Out-of-pocket medical financial abuse

Sep 28, 2020

Charging unjustifiable and unreasonable fees leading to very high out-of-pocket expenses for specialist medical care is an abuse of power and should be called financial abuse. It should also be deemed a form of professional misconduct.

Attention to the issue of out-of-pocket expenses in health care usually conflates two issues; one is mounting foreseeable out-of-pocket expenses and the other is morally unacceptable over-charging. Out-of-pocket expenses arise from many sources. For example, there are foreseeable out-of-pocket expenses for medications via the Pharmaceutical Benefits Scheme. In this article, our focus is on out-of-pocket expenses arising from doctors’ fees and especially morally unacceptable fees. So long as a patient is fully informed, there are known out-of-pocket expenses in seeing a doctor in Australia (other than when a doctor chooses to accept the Medicare rebate as full payment – i.e. ‘bulk-bill’, or when attending a public hospital for care). For ambulant private out-patient care from GPs and specialists these out-of-pocket expenses were built in to Medicare from day one as Medicare rebates only 85% of the Schedule Fees set each year by government.

Out-of-pocket expenses are built in to most health care systems that are a hybrid of public and private care. Thus in countries that have comparable health care systems to Australia, the foreseeable out-of-pocket expenses are not dissimilar although Australia’s are rising. These out-of-pocket expenses are usually ameliorated by mechanisms such as safety nets designed to assist the less well-off and the chronically ill. For major elective surgery, one such mechanism in Australia is the option for the less well-off to attend a public hospital – not always a satisfactory mechanism as waiting times may be very long.

We see unjustifiable and unreasonable out-of-pocket expenses for specialist medical care as a separate issue. We suggest that charging such fees is a deliberate misuse of the imbalance of power that exists between the specialist doctor and unsuspecting trusting patients and should be called financial abuse. In addition it should be deemed a form of professional misconduct.

Data on the extent of this problem is not easy to obtain and interpretation is difficult because the abuse occurs on a continuum. However its existence was officially acknowledged in the 2018 report of the Ministerial Advisory Committee on Out-of-Pocket Costs. Some specialists who charge higher fees will claim greater skill but there is no evidence to support such claims. Indeed, there are data for surgeons that show no correlation of results of surgery with the fees charged by the surgeon.

We do not deny that overall rises in out-of-pocket expenses are a matter of concern. They can be a barrier to access to care. This is especially the case for patients who are repeatedly or chronically unwell and require multiple visits for specialist care. In such situations, foreseeable out-of-pocket expenses can rapidly add up and feel very much like financial abuse. This is not our focus in this paper but it is well-addressed in a recent article by Doggett and Russell.

Conflating foreseeable out-of-pocket expenses with financial abuse can suit the purposes of government as well as those doctors who charge unjustifiably high out-of-pocket fees. By suggesting that all doctors are greedy, government can divert attention away from rising foreseeable costs while those avaricious doctors who charge unjustifiable fees can blame government for not keeping Schedule Fees and Medicare rebates in line with inflation.

If one accepts our distinction between foreseeable out-of-pocket expenses and unacceptable and unethical over-charging then it should be clear that the level of foreseeable expenses cannot be solved by the medical profession on its own. These are built in to our health care system and are thus primarily matters of government policy. However, for the exorbitant out-of-pocket expenses that represent financial abuse, this is a matter that the medical profession must address.

This form of financial abuse is confined to specialist care. This is probably so because the circumstances of seeing your GP are very different to those of visiting a new specialist. Leaving aside those people who live in areas of under-supply of GPs, patients are generally able to vote with their feet if they are not getting value for money from a GP. For urban patients, moving patronage away from a doctor who charges well above the Schedule Fee is usually straightforward. This is in distinct contrast with the situation with specialists. The choice of specialist is normally in the hands of the referring GP. By the time the unsuspecting patient finds out what the out-of-pocket expenses will be, it takes a remarkable degree of fortitude to go back and start again, even if the health issue is not urgent.

Added to this difference between GPs and specialists, there is the likelihood that less ethical procedure-only specialists, including some anaesthetists, are aware that there is not to be an ongoing patient-doctor relationship. The absence of such a relationship and seeing their fee as a one-off charge for a one-off visit makes it easier for these doctors to ignore any impact of excessive charges on the patient.

In an ideal world, referring GPs should have some knowledge of the billing practices of their specialists of choice. However, even in if this were so, GPs will not necessarily know what are the billing arrangements for other necessary services such as those of an anaesthetist, assistant surgeon, or pathologist.

What do the ethical guidelines of the medical profession have to say about gross over-charging and financial abuse? The World Medical Association’s code of medical ethics is silent on the matter. Mention of this issue in Australian codes of ethics or conduct is usually oblique. The Medical Board of Australia’s Code of Conduct states:

4.5.3 ‘Ensuring that your patients are informed about your fees and charges in a timely manner to enable them to make an informed decision about whether they want to proceed with consultations and treatment’; and

10.13 ‘Doctors must be honest and transparent in financial arrangements with patients. Good medical practice involves: 10.13.1 Not exploiting patients’ vulnerability or lack of medical knowledge when providing or recommending treatment or services and setting fees.’

The Australian Medical Association (AMA) Code of Ethics has this to say on fees:

2.7.1 Set a fair and reasonable fee having regard to the time, skill and experience involved in the performance of your services, the relevant practice costs and the particular circumstances of the case and the patient.

2.7.2 Recognise the importance of informed financial consent, ensuring that the patient is informed of and consents to your fees prior to the medical service being provided, where possible. Where a service you provide is in conjunction with other doctors or hospitals who will charge separate fees, advise the patient of this and how they can obtain information on those separate fees.

In addition, in 2017 the AMA issued a Position Statement that included ‘The AMA does not support exorbitant charges; fees that the majority of a practitioner’s peers would consider to be unacceptable.’

The Royal Australasian College of Surgeons (RACS) has tackled the issue more directly as its Code of Conduct now states:

‘A surgeon will ensure that the professional fee charged is justifiable and reasonable and does not exploit a patient’s need or take financial advantage of the patient and ensure informed consent and informed financial consent are obtained before providing treatment’. The College has also issued a more detailed position paper on surgeons’ fees.

The AMA’s code appears to put the onus on patients to inform themselves. More importantly, neither the AMA nor the RACS, nor any other medical college, has the power to investigate or address breaches of their respective codes. In addition, no code recognises that by the time a patient has arrived to see a specialist it may be difficult to turn back. The Medical Board of Australia’s code is headed in the right direction but it is incomplete. It needs to state unequivocally that charging excessive and unjustifiable fees represents a form of professional misconduct and that the Board will deal with it as such. Under the relevant legislation, all registered health professionals have a mandatory duty to report allegations of serious misconduct such as sexual misconduct: perhaps financial abuse should be added to the mandatory reporting list.

While the Medical Board of Australia now operates in a form of partnership with the Australian Health Practitioners Regulation Agency, the Board remains the peak national body for setting the standards of conduct for registered doctors and it should address this matter of financial abuse head on. The Board will need to consult with the medical profession but given the leadership now provided by the RACS it should feel confident of the outcome.

There will be many who will argue that it will be impossible to prove financial abuse in a tribunal or appeals court. We argue that, other than where criminal conduct has already been proven, all forms of professional misconduct identified in codes of conduct are based originally on what most medical peers would accept. Since both the RACS and a Ministerial Advisory Committee (the latter containing representatives of the AMA and most medical colleges) have declared this to be a real issue, we believe that such judgements will not be beyond the wit of medical tribunals.

What else might be done to curtail financial abuse? The Federal Government’s new website designed to inform patients about anticipated fees is unlikely to be of any assistance in its current form. However, the information it contains might help patients confirm financial abuse after the event. Others have suggested the use of ‘regulatory incentives and constraints within the Medicare system’ or ‘making Medicare an opt-in system for doctors who agree to meet particular charging guidelines’. Such broad changes would probably meet with wide opposition from the medical profession as well as legal challenge arguing some form of conscription. Declaring financial abuse to be a form of misconduct seems a simpler proposal and one that, if adopted, would send a strong signal to those in the medical profession who abuse their professional position. It would also help to reassure the community that the vast majority of its doctors are ethical and do not support the excessive fees charged by a small proportion of specialists.

Kerry Breen AM is a retired physician and gastroenterologist and past President of the Medical Practitioners Board of Victoria. He is a co-author of Good Medical Practice: Professionalism, Ethics and Law, published in 2016 (4th ed).

Dr Kerry Goulston AO is a retired physician and gastroenterologist. Past positions have included Associate Dean, Northern Clinical School of the University of Sydney, Royal North Shore Hospital and Inaugural Chair of the Postgraduate Medical Council of Australia and New Zealand.

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