‘Simply not true’: Experts dismantle $8 billion Medicare fraud claims


By Geir O'Rourke

20 Oct 2022

The top specialist who led Australia’s biggest ever review into Medicare has rubbished suggestions that $8 billion a year is being lost to fraud and errors, saying the figure doesn’t fit with what he saw over five years examining the system in detail.

The message from Professor Bruce Robinson comes after Minister for Health Mark Butler ordered an inquiry into Medicare compliance after media reports on Monday alleging rampant fraud as well as incorrect payments and billing errors by doctors.

Sparking outrage from doctors’ groups, the claim is based on estimates by Dr Margaret Faux (PhD), a researcher and CEO of a medical administration provider called Synapse Medical.

She estimated the leakage at nearly 30% of Medicare’s annual budget, or about $8 billion a year, according to the reports published in the ABC and Nine newspapers.

“The system is being rorted by health professionals, fabricating medical records and billing unnecessary services to boost their profits,” the report said.

“The lack of regulation is staggering and patients’ lives are at risk.”

Dr Faux said her claims were based on “the best available evidence” identified in her PhD thesis on Medicare compliance, adding the $8 billion figure was conservative and “might be higher”.

She also pointed to research undertaken by an academic at the University of Wollongong in 2004 finding up to 25% of Medicare payments could be inappropriate.

“Since then, complexity has increased exponentially and support has decreased to the point where it’s almost non-existent,” she told the media.

“And there’s no controls. We took more controls out of the system so it can only be higher than it was then.”

‘No way’

Professor Bruce Robinson, the endocrinologist behind the MBS Review Taskforce, said he saw nothing while chairing the review from 2015 to 2020 that suggested the system was being abused at anywhere near that scale.

He told the limbic: “When I saw that $8 billion figure, I thought ‘no way actually’. It just seems like too large a number.”

Professor Robinson’s own idea, the review cost millions, involving 700 experts and examining the use of all 5700 items on the MBS.

A former University of Sydney medical dean, he stressed fraud and inappropriate claiming remained real concerns despite the taskforce’s efforts to eliminate outdated or commonly-misused items.

“The goal of the review was to try to tighten up the item descriptors so that fraud was less possible and they were also clearer,” he added.

“As more of these things come to light, maybe other items will need to be tightened up too so some of that waste and overservicing is able to be reigned in.”

Former Professional Services Review (PSR) director Professor Julie Quinlivan also dismissed Dr Faux’s estimate, saying there was “very strong evidence” the overwhelming majority of billing was appropriate.

Professor Quinlivan, who ran the Medicare watchdog from 2017 until July this year, said thousands of patient files were independently audited every year in Australia for research purposes, with no sign of widespread abuse.

“Here at Curtin University we have very widespread trials into Alzheimer’s and dementia patients, where teams of nurses audit over a quarter million patient files across Australia. There has been no risk of fraud identified,” she said.

An obstetrician and gynaecologist, she also pointed out patients had visibility of their own billing through Medicare’s online portal, which was an important safeguard against fraud and inappropriate claims.

Added to that, private health insurance companies had “very robust” fraud detection systems allowing them to audit patient records and Medicare items claimed, Professor Quinlivan said.

“So I would say that there’s actually really profound evidence that there’s not widespread fraud,” she said.

“Yes, there is the one-in-1000 bad egg, which is actually lower than other professions, but they are picked up pretty well.”

Against this, Professor Quinlivan said she had reviewed Dr Faux’s research and found it far from compelling, based as it was on qualitative interviews with just 26 health practitioners.

The thesis also comprised a survey of education providers and a literature review, neither of which offered concrete evidence with which to estimate rates of fraud, she said.

“To me, the best evidence that this is simply not true is that over a quarter of a million Australians consent to have their medical information used for audits,” Professor Quinlivan said.

“Those audits aren’t done by the people who bill, they are done by independent researchers. So if there was widespread fraud, it would have been detected by that process alone, let alone that private health insurers do it, the Commonwealth does it and that patients can see their own claims history.”

“So can Medicare compliance be improved? Of course it can. But the way this has been reported is very sad and damaging.”

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