Medicare “rorts”ridiculous, but reform still needed

Oct 25, 2022
Medicine, people and healthcare card payment concept

Suggestions that Medicare is being “rorted” to the extent of $8 billion a year are ridiculous. But that doesn’t mean there isn’t a need for reform in how Medicare pays GPs.

About twenty years ago I held a job for a year that included the role of “determining officer” under the Health Insurance Act. Doctors suspected of overcharging Medicare were referred by the Health Insurance Commission to the Professional Services Review (PSR). The director of the PSR could refer the case to a panel of doctors for consideration, and the panel’s report was then provided to the determining officer who could decide to require repayment of Medicare benefits, and/or to disqualify the doctor from accessing Medicare for a period of time.

It was a frustrating task. Even though many reports from the PSR demonstrated professional negligence, bordering occasionally on criminality (supplying drugs of addiction with no clinical basis), my focus had to be on the impact on Medicare benefits, not on professional misconduct. But despite the professional failings of the doctors involved, every case that came before me involved stupidity rather than cupidity as far as Medicare billing was concerned.

Two decades on the world has changed. The scope of corporatised medicine has expanded greatly, and there are now entities focused on maximising their Medicare billings rather than the quality of the care they provide. At the same time, the compliance and enforcement capability in government has also increased dramatically. Sophisticated data mining and data analysis tools has greatly improved the government’s ability to identify wrongdoing. There is no basis to suggest that the poachers have overwhelmed the gamekeepers.

Several media outlets have referred to an Australian National Audit Office (ANAO) 2020 report that estimated the cost of Medicare non-compliance at $2 billion. The report didn’t include any independent estimates by the ANAO – it simply reproduced the estimates in two Boston Consulting Group reports, a McKinsey report, and a Department of Health document about the range of improper or noncompliant payments. The reports variously estimated non-compliance at 1 to 4, 2 to 5, 3 to 5, and 6 per cent, but were not based on empirical analysis.

These estimates are far removed from the 25 to 30 per cent implied by the $8 billion estimate. And there is a vast difference between improper payments and “rorts”.

For example, a non-card holder adult attends a GP for a standard consultation and is billed $90. She pays with EFTPOS, and the practice then runs her Medicare card and arranges for the $39.75 benefit to be paid direct to her bank account (usually the next day). As a result the patient is out of pocket by a net $50.25 after the benefit is received. That is proper.

But if the practice only bills her $50.25, and direct bills Medicare for $39.75, that is improper. It may play havoc with the government’s bulk billing statistics, but it is hard to see the real harm. The service was provided, and the patient was better off in not having to pay the $39.75 initially and await the refund.

The President of the Royal Australian College of General Practitioners has been one of many commentators pointing out that the research by Dr Margaret Faux central to the claim of $8 billion found that the principal cause of incorrect payments “is the complexity of the system and margin for mistakes”. According to the College, “Nearly half of all GPs surveyed… indicated that they either avoided providing certain services or avoided claiming patient rebates, despite providing services out of fear of Medicare compliance ramifications”.

The complexity of the system for GPs has developed over the last twenty years as the government has sought to use the MBS fee structure as a way of encouraging particular clinical activity. So as well as time-based GP consultation items, there is now an eclectic smorgasbord of items including those for:

  • Preparing and/or reviewing and/or coordinating and/or participating in eating disorder management and treatment plans, mental health treatment plans, GP management plans, team care arrangements, or multidisciplinary care plans
  • Providing a cervical cancer screening test to a person who has not been screened in the previous four years
  • Providing a “cycle of care” for a patient with asthma or established diabetes mellitus
  • Carrying out a health assessment for a person who is aged 40-49 and at risk of diabetes or a chronic disease, or aged over 70, or an aged care resident, or has an intellectual disability, or is a refugee, or is a veteran, or is an Aboriginal and Torres Strait Islander.

These items have been introduced in the context of systematic under-indexation of the benefits for the standard consultation items, and have significantly higher remuneration. For example, a health assessment item 703 has a benefit of $145.80 for a 31-minute consultation, compared with only $76.90 for a 31-minute standard consultation billed under item 36.

This disparity is remarkable given the requirements for the content of the two items are so closely aligned: “detailed information collection, including taking a patient history” or “taking a detailed patient history”; “an extensive physical examination” or “performing a clinical examination”; “initiating interventions and referrals as indicated” or “arranging any necessary investigation”; “providing a preventive health care strategy for the patient” or “providing appropriate preventive health care”. It is hard to believe that the first set of requirements is worth almost twice the hourly rate of the second.

There is a growing body of evidence that the GP workforce is not growing fast enough to address population needs. It is getting a lot harder to see a GP, and surveys suggest existing GPs are going to leave the profession, while medical students will seek other specialties.

Where to from here? The government should accept that GPs are underpaid, and increase the rate of remuneration for standard consultations to match that under the special items. These would become redundant and could be abolished, reducing the complexity of the system.

It should then embark on a review of primary care intended to design a system which not only pays GPs properly, but engages and remunerates other primary care providers to deliver an appropriate mix of care. Professor John Dwyer has advocated for such a system on this blog for many years.

Share and Enjoy !

Subscribe to John Menadue's Newsletter
Subscribe to John Menadue's Newsletter


Thank you for subscribing!