The Sick System -Survival or Greed ?


A recent excellent article in The Australian (See text below) highlighted the longstanding issues in our health system that are gnawing away at it like termites and will lead to the system imploding if we do not act.

The article identifies two main areas of concern the first being rorting of Medicare within General Practice. This is off course the more glamorous eye catching component and there are indeed spectacular examples as raised in the article. Things should be however placed in context – the Professional Service Review investigations and findings involve less than 1 % of the General Practice work force in Australia. To attempt to extrapolate the overcharging of $187, 000 (average) by the 200 odd rogue practitioners to the over 30,000 other GPs out there is ridiculous – especially since the average full time GP’s net taxable income is  around $ 180,000 or less.

There is no doubt that there is some large scale rorting of the system happening – much of it is however not individually driven but rather driven by the organisations that employ doctors – typically large Corporate or other entities. Examples that springs to mind are:

  • Charging patients an out of pocket fee while at the same time bulkbilling. Illegal unless you cleverly describe the out of pocket payment as a membership fee or similar. And off course also then pocketing a Medicare Bulkbilling incentive payment for every eligible patient. This is happening on a very large scale in Canberra
  • Seeing patients after hours and bulkbilling them – whilst using lucrative and much more expensive urgent Medicare codes despite attending for non-urgent matters – once again happening on a large scale in Canberra
  • Gross overuse of the so-called Chronic Disease Management program. This is partly as a response to the chronic under funding of standard Medicare consultation fees (understandable response but still a dodgy use of Medicare funding) and requests by Allied health workers and Psychologists for these plans – out of greed or under pressure from patients. You decide. This happens on a very large scale all over Australia

It is certainly fair to say that the Medicare Benefit Scheme is at times very difficult to interpret, changes made are not often given through to the Profession and it is a rare thing to get the same answer twice when advice and/or guidance regarding billing is sought from Medicare. This needs to be kept in mind when interpreting the issue regarding General Practice billing.

This brings us to the elephant in the room – the longstanding, blatant and indiscriminate rorting of Medicare by State & Territories and Private hospitals alike. This has openly been going on for years all over the country and has now been so entrenched in the system that no hospital would be able to survive if it was stopped. There seems to be little doubt that it is blatant double dipping and very likely fraudulent use of Medicare funding but the federal Government has for decades known about this and looked the other way.

In the ACT it presents itself in many ways:

  • All referrals to outpatient clinics are required to be to a “named Specialist” – it is debatable how often the patient actually end up seeing the Specialist and instead end up seeing a trainee doctor – yet Medicare is invoiced for a Specialist consultation.
  • GP clinics waste extraordinary amounts of time re-doing referral letters each time they have run out or if there has been a change in Consultants at the department. This has absolutely no impact on the clinical care delivery at the hospital and occupies the GP’s time when the GP should seeing his/her own patients.
  • Nearly all public joint replacements in the ACT are performed at a private hospital (As are many of the Ear Nose & Throat and other procedures). Through a clever accounting system the waiting lists are artificially shortened which is great for the individual patients involved and the purses of the private hospital and doctors.
    • It does not fix the systemic issues within the public hospital that results in the lack of capacity to do this work
    • It removes Specialists and Trainee doctors from the premises of the public training hospital with a resulting flow-on impact on other services.
  • Several Specialities no longer offer outpatient appointments at all or within a reasonable waiting time. Patients have to resort to finding the money to go and see the Specialists at their private rooms despite being referred to the public clinics

The solution to these issues seems simple:

  1. Remunerate General Practitioners properly for the work that they do by  unfreezing the Medicare rebate and raising the Medicare consultation rebate amount to a proper Professional service fee. Replacing it with more complex systems (to replace Chronic Disease and other item numbers) only creates opportunities for Corporates and/or dodgy individuals to rort the system. It is much easier to police straight forward consultation item numbers and keep people accountable.
  2. Fund the State & Territory Health systems adequately and cease all opportunities for Private industry, including Doctors, Insurers & Hospitals, to enrich themselves from the public health system.

It seems so simple – yet no Government seem to be able to address this issue without making it more complex, more unworkable and more open to manipulation and defrauding by unscrupulous forces.

As perfectly exemplified in the ACT where our local Government rips off Medicare in the hospital system on the one hand yet duplicates Medicare funded GP services in Canberra by setting up competing, Territory funded, Nurse Practitioner clinics on the other hand


From the Australian March 6, 2017:

Hung Dien Phan came to Australia as a refugee in 1979 after fleeing Vietnam with his family, obtained a degree in medicine from Monash University and then discovered how easy it can be to make serious money in this country.

As a GP locum in Melbourne, he earned almost $3 million between 2006 and 2013 in Medicare payments based on valid claims for patients he had seen. During the same period, he decided to top up his income by making additional claims for 14,565 services that he did not perform, using the names and Medicare details of ­patients he had seen previously. By the time the federal government caught up with him, he had raked in $854,188.20 in fraudulent claims.

The Victorian Supreme Court sentenced Phan to three years’ jail with a non-parole period of 16 months and issued an order for him to repay the money. The prosecution argued the sentence was inadequate and last year the Victorian Court of Appeal increased the term to four years, with a non-parole period of two years.

The federal government has caught a few other big-time scammers in recent years. Barbara Cindric was a dental receptionist in NSW when she submitted 300 false Medicare claims, 253 of which were paid, netting her $438,509.71. She was sentenced to 3½ years in jail, with a non-parole period of two years, and also will be required to repay the money.

Are these isolated cases? Perhaps only in the size of cases defined as fraud. Some exploitation is inevitable in a scheme that in 2015-16 paid out $21.4 billion in benefits for 389 million services. But the signs are that Medicare is wide open to abuse and the government may be doing no more than uncovering a small tip of a very large iceberg.

A project conducted by the Department of Human Services between 2012 and 2014 identified 12,000 large medical practices, mostly involving between four and seven doctors.

It conducted interviews at 30 practices with 207 practitioners, the result of which, largely based on changed billing behaviour, was an average saving of no less than $185,000 per practitioner in a single year. It estimated an average of another $75,000 a year from “a peer group effect” — changed behaviour by doctors working in the same practice as colleagues who were interviewed.

Savings from the project were estimated at up to $71.5m, 3½ times the target. While the review ­focused on practices with high Medicare claims, this nevertheless suggests doctors are making claims on Medicare to which they are not entitled totalling hundreds of millions of dollars.

Asked about the findings of the project, Australian Medical ­Association president Michael Gannon tells The Australian the AMA is a strong supporter of compliance to protect the integrity of the Medicare program.

“The AMA acknowledges there are a few individuals in our profession who are taking undue advantage of the Medicare ­arrangements,” Gannon says.

“Our colleagues know that if action is taken against one of our colleagues to address inappropriate billing of Medicare, it is not long before any others who are inappropriately billing will change their behaviour to avoid similar compliance action.”

He says the AMA supports greater information for practitioners on billing for Medicare items. But 207 practitioners overcharging taxpayers by an average of $185,000 each per year suggests the problem is bigger than a few rogue individuals.

Though ignorance is not a defence under the law, doctors generally are allowed to correct past mistakes in their billing practices in return for commitments to “behavioural change”. Or, as the Health Department puts it in response to questions: “The department works closely with health professionals to resolve issues, including if they have not complied with reporting requirements because of genuine mistakes.”

Last financial year, audits and investigations of 2185 cases identified debts of $18.6m. Many of these were a result of medical practitioners acknowledging they had lodged incorrect claims. Just 190 investigations were conducted into possible fraud and only 35 of these were referred to the commonwealth Director of Public Prosecutions.

The government managed to recover only $8.9m in debts in 2015-16 — a figure the Health Department acknowledges is inadequate. “Similar compliance programs in the private sector and internationally recover higher proportions of relevant expenditure,” a spokeswoman says.

She says that this was why the government had allocated $48m over four years in the last budget to improve compliance performance and it expects this to generate ­additional savings of $67.6m over the same period.

Responsibility for policing Medicare fraud and so-called inappropriate practices by medical practitioners was transferred in November 2015 from the Department of Human Resources to the Health Department, following an efficiency review.

The following February, the Health Department introduced a health provider compliance hotline. In just the remaining four months of the financial year, it received an estimated 850 tip-offs from members of the public and health providers about fraud and other breaches of the rules. But whether the department is any more effective than its predecessor in pursuing wrongdoers remains to be seen.

The Professional Services Review, a unit within the Health Department that investigates cases of inappropriate practice referred to it by Medicare, highlights in annual reports the limitations in the data it receives to enable it to conduct proper investigations, including as a result of the growth of large practices.

Then there is a huge grey area. It has become common practice at public hospitals to “privatise” public sector outpatient clinics staffed by hospital doctors with rights of private practice. Instead of the clinics being funded by the hospitals, which are run by state governments, the doctors in the private clinics bill Medicare, which is run by the federal government. While the hospitals are paid to provide outpatient services, they are shifting the cost of running them to Canberra.

That helps hospitals ease the pressure on their always stressed budgets and it suits the doctors, who earn more from their private practice than from their salaried work at hospitals. It is a process encouraged by a health system that caps public hospital funding while Medicare remains uncapped, paying out benefits according to the number of claims it receives.

Another area of concern is highlighted by The Weekend Australian, which revealed a report by Ernst & Young, commissioned by the Independent Hospital Pricing Authority, found the practice of public hospitals billing insurers has ­increased greatly. More than 20 per cent of NSW public hospital separations, or services, are funded by insurers — the national average is 14.1 per cent — even though less than half of Australians have insurance.

Other states have followed the NSW lead. The number of Queensland public hospital patients billing their insurer has increased at an average annual growth rate of 27.2 per cent (the national average is 10 per cent).

While some blame gap fees in the private sector for members going public, Ernst & Young found state governments actively pursuing the insurance dollar, often hiring staff with the specific purpose of convincing patients to bill their health fund.

In most cases of patients treated at outpatient clinics, the Medicare fees claimed by the doctors go to the hospital. This is in breach of the Medicare agreements reached between the commonwealth and the states, but successive federal governments largely have turned a blind eye to the issue.

But what if the Medicare payments are going to the shareholders of a listed company? Forbes magazine estimated Paul Ramsay’s wealth at $3.4bn before he died in 2014. He founded Ramsay Health Care and built it into a listed company that now says it is among the top five private hospital operators in the world.

Ramsay has been a generous donor to the Liberal Party, as well as a substantial supporter of charitable causes. In 2011-12, Paul Ramsay Holdings gave the Liberals $515,000 and Ramsay Health Care contributed a further $100,000, making Ramsay the biggest donor that year. Paul Ramsay Holdings gave another $600,000 in 2013-14 but scaled back to $125,000 in 2014-15. Last financial year, Ramsay Health Care gave $45,000 to the Liberals’ West Australian branch and $20,000 to the ­Nationals.

One of Ramsay’s facilities is the Joondalup Health Campus near Perth. As well as a private hospital, it provides public hospital in­patient services under contract to the West Australian Health Department. It also hosts private clinics in areas such as gynecology and pediatrics, staffed by doctors with rights of private practice.

In the gynecology clinic, the doctors work as part of their salaried hours provided by the hospital. But Medicare is charged for the clinic’s services and a hospital spokeswoman says the payments “generally” are kept by the ­hospital.

She says: “The gynecology clinic operates as a private practice, administered by the hospital, with the hospital carrying the running costs such as the salaries of the clinic staff, including the consultant gynecologists and all other costs. Medicare is validly billed for consultations provided to patients who are referred by general practitioners to this clinic.”

In April last year doctors at the Joondalup Hospital wrote to fellow doctors, saying the clinic, which bulk-billed services to Medicare, was no longer sustainable. From June last year it would become a private billing clinic, whose patients incurring out-of-pocket costs would be able to claim a Medicare rebate. This increases the hospital’s income from Medicare payments.

In the case of pediatrics, the hospital says it has no say in the administration of this clinic; rather it is run from the specialists’ private rooms at the hospital and it is “entirely appropriate” that the doctors retain the Medicare payment because they are carrying the costs.

But hospital employees also work there. The hospital says registrars — doctors on the hospital’s staff — work in both the gynecology and pediatrics clinics “for the purpose of training, under consultant supervision. Registrars may see a patient alone — for example for the purpose of a single test — but in these situations Medicare would not be billed.’’

The law in this area is explicit. According to a federal Health Department spokeswoman, “when a specialist or consultant physician bills Medicare for consultation services, he/she must be the person who actually renders the service to the patient”. She says that, as hospital employees, registrars are not eligible to bill Medicare.

Another requirement for billing Medicare is that people make a choice to be treated as private ­patients, which also gives them the right to choose their doctor. At Joondalup, patients usually are referred to the clinics from within the hospital and it is not clear they are making this choice.

Joondalup’s spokeswoman says the hospital has never been funded to provide pediatric and gynecology services. “The only way they can exist under the current arrangements is via Medicare billing as private clinics.”

The Australian has an information sheet given to patients referred to another of Joondalup’s clinics, orthopedic trauma, which is funded by the state government. The sheet says: “A current Medicare card must be shown at each visit.”

The hospital says this is purely to verify eligibility for treatment as a public patient, not to bill Medicare, and that this is a mandatory government reporting requirement. It says it is confident that all its clinics “are legitimate and compliant with all the relevant legislation”.

The Health Department tells The Australian that although it is unable to comment on any investigations or even confirm they were taking place, “we take the res­ponsibility of protecting the integrity of the Medicare Benefits Schedule seriously. We seek to ensure all MBS payments are made appropriately.”

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