Introduction

1. The Practice Incentives Program (PIP) aims to provide a flexible, cost-effective mechanism for the Government to encourage both short and long-term changes to general practice, to support quality care, and to improve access and health outcomes with a minimum of red tape.

2. In establishing the program objective, an inter-departmental committee (IDC)¹ report to government noted that any overlaps between PIP and other measures were mutually reinforcing rather than duplicative. The Government agreed to the objective in February 2006.

3. PIP offers 13 incentives with diverse aims to general practices and their general practitioners (GPs) to complement fee-for-service arrangements available through the Medicare Benefits Schedule (MBS) that reward high volume, brief consultations. Examples of incentives include ones that encourage practices to: provide after-hours care for patients; equip their practices for secure, electronic transfer of patient information; and deliver recognised better practice care to patients with diabetes.

4. PIP started on 1 July 1998. In 2009–10, approximately 4 900 practices participated in PIP, making it the largest Australian Government program aimed primarily at general practices rather than general practitioners. Some $282 million was paid to general practices and GPs under PIP in 2009–10, with an average payment to a practice of $57 800. Eighty-two per cent of general practice care in Australia is delivered through PIP practices.²

Key characteristics of PIP payments

5. To participate in PIP, practices need to be accredited against the Royal Australian College of General Practitioners' (RACGP's) Standards for General Practices (the Standards).³ Access to PIP payments is the primary reason for most practices attaining accreditation; approximately 67 per cent of all general practices⁴ are accredited, providing around 82 per cent of GP patient care.

6. Accreditation is undertaken by one of two entities approved by the Government for this purpose. One of these entities, Australian General Practice Accreditation Limited (AGPAL) was established with government assistance and is an industry organised body governed by members of the health profession within a not-for-profit framework. The other, Quality Practice Australia Pty Ltd (QPA), is a for-profit agency formed to accredit general practices.

7. The level of PIP payments a general practice will receive is determined by the particular incentive adjusted, in the main, by the following factors:

•  the Standardised Whole Patient Equivalent (SWPE), which is intended to be a measure of a practice's patient load being independent of the number of services provided to patients. It is based on the proportion of care a practice provides to each patient using the value of the patient's MBS fees, and then weighted using an age-sex factor. Over 75 per cent of PIP payments to practices use the practice's SWPE as a determinant; and
• the location of the general practice as determined by the rural, remote, metropolitan area (RRMA) classification, based on the population distribution from the 1991 Australian Bureau of Statistics Census of Population and Housing.⁵ General practices located in rural and remote RRMA classes have a loading of between 15 to 50 per cent added to other PIP payments.

Program administrative arrangements

8. The Department of Health and Ageing (DoHA) has overall policy responsibility for PIP and manages program planning (including eligibility criteria), monitoring and review. Medicare Australia processes all applications from general practices and undertakes the day-to-day administration of PIP, including ensuring compliance with program and payment eligibility.

9. PIP is not covered by specific legislation but rather is an executive scheme supported by appropriations. To support program service delivery, a memorandum of understanding (MOU) between DoHA and Medicare Australia was signed in May 2009. A Business Practice Agreement (BPA)⁶ that forms part of the MOU, addresses the service delivery of PIP by Medicare Australia and the administrative roles and responsibilities with respect to PIP.

Audit objective

10. The objective of the audit was to assess DoHA's effectiveness:

• in undertaking PIP program planning, program monitoring and review; and
• with Medicare Australia, in ensuring PIP program delivery to general practices and their medical practitioners.

11.  In undertaking the audit, the ANAO considered the 12 incentives that comprised the PIP up to August 2009.⁷ The three most recently introduced incentives at the time of audit fieldwork, namely, Domestic Violence, GP Aged Care Access and eHealth incentives, were examined in greater detail and formed case studies to support audit analysis. The ANAO also sought views on the program administration from industry, including from general practices directly through an online survey.

12.  With regard to accreditation of general practice, the audit scope did not include an assessment of the Standards nor the work of the bodies that undertake accreditation of general practices. The ANAO's focus on general practice accreditation related to DoHA's management of program entry criteria.

Overall conclusion

13. Since 1998, $2.7 billion has been paid to general practices and general practitioners under the Practice Incentives Program (PIP). The program has been a means of funding general practices and GPs for a diverse range of activities, outside the fee for service arrangements through the Medicare Benefits Schedule (MBS).

14. The Department of Health and Ageing (DoHA) has been broadly effective in undertaking its responsibilities for PIP planning, monitoring and review and, with Medicare Australia, has ensured delivery of a complex program to general practices and their medical practitioners. As a result of the program, general practice accreditation has increased to 67 per cent of general practices that provide most of Australia's primary health care – these practices have taken up one or more PIP incentives contributing to improved services for patients and practice management.

15. PIP has a number of features that make its management challenging; in particular it comprises a diverse range of incentives with varying aims and payment arrangements. These features and the large number of changes that have applied to PIP since its inception, particularly the addition of new incentives, highlight the importance of a systematic approach to assessing whether a new incentive payment to be delivered through PIP will appropriately target the identified needs and intended recipients. A particular consideration for PIP is that although it has facilitated the accreditation of 67 per cent of all general practices, it is often used as an umbrella program to deliver individual initiatives, such as the eHealth Incentive, that align with government policy more widely and are applicable to all general practices, not just those that are accredited.

16. Accreditation, the entry requirement to receive PIP incentives, can be a significant barrier to certain general practices including Aboriginal Medical Services (AMSs) and smaller practices. Therefore, in some cases PIP alone may not always be the most suitable means for delivering an incentive that is applicable to the entire general practice community. To illustrate, while noting that initiatives have recently been announced or progressed with the potential to offset the costs of accreditation – AMSs, and small practices servicing remote locations and non-English speaking communities, have been underrepresented in PIP.

17. In addition, the factors that determine the amount of PIP payments to individual practices - the standardised whole patient equivalent (SWPE) measure of patient load; and the rural, remote, metropolitan area (RRMA) classification of location - can have unintended consequences for particular practices, potentially distorting uptake of an incentive and, thereby, not achieving the intended impact.

18. These characteristics of PIP underpin the importance of DoHA undertaking an assessment, to inform Government decision-making, of whether a new incentive, if placed in PIP, will best target intended recipients and deliver expected outcomes. An assessment at the design consideration stage modeled on a range of general practices with varying characteristics would assist DoHA to better understand which sectors of the general practice population are most likely to benefit, or be influenced by, an incentive placed within PIP and using parameters, such as SWPE and RRMA.

19. PIP has a range of objectives and sub-objectives relating to: improved access and health outcomes; improved services to general practices and their patients; while, at the same time, minimising ‘red tape'. Each incentive is aimed at contributing to one or more of PIP's sub-objectives. However, the key performance indicators (KPIs) that DoHA relies upon for monitoring, reporting and review at the overall program and individual incentive payment level, focus on take-up statistics rather than effectiveness measures. While DoHA has drawn on both broad and incentive specific evaluations to inform program development, the lack of effectiveness KPIs has meant that these evaluations have been limited in their ability to inform government on the ongoing success, or otherwise, of particular incentives in meeting their objectives and sub-objectives. The use of effectiveness KPIs that are identified through a program evaluation strategy, and regularly measured and reported, would assist the assessment of PIP achievements.

20. Medicare Australia has responsibility for PIP service delivery. The arrangements between DoHA and Medicare Australia are supported by a business practice agreement that provides a sound framework for managing PIP service delivery. In practice, the assurance that DoHA obtains from Medicare Australia that correct payments are made to general practices could be improved. In particular, while PIP payments to practices are accurate according to information currently held by Medicare Australia, general practices have not confirmed the ongoing currency of a significant amount of this information for five years or more – increasing the risk of inaccuracies in payments. Furthermore, until recently, Medicare Australia's PIP compliance audits have been based on factors such as the type of incentive payment and geographic considerations, rather than practices with higher risk of non-compliance. Medicare Australia has advised that it is currently progressing initiatives which should improve the currency of practice information to determine their continuing eligibility for PIP incentives and consequently should provide greater assurance to DoHA on the accuracy of payments.

21. PIP has been evolving for 12 years and, as such, it is timely for DoHA to review how it managers PIP, particularly the implementation of new incentive payments. More specifically, the ANAO has made three recommendations to improve the DoHA's ability to inform program development decision-making, to assess the outcomes from PIP, and to manage program entry requirements, including accreditation.

Key findings

Informing program development decision-making

22. DoHA has criteria against which to assess whether PIP is the most appropriate instrument for progressing individual incentive payments related to, for example, whether a change in the behaviour of GPs is required, that is, to support quality care, improve access and health outcomes. Based on the ANAO's assessment of three case studies: Domestic Violence; GP Aged Care Access; and eHealth, DoHA appraised each incentive against the criteria, albeit informally and undocumented. An explicit, documented assessment would provide DoHA with a more robust basis on which to advise government as to the placement of an incentive in the PIP.

23. There are also PIP design features which affect the ability of initiatives placed in the program to influence general practitioners and their practices. These relate to PIP being unavailable to general practices that are not accredited and the use of the SWPE and RRMA as the main bases for paying practices. While such features and the placement of initiatives in PIP are a matter for decision by government, DoHA has a role in assessing the impact of placing an initiative in PIP, and identifying whether any design modification may be beneficial in the light of experience.

24. General practice accreditation was designed to promote access to high quality primary health services, with most accredited general practices considering that accreditation has a positive impact on the quality of patient care that they provide. Nevertheless, general practice accreditation can be an entry barrier for participating in PIP for some types of practices. The cost and work effort needed for accreditation are regarded by over 80 per cent of ANAO survey respondents as ‘high' or ‘very high'. As a result, small practices servicing remote locations and non-English speaking communities, as well as AMSs, have been underrepresented in the program.⁸ Overall, there has been limited assessment by DoHA of the impact of restricting incentive access to accredited general practices. This is particularly important for incentives, such as the eHealth which is part of a broader initiative that the Government aims to progress across the whole health sector.

25. While the SWPE was designed to reward practices that spent more time with individual patients, it actually provides greater payments to practices that have higher numbers of patient visits as opposed to fewer, longer consultations. The SWPE also results in solo practices and those treating Indigenous patients, receiving disproportionately less in PIP payments. The SWPE formula has not been subject to review since its implementation along with the PIP in 1998–99.

26. The other central factor in determining PIP payments, RRMA, is based on outdated 1991 Australian Bureau of Statistics census data and is not used consistently by DoHA; a district can be assigned different RRMA categories under different programs. The timing to implement the planned replacement of the RRMA classification for PIP is subject to government consideration.⁹

27. An assessment at the design stage, modelled on a range of practices with varying characteristics, would assist DoHA understand how the proposed incentive will translate into the target population if placed in PIP and the impact of using parameters, such as SWPE and RRMA. More broadly, an analysis of the PIP design features, the SWPE and program entry requirements, on the effectiveness of incentives, would assist DoHA in advising government on the benefits, or otherwise, of program design modifications.

Assessing the outcomes from PIP

28. Since its inception in 1998, PIP has had a range of objectives and aims relating to, for example, a ‘blended' payment approach,¹⁰ and improving services to general practice patients, while minimising ‘red tape' for practices. PIP also comprises a significant number of incentives, each with their own aims. These complexities highlight a need for DoHA to implement a strategic approach to undertaking its program management activities to measure, assess and report the effectiveness of PIP.

29. To examine the extent to which DoHA determines and reports on PIP outcomes, the ANAO assessed: PIP achievements against its objectives; DoHA's setting and reporting against KPIs and associated targets; and DoHA's evaluations of PIP at the broad program and individual incentive level.

30. The ANAO's analysis indicated that PIP has positively contributed to increased accreditation rates and aspects of its objective, such as improved services to patients and improvements in general practices. In the view of stakeholders, however, PIP's administrative burden on general practices has not decreased, with 80 per cent of ANAO survey respondents considering that there had been at least a slight increase over the last five years in the cost and work effort to receive PIP incentives. This contrasts with aim of the program to achieve results with a ‘minimum of red tape', and suggests that initiatives implemented to address administrative burden have not been fully effective. PIP Online, a key measure identified to reduce ‘red tape', is planned to be introduced in October 2010.

31. Over the same period, while there has been an increase of 86 per cent in MBS expenditure on GP-related services, PIP expenditure has risen 25 per cent, with savings measures for PIP, and changes to the MBS and GP workforce contributing to these trends. This highlights that the balance in financial incentives provided through PIP and benefits through the MBS, has shifted towards practices providing higher volume services. The ANAO's analysis suggests that PIP, with an aim of encouraging general practices to spend more time with their patients in individual visits, has not made a notable difference in limiting MBS fee-for-service expenditure that rewards brief consultations.

32. The broader program evaluations and incentive-specific evaluations of PIP undertaken by DoHA, while informing program changes, have been limited by a lack of effectiveness KPIs identified ‘up-front' and used as the basis for quantitative assessment of PIP achievements against its objectives and sub-objectives. DoHA's performance monitoring and reporting, at both the broader program and individual incentive level, focuses on take-up statistics rather than effectiveness measures and does not allow for trend analysis over time. An evaluation strategy would provide DoHA with a more considered and planned approach to the assessment of PIP incentives that have been operating over an extended period, and assist in reducing gaps and delays in evaluation activity.

DoHA's assurance on the quality of accreditation processes

33. The Australian Government has a commitment to the accreditation of general practices and has previously contributed funds to assist in establishing the Standards for General Practices. These Standards are administered by the Royal Australian College of General Practitioners (RACGP).

34. The ANAO assessed whether DoHA gains assurance over the quality of accreditation processes, especially the consistency of assessments and compliance with the Standards. Without such assurance there are risks that general practices could be assessed inconsistently, and that general practices do not maintain their compliance with the Standards across an accreditation cycle. As accreditation is the key eligibility requirement for PIP, a poor compliance regime could allow some general practices to continue to receive PIP payments while not adhering to the Standards. More broadly, a lack of adherence to the Standards could limit the achievement of high quality primary health care that government expects from accreditation.

35. The following features for the accreditation of general practices limited DoHA's assurance on the quality and rigor of the accreditation processes:

• when conducting accreditation assessments, the two accrediting bodies - Australian General Practice Accreditation Limited (AGPAL) and Quality Practice Australia Pty Ltd and (QPA) - each used their own accreditation framework that general practices were required to follow;
• while both accrediting bodies seek assertions from general practices on adherence to the Standards across the accreditation cycle, there are no checks on these claims through risk-based interim assessments; and
• there is a lack of clarity as to the auditability of the current Standards and their applicability to all general practice settings, such as those that operate outside office settings.

36. DoHA has worked previously with the health profession to develop an improved governance framework with the potential to address many of the issues affecting accreditation arrangements, including the possible use of a single accreditation framework. The resulting proposals were not progressed for consideration by government.

DoHA's assurance on the accuracy of PIP payments to practices

37. DoHA receives reports from Medicare Australia for the release of funds to make quarterly payments to practices and on the payment amounts sent to practices, as well as those payments withheld. Such reports, together with regular liaison meetings and PIP compliance audit reports, provide DoHA with a degree of assurance against its responsibilities for public money under the Financial Management and Accountability Act (1997).

38. ANAO sampling indicated that Medicare Australia has information to support all payments being made to practices. Medicare Australia relies on practices to provide the information necessary to receive a PIP payment and assumes this information remains current unless advised. A large amount of information held on practices by Medicare Australia used to make these payments, however, has not been updated for significant periods. Based on a sample of 70 practices, over 40 per cent of After-hours and Practice Nurse Incentives payments made in May 2009 (representing 15 per cent of total payments) were determined on information that was received by Medicare Australia between five and 10 years previously.

39. Most details on practices are currently manually entered by Medicare Australia staff. A review of the PIP database found that some information, such as accreditation expiry dates that are required to test for ongoing eligibility, had not always been recorded. Developments underway at the moment, such as annual confirmation statements and the ability for practices to apply for PIP incentives and update details electronically through PIP Online, should assist in addressing this issue, and any risks concerning the currency of information.

40. Until 2009–10, the compliance audit program for PIP generally did not target high risk practices. However, there was recognition by both agencies that the After-hours and Practice Nurse Incentives had the highest degree of potential non-compliance and a substantial proportion of the audits concentrated on these payments.¹¹

41. To receive Tier 3 of the After-hours Incentive, practices are required to ensure patients have access to after-hours care by a practice doctor 24-hours a day, seven days a week. After-hours telephone calls made by the ANAO to 34 practices with low after-hours MBS item billings that were receiving After-hours Incentive payments of almost $500 000 in 2008–09, demonstrated the importance of using secondary sources of information to identify practices with higher risk of non-compliance. While patients may have various means of accessing 24-hour care from practice doctors, none of the practices contacted answered the calls in person. Answering machines provided callers with an after-hours number for a practice doctor in only half the cases, with two practices indicating that no practice doctors were available after-hours.

42. During the course of the ANAO audit, Medicare Australia developed its 2009–10 PIP compliance audit program. In this, Medicare Australia identified audits on the After-hours, Practice Nurse and Domestic Violence Incentives, proposing to target practices whose MBS after-hours and practice nurse item billings do not appear to be commensurate with their PIP requirements.

Agencies' responses

Department of Health and Ageing

Individual incentives available through the Practice Incentives Program cover a broad range of activities in general practice, and aim to support quality care as well as improve access and health outcomes for patients. The Department, in consultation with Medicare Australia, has been undertaking a number of activities to improve the administrative arrangements for the program. The recommendations included in the audit report will further guide and enhance this ongoing work.

Medicare Australia

Medicare Australia welcomes the ANAO performance audit findings that the Business Practice Agreement between Medicare Australia and the Department of Health and Ageing provides an appropriate framework for delivery of Practice Incentive Program payments.

Medicare Australia supports the recommendations in the report.

43. Extracts of the proposed report were also provided to the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA), the National eHealth Transition Authority (NEHTA), the RACGP, AGPAL, QPA, and the Joint Accreditation System of Australia and New Zealand (JAS-ANZ). The comments subsequently provided are included in Appendix 1 of the report.

Footnotes

¹  The IDC comprising Departments of (then) Finance and Administration, Prime Minister and Cabinet, Health and Ageing, and Treasury, was established to advise government on the future directions for PIP.

²  Department of Health and Ageing, 2008–09 Annual Report, p. 115  <http://www.health.gov.au/internet/main/publishing.nsf/Content/DD09CE2B6CC37536CA25765500144F4D/$File/Full%20Report%20of%20the%202008_09%20Annual%20Report.pdf> [accessed 17 December 2009]

³  To promote access to high quality health care services, the Government supports general practice accreditation. General practice accreditation is voluntary, and does not affect eligibility for MBS payments relating to patient services.

⁴  The total number of general practices is based on self reporting through the 2007–08, Annual Survey of Divisions.  <http://www.phcris.org.au/fastfacts/fact.php?id=6752> [accessed 14 October 2009]

⁵  Departments of Primary Industries & Energy and Human Services & Health, (1994), Rural, Remote and Metropolitan Areas Classification (RRMA), 1991 Census Edition.

⁶  The BPA relating to PIP is made under section 7A of the Medicare Australia Act 1973.

⁷ The Indigenous Health Incentive was introduced in May 2010. This incentive is referred to throughout the report, but not included in the audit scope.

⁸ The ANAO notes that progress has been made to increase Aboriginal Medical Service (AMS) accreditation rates, and that a one-off grant for general practices to attain accreditation was announced as part of the 2010–11 Budget measure, the Practice Nurse Incentive Program.

⁹ Based on a further review of RRMA in 2008 sought by the Minister for Health and Ageing, the Government announced as part of the 2009–10 Budget, that RRMA will be replaced by the Australian Standard Geographical Classification—Remoteness Areas system, in a phased approach from July 2009. While most RRMA-based programs will be changed over to the Australian Standard Geographical Classification—Remoteness Areas in 2009–10, the Government is yet to determine the timing to apply this change to PIP.

¹⁰ A ‘blended' payment approach provides general practices and GPs with income from a range of sources, such as PIP, and payments for individual services from MBS rebates and patients.

¹¹ With the development of the Practice Nurse Incentive Program and Medicare Locals, announced in the 2010–11 Budget, the PIP Practice Nurse Incentive will be abolished at the end of 2011. Tier 1 of the After-hours Incentive will cease by July 2011, with Tiers 2 and 3 finishing by July 2013.