Whistleblower alleges widespread fraud by dozens of ‘double-dipping’ specialist doctors, sparking probes

Dozens of anaesthetists and surgeons have been accused of systematic fraud, double-dipping and pocketing off-the-book fees in a damning whistleblower complaint that has sparked probes by a federal regulator and private health insurers.

The complaint centres on allegations that a group of doctors based on the Mornington Peninsula have been charging patients hidden out-of-pocket costs up to $5000, disguised as booking or administrative fees, for personal financial gain.

Dozens of anaesthetists and surgeons are under investigation by private health insurance funds over a damning whistleblower complaint.Credit: Tamara Voninski

At the same time, the specialists were purporting to participate in no-gap-fee schemes with health insurers.

Health insurers across the country are now investigating the allegations and urging tens of thousands of Australians who have had surgery in private hospitals to check if they have been correctly billed under no-gap-fee arrangements.

The allegations have also triggered a probe by the federal government’s Benefits Integrity Division, which investigates claims of health and Medicare fraud.

The federal regulator probe is investigating allegations the specialist doctors “bulk-billed” their services and pocketed rebates from Medicare – while also charging individual patients for services such as consultations.

The practice of bulk-billing and charging a separate gap fee for the same service is illegal in Australia.

Separately, under no-gap-fee arrangements in Australia, specialists such as anaesthetists and surgeons receive higher rebates from private health insurance funds if they sign a contract agreeing not to charge a gap fee.

The whistleblower alleges the specialists signed these agreements and were breaching those contracts.

She alleges that during her employment at a Mornington Peninsula medical clinic, which spanned a decade, about 90 per cent of patients were stung with out-of-pocket costs – despite the no-gap-fee arrangements.

These hidden fees spanned from $500 to more egregious charges of up to $5000, she alleged.

“I am shocked that I have been part of a scam and was absolutely distressed … I do not wish to be branded a criminal or have a criminal record and be out of work,” the whistleblower, who is not identified, wrote in the confidential document seen by The Age.

“I brought this concern up to my superior, who told me not to worry because they have been doing this for more than 10 years and everyone including the specialist surgeons we look after are doing it. ‘It can’t be wrong if anyone is doing it!’”

“She told me that the patients are happy because we are splitting the cost of the service and claiming the NO GAP portion directly from the health fund and Medicare.”

“I am concerned about the practice … This is illegal and immoral. I am now convinced that no gap means no gap and not ‘pretend no gap’.”

Whistleblower complaint

The complaint alleges the out-of-pocket fees were kept off the books and not documented in the patients’ insurance paperwork.

“I am concerned about the practice … This is illegal and immoral,” the whistleblower wrote. “I am now convinced that NO GAP means NO GAP and not ‘pretend NO GAP’, with out-of-pocket costs hidden as booking fees or administrative fees.”

Private Healthcare Australia (PHA) confirmed health insurers were notified of the allegations against nearly 50 doctors in one part of Victoria.

The allegations are primarily against a group of anaesthetists and surgeons, but also involve an obstetrician and a gastroenterologist. However, it has also stoked fears about more widespread medical fraud.

How to check if you’ve been billed incorrectly under no-gap-fee arrangements

If you have private health insurance, call your health fund to examine your bills and ask questions about whether you should be paying out-of-pocket fees or not. They can help you ask the right questions of your provider. If your Medicare records show you were bulk-billed when you were charged a fee, report it to Medicare.

PHA chief executive Dr Rachel David urged consumers to examine their medical bills and see if they had been charged a fee while being bulk-billed or treated under a “no gap fee” arrangement with their health insurer because they may be able to take action against the providers.

“These allegations are deeply disturbing because of the trust patients put in their specialist doctors,” David said.

“When you seek the help of a surgeon and an anaesthetist, you are typically at your most vulnerable. You do not expect them to be exploiting you financially at the same time.”

David said the allegations suggest the specialist doctors were “shadow billing” – a practice whereby consumers are billed unknown amounts of money. This income is not reported by clinicians to other payers, including Medicare and insurers.

Private Healthcare Australia chief executive Rachel David

Last year it was estimated Medicare fraud and non-compliance by doctors was costing taxpayers up to $3 billion a year. An independent report into non-compliance also warned that Australians risk losing billions more to rorts in an overly complex and opaque system that needs urgent reform.

“Medicare needs to urgently investigate these allegations to ensure taxpayers are not footing the bill for wide-scale fraud in our private health system,” David said.

Health practitioners convicted of Medicare fraud face serious penalties including being disqualified, hefty fines and imprisonment.

For Australians in the private healthcare system, if such allegations are proven, it could mean consumers have been potentially overbilled thousands of dollars.

PHA said one survey by a major health fund recently found about 31 per cent of its more than 4000 members had potentially been ripped off after paying a fee despite no-gap arrangements. The health fund is still working through the cases to determine the extent of overbilling.

The whistleblower complaint also alleges that a culture of pocketing additional fees is rife among locum specialists, sparking alarm among medical experts who want greater regulation and transparency around medical billing.

Associate Professor Joanna Sutherland, who chairs the safety and quality committee of the Australian and New Zealand College of Anaesthetists (ANZCA), said the current medical billing system lacked transparency and was skewed towards clinicians making a profit.

“If these allegations are found to be true, in my view, that’s outrageous, unethical and it would be unacceptable,” Sutherland said.

Health insurers are Australians who have had surgery in private hospitals to check if they have been correctly billed.Credit: Glenn Hunt

Sutherland said the lack of transparency in Australia’s health billing system meant it was impossible to determine how widespread the practice of inappropriate billing was.

“Consumers are ripe for exploitation,” she said.

Medical fraud and compliance expert Dr Margaret Faux said the complaint contained allegations of “misleading, deceptive and unconscionable conduct”, and she feared consumers were being financially exploited during a national cost-of-living crisis.

“There’s a whole lot of potential illegal conduct detailed in this letter,” Faux said.

Dr Margaret Faux fears patients are being financially exploited by doctors.Credit: Janie Barrett

“There’s evidence of potential fraud. There’s also likely breaches of contract between the doctors and health insurers, there are also almost certainly breaches of the health practitioner national law, but the consumer law breaches are potentially very serious.”

Faux said the conduct detailed in the whistleblower complaint could only have been written by somebody who had personal experience and knowledge in the area.

“In my experience, this conduct is widespread,” Faux said.

Australian Society of Anaesthetists (ASA) president Dr Mark Sinclair said he had no knowledge of the allegations until contacted by this masthead.

He said the specialist doctors’ group stood by its position that the overwhelming majority of services performed by anaesthetists in Australia were billed appropriately.

“Anaesthetists are free to bill a patient however they wish, while of course observing the best possible informed financial consent practices,” he said.

“If an anaesthetist chooses to bill a patient using a health insurance product, they must abide by the terms and conditions covering that insurance product.”

The ASA has a position statement on informed financial consent, and Sinclair said it regularly worked with Medicare compliance officials to ensure anaesthesia claims were correct.

“Where concerns have been identified in the past, these were communicated to the ASA and investigated by both bodies,” he said.

Royal Australasian College of Surgeons (RACS) president Associate Professor Kerin Fielding said while she was unable to comment on the specifics of any individual case, the college takes allegations of this kind “very seriously”.

“Our fellows understand that patient care is at the core of what we do, and our reputation is key to that,” Fielding said.

“More generally, we strongly refute any suggestion that unethical practices of any kind are commonplace or widespread for RACS members.”

The college has also published a position paper on surgeons’ fees, including principles around informed financial consent, stating any charges “should be reasonable, justifiable and proportionate with no hidden booking or administration fees”.

David and Faux said the allegations called into question the accuracy of publicly reported statistics, including data from Medicare and the Australian Prudential Regulation Authority.

“We need the regulators to step up here, and if there is criminal conduct, such as fraud, we need the Australian Federal Police to be involved,” Faux said.

Anaesthetists and surgeons are frequently listed among the highest-paid jobs in Australia. In the last financial year, surgeons pocketed the highest national income, averaging earnings of more than $460,000 a year, followed by anaesthetists, who came in second with average earnings of $431,193.

ANZCA’s Sutherland, who worked as an anaesthetist for more than two decades, said that while she never witnessed the practice of unethical billing, rumours of it had swirled for years.

Sutherland, who was also a member of the Medicare Benefits Schedule Review Taskforce that discovered a litany of questionable billing practices during a probe in 2020, wants a crackdown on billing in Australia.

“The way it’s set up, there’s an asymmetry of knowledge so that the clinicians, the doctors, understand the system and they can work it to their advantage,” she said.

The allegations refer to cases of no-gap-schemes. In instances where there is a ‘known- gap-scheme’ consumers can be charged a fee by a specialist under the agreement.

The whistleblower said in the document that her role included billing health funds directly for the specialist services, collecting payments and chasing up unpaid accounts.

She details how she personally called private health funds and was allegedly told it was illegal to violate the terms of Medicare compliance and health insurance agreements.

“This double-dipping culture is endemic,” she wrote.

“I am sure this is only the tip of the iceberg and hope you people … in high place[s] will stand up to this toxic culture, which blatantly preys on retired, helpless people ... who take up private health insurance in good faith only to be taken advantage of.”

Australian Medical Association vice president Professor Julian Rait said 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,” Rait said.

About 55 per cent of Australians – 15 million people – are privately insured, with health insurers paying for two-thirds of all planned surgical procedures.

A spokesman for the federal Department of Health and Aged Care said it was unable to share details of its compliance investigations, including probes still underway.

He said the department took allegations of non-compliance seriously and compliance responses were based on the seriousness and scale of the identified issue.

How to report potential fraud to Medicare:

• Complete the Government’s health provider fraud tip-off form
• Call the national fraud hotline – 1800 829 403 or the Benefits Integrity Hotline[phone]
• Email [e-mail].

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