Dr Pradeep Philip’s independent review of Medicare has backed some of the ABC’s 7.30 doctor rort claims based on Dr Margaret Faux’s research, while also defending some GP practices.
The Independent Review into Medicare Compliance and Integrity found that due to the complexity of the Medicare system, new business structures, and the almost constant development in payment systems – combined with a lack of effective oversight – up to $3 billion in leakage could realistically occur.
Dr Philip, the lead partner at Deloitte Access Economics, chaired the review that was launched in November 2022 following the 7:30 investigation.
“This analysis provides, an albeit partial, perspective that leads me to conclude 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 $1.5 billion to $3 billion, not inconsistent with previous studies,” Dr Philip said.
“This comes with a significant caveat that there is real potential for the problem to scale to the order of magnitude of Dr Faux’ analysis should effective controls, systems and education not be put in place.”
The ABC was joined by The Sydney Morning Herald and The Age in claiming that up to 30% of Medicare’s annual budget, nearly $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 their allegations with supporting claims made in 2012 by GP and former head of the Professional Services Review (PSR), Dr Tony Webber, that errors were costing taxpayers up to $3 billion a year.
This figure matched the initial estimate put forward by Dr Faux of $1.8 to $3 billion in the executive summary of her controversial research, and Dr Philip acknowledged the significance of her work for the Australian healthcare system.
“A great deal of attention has been drawn to the subject matter covered by this review by public analysis of Dr Margaret Faux’s work. I have had the opportunity to spend time with Dr Faux and thank her for her generosity and openness,” Dr Philip said.
“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.”
Dr Philip also pointed out that while the Commonwealth Fraud Control Framework 2017 may classify inappropriate practice and incorrect claiming as non-compliance, from an academic perspective, these behaviours would still be considered as fraud.
“It is important to acknowledge that definitions of what is considered fraud and non-compliant activity is complex,” he said.
“Different stakeholders have different understandings of what is considered fraudulent and non-fraudulent behaviour and there are multifaceted interactions between intent, compliance, integrity, and clinical appropriateness which mean distilling definitions to just a simple categorisation of fraud is impossible.
“There have been several studies and media reports over the past five years which provide vastly different estimations of fraud and non-compliance. In part, these differences in estimates are driven by the different definitions adopted by stakeholders of what constitutes compliance, fraud and over/under servicing.
“Similarly, it is important to distinguish between inadvertent errors that are isolated or ad hoc, versus systematic and repeated error, versus downright fraud. Indeed, understanding these distinctions helps one understand the breadth of estimates of non-compliance versus fraud, and the debate as to why systematic errors might be considered fraud.”
As Medical Forum highlighted in November, Dr Philip acknowledged that changes in technology, business models and health-care delivery have led to the lack of a system-wide perspective as each provider has endeavoured to create and support their own internal processes.
“At the core, lies the complexity of the system, the lack of clarity of many aspects of the compliance system, the lack of emphasis of pre-claim and pre-payment decision-making, and the lack of continuous monitoring,” Dr Philip said.
“Legislation, governance, systems, processes, and tools are currently not fit for purpose and, without significant attention, will result in significant levels of fraud.
“It is my strong suggestion to commentators and policymakers that the actual number should not be the main subject of debate, attractive as that may seem, as the main lesson 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.”
Dr Philip was also very clear that individual practitioners were trying their best to cope with a dysfunctional system and praised their integrity.
“On the basis of my consultations and my experience with Australia’s health system, the overwhelming majority of practitioners are well meaning and protective of the Australian health system, particularly of the care they provide to their patients,” he said.
“A large part of the success and efficacy of Australia’s health system, to date, is due to this level of altruistic behaviour by health professionals.”
Yet despite supporting GPs, Dr Philip labelled the AMA anachronistic and suggested that the association’s role, as the only body that could veto the appointment of the director of the PSR, no longer reflected the fact that there were a range of professionals who could be referred to the board.
“Either all professions should be reflected in director appointment decisions, or none at all,” Dr Philip said.
“Acknowledging that legislative change would be required to achieve this and that it is not a straightforward decision, I believe it could bring about a measurable enhancement to the perception of the PSR by the sector and any perceived conflicts of interest.”
The AMA’s President, Dr Steve Robson, was quick to defend the association’s role in governance while welcoming the findings.
“While the Dr Philip may view the AMA’s role as anachronistic, the reality is that the AMA played a significant role in establishing the PSR and the peer review process as part of our commitment to ensuring Medicare funding is used appropriately,” Professor Robson said.
“Our role has always been constructive, and our ongoing involvement has provided reassurance for the medical profession, which makes up the vast majority of practitioners participating in the Medicare system.”
The RACGP, which was quick to denounce all aspects of Dr Faux’s report, has also embraced the new clarity provided by Dr Philip on the definition of ‘fraud’ and has realigned the data to frame a message more critical of government and Medicare.
RACGP President Dr Nicole Higgins said that GPs and practice teams should hold their heads high.
“Let me be clear, Dr Philip’s review found no evidence to support allegations of Medicare rorting amounting to $8 billion a year, or even a fraction of that amount,” she said.
“The RACGP agrees that Australia’s health funding system is fragmented and disjointed and in critical need of simplification. Estimates of $1.5 billion to $3 billion leaking from the system every year is lost predominantly from honest billing errors rather than premeditated fraud.
“It is vital that the ABC and Nine newspapers recognise this, because their ‘investigation’ severely damaged the morale of GPs and practice teams after several trying years managing patients during the pandemic.”
Strikingly, Dr Philip’s report pointed out that the impact that non-compliance and fraud have the quality of care that patients receive appeared to be overlooked by participants in the review process, a glaring inconsistency with the values of healthcare.
“I have been more than surprised during this review by the lack of mention of patient experience and health and well-being during my consultations and in my review of previous analyses,” he said.
“All aspects of our health system must revolve around this as a matter of the culture of our health system, including deliberations on questions of non-compliance and fraud.”