Health quietly passes Medicare payments sell-off deadline

The Department of Health is staying silent on its proposed sale of Medicare payments to the private sector, despite sailing past the date it originally scheduled to have contracts signed without any movement.

In August 2014, the department issued a request for expressions of interest from organisations to take over the processing and payment of $19 billion in medical benefits claims, $10 billion in pharmaceutical claims and nearly $2.5 million worth of veterans affairs claims every year.

Facing a mammoth IT upgrade bill to replace the ageing system that calculates the Medicare and DVA entitlements, the government instead opted to test the market and see whether any private sector companies already equipped to deliver similar functions - like private health insurers, general insurers or banks - would be interested in taking over the work.

EOIs closed at the end of August 2014 and the Department of Health - which is leading the process - has not issued an update since.

It is still refusing to confirm whether it will even go ahead with the planned privatisation of the function.

In response to iTnews’ enquiries, the Department of Health stuck to the same advice it has consistently issued in the year since the EOI was released.

“There has been no decision made by government in relation to this matter," a spokesperson said.

“Any further steps on the market testing for health services payments is still subject to government consideration."

However, a tranche of documents recently released to the Community and Public Sector Union (CPSU) under freedom of information laws reveal the department had expected to have the deal sewn up by now.

A timeline put together by PriceWaterhouseCoopers, the consultancy put in charge of overseeing the approach to market, shows the original plan had scheduled contracts to be signed in October this year, and for transition work to begin this month.

But even the PwC team warned the estimated deadline was prone to slippage.

“We understand that the department has an imperative to complete the full procurement (“stage two”) and appoint a service provider, or providers, by the end of September 2015," it wrote in a letter to the Department of Health.

“This is an ambitious timeframe for a procurement of this scale, particularly given the intention to co-design innovative solutions with providers during stage two."

PwC had previously handed in its market viability report, assessing the feasibility of the plan, in late November 2014. It pitched to the department on 6 November 2014 to stay on with the project to also manage the subsequent selection, design and contract finalisation.

The CPSU is campaigning hard against the move, arguing it will lead to major job losses and increase the risk of sensitive health data being handed to private sector operators.

Executives from the Department of Human Services, who were quizzed about the scheme late last month during senate estimates, said roughly 1500 to 1700 staff currently work on maintaining and coding the Medicare payments system.