Medicare to share Centrelink's new SAP-based payments platform

A centralised platform developed to deliver welfare payments to Centrelink customers will replace part of the country’s 30-year-old Medicare payments system, Services Australia has confirmed.

iTnews can reveal the SAP-based platform, which has been built as part of the billion-dollar welfare payments infrastructure transformation (WPIT) program, will be shared with Medicare.

Dubbed ‘Payment Utility’, the platform is the result of two years of work to transform how the agency sends and receives more than $170 billion in welfare payments through Centrelink each year.

It is expected to simplify and automate both inbound and outbound payments and provide the ability to deliver combined, same-day payments by leveraging Australia's real-time New Payments Platform.

But the platform has been designed as a white-label service that can also used across Services Australia, as well as by other government agencies, in line with advice from the Digital Transformation Agency.

While the agency was still considering how the platform could be applied more broadly last year, a spokesperson has now confirmed the platform, which is currently progressing through the final stages of testing before use, will be adopted by Medicare and Child Support.

It follows Payment Utility's first release last July to process payments related to the Tasmanian Freight Equalisation Scheme, a program offering financial assistance to shippers of eligible non-bulk goods across the Bass Strait.

“The Payment Utility platform is in its final stages of testing and preparation prior to wider use,” the spokesperson told iTnews.

“Over the next few years, the platform will be extended to cover all Centrelink, Medicare and Child Support payments as well as other payments.

“The platform has been designed and built as a whole-of-government asset, and will be available for use by other government departments and agencies.”

A series of future platform releases are then expected to follow until mid-2022.

Services Australia has also confirmed that IBM will supply the IT infrastructure behind the platform until the end of 2022, having secured a $15 million contract late last year to install Power9 infrastructure.

“This contract includes hardware, software, and services to design, build, install and support the infrastructure solution, which is an ongoing process,” the spokesperson said.

Real-time Medicare payments

While Payment Utility won't play any part in the calculation of Medicare claims, the platform will replace an important front-end component of the existing legacy Medicare payments processing system.

The ageing mainframe platform - also known as the health and aged care payments system - has been used for more than 30 years to deliver Medicare, Pharmaceutical Benefits Scheme, veterans and aged care payments.

But since the Department of Health shelved plans to replace the system, more than two years into the procurement, there has been a question mark over the long-term viability of what is a mission-critical system.

As iTnews revealed in August 2018, the Department of Health opted against proceeding with the procurement of a proposed cloud-based digital payments platform, choosing to improve the existing system run by the then Department of Human Services instead.

The procurement began after the government was forced to abandon plans to outsource Medicare payment processing in the wake of the so-called ‘Mediscare’ campaign in the run-up to the 2016 federal election, and commit to keeping the back-end owned and operated by the public sector.

Since dumping the procurement, the government has continued to bleed cash trying to resuscitate the system, which found to be suffering an increasing number of outages in 2018 as a result of its continuing deterioration.

In December, Services Australia received $37 million to perform “essential” maintenance on the payments system to ensure that it continues to operate during the 2019-20 financial year.

The government has provided approximately $210 million towards the Medicare payments systems since 2017, more than half of which was provided in the 2018 federal budget.