Medicare payments IT system overhaul gets $31.5 million kick-start

The Federal Government is planning to spend $31.5 million during 2016-17 in a bid to kick-start its efforts to overhaul the IT systems it uses to deliver Medicare payments to Australians.

The government flagged its decision to go ahead with replacing the 30-year-old IT system it uses to deliver health, aged care and veterans’ payments in October, commencing a process to identify solutions for the new proposed payments system.

According to the government’s Mid Year Economic and Fiscal Outlook (MYEFO), handed down by Treasurer, Scott Morrison, on 19 December, $29.7 million of the funding will go to the Department of Health, $1.7 million will be put into the Department of Human Services, and the Department of Finance will receive $100,000.

The initial funding is aimed at kicking off the modernisation of the IT systems supporting the Federal Government’s health, aged care, and related veterans’ payments services, and to conduct public communication and stakeholder consultation on the requirements for the new system.

“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,” Minister for Health and Aged Care, Sussan Ley, and Minister for Human Services, Alan Tudge, said in a joint statement when the plan was announced on 19 October.

While the $31.5 million earmarked for the Medicare payments system replacement represents new budgetary funding, it pales in comparison to the $313.5 million of existing funding the government is intending spend over four years from 2016-17 on its Centrelink payments IT system overhaul, which has been tipped to cost more than $1 billion.

The Department of Human Services’ welfare payments system overhaul includes $55.3 million in capital funding in 2016-17 and 2017-18 to help progress “Tranche Two” of the Welfare Payment Infrastructure Transformation (WPIT) program. The WPIT program will progressively replace Centrelink’s ageing technology platform.

The second tranche of the project is aimed at transforming the delivery of payments to students by implementing more efficient and automated claim and assessment processes, and will develop core system capability, including a new omni-channel user interface, segmentation, and risk profiling.

In early November, IBM and Hewlett Packard Enterprise (HPE) joined Capgemini and Accenture on the panel of service providers taking part in the project, with the Department of Human Services (DHS) saying that the two additional entries will be among those the government can call upon for systems integration work for the project.

During a so-called “Competitive Dialogue” stage of the project, Capgemini and Accenture will work with the Department, and its preferred core software vendor, SAP Australia, on the design work that will play a key part in second phase of the project.

It is understood that the four IT providers on the panel, Capgemini, Accenture, IBM, and HPE will be able to compete for work in a number of tranches over the next several years of the project.

Meanwhile, the MYEFO reiterated the government’s commitment to invest $60 million over three years from 2017-18 for round three of the Mobile Black Spot Program, which is aimed at improving mobile phone coverage and competition in outer metropolitan, regional, and remote Australia.

The funding will be provided to target priority black spot locations that have not yet received funding under the $600 million program and locations that mobile network providers do not currently service due to commercial reasons.

In early December, Optus and Telstra were granted a share in $60 million funding for round two of the program, with Optus set to build 114 new mobile sites and Telstra to construct an additional 148 mobile sites as part of the program’s second round.