Medicare branches to drop cash for real-time transfers

Medicare branches will no longer deal in cash after the agency rolls out real-time, electronic payment facilities across the nation this year.

The national roll-out follows a four-month trial of Credit EFTPOS in 20 Medicare branches, allowing staff to immediately deposit funds into customers’ bank accounts by swiping their debit cards.

Medicare’s parent Department of Human Services originally described the trial as a way of offering customers more options and aligning the agency with retail and health insurance industries.

It has since decided to extend Credit EFTPOS to all 242 Medicare branches on a staggered basis from 1 July, and stop making cash payments once Credit EFTPOS is switched on.

“Medicare is the only Australian Government program that still deals with cash in significant volumes,” a departmental spokesman told iTnews.

“By removing cash from offices, security and safety for both customers and staff will be improved. It also means a move away from high counters and security glass in service centres, making it a more welcoming environment.”

In the last financial year, Medicare reported processing 319.1 million payments, of which 240.2 million (75.3 percent) were paid by bulk billing to healthcare providers (pdf).

It issued 11.6 million cheques to practitioners and healthcare recipients, representing 3.7 percent of total payments processed, and 26.6 million (8.3 percent) cash payments.

Some 40.6 million payments (12.7 percent) were made electronically, including Electronic Funds Transfers that could take two to three days to clear.

According to advisory firm Deloitte, Medicare has campaigned to raise awareness of electronic claiming options for some time, but adoption has been slow.

Deloitte explained that that Australians were “slow to volunteer bank account information” to the Government for electronic payments, and not all practices offered electronic payment options.

Timeliness was also an issue, with patients more likely to “opt to receive a cash payment [over an overnight online payment] despite the time and effort involved in visiting a Medicare office”.

Of Medicare’s 242 branches across Australia, a total of 43 currently offer Credit EFTPOS as a payment option, including 20 that have ceased offering cash.

Human Services’ spokesman said Credit EFTPOS terminals had been available in some service centres since 2001.

Credit EFTPOS terminals are configured by the Reserve Bank of Australia and use a dedicated wireless connection, or in some cases, a PSTN line.

The spokesman said the extension of Credit EFTPOS into the 199 remaining branches would not require any system enhancements.

A majority of branches would receive new Credit EFTPOS terminals within the year, he said, with the roll-out funded from the department’s existing operating budget.

“Once the service centre receives the terminals, they set up each staff member with a user ID and the units are then able to be used,” he noted.

“This is a simple process which has allowed terminals to be deployed to sites and used the same day of receipt.”

He said Medicare would “work closely with” any customers who were unable or unwilling to have payments made directly into their bank accounts.

“If someone doesn’t have a bank account, they can take a friend or family member with them and have their benefit deposited into their family or friend’s bank account via electronic funds transfer,” he said.

“Staff can also provide a cheque to the customer or arrange to have this mailed to a friend or family member.

“There will be special arrangements to pay benefits to vulnerable people – such as those who are homeless – and those without bank accounts, [for example,] cheque.”

Prepaid cards and the cost of manual payments

In a Visa-commissioned report last month (pdf), Deloitte wrote that Australia could save $1 billion over four years by replacing manual payment methods with prepaid cards.

Deloitte director Ric Simes said it consulted with “a number of federal and state agencies” for the study.

Spokespeople for the Department of Human Services and Australian Taxation Office said they were not involved in the report.

“For most government payments, electronic transfers are the most efficient payment method,” Simes noted.

“However there are a number of government payment types where electronic transfers are not adequate,” he said, highlighting time-critical, emergency payments and payments to persons with no bank accounts.

“Currently, cheques – and in the case of Medicare, cash payments – are used in most circumstances outlined above, both of which are relatively expensive payment options. 

“Prepaid cards offer an electronic alternative to current payment methods that are generally more convenient for consumers and allow government to streamline payment processes and more easily reconcile payments.”

Deloitte reported that the Australian Taxation Office processed 17.9 million electronic payments in the 2010-11 financial year and 1.9 million manual payments, via cheque.

A spokesman for the tax office said it actively promoted electronic payment options to drive down the use of cheques.

“At this stage, further work needs to be completed to understand if and when prepaid cards would be a viable alternative to the payment of refunds direct to a taxpayer’s bank account,” the spokesman said.

“We need to balance the cost against the demand for new services and in the context of the range of simple electronic options already provided.”

The Department of Human Services said it was “always looking for ways” to improve services to customers, including through new technologies.

But it had no plans to increase its use of prepaid cards to distribute welfare payments beyond existing electronic benefit transfer (EBT) cards.

“The majority of our payments are distributed quickly and efficiently via direct deposit into customer’s bank accounts,” Human Services’ spokesman said.

“Implementing and operating a prepaid card system would be far less cost-efficient than the current system and only return minimal customer benefits for the outlay.

“Due to the department’s extremely large and diverse customer base, there is no single payment option that is universally suitable for all customers.

“For this reason, it is likely that cheques and, to a lesser extent, cash will continue to make up a very small part of our business into the future.”