12 May 2022

Pay now, extort back later

Comment KnowCents Medicare

Medicare should reject incorrect claims on the spot. Instead the only way to learn is the hard way.


A GP asked me whether he could claim item 41764 – nasendoscopy/ sinoscopy/fibreoptic examination of the nasopharynx/larynx. He has successfully completed specific ENT training and has the equipment. What’s the answer?

Now let’s assume he decided to go ahead and provide the service, met all requirements of the item descriptor, submitted a bulk-billed claim for item 41764, and it was paid. Is it safe for him to assume that he is eligible to claim the item and can continue doing so without fear that he will run into compliance problems down the track?

On any rational, objective assessment, the answer would be yes. In fact, it is an emphatic no!

The doctors who participated in my research commonly expressed heavy reliance on Medicare to reject their claims if they were wrong. They equated payment with compliance, holding a strong belief that if a claim was paid it must be right. However, the evidence makes clear they are sorely mistaken.

The questions of whether a submitted claim will be paid or not, and if paid, whether the doctor was entitled to that payment, are largely dependent on the vagaries of rules programmed into the backend Medicare system.

All health financing systems use rationing rules because no country can afford to pay for everything. In Australia we are lucky because Medicare is an expansive universal health coverage system, imposing relatively modest rationing rules. These are things like – only one item 132 per year per patient for physicians, and if a surgeon tries to claim item 23 or a GP tries to claim item 104 or 40856 (deep brain stimulation) the claims will bounce.

Programmed rules are therefore a critically important and appropriate tool in the frontline management of Medicare payments integrity. However, unrelenting changes made to Medicare over many decades suggests the system is no longer fit for purpose. We currently do not know whether the rules programmed into Medicare’s software are correct, and legal precedent tells us that sometimes they are not.

Take the 2017 Federal Court case of Dr Stirling. He was a GP and phlebologist, who apparently should not have been permitted to claim items 55246 and 55054, but the Medicare system allowed him to claim and be reimbursed for both services for five years, after which the department demanded repayment.

Dr Stirling had even contacted Medicare before embarking on this course of conduct to specifically find out whether he was permitted to claim the services or not. In the court proceedings, Dr Stirling’s evidence included the recorded telephone conversation with Medicare and a formal letter confirming the contents of the telephone conversation, which was enough to persuade the judge that the demand for repayment was unjust.

However, while Dr Stirling appears to have finally been afforded justice, it remains unclear whether the system error has been rectified, or whether another GP with an interest in phlebology could befall the same fate.

Returning now to the item 41764 scenario, how would you advise the GP? It is by no means clear. Item 41764 is located in the surgical, ENT section of the schedule, which includes several items GPs can and do claim such as item 41500 (removal of foreign body from the ear).

The problem, therefore, is that if the GP decides to continue bulk-billing item 41764 on the back of one successful claim, that does not mean he is entitled to claim it. The Stirling decision makes clear that it could simply mean that the relevant rule blocking a GP from claiming item 41764 has never been programmed into the government software, and the GP is therefore at risk of being required to repay hundreds of thousands of dollars, like Dr Stirling, after years of innocently thinking he was claiming correctly.

In addition, calling Medicare for advice prior to embarking on this course of action would seem pointless, given the advice Dr Stirling received was unreliable and wrong.

It should never have come to this – a place where these types of threshold decisions (which are surprisingly common) have become daring, and both doctors and their legal advisors must weigh up the risks of Medicare false positives, even when there is no question around the legitimacy of the services in question. But here we are.

From a Medicare compliance risk perspective, the safest option for this GP is to never bulk-bill item 41764, and instead charge his patients private fees and not include any MBS item on their invoices.

But of course, this creates downstream problems that compromise the proper functioning of the health system. Consumer out-of-pocket costs go up, public health data collection is negatively impacted, and the government has no visibility whatsoever over the fact that this GP has a busy and thriving ENT practice, his claims for item 41764 having disappeared.

In time, as more and more doctors stop bulk-billing and/or adjust their billing practices to mitigate the constant threat of unintentionally breaching unknown rules, the consulting firm earning millions running the robodebt scheme will be exposed for its utterly flawed methodology, and the PSR may well go out of business.

Perhaps that is the point we need to reach before we do a hard reset on Medicare.

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.