7 June 2022

Let’s bill the why, not just the what

Comment KnowCents Medicare

Patient rebates need to go up, but doctors will have to give something small in return.


Dr Lande graduated from medical school in 1955, Dr Raynor in 1963.

Both were working as GPs in the years prior to the introduction of Medicare’s predecessor, Medibank, and remember very clearly how their incomes soared when the national scheme was introduced on 1 July 1975.

Dr Lande’s country practice of two GPs charged seven shillings and sixpence for consultations. “We did pretty well,” he told me, adding that this was the equivalent of about $10.

Dr Raynor was a trailblazing female GP who said that in 1966 her fees were £2.50, which she had increased to £3 by 1969.

Drs Lande and Raynor collectively practiced medicine for well over 100 years, and it was a great privilege to interview them about their experiences pre and post the introduction of universal health coverage (UHC) in Australia.

When asked whether people were happy to pay to see the doctor in pre-Medibank days Dr Raynor replied:

“No! People didn’t come to the doctor because they could not afford to pay and so when they finally did come, they were very sick.

“Often, they would refuse to have blood taken or X-rays as they could not afford to pay the additional costs. They would just say to you ‘no, I’m not having that X-ray’ or ‘don’t take any blood because I can’t afford it’. So you had to do your best with what you had.”

Dr Lande said his practice used only one word to describe everything they did: consultation. It was the one and only service description used on all patient invoices. “What about things like setting fractures and minor surgery?” I asked – I knew he did those things because he had set my broken arm twice following childhood monkey bar incidents. All just “consultations”.

So, when Medibank introduced separate fees for procedures, his practice did much better.

“We actually made quite a lot more money when we actually described what we were doing,” Dr Lande said.

When Medibank came along in 1975, suddenly all Australians were able to be tested and treated by medical practitioners, irrespective of their ability to pay, and GP incomes appear to have gone through the roof. Certainly, these two GPs described Medibank as dramatically increasing their incomes, and both were emphatic that they would never want to be back working in a pre-Medicare health system again. Bulk billing was king, and everyone was winning – patients, GPs, and public health.

What a difference 50 years makes.

A fundamentally good UHC system has been decimated. My research found that most of the damage has been done over the past 20 years, starting with the introduction of the somewhat hilariously called “simplified billing schemes” in 2000. Then came a devastating loss of corporate knowledge with the dismantling of the Health Insurance Commission in 2006, followed by the 2007 introduction of the Private Health Insurance Act, which didn’t really align well with key provisions of the Health Insurance Act, then came Activity Based Funding which was great for inpatients but a complete mess for outpatients, then rebate freezes and well, here we are, with general practice in tatters.

All the while there has been a concerted effort to move away from fee-for-service payment arrangements, based on the well-documented fact that fee-for-service encourages the supply of unnecessary services. Quite true. But what we also know about fee-for-service is that it encourages the supply of necessary services too, particularly when there is an undersupply.

There are actually only four ways we pay doctors anywhere in the world – fee-for-service, capitation, salary, and performance-based models – each of which has well documented advantages and disadvantages.

My research found this to be yet another area where there is a significant amount of misinformation. For example, I was not surprised to learn that the introduction of fully capitated managed care in the US did not alleviate fraud and non-compliance, as is often believed, but actually made it worse. Not only did non-compliance become more difficult to detect, but it also became more dangerous to patients when overservicing was replaced with underservicing.

The ways we pay for health will continue to evolve, but the Australian health system is in crisis, so we need to act quickly while there is still something to salvage.

One of the core, structural problems with the current Medicare billing system is that the government basically pays blind. It is a historic legacy, nothing more, and attendance items are the main culprit.

For example, item 110 tells the government that a patient and a physician were in a room together. Item 23 tells the government that a patient and a GP were in a room together for between 5 and 20 minutes. But why?? What was the reason for the encounter?

Medicare is funded by public money so the government has a legal obligation to know, and until this critical transparency gap is plugged, rebates under our fee-for-service scheme cannot be increased – at least not by enough to make any real difference to GPs.

But the good news is that this is a common issue in medical billing systems around the world and a relatively easy one to fix. The most common solution is to add additional codes to claims for reimbursement. My research concluded that, in Australia, it would make the most sense for the additional codes to be Snomed codes because they already underpin Australia’s digital health strategy and do not require any additional learning or effort on the part of the doctor. It’s a quick, low-cost digital way of providing necessary government visibility over Medicare claims, and has the added advantage of collecting valuable public health data at the point of service.

Increased rebates in return for Snomed codes – it’s a sort of quid pro quo arrangement that would be great for GPs. Not too dissimilar from replacing Dr Lande’s 1957 description of “consultation” with “superficial laceration 3-5cm on the face after falling from a chair” or even something breathtakingly simple like “cough”.

Perhaps like Dr Lande, who realised he actually made a lot more money when he was asked to describe what he did, this generation of GPs can benefit by not only describing what they did but why they did it. Public health officials would also benefit by having real-time information – such as if a cluster of GP practices near a sewage works suddenly starts coding their consultations as “diarrhoea” five times more often than the previous month.

Whatever the solution, what is certain is that current fiscal challenges will prevent Australia spending more of its GDP on health. Instead, we need to spend the approximately 10% better, and that can be achieved through cooperation between doctors and the government.

* Dr Lande and Dr Raynor are not their real names.

Dr Margaret Faux is a health system administrator, lawyer and registered nurse with a PhD in Medicare compliance, and is the CEO of AIMAC, which offers courses and explainers on legally correct Medicare billing

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8 Comments on "Let’s bill the why, not just the what"

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Ross Kerridge
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Ross Kerridge
2 months 2 days ago
A great historical perspective on pre-medibank days. Moving on to the current accelerating crisis in access to and supply of GPs. I think the new government has to take urgent simple action as quickly as possible, whilst working out more comprehensive solutions such as you suggest. The urgent action must support GPs working in the role of ‘bedrock’ healthcare providers/coordinators (rather than those just opportunistically cherry-picking the FFS system). Steve Hambleton’s report is great, but there needs to be interim action to buy time to implement it. I think introduction of a simple, graded, capitation fee (over and above the… Read more »
Gull Herzberg
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2 months 2 days ago

To what extent are or can PROMs be incorporated into funding? Does anyone sue these? While it can’t be the whole story, it probably shouldn’t be none of it.

Susan Swanston
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2 months 3 days ago

That will be a challenge with patient confidentiality when the local MP attends for an STI!

Jeffrey Clark
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Jeffrey Clark
2 months 3 days ago
Not sure about this. Practically in a “routine consult” pretty rare to deal with one issue. Issuing repeats for blood pressure diabetes depression and cholesterol medications in one setting is common, usually talking about all these issues, before one gets to patient’s list of new complaints. If I needed to record all the problems dealt with it may take another 5 minutes pushing all consults into level c, which Medicare are not happy with at all. Or try the bulk billing clinic option I have been told about of one problem per consult.
Margaret Faux
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2 months 3 days ago

Thanks Jeffrey. Snomed now has over 2 million codes and can easily handle everything a patient presents with. We definitely don’t want to increase the burden on doctors and Snomed is not designed to be used in that way anyway. It will extract what you type about your patient as you are typing (which you have to do anyway in your PMS) and automatically code it. This proposal literally does not add any extra work for GPs. All it does is provide the government with visibility.

Steve Hambleton
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Steve Hambleton
2 months 3 days ago

Totally agree Dr Lande and Dr Raynor. Let’s not switch to a completely different system, lets implement a blend of funding models that works for us and for our patients. Here a few ideas https://consultations.health.gov.au/primary-care-mental-health-division/draft-primary-health-care-10-year-plan/supporting_documents/Primary%20Health%20Reform%20Steering%20Group%20%20Recommendations%20September%202021.pdf

Karen Price
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Karen Price
2 months 2 days ago

Yes. Flexible. Multi source funding.

Agree Margaret with the dangers of underservicing.

Margaret Faux
Guest
2 months 3 days ago

Thanks Steve. This does not switch to a completely different system at all. I agree with you – that’s too hard and will take too long, by which time we may have no GPs left. This is just a simple addition to the existing system.

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