A The Parliamentary Compromise

The Chifley Labor Government introduced the Constitution Alteration (Social Services) Bill 1946, which proposed altering the Constitution to add a further legislative power under Section 51. The proposed addition would allow Parliament to make laws for the peace, order, and good government of the Commonwealth with respect to:

In moving the second reading of the Bill, Attorney-General Dr Evatt linked the legal motivations for the change to the outcome of the Pharmaceutical Benefits case. He stated that the ‘object of this Bill is to alter the Constitution so that this Parliament can continue to provide directly for promoting social security in Australia’,^{Footnote 28} and ‘to place Australian social service legislation on a sound legal footing’.^{Footnote 29}

The Federal Opposition, led by Mr Robert Menzies, supported the proposed social services amendments. It was strongly opposed, however, to the Bill’s reference to ‘medical and dental services’.^{Footnote 30} The Opposition feared that this terminology would give the government power to nationalise the medical and dental professions in Australia^{Footnote 31} — something to which Menzies said his party had a ‘very great objection’.^{Footnote 32}

International events at the time undoubtedly contributed to this fear of the legislation’s potential. In Britain in 1946, the Labour Government just passed the National Health Service Act, which nationalised the hospital system and led to the creation of the NHS. Similarly, in New Zealand, attempts to nationalise medical services had been prominent in political discourse for the previous decade.

With the British Medical Association (‘BMA’) acting as the representative organisation of the medical profession in Australia, New Zealand, and the UK, Australian doctors were particularly aware of these international developments. Australian and New Zealand doctors could follow debates about Britain’s introduction of the NHS through the pages of the British Medical Journal, which they received as part of their membership.

The BMA had lobbied hard against nationalisation schemes overseas,^{Footnote 33} and in Australia it was once again the loudest voice in protesting against the government’s proposal. Its members, for example, submitted to Parliament that medical practitioners were opposed to ‘any form of service [leading] directly or indirectly to [the profession] becoming full-time salaried servants of the State …’.^{Footnote 34} The BMA heavily lobbied Menzies to see their wishes safeguarded.^{Footnote 35}

The government’s broad responses to opposition questioning about the Bill, such as Dr Evatt’s explanation that the legislation ‘would enable the Commonwealth to make use of the services of doctors and dentists to provide national medical and dental services’,^{Footnote 36} did little to allay Liberal or the BMA’s concerns.

Feeling the effect of these pressures, the federal opposition was determined to remove, or at the very least alter, the suggested provisions regarding medical and dental services. Reportedly upon the advice of the President of the BMA’s Australia branch,^{Footnote 37} Menzies proposed an amendment to the Bill that authorised the government to legislate on medical and dental services, but with the proviso that such legislation would not be ‘so as to authorise civil conscription’.^{Footnote 38}

While the term ‘civil conscription’ was new and hence its meaning unclear,^{Footnote 39} the analogous phrase ‘industrial conscription’ had a more settled interpretation due to its inclusion in several pieces of contemporary legislation.^{Footnote 40} An amendment to the National Security Act 1939, for example, had removed a prohibition on industrial conscription so that the government could ‘[require] persons to place themselves, their services and their property at the disposal of the Commonwealth’. The term had surfaced again in the 1944 referendum on federal powers for post-war reconstruction, with campaigns explaining that industrial conscription entailed ‘[giving] up your right to choose your own way of living and [taking] orders to go to the job selected for you’.^{Footnote 41}

Menzies noted that he had drawn his proposed ‘civil conscription’ phrasing directly from this idea of ‘industrial conscription’.^{Footnote 42} He argued that ‘if industrial workers are to be put beyond the danger of industrial conscription, then what is good for them should be good for professional workers also’.^{Footnote 43} Hence, politicians and lawyers at the time understood civil conscription to denote a similar concept of protecting against conscription of professional workers to service of the State. The ‘yes’ campaign for the 1946 referendum, which was supported by both federal parties, evidenced this shared understanding. In their campaign materials, it was stated that the protection against civil conscription meant ‘one thing’, namely ‘that doctors and dentists cannot be forced to become professional officers of the Commonwealth under a scheme of medical and dental services’.^{Footnote 44} Final confirmation of the phrase’s interpretation came through formal advice from the Solicitor-General and two officers of the Attorney-General’s Department, who submitted that ‘the only kind of legislation which the amendment would preclude would be such as compelled doctors or dentists in effect to become servants of the Commonwealth, or to have the whole of their professional activities controlled by Commonwealth direction’.^{Footnote 45}

With the partisan differences apparently reconciled, and presumably believing the meaning of the constitutional amendment was clear, Dr Evatt accepted the amendment on behalf of the Government. The Bill proposed amending the Constitution to include:

The proposed amendment to the Constitution was put to Australian voters at referendum in September 1946 and passed.^{Footnote 46}

A The Initial Interpretation of Civil Conscription — The Limitation is Very Broad (the BMA Case)

The first case before the High Court to consider the impact of the civil conscription sub-provision was British Medical Association v Commonwealth (‘BMA case’),^{Footnote 49} a test case to determine the scale and scope of the limitation. The case challenged certain sections and regulations emerging from the Pharmaceutical Benefits Act 1947 (‘PB Act 1947’).^{Footnote 50} The Court ignored the expectation of what was meant by civil conscription which informed the parliamentary debate and asserted a very broad interpretation of what was precluded.

One of the first issues for the High Court to consider was whether the civil conscription issue was moot because the PB Act 1947 was an exercise of the pharmaceutical benefits power and so the civil conscription limitation did not apply. Latham CJ left open the question as to whether the civil conscription provision applied only to the provision of medical and dental services, and not to pharmaceutical, sickness, or hospital benefits.^{Footnote 51} Dixon, Rich, McTiernan, and Williams JJ found that the civil conscription provision attached only to the provision of medical and dental services.^{Footnote 52} Later, in Alexandra Private Geriatric Hospital Pty Ltd v the Commonwealth (‘Alexandra’),^{Footnote 53} the High Court stated it was settled that the civil conscription provision is attached to medical and dental services. However, it was ‘not irrelevant’ to other aspects of s 51(xxiiiA)^{Footnote 54} to the extent that medical and dental services are provided pursuant to the provision of another benefit.^{Footnote 55} The BMA case also settled that the civil conscription provision applied only to the Commonwealth — it had no application to the states.^{Footnote 56}

Section 7A of the PB Act 1947 imposed a fine on a doctor for not using a standard prescription form. This was enough for a majority of the High Court to deem the specification of how doctors should undertake prescribing confirmed that it amounted to ‘medical service’. It appeared that it was this exercise of compulsion, as some of the judges termed it, that led the majority to conclude it infringed the civil conscription sub-provision and should be struck out of the PB Act 1947. In the minority, Dixon J concluded that the impugned provisions did not create a duty to attend the patient or prescribe. The only duty is triggered once the doctor or dentist decides to prescribe, and that duty is limited to formalities of the paperwork which is a non-medical, financial, or administrative purpose.^{Footnote 57}

The majority’s conclusion, that regulating prescription paperwork constitutes civil conscription, shows that the majority in the BMA case adopted a very broad view of civil conscription. Latham CJ stated:

Contrary to the early views in the parliamentary debate that civil conscription was parallel to industrial conscription and compulsory service to the state, the Court now suggested that it also encompassed ‘performing work in a particular way’. Latham CJ went further to discuss whether the conscription needed to be direct and explicit or whether it could be indirect:

The others in the majority found that civil conscription could arise through a practical compulsion to provide a service.^{Footnote 60} However, the minority took a more limited view, with Dixon J stating: ‘… a wide distinction exists between … a regulation of the manner in which an incident of medical practice is carried out … and … the compulsion to serve medically or to render medical services’.^{Footnote 61} Dixon continued: ‘no doctor is any less a private practitioner than he was immediately before the Act was passed’.^{Footnote 62} McTiernan J (also in the minority) noted: ‘practical necessity or moral duty is not conscription’.^{Footnote 63}

It was immediately clear from BMA that the Commonwealth could not make laws which impacted on the practice of medicine — even to the extent of regulating the form of a prescription. More importantly was the discussion of just how broad ‘civil conscription’ might be: the BMA Case suggested that practical compulsion might potentially have a very large ambit.

During the 1960s and 1970s, when Australia’s universal health insurance scheme was being designed and implemented, as noted above, one option under consideration was a salaried scheme. Such a scheme was thought to be precluded under the broad reading which therefore influenced the shape of Australia’s universal health insurance arrangements in terms of what could be seen as constitutionally possible.^{Footnote 64}

B The High Court Revisits the Civil Conscription Sub-provision in the 1980s and Narrows the Policies Precluded

The civil conscription sub-provision was not reconsidered for another 31 years, until 1980, when the High Court revisited it in the GPS Case.^{Footnote 65} By 1980, universal health insurance had been introduced in the form of Medibank and then slowly unwound by the Fraser-led Coalition government.^{Footnote 66} But remnants of government-provided medical benefits remained and their regulation stimulated a further case testing consistency with s 51(xxiiiA). The GPS Case narrowed the scope of the civil conscription limitation to where there was ‘practical compulsion’.

The GPS Case focused on a series of requirements imposed upon pathologists by the Health Insurance Act 1973 (Cth) (‘HI Act’) and so directly related to the provision of medical benefits, potentially triggering the civil conscription provision. The majority of the High Court reformulated the test and adopted Dixon J’s approach in the BMA Case, which distinguished between regulating practice and a ‘compulsion to serve’. The Court determined that civil conscription was a ‘practical and legal compulsion’ to provide a service or to exclude a health care provider from providing a service.^{Footnote 67} Thus, any requirement to engage in practice or perform a particular service would amount to civil conscription. Barwick J thought it would be a rare set of circumstances where practical compulsion would apply.^{Footnote 68} Gibbs J determined ‘[conscription] connotes compulsion to serve rather than regulation of the manner in which services are provided’,^{Footnote 69} with the latter, regulation, not infringing the civil conscription constraint. In general, the Court concluded that the HI Act did no more than provide that if the patient is to receive the prescribed Commonwealth benefit the practitioner assists by following the incidental provisions of the Act.^{Footnote 70} Aickin J provided some examples of what might amount to civil conscription, including a prohibition on performing medical or dental services, a requirement to perform services in a particular place, or to perform services only as an employee of the Commonwealth.^{Footnote 71} The majority’s view was that the impugned provisions in the HI Act regulated the way some incidents of practice are carried out but did not relate to the service itself: no one was under a legal compulsion to become an approved pathology provider.

The GPS Case therefore narrowed the BMA Case from any interference in the way doctors did their job, to ‘a legal or practical compulsion’ to provide a service. However, it left continuing uncertainty about the new test, especially regarding what might constitute a practical compulsion. In the GPS Case, Aickin J suggested that an example of a practical compulsion to provide a service would be economic pressure of such a type that it would be unreasonable to suppose the pressure would or could be resisted.^{Footnote 72}

C The High Court Revisits Practical Compulsion to Provide a Service — Wong in 2009

The practical compulsion through economic pressure example was tested 29 years after the GPS Case, in 2009, in Wong.^{Footnote 73} By then, Medicare had been introduced as a universal health insurance scheme and Wong related to the sections of the HI Act about ‘inappropriate practice’ or over-servicing.^{Footnote 74} The HI Act imposed a maximum penalty of a 3-year disqualification from billing Medicare if a practitioner was found through professional standards review to have ‘over-serviced’ — that is, provide a service which did not have a clear clinical justification.^{Footnote 75} The majority in Wong held that the provision of the HI Act imposing the penalty did not constitute a breach of the civil conscription sub-provision. The section provided a compulsion to participate in Medicare but not a compulsion to provide a particular service or to work for the Commonwealth.^{Footnote 76} Kirby J, although in the majority, was unpersuaded by the distinction in the GPS Case between compulsion to serve and regulation of the way service is performed; he preferred the broader definition in the BMA Case.^{Footnote 77}

A similar conclusion, distinguishing between the practise of medicine and access to Medicare rebates, was reached in the Alexandra case decided in 1987.^{Footnote 78} The case centred on the provision of hospital benefits and thus was not directly subject to the civil conscription sub-provision. The plaintiffs challenged provisions of the National Health Act 1953 (Cth) relating to approved nursing homes.^{Footnote 79} They argued that the impugned provisions in the National Health Act imposed significant regulatory controls on nursing homes that exceeded the Commonwealth’s legal capacity, because s 51(xxiiiA) only allowed the Commonwealth to provide benefits, not to regulate. The High Court unanimously noted that there should be no objection to adopting a private enterprise approach by allowing nursing homes to voluntarily choose to receive a government subsidy. The High Court stated:

What might amount to civil conscription after the Wong case? Kirby J in Wong offered some obiter comments on this point. A law pretending to be about finances but, which really intruded into the individual relationship between patient and doctor, or that created blanket rules that intruded on that relationship, or requirements that are so detailed and intrusive as to be coercive and disproportionate to the legitimate interest of the Commonwealth, might be unconstitutional.^{Footnote 81} Any attempt by the Commonwealth to nationalise or force doctors or dentists into full-time or part-time work would infringe the civil conscription provision. But he also noted:

D Reaffirming the Narrow Scope of Civil Conscription

The High Court and other courts have touched on the scope of s 51(xxiiiA) in a number of cases in the last 25 years, all of which reaffirmed the narrow scope of the civil conscription limitation. Recall that it was an administrative requirement about a pharmaceutical formulary that led to the expansive interpretation in BMA; subsequent cases have authorised a generous interpretation of what is allowable.

It has long been clear that everything necessary (incidental powers) to the effective exercise of a constitutional power is included in the grant of the power unless there is an express prohibition.^{Footnote 83} However, the majority in the BMA Case suggested the civil conscription sub-provision placed limits on the scope of the incidental powers.^{Footnote 84} Dixon J, in the minority, said that even if the PB Act 1947 did constitute a duty to provide a service in a particular way, the power in the Constitution to regulate matters that are incidental to the power would apply.^{Footnote 85} Dixon J’s view was affirmed in GPS, Gibbs J noting ‘if the incident of practice which is regulated is not medical or dental, but financial and administrative, it is clearly outside the prohibition [civil conscription]’.^{Footnote 86} Similarly, Gibbs J noted that something that related incidentally to the course of medical practice, rather than the medical service itself, would be allowed by the incidental powers provision. For example, a legislative provision that imposes more administrative work but does not affect performance of medical duties would be a use of the incidental powers.^{Footnote 87}

The same acceptance of incidental powers was affirmed in the Alexandra case where the High Court held that the requirements under the National Health Act amounted to a scheme to provide money to a nursing home to provide care to a patient. Broader requirements, such as quality standards, are incidental to the subject matter of the power, and justifiable given the need to ensure patients receive quality care appropriate to the cost of the program.^{Footnote 88}

Decisions by the Federal Court in Yung v Adams (‘Yung’)^{Footnote 89} and the Full Federal Court in Selim v Lele ^{Footnote 90} noted the Commonwealth’s interest in ensuring that the medical services it funds are provided with the appropriate level of care and skill. In Yung, Davies J expressed the view that the Commonwealth ‘has no general power to regulate the activities of medical practitioners’ but does have power ‘in relation to conduct which is related to the payments which are made by the Commonwealth under the Act by way of medical benefits and the like’.^{Footnote 91} This approach was also followed in Wong: the incidental power must be exercised proportionally to the fulfilment of the power.^{Footnote 92}

In addition to the incidental power arguments, there has also been discussion by the federal courts about what constitutes administrative powers in respect of legislation, such as the HI Act, that impacts on doctors. The Federal Court of Australia heard a series of cases relating to findings of the Professional Standards Review process about inappropriate practice by doctors.^{Footnote 93} All of these cases tested the legitimacy of what is and is not allowable (billing) practices of medical practitioners.

Yung and Tankey v Adams (‘Tankey’)^{Footnote 94} were both brought before the Court on appeal from the Professional Services Review Tribunal, having been heard initially by the Professional Services Review Committee. Health Insurance Commission v Grey (‘Grey’)^{Footnote 95} was also brought before the Court only after consideration by the Professional Services Review Committee. The professional standards review system was challenged in Tankey and Grey, where the respondents argued that the Professional Services Review bodies were being unconstitutionally vested with judicial power.

If the Federal Court agreed with this argument, the system and any penalties issued would have been invalid, because the Commonwealth is prohibited under section 71 of the Constitution from granting judicial power to non-judicial bodies.^{Footnote 96} However, the Federal Court held that no judicial power was being exercised in these cases. It cited various features of the Professional Services Review schema that suggested the power was administrative, not judicial, in nature. These included the fact that repercussions for doctors were not imposed as punishment, but as a protection against abuse of the system;^{Footnote 97} that disqualification orders were ‘much more akin’ to a professional judgment than a legal demand;^{Footnote 98} that the Review was not concerned with the ascertainment of legal rights and obligations;^{Footnote 99} that the process required peer review, which is ‘a delegated administrative function of government’;^{Footnote 100} and that the Committee and Tribunal were unable to directly enforce their own determinations.^{Footnote 101} Further, the Federal Court noted that simply because the bodies were set up to consider ‘inappropriate practice’, a concept defined by statute, did not mean that they were automatically judicial entities.^{Footnote 102}

The civil conscription sub-provision was recently considered by the Supreme Court of New South Wales in Kassam.^{Footnote 103} This case considered a number of grounds challenging orders issued under s 7(2) of the Public Health Act 2010 (NSW) which prevented ‘authorised workers’ from leaving an ‘area of concern’ they lived in and prevented some people working in certain industrial sectors without being vaccinated for COVID-19. An argument was made by one plaintiff group that requiring a person in a specified industry to be vaccinated had the effect of conscripting both patient and doctor. The Court noted that nothing in the impugned order or the Act imposes any compulsion on a doctor to vaccinate anyone. The civil conscription provision does not apply to the acquisition of a medical service but only to the provision of the service.^{Footnote 104}

E What is Allowable

The judgments of the courts in these cases provide several key lessons that can guide future healthcare legislation. They affirm that the government can use Medicare as something of a bargaining chip, validly threatening to restrict access to the scheme unless medical practitioners abide by certain government-imposed regulations. Additionally, they show that the government may set up institutions to ensure there is adherence to those regulations: so long as these bodies retain administrative qualities (like those enumerated by the Court in Tankey and Grey), and do not become judicial in their function, they will be legally valid. Any of these regulations, however, need to be mindful of the distinction between services and payments — the Commonwealth power to regulate the way in which doctors and dentist ply their trade, specifically the content of the clinical interaction, remains limited.

A Responsibility for Taxpayers’ Money

In Wong, Kirby J stated that the Constitution requires that taxpayers’ monies are ‘lawfully and properly expended’,^{Footnote 105} and he recognised that enacting detailed administrative provisions to effect this would not amount to any form of civil conscription.^{Footnote 106} Kirby J noted that mechanisms proportionately undertaken to assure that funds are lawfully expended would not in and of themselves constitute civil conscription, even if they involve a burden, even a coercive one, on providers of medical or dental services.^{Footnote 107} A high degree of specificity in monitoring, supervision, and checking is expected and would not be second-guessed by the courts, as long as the measures seem reasonably appropriate.^{Footnote 108} Similarly, in Alexandra the High Court noted:

Latham CJ also acknowledged this as a general principle in the BMA Case,^{Footnote 110} although later qualified this after considering his broad interpretation of the civil conscription provision. This was revisited in the GPS Case, where Gibbs J noted ‘the purpose of the impugned provisions appears to be to protect the public revenue against abuses of the system under which such benefits are provided’.^{Footnote 111}

B Value for Money

While not directly a s 51(xxiiiA) case, Health Insurance Commission v Peverill (‘Peverill’)^{Footnote 112} addresses the question of whether a benefit payable under s 51(xxiiiA) can be retrospectively changed by legislation. The change was to reduce the amount paid to the doctor for the provision of a pathology service. Medicare payments in Peverill were seen as payments to patients,^{Footnote 113} and assignment of those payments to a doctor as part of bulk-billing did not create a contract between the doctor and the Commonwealth government about those payments nor give rise to a property interest. Importantly, an entitlement for payment from Medicare was not created, Brennan J describing it as ‘what is, as between the Commonwealth and the claimant for the Medicare benefit, a gratuitous payment’.^{Footnote 114}

The justices approached this case on the assumption that there was a legitimate government responsibility to contain health care costs:

The High Court also recognised that there are several factors which government can take into account in setting the Medicare fee, including ‘the capacity of government to pay and the future of health services in Australia’.^{Footnote 116}

C Equity is a Valid Policy Consideration

Broader considerations about legitimate policy purposes were examined in the Alexandra case. A unanimous High Court appeared to acknowledge an equity argument, arising from the specific principles developed under s 40AA(7) to guide the Secretary to set fees, in particular paragraph 2(4)(c) ‘the need to ensure that the cost to nursing home patients of nursing home care is not excessive or unreasonable’.^{Footnote 117} The High Court stated that if aged care facility fees were not subject to control by the Commonwealth, some of the more needy may not be able to obtain aged care and take advantage of the benefit.^{Footnote 118} Specifically, the High Court stated:

The policy concerns of the Commonwealth about responsibility for taxpayers’ money, value for money, and equity have thus all been explicitly acknowledged by the courts as part of the calculation about the scope of the civil conscription sub-provision.

D Four Guideposts

As we have shown, cases determined in the past 40 years have narrowed the interpretation of civil conscription contained in s 51(xxiiiA) and upheld an interpretation of Commonwealth power which allows the Commonwealth to put limits on medical and dental professionals’ access to Medicare.

The original interpretation of section 51(xxiiiA) did not allow government to regulate the form of a prescription, causing Labor leader Whitlam to condemn the abdication of control to the medical profession. The evolution of the High Court’s thinking on the legitimacy of government regulation has paralleled global shifts in health policy. The Second World War saw international attention to meeting social needs, including access to healthcare. The Chifley government’s policies were the Australian example of this.

Over time, funders became more overtly concerned about constraining spending leading to the development of an ‘implicit bargain: clinical freedom under global cost control’.^{Footnote 120} The contemporary High Court approach is consistent with that: government may not be able to regulate what a medical practitioner does in a clinical encounter but can regulate to ensure value for money and good public policy. Importantly, the development of the High Court interpretation of section 51(xxiiiA) shows it is not now as constraining as Whitlam feared.

The High Court’s reasoning in these cases can be used to determine four guideposts within which policy could be developed which would not offend subsection 51(xxiiiA).

1. 1 The Commonwealth Can Impose Reasonable Conditions on Payments to Medical Practitioners to Ensure Value for Money — This Includes Measures to Ensure Probity and Quality (the Reasonable Conditions Rule)

This rule can be derived from the GPS,^{Footnote 121} Wong,^{Footnote 122} Alexandra,^{Footnote 123} and Peverill,^{Footnote 124} cases and the incidental powers. Peverill,^{Footnote 125} and Alexandra,^{Footnote 126} especially suggest that the High Court accepts that government ought to be able to ensure value for money and equity in the way s 51(xxiiiA) spending occurs.

French CJ and Gummow J in Wong ^{Footnote 127} summarised the important distinction in the GPS Case:

Reasonable administrative requirements to achieve broader policy goals are clearly now legitimate.

1. 2 The Right to Practice is Not a Right to Bill. The Government Has no Obligation to Offer All Doctors the Right to Earn an Income From Medicare (the Separation of Practice and Payment Rule)

This rule — which goes to the heart of practical compulsion — is derived from Wong ^{Footnote 129} and Peverill. ^{Footnote 130} As Hayne, Crennan, and Kiefel JJ concluded in Wong, ‘a practical compulsion to participate in the Medicare scheme does not … provide for a form of civil conscription’.^{Footnote 131}

In the past, the medical profession has argued that the critical relationship in medical practice is between the doctor and the patient, and the payment relationship is a matter between the patient and the doctor, into which government — and insurers — should not intrude.^{Footnote 132} Medibank and then Medicare was seen as potentially threatening this relationship in the sense of third-party intrusion into the doctor-patient relationship. What is now clear from Wong ^{Footnote 133} is that regulating the flow of Medicare benefits to patients — and hence to the doctors who treat them — is allowable. Peverill ^{Footnote 134} shows that the payment of benefits does not create or involve a contract between government and doctor, and so concomitantly not creating such a contract does not involve compulsion. Regulating the payment flow is not the same as regulating the clinical work of a doctor and hence is not civil conscription relating to a medical service, or even relevant practical compulsion.

1. 3 If a Medical Practitioner Voluntarily Decides to Participate in a Funding Arrangement Offered by the Commonwealth, That Cannot Create Civil Conscription, and the Conditions of the Funding Arrangements Bind the Medical Practitioner (the Voluntary Participation Rule)

This rule can be derived from Alexandra ^{Footnote 135} and Wong ^{Footnote 136}. The High Court noted in Alexandra that:

There are two critical caveats to the voluntary participation rule. The first caveat is, per Kirby J in Wong, the provision should be about payments of benefits and should not go further into the clinical sphere.^{Footnote 138} If it does it converts a law about benefits into one about the way a doctor practises medicine in an encounter which attracts benefits.

The second caveat is about practical compulsion: the more medical practitioners’ options are limited, the less participation is truly voluntary. But while choice of speciality is voluntary, constraints on payments to those specialists, for example limiting the number of specialists who can bill Medicare, is unlikely to be practical compulsion, especially where other routes to practise, such as public hospital practise, remain.

1. 4 There are Other Relevant Sections of the Constitution Which Potentially Provide Power for Specific Legislation (the Alternative Sources of Power Rule)

The civil conscription sub-provision is directly attached to s 51(xxiiiA) and, indeed, only to part of that section. Other heads of power can also be used to effect policy objectives.^{Footnote 139} Medical practice has become increasingly corporatised, and corporatised practices can be regulated by reliance on the corporations power(s 51(xx)); payments to doctors in hospitals can be made under the hospital benefits power; and the sickness benefit power might also be used in some circumstances. Given the wide scope of the corporations power,^{Footnote 140} this may be particularly relevant for future legislation to support policy goals.

A Reducing Financial Barriers to Access

In 2019–2020 about $9 billion was spent by government and patients on out-of-hospital primary medical care (defined as unreferred services and practice nurses); about 81% of this was spent for Medicare rebates for bulk-billed services, about 10% on rebates for services which were not bulk billed, and about 9% on out-of-pocket payments by patients.^{Footnote 142}

Governments over the years have aimed to increase the proportion of services bulk billed — especially for general practice visits — through targeted payments such as additional payments to encourage bulk-billing for some groups and general incentives such as increasing the rebate for all services to 100% of the scheduled fee.^{Footnote 143} Despite these initiatives, about 10% of all primary care attendances are billed to the patient, and patients face an average out-of-pocket payment of $40.84 for each of these visits.^{Footnote 144} Some cannot afford this: in 2019–2020, 3.7% of people who needed to visit a general practitioner (GP) deferred the visit or missed out on a visit because of cost.^{Footnote 145} Only about two thirds of Australians have all their GP visits bulk-billed, leaving one third with out-of-pocket payments for at least for some of their visits.^{Footnote 146}

Financial incentives on practices still leave people missing out on care because of cost, so a critical policy question is whether government can go further and mandate bulk-billing to address financial barriers to access. Phrased that crudely, probably not. However, a policy could be designed to increase bulk-billing rates which does not involve practical compulsion. This would rely on the voluntary rule to achieve the policy objective with a ‘participating provider’ scheme. In brief, government might restrict access to some or all Medicare items to those practices which voluntarily decided to opt into participation. New items — such as telehealth or enrolment payment items — might be candidates for restriction to participating practices. A condition of participation might be that all patients be bulk-billed.

Doctors not opting into participation would still be able to practice medicine outside this scheme but would rely solely on patient out-of-pocket payments. Demand for doctors charging full out-of-pocket payments would decline marginally because the effective price for patients would increase. Literature suggests that a 10% increase in price leads to only a 2% decrease in demand for GP services.^{Footnote 147} The fact that about 10% of services are currently not bulk-billed suggests there is a market distinct from bulk-billed practice and that some patients are willing to pay out of their own pockets for GP services. Some of these people will continue to make out-of-pocket payments to see a non-participating GP of their choice.

GPs are probably under-remunerated for the work they do, relative to other clinical specialists, and so a participating doctor scheme, implemented with a requirement to bulk-bill, might be more politically attractive if it were accompanied by an increase in the average rebate for each service.

B Improving Geographic Equity

Medical services are very unevenly distributed across Australia, with more doctors per head located in wealthier suburbs than in regional and remote locations.^{Footnote 148} At present the geographic distribution of medical practitioners is only weakly regulated by government, with strategies essentially providing carrots with no sticks. The result is that there are significant distortions in access for patients. Despite a host of training initiatives and subsidies to encourage Australian-trained doctors to work in areas of need — defined either by geography or speciality — rural and regional areas rely very heavily on international medical graduates for their medical workforce.

There is currently a two-stage process for medical practitioners to enter practice. The first gate occurs after completion of a doctor’s first hospital-based post-graduate year, when medical practitioners become eligible to be registered to practise. Almost all doctors then undertake further training, and many qualify into one of the clinical colleges.

Eligibility to bill Medicare, and to be issued with a Medicare provider number, is a separate process from medical registration. Only a subset of doctors are issued with a provider number — those who have completed training or who are in an approved training position, the latter only while they are in training.^{Footnote 149} Doctors who do not complete speciality training (including general practice training) can continue to work as medical practitioners in hospitals or in non-clinical roles. At present all medical practitioners who complete their speciality training, including general practice training, are issued with a provider number. This raises the question of what would happen if government limited the number of new provider numbers on issue to specific geographies or specialities? Would this infringe subsection 51(xxiiiA)?

Under geographic provider-number restrictions, government would advise, for each geographical area, how many new provider numbers would be available in which specialities, including general practice, in that area. Registered medical practitioners could apply for these provider numbers, and thus gain the right to bill Medicare for services provided to patients in those areas. Government could also allow transfer of provider numbers to other locations after a designated period, or give priority in the allocation process based on longevity of practise or other criteria.

Medical practitioners who do not apply for, or who are not allocated, a provider number could continue to practice medicine anywhere, but their patients would not be eligible for a Medicare rebate, or, in another variant, would receive a significantly reduced Medicare rebate. It is highly likely that such a scheme would increase the number of Australian-trained doctors practising in rural and remote Australia and would encourage a more even distribution of specialists and general practitioners in line with community needs.

Gibbs J specifically referred to location controls in the GPS Case and noted that such controls:

Aickin J also referred to location controls:

A system of geographical allocation of provider numbers does not involve any form of directing how a doctor might provide medical care, and importantly, given the Wong ^{Footnote 152} case, is about regulating how much is paid in rebates. The views of Gibbs and Aickin JJ make it clear that requiring a medical practitioner to work in a particular location is probably ultra vires but regulating provider numbers may not be ‘practical compulsion’.^{Footnote 153} Differential rebates (rather than no rebates) may reduce the extent to which provider number controls give rise to practical compulsion but would also reduce the impact of the policy.

Differential rebates could be structured as a proportion of the standard rebate — acting as a stick, rather than the carrot of an increased rebate for working in a particular geographic area, which has been a policy tried in the past^{Footnote 154} — or might apply to only some types of services, for example, discounting rebates for procedures or care-management items.

About half Australia’s medical workforce work mainly in private practice,^{Footnote 155} but there is no reason for medical graduation and medical registration to be regarded as a guarantee of the right to earn an income as a Medicare-eligible private practitioner. Employment is not guaranteed in any other profession, and employment should not be an assumption for medicine. Given that provider numbers are only necessary for a particular type of medical practice, namely private practice,^{Footnote 156} it is arguable that geographic provider-number limits would not involve practical compulsion and hence would not infringe s 51(xxiiiA).^{Footnote 157}

C Improving Efficiency

Medicare, and its predecessor Medibank, were developed and implemented when the typical model of service provision was small, often solo, practice.^{Footnote 158} That time is long gone. Medical services are increasingly provided by corporations, some listed on the stock exchange, with the medical encounter provided by salaried medical practitioners, or medical practitioners engaged by the corporation under contract, including under revenue-sharing arrangements. This change has been particularly significant in provision of diagnostic services, such as pathology and radiology, where a handful of private corporations provide more than 80% of services in each speciality.^{Footnote 159}

These changes in ownership provide opportunities for changed payment and regulation options. Instead of uncapped fee-for-service payments, corporations could be invited to tender for provision of laboratory or imaging services in a particular region. The head of power could still be section 51(xxiiiA), but because corporations would be invited to tender and participation would be voluntary, it is unlikely that the civil conscription limitation would be infringed.

Under a tender arrangement, pathology and radiology services would either be removed entirely from the Medicare schedule, or a parallel scheme could be implemented whereby only a professional fee would be retained in the schedule and the work of diagnostic imaging and medical laboratory technologists, and associated equipment and supplies, would be paid for under the tender. The voluntary participation rule derived from Wong ^{Footnote 160} and Alexandra ^{Footnote 161} would suggests that this reform would not fall afoul of s 51(xxiiiA).

The High Court has also previously given a broad reading of the corporations’ power and so restriction of provision of pathology and radiology services outside the tender arrangement could potentially also be based on that head of power.

D Improving Accountability and Quality

In 2019–20, Medicare paid a total of almost $25 billion in rebates, yet despite this, there is little information to ensure accountability and value for money. Data collected by Medicare is generally limited to the item number, with no requirement to report diagnosis, or reason for attendance, or incidental treatments not separately billed. There is almost no publicly available information about the quality of individual general practices.

Billing information collected by Medicare from each visit includes the age, gender, and address of the patient, and the item number, but unlike in other countries, information about diagnosis and reasons for the visit are not collected. Diagnostic information might be able to be deduced by matching medications prescribed, but there is not always a one-to-one match with diagnosis and prescriptions. This dearth of information contrasts with the situation with hospitals, where information is collected about diagnoses and procedures performed on all patients, public and private. This makes it possible to measure quality and efficiency of care.^{Footnote 162} The lack of information on out-of-hospital care means it is not possible to measure whether different medical practices are better or worse on average in managing patients with different conditions, and whether variation in testing patterns or prescribing is because of differences between the patients being seen or whether it is due to the doctor’s behaviour.

It is now clear that the Commonwealth government has power to oversee the quality of services it funds. It would be reasonable to impose a condition that patients in a practice would be eligible for payments only if the practice agreed to provide information about its patients, in a way that protected patient privacy but enabled monitoring of probity and quality.

The Commonwealth also has power to impose conditions and collect information to ensure probity and value for money. Again, a scheme could be initiated so that practices which wanted to be eligible for Medicare rebates could be invited to register for participation. Participating practices could be subject to a broad range of evidence-based requirements to ensure quality and value for money.

A recent Grattan Institute report outlined how a participating dental practice scheme might work, including that participating practices would agree:

• • Not to charge co-payments for eligible treatment to any person covered by the scheme, and, as part of documented treatment plans, to provide clear information to patients when services are being provided outside the scheme;

• • To provide detailed information about each service provided, including by participating in a new common e-dental record;

• • To obtain feedback from patients on their experience of care and the outcomes of their care;

• • To adopt evidence-based protocols, including risk and severity screening tools, for managing standard conditions in a cost-effective way; and

• • To participate in quality improvement and utilisation review programs.^{Footnote 163}

A participating medical practice scheme could be similar.