Study shoots down Medicare rorts claim

Far from siphoning billions, GPs are underbilling $350 million a year, according to a BEACH analysis.

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The notorious and still unsubstantiated assertion that doctors rort $8 billion a year from Medicare through fraud, overservicing and error is facing a serious challenge.  

Rather, according to University of Sydney researchers, it’s likely that the total effect of GP undercharging and overcharging amounts to a net saving of $350 million to Medicare each year.  

“We underbill, and that is because we’re working in a system that is complicated and difficult to understand,” RACGP president Dr Nicole Higgins told The Medical Republic. 

She urged GPs to bill without fear of reprisal from Medicare.  

“That $350 million that we’re saving the government every year needs to be reinvested in general practice and the $4 billion that has been ripped out of Medicare due to the freeze and low indexation must be reinvested in general practice,” Dr Higgins said. 

The $8 billion figure was repeated in multiple reports by Nine newspapers and the ABC last year and reportedly based on Dr Faux’s PhD thesis on Medicare claiming and compliance. 

This was despite the fact that the figure did not appear anywhere in the paper itself. 

Health Minister Mark Butler indicated at the time that his office had not found any evidence to substantiate Dr Faux’s estimate of $8 billion in fraud and inappropriate billing, but commissioned an independent investigation by Deloitte economist Dr Pradeep Philip. 

Dr Philip’s report was due to be handed to the department by the end of February, but it has not yet materialised.  

What we have instead is a report from the University of Sydney which was published in the Australian Journal of General Practice today and addresses Dr Faux’s claim head on.  

“A significant barrier to investigating the validity of the [$8 billion] claims is that there are no current reliable data sources that can examine GP billing,” the researchers wrote.  

The key problem is that Medicare statistics can only reveal patterns of service utilisation – not actual consultation length or content – but extracting data from practice software is unreliable and the information itself is non-standardised.  

Enter the Bettering the Evaluation And Care of Health (BEACH) project, which ran between 1998 and 2016.  

BEACH captured a new randomly selected sample of 1000 GPs every year. 

After each patient encounter, participating GPs were asked to record whether the consult would be paid through the MBS, workers compensation, another source or be free of charge completely.  

One of the many BEACH substudies also asked a portion of GPs to record the start and finish time of the encounter, so the length of each consult could be calculated.  

The University of Sydney team used data from a sample of responses collected between 2013 and 2016 for which the length of the consultation could be calculated, and a time-based MBS consultation item was recorded. 

The records were sorted into three datasets: those where the consult length was similar to the time-based item charged (i.e. the billing matched the actual length), those where the consult was shorter than the time-based item charged (i.e. the patient was overcharged) and those where the consult was longer than the time-based item the GP charged (i.e. the patient was undercharged).  

Around 98% of consults lasting less than 20 minutes were appropriately billed as a Level A or B item, but 45% of consults between 20 and 39 minutes in length were undercharged as a Level A or B.  

The bulk of the remaining 20-to-39-minute consults were correctly billed as a Level C.  

For consults of 40 minutes or more, almost 60% were undercharged as level A, B or C items. 

Overcharging was most common in consults of 20 minutes or less, with a Level C item claimed around 2% of the time. 

In all, GPs undercharged 12% of the time and overcharged 1.6% of the time. While 85% of the GPs included in the data undercharged at least once, but just 30% overcharged at least once.  

These rates were then extrapolated to the total number of times that items in each level were claimed nationally in the 2021-22 financial year.  

Between the undercharging and overcharging, the researchers estimated that GPs save Medicare about $350 million per year. 

It’s likely an underestimate, given that GPs can only charge for the time they spend face to face; another BEACH substudy estimated non-billable clinical work as being worth up to $23,000 per GP each year. 

Previous studies have identified that main reason that GPs undercharge is fear of triggering a Medicare audit.  

AMA president Professor Steve Robson said the May budget was an opportunity to finally fix Medicare.  

“We have seen increased out-of-pocket costs for patients, a steady decline in bulk billing and some practices being forced to close their doors due to financial pressures,” he said.  

“When added to the fictitious claims of $8 billion in fraud, it is no surprise that medical students are no longer seeing general practice as a viable career option.”   

Dr Faux did not respond to a request to comment before deadline, and it’s not clear when Dr Philip’s independent report on claiming and compliance will be released to the public.