The incredible allegations made by Dr Margaret Faux regarding Medicare fraud have fallen like a Russian missile strike on GPs still reeling from the pandemic.
The joint investigation by the ABC’s 7.30 program, The Sydney Morning Herald, and The Age, claimed that up to 30% of Medicare’s annual budget, a figure which could approach $8 billion, was being lost to leakage in all areas of healthcare, “including GPs, surgeons, pathologists, anaesthetists, radiologists and dentists who use the child dental benefit scheme.”
Yet whilst many stakeholders rubbished the alarming figure, the ABC backed up their allegations with supporting claims made in 2012 by GP and former head of the Professional Services Review (which has oversight of Medicare), Dr Tony Webber, that errors were costing taxpayers up to $3 billion a year.
This figure matches the initial estimate put forward by Dr Faux of $1.8 to $3 billion in the executive summary of her controversial report, which, when examined more closely, actually attributes most of the blame to misconduct, rather than deliberate fraud.
Speaking with 7:30, Dr Faux said that many of the claims were less than $100, which made it far harder for the system to detect.
“The bottom line is we don’t know exactly how much is fraud – deliberate abuse – and how much is errors… I think most Australians believe that doctors are honest people, and I’d like to think that most of them are,” she said.
“But the reality is anywhere where you’ve got a huge pot of money that is super easy to access, you are going to get bad actors building business models just taking the money unlawfully. And it’s a huge problem in the Medicare system.”
Unfortunately for Dr Faux, and her audience, the media investigations focussed on the symptoms, without examining the potential underlying causes that she had so succinctly raised – business models within healthcare have undergone significant change in the last 20 years.
Professor Stephen Duckett, who is currently the director of the Grattan Institute’s Health and Aged Care Program, Emeritus Professor of Health Policy at La Trobe University, and Chairperson of South Australia’s Health Performance Council (in addition to a wealth of other senior roles within the Australian and Canadian healthcare systems) added a new dimension to the conversation when he shared 2021’s Health Sector Report, Trends in the structure and financial health of private medical practices in Australia, by Professor Anthony Scott from the school of Applied Economic and Social Research at the University of Melbourne.
The annual report, prepared on behalf of the ANZ Bank in conjunction with the Melbourne Health Institute, shows that despite the historic freeze on rebates, declining numbers of students entering the profession and rising costs, GP and non-GP specialist medical businesses exhibited much faster growth and were more profitable than legal, finance, accountancy, construction, and agriculture businesses.
“Between 2019–20 and 2020–21, median gross profits for GP businesses increased by 2.2% and by 10.8% for non-GP specialists, consistent with other data showing a bounce back in utilisation during this period,” Professor Scott states in the report.
“Median gross profit margins (profits as a percentage of turnover) were already at 50.3% for non-GP specialist businesses and 37.9% for GP businesses before the pandemic.”
Given the well-known, existing constraints on general practice, another key factor missing from the media reports was that the size of private medical practices has continued to grow over time.
The Health Sector Report shows that the total number of doctors in solo private practice had fallen by 0.5% between 2013 and 2020, whilst the number in group private practice had increased by 28.9% over the same period – equivalent to an average increase of 4.1% per year.
In 2019, 37% of clinics had 6-10 GPS, and 34% had 11 or more on their books, representing a 9% increase on 2018 in this category, and even though there was growth in the number of sole traders entering private practice, most of these retained their ABN, even if they also established private companies or other business entities.
In 2020-2021, 24% of all GP and specialist businesses had corporate business structures, with policies and procedures designed to increase efficiency and create sustainable, profitable business models, divorcing the average GP from involvement with the administrative or managerial side of the organisation.
“The number of new private companies reflects the expansion and growth of existing businesses given that unlisted private companies allow for up to 50 shareholders to invest in the business,” Professor Scott noted.
“In 2019 the total number of accredited and non-accredited general practices was estimated to be 8,147 but there remain no longitudinal data on the total number of general practices in Australia, and there are no data at all on the number of non-GP specialist private practices.
“Therefore, little information is available on the organisation or market structure of private medical practices.”
However, what is known is that the potential level of complexity in business structures is staggering, with an estimated 6.4 business entities per general practice.
“One general practice of four GPs can comprise multiple business entities and ABNs. If two GPs own the business, then this business entity will have its own ABN and Australian Company Number if it is a private company. These two owners could also have their own ABN,” Professor Scott explained.
“This business will usually have a contract with the other two GPs who are not owners. These GPs provide a proportion of the revenue from billings to the business entity to cover overheads and administrative support unless they are salaried employees.
“Each of these GPs will also have their own ABN, be business owners and can be classified as either a sole trader, trust, or private company. A GP could also be contracted with another practice in a different location and use the same sole trader ABN.
“The main business may also contract with other business entities to provide office-based administrative support (e.g., appointment systems, billing, and staff). Therefore, a single GP practice or health centre can comprise several different business entities, and ownership structures can be complex.”
On top of this, there are more than 5700 item numbers contained within the MBS, and over 89 certified developers supplying web ready software for integrating with the system.
A 2019 review task force had to assign more than 70 clinical committees to examine each billing area of the MBS, a process that took more than 700 clinicians, consumers, and health system experts three years to complete, before providing advice on how to improve the MBS and keep item descriptors up to date.
However, even with this review, the information provided to GPs setting up Medicare billing for their own practice still remains deliberately non-comital and vague.
A FAQ put out in 2019 by General Practice Supervisors Australia (GPSA) on managing Medicare billing states that “doctors often have no idea how many items are on the MBS because they are usually only dealing with their speciality.”
“The first person [a registrar] will usually ask for MBS clarification is their GP supervisor, a practice manager, or other practice colleagues,” the FAQ states.
“However, there is an inherent risk in doing so because they may act on incorrect or outdated advice, and if the registrar is audited by the DoH, ignorance will not be a defence to inappropriate billing.
“Comments like, ‘All my colleagues do it’ or ‘My supervisor/practice manager/practice principal told me to do it that way,’ are not a defence for incorrect billing. Nor will a Fellowed GP be excused if they claim, ‘Someone at Medicare told me to do it that way 10 years ago.’
“Encourage your registrar to seek formal clarification of item numbers and descriptors. Fellowed GPs or GP registrars with queries relating exclusively to individual interpretation of the MBS, should email askmbs@health.gov.au.”
Yet as one GP who did just that pointed out, the response that he received included the following disclaimer…
“This response is general in nature and only applies to your specific enquiry. Whilst the Department has taken care in preparing this response, it may not be complete or accurate. To the extent permitted by law, the Commonwealth of Australia accepts no liability arising from you or your organisation using the information, and you must always seek your own legal and financial advice before relying on it.”