Fact check: Is it true there is $8 billion of Medicare fraud per year?

There has been an Australian media storm that alleges 30% of Medicare funding , or $8 billion a year, is “haemorrhaging” in rorts and fraud.   

This is huge claim given the existing evidence on the subject, and the bigger the claim the greater the standard of proof that is expected to back it up.

The main strand of evidence is the 2021 PhD by Margaret Faux, a nurse and Founder and CEO of a Medicare claiming company called Synapse Medical Services. A couple of days after the story broke she implored doctors to “read the evidence” and provided a link to her PhD. The estimated quantity of non compliant billing in Margaret Faux’s PhD is 5 – 15% or $1.2 – $3.6B per year. The source of the $1.2 to $3.6 billion is a ten year old article by the former Director of Professional Services Review (a role established to investigate fraud and protect the integrity of Medicare and the PBS), Tony Webber.

Tony Webber opinion piece in the Medical Journal of Australia; ‘What is wrong with Medicare?’  states; that by “extrapolating modestly from the misuse of the MBS, PBS and the Medicare Safety Net (financial assistance for high out-of-pocket costs for out-of-hospital MBS services) that I am directly aware of, I estimate that 2–3 billion dollars are spent inappropriately each year. Unfortunately, there are no attempts to quantify these losses more accurately. The reasons for this leakage are diverse.”

The leakage he outlines in the MJA is as follows:

“General practitioner care plans are completed by a doctor that is not their regular doctor.” This is a compliance issue, but not necessarily fraud. Having another doctor completing a care plan on one of your patients is something that most GPs will have encountered on occasion and not been happy about. However, one of the difficulties is there is no patient enrolment system to identify who is the primary doctor in Australia and patients are free to seek care from a range of general practitioners at any time.

“Some general practitioners have a quota of care plans that their corporate owner asks them to claim every week, irrespective of clinical need.”  The anecdote could well be true, but as a corporate owner myself I have never come across this or even heard such a thing spoken about, so I would say this is unlikely to be driving significant fraud or waste. In fact I would argue the opposite, corporates have more resources to identify inappropriate practice and remediate.

General practitioners are pressured by allied health practitioners to provide Team Care Arrangements that then allows the patient to claim allied health rebates, and this is “facilitated by computer systems that can generate the necessary paperwork in minutes.” It is correct that Team Care Arrangement templates can be auto filled in the medical software, and these then require further input from the practitioner. On the whole Team Care Arrangements have allowed the public, with chronic medical conditions better access to allied health services.  

The “Minister for Health, tried to reduce ophthalmologists’ fees for cataract surgery by 50% and failed.” This is noted, but it is completely appropriate that ophthalmologists continue to perform cataract surgery and claim this Medicare item.

“Most gastroenterologists and cardiologists practise ethically, there are a few practitioners whose repeated use of procedures and investigations is highly questionable in patients whose clinical condition appears not to warrant them.” This is noted, but this comment is also pointing out that inappropriate care is at the margin.

“The Medicare Safety Net is being gamed and used to subsidise cosmetic procedures such as surgery for “designer vaginas” at $5000–$6000 each.” Surely, assuming this is true, it is also at the margin.

“Another example of Safety Net gaming was a small group of obstetricians raised their fees for antenatal care from around $3000 to nearly $10 000.” Doctors in Australia are able to set there fees as they wish, this story is anecdotal and not evidence of widespread inappropriate fee setting.  

The verdict, yes there is Medicare fraud, and this is why the Professional Services Review disciplines and fines doctors at the rate of about 3 to 7 per month (and there are about 100,000 doctors in Australia). Is the problem of Medicare fraud bigger than just the doctors that are investigated and fined by the PSR, yes it is. Is fraud acceptable, no its not. However the claim of widespread and pervasive fraud of $8 billion or 30% of claims is relying on data that is out of date, anecdotal, case studies, and conjecture.  

There also seems to be confusion as to what is being talked about, both in media and from the experts, as inappropriate billing (Webber 2012) is very different from non compliant billing (Faux 2021) and non compliant billing is very different from fraudulent billing (ABC and the Sydney Morning Herald 2022). For example; antibiotics used for what is later determined to be a viral infection may be deemed inappropriate, antibiotics used outside PBS guidelines can be deemed as non compliant, but may have assisted a patients recovery, and antibiotics prescribed to someone without a medical condition for the purpose of resale at a profit would be deemed as fraud.

Inappropriate care and non compliant care will be much greater than rorts and fraudulent care, by a large margin. Why these terms are being used interchangeably is not clear but it does add greatly to the level of fear and alarm. And of course the estimate of inappropriate billing (Webber 2012) is less than half the alleged $8 billion of fraudulent billing (ABC and SMH 2022). Nowhere in the PhD can I find reference to 30% of Medicare claims or $8 billion of rorts. The data collected in her PhD is three surveys of medical practitioners and education providers as to the adequacy of Medicare billing education, which she finds is lacking. There would be broad support for better training of doctors in Medicare billing but this story is unlikely to captivate the public. It appears the media may be taking the statements from experts on trust without checking the relevant source material? Without the relevant evidence, the estimate of $8 billion of rorts must be labelled as FALSE or NOT PROVEN.   

For those of us working in health care the level of reported rorting seems fantastical. It is no surprise that other people experienced in the area of Medicare compliance, such as Julie Quinlivan have fronted the media and called the alleged degree of fraud “fake news”. Fake news may be profitable and draw eyeballs, but the media created anxiety among doctors by overstating doctor fraud may not be in the public best interest, as one possible reaction of being accused of inappropriately bulk billing is to privately bill and then have the patient review the claim.

I think there is an element of cognitive bias here from Faux and Webber; “If the only tool you have is a hammer, it is tempting to treat everything as if it were a nail”. In this case, if your hammer has been to uncover and discipline doctors for medical fraud, then all the problems and failures with healthcare delivery will look like fraud.  

But lets return to the words of Margaret Faux in concluding her PhD, which says “Medicare continues to function as well as it does because of the dedicated doctors and other health professionals who deliver care every day to millions of Australians, despite constantly burgeoning bureaucratic requirements in the Medicare storm that encircles them.”

I think we can all agree on this, the dedicated doctors and health professionals continue to make the system work, and the exaggerated reporting on rorting is making the encircling storm of Medicare stronger.