‘Implausible’: Healthcare experts doubt scale of Medicare ‘rorting’

Matt Woodley

20/10/2022 4:45:17 PM

Scepticism is growing as to whether $8 billion is really leaking from Medicare each year, with the new reports’ timing now also being questioned.

Medicare card.
More doubts are emerging about a series of investigative reports into alleged Medicare waste.

An increasing number of healthcare experts, public servants, administrators and other stakeholders are questioning a series of reports from Nine Newspapers and the ABC that allege 30% of the $28 billion Medicare budget is being drained annually via incorrect billing, low-value care, and fraud.
The reports initially drew a sharp response from doctors and medical organisations, including the AMA, RACGP and Royal Australian and New Zealand College of Radiologists, but now experts not accused of any wrongdoing are also responding.
Prominent healthcare economist and former health department secretary Dr Stephen Duckett is one who has come forward to cast doubt on the estimate. He told newsGP at no point in his near 50-year career working in health administration has he seen any sign of malfeasance or carelessness occurring at such a scale.
‘It seems implausible to me. It’s just such a high proportion of Medicare billing that it seems speculative,’ he said.
‘I’ve seen no evidence that the fraud is at that $8 billion level … it would have to be endemic to get to those levels and I just don’t think it is.’
It is an assessment shared by Sophie Pennington, a lawyer who has worked in the healthcare space for more than 15 years. She told newsGP the reports are far removed from her own understanding of Medicare compliance issues, both in terms of scale and characterisation.
‘The issue I have is with the use of word fraud. Overwhelmingly, in my experience, fraud is very rare,’ she said.
‘Some doctors do it, no doubt … but they get weeded out, because when Medicare prints its data and sees that you’re in the 99th percentile, they come after you.’
Ms Pennington says carelessness and a lack of billing education are far more common sources of Medicare leakage, and took umbrage with reporting that inferred doctors are deliberately looking to take advantage of the system.
‘This issue of billing dead patients – I’ve had one of those cases in 15 years,’ she said.
‘I just find it a little bit outrageous that there’s a suggestion that there’s huge intentional fraud being perpetrated.
‘[Doctors] have it very tough at the moment. And every claim I have for GPs – bar a few when there has been, let’s say intentional fraud – they’re distraught by it and it’s life changing.’
Meanwhile, prominent media commentators have questioned the timing of the reports, which emerged months after the thesis used as the primary source material was originally published, but just a week before the Federal Government is due to hand down its first Budget.
Federal Treasurer Jim Chalmers has since signalled that Medicare could form part of the Government’s audit of wasteful spending as it tries to reduce the Budget bottom line.
Additionally, despite being labelled an ‘exclusive investigation’, similar stories were also published by rival publications in March and July, albeit with less of a focus on medical malfeasance.
Fraud has occupied a prominent position within the Nine and ABC reports, often being mentioned in headlines and before references to genuine mistakes or waste related to low-value care.
However, these assertions appear to contradict the thesis itself, which ‘concludes with a perhaps unpalatable truth’ that ‘a principal cause of non-compliant medical billing in Australia is system issues rather than deliberate abuse by medical professionals’.
Dr Margaret Faux, who authored the thesis and has been quoted extensively in these reports, was approached by newsGP to comment on this apparent disconnect but declined.
Dr Faux also chose not to elaborate on the evidence underpinning her assertion that 30% of Medicare’s budget is wasted each year; however, the rationale may be found in her thesis.
‘The introduction section of this thesis estimated the quantum of non-compliant billing in Australia at 5–15% of the scheme’s total cost, though precise quantification was impossible,’ she wrote.
‘Precise quantification remains unknown … though with the weight of evidence suggesting the Government exerts less control over compliance now than when prior research was undertaken [Flynn 2004], the incidence of noncompliance has likely increased proportionately, and may now be much higher than previous estimates.’
According to the thesis, this initial estimate of 5–15% was ‘based solely on extrapolation and expert opinion’ – namely from former Professional Services Review (PSR) boss Dr Tony Webber (also quoted in the Nine and ABC reports) and the 2004 PhD thesis by Dr Kathryn Flynn.
Current PSR Director Dr Antonio Di Dio also declined to comment for this article, but others with an intimate knowledge of Medicare have questioned the new estimate, which exceeds a 2020 Australian National Audit Office valuation by up to $7.63 billion.
‘As the primary statistician at [the Department of Health and Aged Care] within the compliance area, we applied rigorous statistical modelling to quantify 12-month behavioural savings following compliance activities,’ statistician Brett Clark wrote in a social media post subsequently shared by RACGP President Adjunct Professor Karen Price.
‘From 2016–2020, Government savings ranged from approximately $100–300 million. This included both Medicare and the PBS [Pharmaceutical Benefits Scheme].
‘Levels of government benefits identified in fraud, leakage, or general non-compliant activities raised as debts were well less than these levels.
‘How this report can identify $8 billion given my experience is beyond me.’
Immediate-past PSR Director Professor Julie Quinlivan has also reportedly said that she found Dr Faux’s thesis to be far from compelling.
‘When I saw that $8 billion figure, I thought “no way actually”. It just seems like too large a number,’ she told medical news website The Limbic.
‘There’s actually really profound evidence that there’s not widespread fraud.
‘Can Medicare compliance be improved? Of course it can. But the way this has been reported is very sad and damaging.’
Federal Health and Aged Care Minister Mark Butler has also expressed caution regarding the scale of the issue, despite commissioning a report on the existing compliance and PSR programs in response to the media coverage.
‘The figures that her work cites are quite different to figures generally provided around the extent of improper claiming or even fraud under Medicare,’ he told the ABC’s 7.30 program.
‘There are strong arrangements in place already ... and in the most egregious cases where there is demonstrated fraud, people are taken before the courts.
‘That’s a very tiny minority amongst the tens and tens of thousands of honest, hardworking health professionals we’re lucky enough to have in this country. But where it happens, it’s picked up and it’s prosecuted.’
Others still are less concerned by the apparent waste, and more by the potential impact on general practice.
‘It’s incredibly disappointing,’ VicHealth CEO Dr Sandro Demaio said in the wake of the reports.
‘Frontline primary care physicians … are the backbone of the healthcare system. The most critical element of the medical chain.
‘Other countries see this. I worry we will lose more excellent GPs.’
Log in below to join the conversation.

fraud Medicare

newsGP weekly poll Should after-hours Medicare rebates extend to all-day Saturday?


Login to comment

Dr Louise Marie Edwards   21/10/2022 7:12:14 AM

Please send this article to Sarah Ferguson on ABC 7:30 report. These truths were not included applied in her interview of Federal AMA president Prof Steve Robson last night. Very disappointing journalism by ABC.

Dr Gabriel Roux   21/10/2022 7:13:03 AM

We’ve all seen docs been investigated around us over the yrs and my concern has always been more about the impact of unnecessary harassment. For Medicare to overlook 8 billion of fraud per year is simply unthinkable. The other side of the coin is more concerning. I was once audited and it turned out that I actually under claimed. When I pointed it out to Medicare they ignored me and certainly did not pay out the deficit. I actually think that if you would calculate the impact in industry of Medicare harassment resulting in under claiming - especially by young docs scared of everything - this might even tip the real scale the other way. I have seen many GP’s practically only billing item 23, despite spending up to 45min on a consultation! Wonder what the impact of these claims will be on a under funded and discredited workforce …?

Concerned GP   21/10/2022 8:38:20 AM

According to the Department of Health and Aged Care, in 2020 there were 104,000 Medical Doctors and Specialists in Australia. Of these 31,000 were General Practitioners and 36,000 were Specialists. It doesn't comment on what proportion of the 104,000 registered Medical Doctors are non-clinical practitioners.
However, applying simple math in the most conservative way possible:
$8,000,000,000 divided by 104,000 = $76,923.08
This would mean that every registered Medical Practitioner is rorting $76,923.08 from Medicare?

Dr William Trevor Hurlow   21/10/2022 10:31:18 AM

Sorting through hundreds and possibly thousands of medicare items that can be claimed is a nightmare especially for overseas and newly trained doctors entering the Australian "Medicare system". We depend on the practice admin to guide us plus our colleagues, plus what we understand from the items list. We discovered after 5 years of practice that there were significant items we had failed to claim through ignorance for which the work had already been done, medicare has benefitted all the way to the bank!! How about a PhD on under charging Medicare and how much GPs are saving the government - this may be more revealing.
The ultimate solution - charge patients exactly what we are worth and let them sort out what to claim from Medicare!

Dr Vivienne Ann Clark   21/10/2022 11:03:59 AM

I agree with Dr Edwards, please forward the article to Sarah Ferguson, and to Prof Robson, so our advocates can be well informed to answer quite assertive interview questions.

Concerned GP   21/10/2022 5:19:03 PM

According to the Department of Health and Aged Care, in 2020 there were 104,000 Medical Doctors and Specialists in Australia. Of these 31,000 were General Practitioners and 36,000 were Specialists. It doesn't comment on what proportion of the 104,000 registered Medical Doctors are non-clinical practitioners.
However, applying simple math in the most conservative way possible:
$8,000,000,000 divided by 104,000 = $76,923.08
This would mean that every registered Medical Practitioner is rorting $76,923.08 from Medicare?

Dr Gregory Richard Lewin   22/10/2022 11:18:49 AM

I will not attempt to reach 1000 characters as I may be at risk of overwriting. How one conducts the Practice of Medicine is a matter of good morality and ethics.
Just recently the Sydney Morning Herald has been supportive of the need to improve GP Medicare rebates and this was heartening. Then this next installment kills any hope of the Australian population being adequately insured.
GP is now in a parlous state. 4 weeks to see me! Only 15 % of Graduates doing it. Poor pay, HECS debt, too much to know, too many forms to fill and specialists busy and relatively expensive for the needy. As I have written to the College and been aknowledged, the education system itself needs to change. You don't need 99 ATAR to be a GP. Good minds are denied the opportunity to do Medicine. What is needed is a separate University Course for career GPs. Much more of an apprenticeship rather than pure academics.
Food for thought with plenty of vitamins!