Medicare review blows apart the AMA’s ‘nothing to see here’ argument

A landmark report into the Medicare juggernaut blows apart the “nothing to see here” argument mounted by the Australian Medical Association in response to the genuine concerns raised about the crisis facing our universal healthcare system.

The report, compiled by Dr Pradeep Philip and commissioned by Health Minister Mark Butler, does not pull any punches about the train wreck Medicare has become after decades of Band-Aid solutions and a lack of scrutiny over the taxpayer-funded piggy bank.

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

Philip described Medicare’s legislation, governance and systems as not fit for purpose and called on state governments to investigate the opaque billing arrangements of public hospitals amid claims by medical specialists that they have little or no visibility of what is billed in their name. “This is a matter for further investigation and discussion with states and territories beyond this review’s timeframe,” he said.

He also found that only a small proportion of Medicare’s payments were scrutinised or analysed, which raises questions about the looseness of the system. “The lack of continuous monitoring and analysis of the 500 million transactions a year is a growing area of vulnerability,” he warned.

In simple terms, the former head of the Victorian health department and now lead partner at Deloitte Access Economics declared an overwhelming lack of scrutiny had left “the gate wide open to fraud”.

Philip tried to put a dollar figure on non-compliance, estimating it at between $1.5 billion and $3 billion a year, but acknowledged that a lack of available data, limited desktop analysis, short time frame and “conservative” definitions of non-compliance and fraud meant a definitive analysis was impossible.

In other words, it was a guesstimate but one he said would quickly balloon by many billions of dollars if effective controls, systems and education weren’t urgently put in place.

Philip’s report was triggered by a series of reports by The Sydney Morning Herald, The Age and the ABC’s 7.30 which uncovered flaws in Medicare’s systems that make it easy to rort and almost impossible to detect fraud, overservicing and errors.

The inappropriate billing occurs in all areas of the health sector including GPs, surgeons, pathologists, anaesthetists and radiologists.

The reports upset lobby groups including the Royal Australian College of General Practitioners and the AMA, which came out with brickbats in an attempt to deflect attention from the substance of the articles and denounce estimates that up to 30 per cent – or $8 billion – could be lost a year in leakage.

Instead of acknowledging the vulnerabilities in the system, they went on the attack, describing it as an unjustified slur on the medical profession and “staggering in its inaccuracies and its nastiness”.

The $8 billion figure was put forward by Dr Margaret Faux, who has dedicated most of her career to Medicare. She has completed a PhD into its compliance regimes and has been at the coalface of administering Medicare bills for decades for hospitals and doctors in all clinical settings.

Her estimates were backed by another PhD, as well as by Dr Tony Webber, the former head of the Medicare watchdog, who saw first-hand evidence of a system that had become a basket case.

Importantly, Faux’s figures were consistent with international estimates including the World Health Organisation which has reported that waste including through fraud and errors leaks 20 to 40 per cent from health systems.

At the time Faux said it was impossible to know exactly how much was fraud or deliberate abuse and how much was the result of errors. “Whether it’s deliberate or unintentional, it has to stop,” she said.

The Philip review handed to Butler makes 23 recommendations, including removing the ability of the AMA to veto who runs the Medicare watchdog, a right that is as alarming as it is inappropriate.

It beggars belief that the veto power was ever allowed as it undermines the independence – and credibility – of a regulator that is supposed to be policing the AMA’s members.

Philip realises that turning this ship won’t be easy “on account of the complexities of the system, inertia and strong positions held by regulators, policymakers, and stakeholders”. He is right. But trying to preserve the status quo is no longer an option.

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