Independent review finds Medicare system ‘wide open to fraud’ and

An independent review into Medicare, released Tuesday, has revealed the system is haemorrhaging $3 billion a year and in need of urgent reform to prevent widespread fraud .

The government commissioned respected health economist Pradeep Philip to investigate the $38 billion universal healthcare system following allegations rorting and waste were costing taxpayers $8 billion a year.

Mr Phillip did not substantiate those claims, finding instead that between $1.5 and $3 billion a year is most likely lost due to billing errors rather than premeditated fraud.

However, he warned this figure was in danger of ballooning as the current system was “wide open to fraud.”

“The current system is overly fragmented, disjointed, and lacking in contemporary tools to detect and address non-compliance and fraud, despite the best endeavours of bureaucrats, regulators, and peak bodies,” he said.

“Legislation, governance, systems, processes and tools are currently not fit for purpose and without significant attention, will result in significant levels of fraud.”

The unwieldy Medicare Benefits Schedule, which contains about 6000 item numbers, has not kept pace with modern methods of service delivery or the reality of complex multidisciplinary care the report says.

In addition, only a small fraction of the roughly 500 million yearly transactions are scrutinised and the growing corporate ownership of medical clinics has weakened the relationship between doctors and patients while limiting oversight of billing.

Together, these factors have created an “opaque” system with no clear oversight that is suffering from the lack of a clear plan for its development.

“It has become clear that Medicare has grown organically over time (in response to changing needs and government agendas) rather than based on clear strategy, changing demography, burden of disease and emerging therapeutics, models of care and technology,” Mr Philip said.

“An unintended consequence of this growth over the last nearly 40 years is that there is no longer the same connection that there used to be between patient, the practitioner, and the payment.

“All these changes open the door for integrity and compliance risks.”

Despite this, Mr Philip did find that the majority of health practitioners were well meaning and protective of their patients. 

“A large part of the success and efficacy of Australia’s health system, to date, is due to this level of altruistic behaviour by health professionals,” he said.

“There is much to commend those working in the system (in both the department and Services Australia) who are diligent and working with the best that they have in terms of resources, infrastructure, and tools.”

Mr Phillip recommended urgent reforms to address compliance including a continuous monitoring system that would send SMS alerts when claims are made and simplifying the Medicare billing system with items that better cater for complex conditions, clearer language and more details of the service, such as length and location.

He also suggested the establishment of a new Medicare oversight committee made up of department representatives and independent experts, as well as removing the Australian Medical Association’s veto power over who controls the system’s regulator.

The review is now with the government who will examine the 32 total recommendations and “work closely with health professionals, patients and peak bodies to develop a comprehensive response,” according to a statement from Health Minister Mark Butler.

“At a time of great pressure on household and Government budgets, every dollar in Medicare is precious and must be spent directly on patient care,” Mr Butler said.

“Strengthening Medicare also means safeguarding the taxpayer funds that underpin it and this Government is committed to that task.”

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