Defence Health's new platform failed direct debits and left members uninsured

Late in 2022 Defence Health, a major Australian health fund, wrote to more than 300,000 members promoting its new website and platform as 'the first of its kind in Australia'. In 2023 the transition caused hundreds of premium direct debits to fail, leaving members technically uninsured and in arrears, and a backlog of claims that staff had to process manually. In August CEO Joanne Kadlecik apologised for 'significant disruption' and then took medical leave, replaced temporarily by predecessor Gerard Fogarty.

ABC News reported that the Commonwealth Ombudsman had received 328 complaints about Defence Health since the start of the year, 305 of them after 1 July 2023, with 20 still open. Members described two-hour phone waits and denied claims. One was told minutes before a procedure that she was not a financial member and had to pay $1,250 up front. The ombudsman said it expects insurers to carefully plan for and mitigate the risks of ICT changes.

Fogarty said the issues 'did not affect the majority' of members, that the system had suffered 'unforeseen issues' and 'performance problems' despite extensive testing, and that rolling back was 'not an option'. The insurer hired more staff to clear a month's backlog and said members in arrears because of the faults could still claim.

328 Commonwealth Ombudsman complaints in 2023; a month's claims processed by hand; members hit with bills such as $1,250 at the hospital door

The new platform went live with faults in direct-debit collection that left hundreds of members unpaid and uninsured.

Defence Health said extensive testing had been done, but issues appeared after go-live given the transition's complexity and scale.

Management considered rolling back but concluded it was not an option, so the fix was manual processing.

Members struggled to reach the insurer, with some on hold for up to two hours, which amplified the complaints.

A big-bang migration of billing and claims needs a tested way back. Defence Health said rollback 'was not an option', and members found out through failed debits and hours on hold.

As of October 2023 Defence Health was manually processing a month's worth of claims and aimed to clear delays by the end of the month, without saying when the new system would be fully functional. It also promised that members in arrears because of the technical issues could still make claims. Twenty ombudsman complaints remained open, and the CEO remained on medical leave with Fogarty acting.