Medicare fraud costing taxpayers $7 billion per year

doctor in handcuffs

The concept of ‘honour among thieves’– the idea that even thieves have a code of conduct – is centuries old, but what about honour among doctors? If research by lawyer and health regulation expert Dr Margaret Faux is anything to go by, it seems to be severely lacking in some quarters.

According to Dr Faux, a registered nurse and lawyer who has worked in the health system for more than 40 years and who recently completed a PhD in Medicare claiming and compliance, Medicare fraud and billing errors are costing taxpayers the staggering sum of $7 billion a year.

Dr Faux’s business, Synapse Medical Services, which advises doctors, hospitals and regulators, has found consistent issues with client billing practices, with errors and abuse of process accounting for as much as 30 per cent of all Medicare costs.

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How is this ‘rorting’ happening on such a large scale? Dr Faux says the problem is rooted in a system drawn up decades ago, one which was, and remains, very much honour based. Under the system, doctors are assumed to bill correctly for the services they provide.

Given that doctors take the Hippocratic Oath and/or its modern-day companion, the Declaration of Geneva, one could expect them to observe a code of ethics that rises above that of the general population. But that appears not to be the case.

Among the findings uncovered by Medicare watchdog the Professional Services Review (PSR) is a claim for a male patient billed for a caesarean anaesthetic. Other less obvious ones included bills for X-rays, ultrasounds, CT scans and MRIs conducted on the same body part on the same day.

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The scale of some of the breaches is far from small. One GP in NSW was required to pay back $672,273 for a series of inappropriate billing activities, including claiming Medicare for services that were not provided. In another example, a GP repaid $277,312 and was disqualified from Medicare for three months for billing patients who were dead.

Former PSR director Professor Julie Quinlivan, says the watchdog inherently favours doctors, especially when compared to regulation practices in other industries. “When you look at compliance activities with equivalent sizes of funds in the tax and corporate world, this is a very low-key and gentle regulation,” she said.

Even breaches that are clearly identified as fraud – potentially a criminal offence – are rarely handed over to the police. Instead, many are dealt with ‘in-house’, with offending doctors simply asked to refund inappropriate earnings and, perhaps, suspended from making further claims for a short period.

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Such ‘slap on the wrist’ penalties may not act as much of a deterrent for some doctors.

Not all of the $7 billion per year loss is fraudulent, says Dr Faux. Much of the non-compliant billing is unintentional, but it is costing taxpayers nonetheless.

With a new federal government, now is the time for a thorough review and overhaul of the system, Dr Faux says.

“Rebuilding knowledge and expertise within the department should be a priority for the new government,” she said.

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Written by Andrew Gigacz

Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.

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