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Health minister raises stakes by calling independent inquiry into Medicare

By Adele Ferguson
This story is part of a series examining how billions of dollars are being rorted from Medicare each year.See all 30 stories.

Health Minister Mark Butler has bowed to pressure and launched an independent inquiry into Medicare in an attempt to curb fraud, errors and over-servicing within the troubled universal healthcare system.

The probe – to be fronted by health economist, Deloitte Access Economics partner and former Victorian Department of Health secretary Dr Pradeep Philip – will also look at ways to beef up penalties for any medical professionals abusing the system.

Philip has been tasked with estimating the scale of waste, identifying specific integrity risks for Medicare payment channels, assessing ways to improve pre-payment mechanisms and controls, and examining existing legislation and regulations.

Other areas set for scrutiny include the effectiveness of Medicare’s watchdog, the Professional Services Review (PSR), which investigates just 0.07 per cent of health professionals each year.

Crucially, Philip’s investigation will also examine the independence of the PSR given the regulator’s recent leadership has strong links to the powerful Australian Medical Association.

Under the Health Insurance Act, the federal health minister can only appoint the head of the regulator if the AMA has agreed to the proposed hire.

The acting head of the PSR, Dr Antonio Di Dio, also sits on the board of the AMA. The previous head of the PSR, Professor Julie Quinlivan, was a “longtime” AMA member and her predecessor, Bill Coote, was once the secretary general of the AMA.

The Herald and The Age are not suggesting any of these individuals engaged in any wrongdoing, but rather that ties to the AMA give the PSR the appearance of a body that lacks true independence.

The inquiry into Medicare and the PSR follows a joint investigation by The Sydney Morning Herald, The Age and the ABC’s 7.30 program. The investigation uncovered an array of fraud, inappropriate billing and over-servicing, some of which was never detected by the PSR, which claims to “safeguard the Australian public from the risk and cost of inappropriate practice within Medicare”.

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The leakage has been allowed to occur for decades despite repeated warnings to successive governments from experts, including Dr Margaret Faux, who has a PhD in Medicare and estimates leakage of up to 30 per cent, or $8 billion a year. Her estimate was corroborated by Dr Tony Webber, a former head of the Medicare watchdog.

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Rorting includes patients being misdiagnosed with diabetes for extra Medicare billings, a doctor caught charging for dead people in aged care homes, radiologists over-servicing terminally ill cancer patients, eye surgeons over-servicing patients with macular degeneration to claim Medicare items, and one of the country’s largest telehealth companies – Phenix Health – bulk billing some patients while also charging them a fee, a practice that is illegal under the Health Insurance Act.

The exposé sparked fierce debate, with the AMA attacking Faux and the media reports and claiming only a tiny minority of medical professionals abuse Medicare.

The investigation also prompted Butler to announce a departmental inquiry, something Health Services Union national president Gerard Hayes and others criticised as not going far enough.

Butler has been told by the bureaucracy there is no evidence Medicare waste represents $8 billion a year but the government has now asked Philip to investigate further.

Dr Margaret Faux estimates up to 30 per cent a year is leaking from the Medicare system.

Dr Margaret Faux estimates up to 30 per cent a year is leaking from the Medicare system.Credit: Janie Barrett

“I’ve asked Dr Philip to measure and report on the true extent of non-compliance in Medicare and identify fixes to protect the integrity of the system, for all who use it,” Butler said.

Philip’s interim report, to be completed by the end of January, will consider whether regulation, enforcement and compliance settings are adequately balanced against policy and service priorities.

“This is to be informed by an assessment of the levels of potential non-compliance and the department’s current compliance framework and approach,” the terms of reference said.

Butler said in a statement the independent review would provide an evidence-based estimate of the likely value of non-compliance in Medicare.

“Australians know that the overwhelming bulk of Australia’s doctors and health professionals are honest, hardworking and comply with Medicare rules. But they also understand that, after nine years of cuts and neglect, every dollar in Medicare is precious and must be spent directly on patient care.”

The terms of reference include finding ways to reduce the risk of fraudulent billing or over-servicing before payments are made.

Under the current system, which is based on an honour system where professionals are assumed to bill correctly, payments are made to health practitioners without proof of service and only chased if there is evidence of inappropriate billing.

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Original URL: https://www.smh.com.au/link/follow-20170101-p5bvq3