Some overlooked questions about the Medicare fraud hullabaloo

Oct 26, 2022
Health Care Concept. Doctor holding a jigsaw puzzle with medicare word.

The ABC’s 7.30 Report is not inclined to sensationalism. Why on earth then did they turn a possibly valuable story on Medicare into a sensationalist one?

In general, the ABC and its 7.30 Report are not inclined to sensationalism and neither is the investigative journalist employed by the Age and the Sydney Morning Herald who prepared and presented the recent exposé on a “Medicare Scandal” so the first question one might ask is why on earth did the program turn a possibly valuable story into a sensationalist one?

Why was the unbelievable claim of $ 8 billion annual loss via fraud, over-servicing and billing errors ever aired? A quick search of the website of the Australian National Audit Office (ANAO) would have revealed that as recently as November 2020 the ANAO had reviewed the Health Benefits Compliance Program and had made recommendations for its further strengthening. That report noted that independent experts had estimated that misuse of Medicare claims could be costing the nation between $366 million and $2.2 billion per annum. The same document refers to a 2019 Health Department estimate “that two to five per cent of claiming may be non-compliant”, noting that this estimate is in line with data from comparable systems in other nations.

What was it in the findings of this investigation that was new? The potential for fraud and over-servicing has always been recognised within Medicare, and internal mechanisms have been in place from the start to detect and address the issues. Experience has shown that the capacity of persons wanting to game the system has often out-smarted these mechanisms and as a result these have been adjusted and strengthened from time to time.

The best known exponent of maximising income from Medicare was the late Geoffrey Edelsten. Via his ‘superclinics’, he was able to game the system through internal referrals for on-site pathology and X-ray services. He set the scene for the now extensive corporate ownership of general practices. But there were earlier examples that included Whitlam’s Medibank, the forerunner of Medicare, where in the 1970s disputes over the fees charged by unqualified and unaccredited private pathologists led to deep discord within the College of Pathologists which was pushing hard to have the system cleaned up. Then in the early 1980s, the Federal Government Joint Parliamentary Committee on Public Accounts conducted an inquiry into over-servicing by doctors and reported annual abuses totalling $100 million ($350 million in current terms). That inquiry led to further strengthening of the Medicare investigative arm (now called the Health Benefits Compliance Program) and harsher penalties for offenders.

An even-handed report about the present state of affairs would have put to air an outline of what investigative tools, responses and penalties are now in place. Instead, the 7.30 Report, as an aside, directed viewers to a statement from the Health Department which we were told could be found on the ABC website. I am yet to find it.

For a former medical regulator reasonably familiar with the history of fraud and over-servicing, the only new information for me that came from the 7.30 Report was the alleged rampant illegal misuse of Medicare item numbers for a range of preoperative tests ahead of planned cosmetic surgery. If these allegations are proven, then one might question the lack of foresight of any risk analysis arm of the Health Benefits Compliance Program.

The most pertinent comment that I have ever read on this topic was in a submission to the 1980s Joint Parliamentary Committee on Public Accounts inquiry where it was stated that ‘medical fraud and over-servicing is the creation of the medical profession and therefore their responsibility’. Thus the defensive stance taken by the president of the AMA to the 7.30 Report was disappointing – but also totally understandable given that the unbalanced presentation seemed to impugn all doctors.

Putting this hullaballoo behind us, what more should be done to prevent fraud and reduce over-servicing? Here are a few suggestions. At the international level, the World Medical Association Declaration of Geneva (last updated in 2017) must address this aspect of the conduct of doctors. In 2006, I suggested the addition of the following words: “Despite my patient being my first consideration, I will also seek to use resources wisely and to play a constructive part in the health care system my country chooses to establish”. The current version remains silent on doctors’ responsibilities in this area.

Similarly for Australia, the Code of Conduct issued by the Medical Board of Australia must more explicitly state that Medicare abuse, fraud or over-servicing will be dealt with as possible professional misconduct that could place a doctor’s registration at risk. Current references to such conduct, including phrases such as doctors “must be honest, ethical and trustworthy” and “ensuring that the services you provide are necessary and likely to benefit the patient” are too oblique to make this message clear.

In the past there was a disconnect between the Medicare compliance pathway and the medical board disciplinary pathway. This has since been corrected such that the Medicare Director of Professional Services Review now has an obligation “to refer practitioners to appropriate bodies when a significant threat to the life or health of a patient is identified, or if the person under review has failed to comply with professional standards”. The phrase “significant threat to the life or health of a patient” presumably encompasses doctors thought to be mentally or physically impaired. The phrase “failed to comply with professional standards” presumably refers to over-servicing and/or fraud but until such time that the Medical Board Code of Conduct is amended to make it clear that over-servicing and fraud represent professional misconduct, it is difficult to see how such alleged misconduct can be successfully prosecuted. In the reporting year 2020/21, the Director of Professional Services Review referred 22 practitioners to the Australian Health Practitioner Regulation Agency (AHPRA) and the Medical Board. AHPRA’s annual reports are not simple to search but, to date, no reference to the outcome of such referrals has been found.

The annual reports of the Director of Professional Services Review also show that it is open to doctors to negotiate agreed settlements of allegations of inappropriate billings. In one recent case the settlement was for over $500,000. Most people would automatically class such billings as unprofessional conduct. The identity of the doctors who negotiate settlements is not revealed and hence it can be readily argued that the present system contains little or no general deterrence. If the medical profession as a whole genuinely wishes to see fraud and other abuses of Medicare curtailed, it should support a much stronger “name and shame” approach to deterring such abuses.

Finally on the subject of over-servicing, such practices are sometimes claimed to be driven by “defensive medicine”, i.e. ordering tests to avoid being sued for medical negligence. There will be occasions where this claim can be justified but this is a very small part of the problem of the abuse of Medicare. Besides, a potential solution to the problem of defensive medicine is available via a no-fault medical indemnity scheme originally proposed for Australia in the last days of the Whitlam government.

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