The watchdog responsible for policing Medicare investigates just 0.07 per cent of health professionals each year, is chronically understaffed and underfunded, and is led by bureaucrats with strong links to the powerful Australian Medical Association (AMA), a joint investigation has found.
The AMA – a union that represents about a third of the country's doctors – also holds an extraordinary veto over whom the federal government wants to run the regulator, known as the Professional Services Review (PSR).
The Albanese government has been urged to order a radical overhaul of the PSR amid concerns that its weak compliance and enforcement regime allows up to $8 billion a year to be lost through fraud, incorrect billing, or overservicing.
A joint investigation by The Sydney Morning Herald, The Age, and the ABC's 7.30 program has uncovered an array of fraud, inappropriate billing, and overservicing by medical professionals that was never detected by the PSR, a government agency which claims to "safeguard the Australian public from the risk and cost of inappropriate practice within Medicare".
The agency's performance casts doubt over whether the government knows the true extent of Medicare waste, given the minuscule number of wrongful claims being picked up each year.
The PSR examines only about 100 cases of fraud and inappropriate billing every 12 months, which represents just shy of 0.07 per cent of the 150,000 medical professionals the regulator is responsible for monitoring.
Helen Bird, a law and governance specialist at the Swinburne University of Technology, said the PSR model was flawed.
"I think questions need to be asked about how money inside Medicare is being spent, and there should be greater transparency over how that's occurring," she said.
Questions over independence
The unique design of the PSR also raises questions about its independence.
Under the Health Insurance Act, the federal health minister can only appoint the head of the regulator if the AMA has agreed to the proposed hire.
The AMA has strong links to the regulator's recent leadership — the acting head of the PSR, Dr Antonio Di Dio, also sits on the board of the AMA and is a former president of the lobby group's ACT branch. He was deputy director of the PSR for a decade.
The previous head of the PSR, Professor Julie Quinlivan, was described in an AMA press release as a "longtime member". Her predecessor, Bill Coote, was once the secretary general of the AMA for six years.
ABC 7.30, The Age and The Herald are not suggesting that any of these individuals engaged in any wrongdoing, but rather that its ties to the AMA give the PSR the appearance of a body that lacks true independence.
AMA President Professor Steve Robson said: "Dr Di Dio is a well-known and widely respected member of the AMA. The PSR is an independent agency and has a demonstrated history of carrying out its functions effectively."
A Department of Health spokesperson said any relationship between Dr Di Dio and the AMA "is a matter for the AMA".
The joint investigation sparked an uproar from the AMA and other medical lobby groups such as the Royal Australian College of General Practitioners.
As AMA president, Professor Robson claimed the reporting was "an unjustified slur," "plain wrong" and the figures "don't stack up at all".
He also told ABC radio that he had spoken about the reports with the acting head of the PSR, and Dr Di Dio had declared them "rubbish". Professor Robson did not tell listeners that Dr Di Dio was also an AMA board member.
The joint investigation prompted Health Minister Mark Butler to ask his department for a report on the existing compliance system, which will cover the PSR. Mr Butler has said he is open to ordering an independent inquiry but is so far resisting.
Applications for a new director are open until November 13 but the little-known clause in the Health Insurance Act means the AMA will have veto rights over Mr Butler's pick.
Fraud, overservicing, errors, and waste have been allowed to occur for decades despite repeated warnings to successive governments from experts including Dr Margaret Faux, who has a PhD in Medicare claiming and compliance, and the former head of the PSR, Dr Tony Webber.
Dr Faux said the PSR should be dismantled and replaced with a more expansive, modern and effective enforcement scheme. She warned wrongdoing was flying under the radar because Medicare and the PSR were unable to detect systemic issues.
"If you are over-servicing or faking claims but your billing profile looks consistent with your peers, without a tip-off you just won't get caught," she said.
Minister for Government Services Bill Shorten last week said the "integrity" of the Medicare payments system had been a "neglected" area under previous governments.
"If you don't put enough effort into payments integrity and guardianship, then you will get rorts, and it's not just Medicare," he said.
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