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Research reveals: A vast number of GPs undercharge while Medicare billing remains problematic


Australia’s Medicare billing system is overly complicated, bureaucratic and fails to meet the needs of a modern healthcare system, potentially draining billions of dollars. But claims that this loss is mainly due to fraudulent billing practices by GPs are inaccurate.

In October, the ABC’s 7:30 program and the Nine newspapers concerns expressed about A$8 billion in Medicare waste, caused by a mixture of doctor errors, over-service and outright fraud. However, the examples mentioned almost exclusively concerned deliberate fraud, mainly in general practice. This promoted Secretary of Health Mark Butler to order a independent assessmentled by Dr Pradeep Philip.

The Philip reviewreleased earlier this month, was highly critical of the current Medicare system, finding that non-compliance and fraud were responsible for $1.5 to $3 billion in Medicare wastage.

Our research team analyzed the activity of the GP recorded during nearly 90,000 patient encounters to assess how GPs billed for the services they provided.

We found that GPs underpaid in 11.8% of the encounters and overpaid in 1.6%. This suggests that primary care physicians are not routinely ripping off Medicare, and in fact saved the system worth $351 million in fiscal year 2021-22.

However, we agree that the current billing system is in urgent need of reform.

Read more: GP practices are struggling. Here are 5 lessons from abroad to reform the finance system

How Does Medicare Billing Work?

Family physicians claim compensation for service, called a rebate, which is a flat amount attributed to the Medicare Benefits Schedule (MBS), based on the type of service provided.

There are almost 6,000 MBS part numbers. GPs can charge one or more MBS items for a patient service.

About 90% of MBS items requested by GPs are considered standard consultation items (surgery, aged care home visits, home visits, etc.), which are in four levels (A, B, C, and D) that increase in length.

The associated costs increase with each level. An example of an error would be a GP inadvertently charging for a Level C consultation (requires 20 minutes or more; $76.95 discount) when the visit only met the criteria for a Level B consultation ( less than 20 minutes; $39.75 discount). An example of under-billing is when a GP is entitled to a claim for a Level C, but only charges a Level B.

An example of over-maintenance is a blood glucose pathology test that is repeated on consecutive visits for the same patient, where the patient’s condition did not warrant the second test.

An example of fraud is claiming a service that has not been provided.

Discounts are based on time spent with the patient.

Examining physician billing in the real world

The data we analyzed in our peer-reviewed study were collected between 2013-2016 from nationally representative samples of GPs during 89,765 real-time encounters with their patients. The GPs recorded the start and end times of each visit.

The Philip review did not attempt to quantify the amount of under-billing.

We decided to examine the billing data after the 7.30 Report/Nine news survey, but the participants could not have been influenced by these reports as the data we used was collected before the ABC/Nine publications.

Why would doctors charge too little?

We theorized that primary care physicians were probably undercharging Medicare for two reasons:

1) While time is the predominant metric, GPs will likely still consider content and complexity when billing standard Medicare items, rather than just billing based on time spent with the patient

2) fear of triggering a professional service review (PSR) of their billing.

A review by professional services can be triggered for several reasons. For example, a general practitioner often has longer consultations than expected. A review of professional services includes a review of GP billing. It could potentially lead to a decision that could prevent the primary care physician from billing Medicare.

Read more: 6 reasons why it’s so hard to go to the doctor

Last week, Healthy, a health education company, included three post-webinar questions on this topic in an online survey of 1,852 GPs across Australia. Answering these questions was not mandatory.

The results showed that most (83.3%) GPs consider the length and complexity of the consultation when billing level C and D items, even though increased complexity is no longer required (since 2011).

More than half (60.3%) intentionally underbilled Medicare in the past week.

The most common reasons for underbilling were:

  • they did not think the content of the consultation warranted a higher MBS item (41.9%)

  • fear of triggering a professional services review alert (33.5%)

  • confusion around Medicare schedule criteria (30.8%).

These answers are consistent with the findings of our nationally representative sample, which suggests that GPs act largely with integrity, but are also based on fear and confusion.

Person hands over Medicare card
Many GPs undercharge for fear of a review of their billing practices.
AAP/Tracey Neary

Time to reform Medicare billing

Simplifying Medicare’s current highly complex billing system would eliminate a lot of waste from unintentional errors. Reducing low grade and unnecessary care is not an easy task as these are difficult to define and often rely on situational judgement. When systems are no longer fit for purpose, they should be reviewed and revised, as the Philip review recommended.

There are bad actors in every profession and those who “play” Medicare should be called out. However, the allegations of widespread fraud are not supported by our work or the Philip review.

Read more: So many GPs leaving the profession, how do I find a new one?

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