On 4 April 2023, the final report of the Independent Review of Medicare Integrity and Compliance (Review) was published containing a series of findings and recommendations regarding the vitality of the Medicare system. The Review was commissioned by Federal Health and Aged Care Minister, Mark Butler, following media reports of widespread ‘rorting’ and non-compliance within the Medicare system which claimed to be costing taxpayers up to $8 billion per year.
The Review undertaken by Dr Pradeep Phillip involved a high-level assessment of the integrity of the Medicare system, specifically an assessment of the potential value of fraudulent, non-compliant or over servicing billings, and the overall vulnerabilities of the payment system.
Dr Phillip reports that, on the basis of his consultations and 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. Accordingly, a guiding principle of his review was that most health practitioners and staff within the system are dedicated to the public good and that a large part of the success and efficacy of Australia’s health system is due to the level of altruistic behaviour of health professionals.
In the report, Dr Phillip noted it had become clear throughout his Review that the Medicare system has organically developed overtime by responding to the changing needs of the healthcare system and different government agendas rather than being developed with a strategic overview.
The report found that the value of non-compliance was likely in the range of $1.5 billion to $3 billion and concluded that the compliance issues were mainly due to non-compliance errors rather than ‘rorting’ or fraud. These non-compliance errors were largely the result of the complexities of the system which have been exacerbated overtime by ad hoc changes, the lack of clarity of many aspects of the compliance system, the lack of emphasis in decision support pre-claims and pre-payment and the lack of continuous monitoring. However, Dr Phillip notes that there is a real potential for the value of non-compliance to scale to the order of magnitude posited in the media reports should effective controls, systems and education not be put in place.
The complexities of the system have increased with the evolution of the payment system following advancements in technology and the changes in the delivery of healthcare and business models, with Dr Phillip identifying the following factors as significant forces impacting the vulnerabilities of the system:
- the changing burden of diseases in Australia;
- the changes in how healthcare is delivered with there no longer being the same connection between patient, practitioner and the payment;
- the complex nature and continuous ad hoc amendments to the Medicare Benefits Scheme (MBS) items;
- corporatisation of medicine;
- development in billing software;
- the opaqueness of the public hospital MBS billing arrangements;
- economics of medicine; and
- lack of continuous monitoring and compliance.
The Review found that the current system is overly fragmented, disjointed, and lacking in contemporary tools to detect and address non-compliance and fraud. The Review has called for greater education measures for practitioners and a shift in focus to pre-payment verification rather than the current post-payment system. There was also found to a be disproportionate fear amongst practitioners regarding the Professional Services Review (PSR) and other compliance bodies, due to the lack of transparency in the processes and the administrative burden they carry.
The Review found that the current system is not fit for purpose and requires significant reform in the relation to governance and structure, operational processes, modernising technology and strengthening legislation.
The Report contained 23 recommendations which included:
- strengthening the governance model overseeing Medicare through each line of defence;
- implementing enhancements to the end-to-end claiming journey to strengthen the first line of defence position and enable continuous monitoring of all MBS claim transactions;
- refreshing the design of key frontline operational process and business rules, which consider fraud and non-compliance risks;
- redesigning the Medicare payments system to a level of capability maturity that is commensurate with the size and complexity of the MBS today and into the future;
- considering ongoing review of Medicare’s enabling legislation and regulations to achieve the envisioned future state; and
- removing the veto power of the Australian Medical Association (AMA) in the selection process of the Director of the PSR. In this regard, the Health Insurance Amendment (Professional Services Review Scheme) Bill 2023 has recently been introduced to Parliament to implement this recommendation.
Dr Phillip’s report concluded that major reforms are required in relation to the function of the system and the management of non-compliance, stating there is ‘greater value to be gained from a focus on the structural recommendations in this review than on the numeric value debate that has been a focus of public discourse to date.‘ The purpose of the proposed reforms is to not only ensure Medicare is sustainable for the future but to build trust in Medicare for patients and practitioners.
The AMA and the Royal Australian College of General Practitioners (RACGP) have both commended the Review and agreed with the findings that the system is too complex and does not reflect modern practice. RACGP has supported the recommendation for greater educations for practitioners in relation to incorrect claiming and compliance.
Whilst the Medicare system was once the benchmark system for universal healthcare, the Review has highlighted that the system does not effectively support the current delivery of healthcare across Australia and is no longer sustainable. The Review has also refuted the media reports claiming the system was beset with fraud and ‘rorting’ and that leakage was largely the result of non-compliance errors.
We are unlikely to see any reforms to the system soon, however the Review is a good indication as to the future direction of the Medicare system and the issues which need to be addressed.
Need further advice?
The Health team at HWL Ebsworth Lawyers has extensive experience in advising individual medical practitioners and corporate entities on the MBS and assisting them through compliance and reviews undertaken by Medicare, including through the Practitioner Review Program and Professional Services Review. Feel free to get in contact with our team if you would like further information or require assistance with the MBS or any associated compliance activity.
This article was written by Scott Chapman, Partner, Luke Depares, Associate and Madeleine Murray, Solicitor.