 30-year-old IT back-end responsible for processing public healthcare rebates rose to an unusual level of notoriety in the last week of the election campaign, amidst squabbling over whether its proposed hand-off to the private sector amounted to an attack on the national health safety net.

Now it is set to become the federal government’s next biggest IT challenge, after a public backlash forced Prime Minister Malcolm Turnbull to promise no element of the system would be privatised.

The political solution dashed plans to shift the payments function to a private sector organisation - like a bank or private health insurer - and take the multi-million-dollar job off the government’s hands.

With Turnbull’s new cabinet officially sworn in last week, iTnews understands that a plan of attack to address the Medicare IT problem is likely to be pushed onto the agenda with some urgency, as public servants grown increasingly nervous about the potential for the critical IT infrastructure to buckle.

It means tech bureaucrats in the Department of Human Services and the Department of Health will have a second mountain to move, on top of the billion-dollar welfare payments modernisation they're currently undertaking.

As the PM himself admitted on national TV, “the payment system has got to be updated”.

The question that remains is: how quickly will the government stump up the cash to get it done?

How big is the job?

The complexity of the Medicare payments system - or systems - is spoken of in carpet-sized proportions.

In February, Health secretary Martin Bowles described it as “if you look at the system diagrams of this, you would probably lay it out on the floor in the middle here; it is that sort of level of complexity”.

What is referred to as the Medicare payments system is actually as many as 200 separate applications and 90 different databases working together to process Medicare Benefits Schedule and Pharmaceutical Benefits Scheme rebates for doctors and patients.

It completes 600 million transactions every year, making it the baby cousin of the notorious Centrelink payments system ISIS, which crunches through something like 50 million every day.

The replacement of the Centrelink payments back-end is estimated to cost between $1 billion and $1.5 billion; the Medicare job would likely to slot in just below this threshold.

DHS CIO Gary Sterrenberg in February said he judged the scale of the Medicare system to be more like the IT that runs retail banking at Westpac than the Goliath-like welfare payments infrastructure.

“Everything is small compared to the social welfare system,” he cautioned.

Another small mercy for DHS and Health mandarins is that the kinds of calculations the Medicare system conducts are a lot simpler than the spider’s web of rules and conditions governing Centrelink.

A successful Medicare rebate is dependent essentially on a yes/no question of eligibility, and then the platform simply needs to get the money into a bank account.

Read on to find out why the system only has four years left...