Health IT overhaul set to deliver landmark tender

Medicare payments system to be replaced

A big government tender could be on the horizon for local partners, with the Department of Health announcing plans to replace the ageing IT system it uses to deliver Medicare payments to Australians.

“The Australian government will replace the IT system to deliver reliable and accurate health, aged care and veterans’ payments,” said Minister for Health and Aged Care, Sussan Ley, and Minister for Human Services, Alan Tudge, in a joint statement.

“Australia’s existing health and aged care payments system is 30-years-old and is now obsolete.

“The new system will support the Australian government continuing to own, operate, and deliver Medicare, PBS [Pharmaceutical Benefits Scheme], aged care, and related veterans payments into the future,” the ministers said.

On 19 October, the government commenced a process to identify solutions for the new proposed payments system, which is set to be based on existing commercial technology.

The government said it intends to consult extensively with health and aged care providers, and sector stakeholders to inform the final design of the new system, with the consultation period set to be finalised in January next year.

The project will be led by the Department of Health and supported by the Departments of Human Services and Veterans’ Affairs, and the Digital Transformation Office.

The Department of Health’s new plans to replace its IT system follows a public outcry after earlier proposals to outsource the operation of the Department’s payments system met with staunch opposition in some quarters.

Most notably, Labor opposition leader, Bill Shorten, voiced concerns over the government’s move to set up a taskforce to review its Department of Human Services operations and the subsequent prospect of outsourcing the management of the Medicare payments infrastructure to the private sector.

“I won't give up on Medicare, and I'm going to fight to defend Medicare and I don't think outsourcing the payments system is in the best interest of Medicare,” Shorten told the ABC earlier this year.

In June, Prime Minister, Malcolm Turnbull, finally ruled out privatising any part of the Medicare system, saying at the time that it would “never ever, ever be privatised”.

Although the proposed Medicare payments system IT overhaul has not yet been given an exact price tag, it follows a similar move last year by the government to overhaul its Centrelink payments operation in a multi-year project that is expected to cost upwards of $1 billion.

“The new welfare payment system is a once-in-a-generation investment, which will transform the way the department delivers payments and services to millions of Australians each year,” said then Human Services Minister, Marise Payne, at the time.