Medicare payments system given $17m to keep the lights on

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Medicare payments system given $17m to keep the lights on

MYEFO: Govt tries to breathe new life into 30-year-old system.

The federal government will spend $16.6 million this year on its 30-year-old Medicare payments system to keep the platform running while it continues to search for a replacement.

The Department of Health will use the funding for “remediation and essential maintenance of the health and aged care payments systems”, it said in its 2017-18 mid-year economic and fiscal outlook (MYEFO) released today.

It will also ensure that the IT platform continues to be owned and operated by the public sector.

The health and aged care payments system is made up of 200 separate applications and 90 different databases that have been built up over the last three decades.

It currently delivers 600 million payments worth $50 billion each year across Medicare, the pharmaceutical benefits scheme, veterans and aged care recipients.

But public servants have long been nervous about the susceptibility of the underlying IT infrastructure to a potential failure, previously describing the payments system as “creaking at the seams”.

According to Department of Human Services chief information officer Gary Sterrenberg, the payments system is expected to reach end of life in just over two years' time. The inflexibility of the current system is also said to limit policy options. 

Funding to support the existing system comes as the department continues to look for suppliers that can offer a cloud-based digital replacement. DHS was allocated $67.3 million in this year’s budget for the effort.

It asked suppliers to pitch off-the-shelf IT solutions earlier this year, with the hope of having achieved “demonstrated progress” by early 2019.

But feedback from industry suggested the department should proceed with a modular architecture and incremental build for what it deemed a complex transformation. 

While the department remains confident it will be able to source a new platform before 2019, the new funding could be seen as contingency in the event that the system is not in place when the existing platform reaches end of life.

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