Australia’s universal healthcare system, Medicare, is no longer fit for purpose because of its complexity, lack of clarity, and lack of continuous monitoring, an independent review has found.
Commissioned by Health Minister Mark Butler in response to reports of widespread rorting and fraud, the review by health economist Pradeep Philip found that Medicare was bleeding between $1.5 billion to $3 billion (US$2 billion) to non-compliance.
“At present, it is my view that a significant part of the leakage in the Medicare payment system stems from noncompliance errors rather than premeditated fraud,” Philip said.
Reports in media last year that alleged rorting and wastage were eating up $8 billion or a third of its budget every year were not substantiated in Philip’s report.
But he noted that Medicare’s governance, system, and tools were currently “not fit for purpose” and that, if left unchecked, these vulnerabilities will lead to “significant levels of fraud.”
For example, the Medicare Benefits Schedule (MBS) now has around 6,000 items that are not all clear and easy to navigate. Additionally, they change at a rate that is difficult for individual medical practitioners to keep up with, with around half the items having undergone changes in the last two to three years.
“With around 6,000 Medicare items, which are undergoing constant change, and 14 claim channels, simplicity is a critical objective for reform,” Philip said.
He also said that there is currently a disproportionate focus on the post-payment systems, with little attention paid to areas such as pre-payment and pre-claim.
“To reduce noncompliance and fraud, clarity of the rules and system focus on pre-claim, and pre-payments are a necessity,” he said.
Despite the complexity and large size of the system, Medicare lacks continuous monitoring and scrutiny of payments, meaning there were no feedback loops to help providers make more accurate claims which held the door wide open to fraud.
“With $38 billion in annual Medicare payments and more than 500 million transactions a year, it would be expected that, like what exists in financial institutions, that continuous monitoring be established,” Philip said.
“In order to implement continuous monitoring, the ‘brain’ of the system needs to be modernised, and new controls, in line with three lines of defence methodology, should be adopted.”
The government said it would consider the recommendations and work with the health sector to develop a response.
Minister Butler said the report showed that the “overwhelming majority” of Australian doctors and health professionals are honest and comply with Medicare rules.
“But they also understand that, at a time of great pressure on household and government budgets, every dollar in Medicare is precious and must be spent directly on patient care,” he said.
Doctors Demand Apology
It comes after a separate study by the University of Sydney found that General Practitioners (GPs) were more likely to undercharge than overcharge Medicare for their services.In a survey of 2,760 GPs, the health system was undercharged nearly 11.8 percent of the time and overcharged 1.6 of the time, saving Medicare an estimated $351.7 million in 2021-22.
Lead author Christopher Harris said the findings contrasted with the reports alleging widespread GP billing fraud.
“General practice is in crisis. Allegations of fraud have been damaging to a workforce that is struggling to attract medical graduates to general practice,” he said.
“While some GPs may undercharge Medicare for altruistic reasons and others because they still consider the complexity of care when determining the Medicare item charged, we believe that a major reason GPs undercharge, even for long consultations, is the fear of being audited.”
“We hope that these results will help inform the current discussion around how to strengthen Medicare and primary care in particular.”
Nicole Higgins from the Royal Australian College of General Practitioners said the study “vindicated” GPs, and they anticipate an apology for the allegations.
“Give us a break. For those who got it wrong, an apology is in order to all the hardworking GPs out there,” she told the AAP.
“The issue is with the system and not the GPs. The government needs to simplify the system and ensure we have a focus on education and not punitive measures.”
