Medicare fraud and non-compliance by doctors is costing taxpayers between $1.5bn and $3bn a year, a conservative estimate that will only increase without system reforms, according to a government-commissioned independent review.
The review into Medicare compliance, led by health economist Dr Pradeep Philip, was commissioned following ongoing concerns about waste and wrongful billing practices.
The Philip review found that “on a conservative definition of non-compliance and fraud it is entirely feasible the value of non-compliance could exist in the range of $1.5bn to $3bn”.
The review makes 23 recommendations, including strengthening the governance model that oversees integrity; removing the veto power of professional bodies in the selection process of the director of the professional services review; ensuring that the legislation that underpins Medicare integrity is amended to be effective and fit for purpose; and improving the detection and disruption of fraud and non-compliance, and mechanisms to address inappropriate and incorrect claiming.
In March 2022, Guardian Australia revealed illegal billing by doctors and other health providers was inflating bulk-billing rates, findings which were sent to the auditor-general’s office and the then health minister, Greg Hunt.
That review, authored by Dr Margaret Faux, found a primary cause of Medicare fraud was ignorance by healthcare providers, who did not comprehend the complex billing system and often had no idea they were not complying with regulations. In some cases, the review found, doctors were deliberately doing the wrong thing.
Guardian Australia then sent the Faux review and its key findings to the health minister, Mark Butler, after the federal election. Butler told the Guardian in August the former government had not been honest about the state of bulk billing.
Faux’s findings were echoed in the government’s independent review, published on Tuesday.
Philip congratulated Faux on her work, saying: “Her work has, on one level, been a great service to the system – in shining a light on the key issue of trust in our health system.”
Philip found “no evidence” of up to $8bn of waste reported by other media who used Faux’s findings to make the claim.
But he said the figure he reached “comes with a significant caveat, in that there is real potential for the problem to scale to the order of magnitude in Dr Faux’s analysis should effective controls, systems and education not be put in place”.
Butler said on Tuesday that the problems with Medicare “have been a long time in the making”.
“I had been drawing attention before the election to the lack of what I thought was clarity and transparency around bulk-billing data in particular, and we’ve done a lot of work over the last few months to get much clearer data on what is happening,” he said.
Butler said he was prepared for some pushback from doctors’ groups about the findings, which he said should not distract from the majority of health professionals who do the right thing and provide a high level of care.
“I’m sure there will be some different views and potentially disagreement about the specific recommendations we’ve received from this review,” he said. “But it’s obviously really important to make sure that every single taxpayer dollar going into the health system is spent well and spent appropriately.”
Philip wrote in his report that the dollar figure on the waste “should not be the main subject of debate, attractive as that may seem, as the main lesson to learn from this Review is that we must focus on the structural issues and controls in the system, to build trust in Medicare and materially reduce non-compliance and fraud”.
“To this end, some of Dr Faux’s key arguments are important to take seriously as they point to vulnerabilities in the payment system,” the report said.
The review also said the billing system must be improved so it is simpler and clearer for health providers to use, recommending better education on Medicare rules, which Faux called for in her review.
Butler said the government is now considering all of the recommendations and that some will be more complex to tackle than others.
“We’ll do this properly,” he said. “That’s obviously not going to be done quickly but we take the recommendations very seriously. Some recommendations are straightforward, but overall this is an extraordinarily complex era of public policy.”
