Two independent reviews refute claims that $8 billion has been lost to Medicare fraud

GPs undercharge for nearly 12% of consultations, saving Medicare an estimated $351.7 million in 2021-22 alone, a retrospective analysis of almost 90,000 consultations has found.

University of Sydney researchers reviewed BEACH data from 2013 to 2016, finding that just 1.6% of GP consultations were overcharged—a figure that was dwarfed by the number of consultations that were underbilled.

Furthermore, the study reported that 85% of GPs who had overcharged at least once had also undercharged at other times, suggesting that errors, rather than deliberate fraud, were the more likely culprit.

The study, which was published in the Australian Journal of General Practice this week, showed that GPs commonly billed consultations that ran over 20 minutes as if they were shorter.

In fact, 45% of 20-39 minute consultations, and 57% of consultations that were 40 minutes or longer, were undercharged.

“We found that GPs were far more likely to undercharge Medicare than to overcharge, which is in stark contrast to allegations of widespread Medicare fraud by GPs” lead researcher Dr Chris Harrison told Healthed.

Healthed’s research indicates that the trend has continued, likely saving Medicare billions over the last decade.

Two-thirds of GPs who responded to a Healthed survey in October said they underbill on a daily basis due to fear of triggering a Medicare alert.

The new study also coincides with the federal government’s release of an independent review of Medicare which found no evidence to support allegations of $8 billion of fraud, which were attributed to Dr Margaret Faux and circulated widely in the media.

The review, led by health economist Dr Pradeep Philip, estimated that non-compliance is costing Medicare $1.5-3 billion, mostly due to accidental non-compliance errors, rather than deliberate fraud.

Still, Dr Philip wrote that the cost could reach the proportions cited by Dr Faux if vulnerabilities in the payment system are not addressed.

“At present, it is my view that a significant part of the leakage in the Medicare payment system stems from non-compliance errors rather than premeditated fraud,” Dr Philip wrote.

“Indeed, one could argue that there is a significant amount of ‘fear’ of the compliance regime, notwithstanding it is not as far reaching or effective as it could or should be in practice,” he continued.

The review addressed Dr Faux’s allegations head-on, noting that her estimate “is based on a far broader definition of non-compliance and fraud than that contained in other studies or than that currently employed by the department. Dr Faux’s study includes behaviours which are considered by DoHAC as compliant because they cannot be validated via data analysis or are difficult to treat through strict interpretation of the rules. And thus not within the department’s purview for intervention.”

Dr Faux has responded, telling the Sydney Morning Herald that her estimate that 30% of the Medicare budget is being wasted “has always been on three things: fraud, overservicing and errors. It was never focused on GPs, it is system-wide.”