Revealed how doctors are cheating health funds and patients

Doctors are cheating health funds and Medicare by charging patients secret fees that can be as high as $12,000. See the plan to ban the practice.

The latest government data shows gap fees charged by doctors surged 9.1 per cent in the year to September 2022, well above the inflation rate of 7.8 per cent.

Administration fees worth thousands of dollars, booking fees and split bills are the secret charges greedy doctors are using to outsmart health funds and heap massive costs on patients.

Doctors would be banned by law from charging privately insured patients these types of surprise bills under a plan to end one of the main gripes of health insurance members.

Health fund lobby group Private Healthcare Australia (PHA) is calling for the change and has revealed three top three ways doctors cheat the system and slug their patients.

The group says doctors who charge more than twice the Medicare fee for operations are using the tactics to hide the full extent of their charges from health funds.

Doctors say they do it to maximise the Medicare rebate available to patients.

Professor Stephen Robson, President of the Australian Medical Association. Picture: Supplied

However it is not approved of by the Australian Medical Association which said it does “not support exorbitant charges”.

“Our position statement on this subject makes it clear that if a medical practitioner has signed a contract with a private health insurer, the billing requirements must be adhered to. Circumventing contractual arrangements by issuing a second, separate bill for a single course of treatment is inappropriate,” AMA President Professor Steve Robson said.

These types of fees are not covered by Medicare or a patient’s health fund and have to be paid out of the individual’s pocket.

“We completely disapprove of charges that are being used specifically to try and get around the system and to maximise revenue from the system,” PHA chief Dr Rachel David said.

“You shouldn’t be able to access Medicare or gap cover fees if you’re charging patients all sorts of extra charges for the same thing,” she said.

Dr Rachel David, Chief executive of Private Healthcare Australia. Picture: Kym Smith

The latest government data shows gap fees charged by doctors surged 9.1 per cent in the year to September 2022, well above the inflation rate of 7.8 per cent.

And consumers are demanding more transparency about doctor’s fees so they can shop around and find more affordable surgery.

A recent Consumers Health Forum (CHF) survey of 1200 patients found a quarter of cancer patients incurred gap fees of over $10,000.

“There is a perception amongst consumers that using private health insurance is more expensive than not using it,” the CHF said in the report.

“Consumers with private health insurance should always get written financial consent from their specialists before any treatment begins so they are aware of what out-of-pocket costs they will face and also talk to their insurer so they are clear on what they are covered for,” CHF CEO Elizabeth Deveny said.

Government records shows gap fees of up to $6100 are paid by 67 per cent of people who have a knee replacement, while 68 per cent of people who have a hip replacement pay gaps of up to $5900, and 50 per cent of people who have cataract surgery pay gaps of up to $2500.

Medicare fees used to set health fund rebates have not been properly indexed for four decades and most surgeons charge well in excess of them.

To minimise the gap fees that result from this, health funds agree to provide rebates that are up to twice the Medicare set fee under “known gap agreements” with doctors.

However despite getting paid twice the Medicare fee some doctors charge their patients other fees on top of this that they keep secret from the health fund, leaving patients with large costs.

One way doctors deliberately deceive insurers is to split their bill three ways and charge part to Medicare, part to the insurer and then charge the patient a gap of thousands of dollars.

Another method is to charge an administration or booking fee that can amount to thousands of dollars; this is common among obstetricians.

The third way doctors cheat the system is to charge a ‘deposit’ to lock in the surgery on a certain date.

A CHF survey found some doctors are demanding the patients pay in full upfront.

‘PRIVATE HEALTH CAN BE A BURDEN’: AUSSIE MUM

Rachel Thomas had a $7000 top health cover policy with Medibank Private but when she was hospitalised multiple times with severe mental illness due to a bipolar diagnosis it didn’t cover her full costs.

Three months after each hospital visit she received a bill from one of her psychiatrists for up to $3000 for in-hospital services, many of which she said she never received, and which she was never warned about in advance.

In total the bills amounted to around $12,000.

Rachel Thomas who suffers from bipolar and has a neurological condition that leaves her paralysed at times paid $7000 a year for Top private health cover but then was charged more than $12,000 in out-of-pocket expenses by a psychiatrist working in a Melbourne psychiatric hospital. Picture: Tim Carrafa

“My mum paid. I didn’t have that kind of money. I was on the disability pension. That would have been all my rent money, all my food money, all my bill money. How would I have eaten, how would I have fed my child? I was a single parent,” the 48-year-old mother said.

In 2019 she had another five month stay in hospital when a rare neurological condition left her paralysed to the point where she could only blink and breathe, but her doctor did not charge out-of-pocket fees.

She had to drop her private health cover because she could not afford it and in 2020 had emergency surgery for a strangulated hernia through the public system. It cost her nothing.

“I think that actually sometimes private hospital cover can be a burden if you’re having to pay so much out of pocket,” she said.

“I was very unwell. I was not in a position to ask about charges. That’s actually up to the psychiatrist or a specialist to notify you about, that’s their responsibility,” she said.

“I definitely think people need to be informed about charges before they get a bill in the mail. I think that if they haven’t been informed that they shouldn’t have to pay it,” she said.

Originally published as Revealed how doctors are cheating health funds and patients