The federal government has committed to replacing the IT systems that handle Medicare, aged care and veterans' payments, but has insisted that operation of the new system will remain in public hands.

Health Minister Sussan Ley said a process had commenced today to identify solutions for a new payments system, which she said will be based on existing commercial technology. However, she provided no figures on the expected cost of the replacement or if any work done by an outsourcing taskforce earlier this year would be reused.