Response to the Latest report on Medicare, by Dr Pradeep Philip

 1. Overview – understanding the scale of the problem

This latest report in Medicare is particularly important because health funding is currently constrained in a number of ways. It is important that governments and healthcare users understand how health funding occurs and ensure it is as efficient as possible.

The system is not in good condition. Access to primary care can now reasonably be said to be in crisis. General Practice is suffering from a number of issues including:

  • A lack of viable fee-for-service model, as outlined in the strengthening Medicare taskforce report.;
  • Frozen/inadequate indexation which has not tracked with the cost of living, coinciding with rapid increases in the number of clinics reducing and removing bulk-billing.
  • Maldistribution of funds: overall, the MBS is open to confusion, waste and in some cases fraud.

Just two of the most substantive negative outcomes of these problems are:

  • The effects of bulk billing rates continuing to slide have a disproportionate effect on those who can least afford gap payments. An increasing number of Australians are foregoing seeing their GP, continuing to suffer at home until they reach crisis point/their conditions worsens and they ultimately either call an ambulance or present to ED. This puts a series of additional pressures on the public hospital system.
  • A lower number of trainees are entering general practice. Due to the ripple effect of the widely publicised issues of primary care, less medical graduates are choosing to train as a GP and instead are choosing other specialities that are more financially rewarded. The AMA reports a shortage of almost 11,000 GPs in Australia by 2031 if there is not an overhaul of the system.

Federal Health Minister, Mark Butler, commissioned Dr Philip’s review in late 2022 following:

  • The findings of the ANAO report which proposed somewhere between $350m and $1.5b leakage from Medicare’s annual budget.
  • Researcher Margaret Faux’s PhD estimate that up to $8 billion (30 per cent) may be leaking from Medicare’s annual budget. Faux’s claims proposed three factors: fraud, over-servicing, and errors. The AMA and RACGP fiercely disputed Faux’s claims at the time, and have pointed to other evidence: Recent research conducted by The University of Sydney (published in the Australian Journal of General Practice in April 2023) proposed that GPs were significantly more likely to undercharge than overcharge patients, primarily due to fear of being audited. Furthermore, despite the Strengthening Medicare Taskforce report recommending multi-disciplinary care and longer consults, the USYD research raises the possibility that some GPs are providing services but underbidding for fear of getting audited.
  • Other wide-ranging and ongoing concerns from a various quarters around the dysfunctionality of the system.

The purpose of the Philip report was to clarify the extent of the problem and make recommendations as to the solution

2. Report – key points

  • Philip’s report proposed that the wastage was less likely “premeditated fraud” and more likely due to “non-compliance errors.” Philip assessed the “overwhelming majority of practitioners” to be “well-meaning”, “protective…of care they provide to their patients,” and altruistic.”
  • “There is a significant amount of fear [on behalf of doctors] of the compliance regime.”
  • Non-compliance in the Medicare system may account for between $1.5 to $3 billion, and without urgent and proper changes to the system, the number can rise to Faux’s claims of up to $8 billion.
  • The controls around new business models must be urgently reviewed.
  • The current software used for claims and services through Medicare do not prevent non-compliance, fraud or billing errors.
  • There is inadequate education and training provided to medical practitioners with regards to the billing system
  • There is a lack of scrutiny of the billing services due to no continuous monitoring of MBS transactions, leaving the system exposed to fraud
  • The oversight of the MBS payments is no longer adequate as healthcare and health conditions in Australia have drastically changed since the inception of Medicare, with more Australians suffering from chronic, complex medical conditions requiring multidisciplinary care
  • The changes in Medibank that have occurred with the changing needs and agendas of government over the past 40 years has resulted in a disconnection between patient, practitioner and payment whereby patients and/or practitioners may no longer be directly involved in the billing process
  • Conclusion – the current system is “overly fragmented, disjointed, lacking in contemporary tools to detect and address non-compliance and fraud” as well as “overly complex and difficult to navigate”

3. Key recommendations of the report

  • Governance & structure
    • Creation of a Medicare Oversight Committee independent of the AMA
    • Restructuring & redesigning MBS item numbers to make billing simpler and easier to understand for all stakeholders – specific reforms include item numbers being time-based, bundling together individual surgical items numbers that are co-claimed into a single procedural item, and greater support for pre-claim decisions
  • Operational processes
    • Greater emphasis on risk identification for fraud & non-compliance
    • Strengthening the education & training for all stakeholders
  • Modernising technology
    • Updating the Medicare payment system to keep pace with constantly advancing and changing technology now and into the future
  • Strengthening legislation
    • Removing the veto power of the AMA in selecting the Director of the PSR due to conflict of interest
  • In addition, Philip’s highlights further areas for improvement:
    • Much greater scrutiny over the 500 million transactions billed through Medicare every year
    • Simplification of 5,800 MBS item numbers, catering for the more chronic and complex conditions suffered by Australians,
    • The need for state governments to look into the billing used by public hospitals as medical specialists have raised that they are unaware of what services are being billed in their name

4. The Australian Patients Association response to Philip’s review, and overview of Medicare issues

  • Billing: Over time, the vast corporatisation of General Practice has led to patients experiencing poorer service that includes inappropriate billing, and in some practices, deliberate over-billing.
  • Scrutiny: Despite the vast majority of doctors in Australia practicing with ‘integrity and altruism’, there nonetheless must be far greater scrutiny of the 500 million transactions billed under Medicare every year in order to detect unintentional errors and deliberate fraud. To achieve full independence and avoid the obvious conflict of interest which exists today, the regulator of Medicare billing who oversees all transactions should be independent, without any veto power of the AMA to dictate who is the Director of the PSR.
  • Complexity: The Medicare Rebate Scheme is excessively complex. Simplifying MBS item numbers, and using methods such as bundling multiple consults relating to chronic conditions would resolve a series of problems, and contribute to improving the issue of non-compliance. Furthermore, lessening the administrative burden medical service delivery will improve the quality of care to patients.
  • Demographic: Medicare currently is not set up to cater for the ageing and changing demographic, and changes the Medicare needs to reflect the health needs of Australians today.
  • Transparency: There needs to be greater transparency and visibility of payments and claims. This is particularly important for pathology and radiology, which are currently very obscure to patients. In the public hospital system, services are frequently billed in the name of specialists without their knowledge. In General Practice, the level of service claimed, is not visible to the patient.
  • Alignment for change: Systemic changes should align with the recommendations of the Strengthening Medicare Taskforce.
    • The current Medicare fee-for-service model no longer fits the primary healthcare needs of Australians. Currently, GPs are financially incentivised to provide shorter consults to a greater number of patients, which is not reflective of the reality an ageing population with increasing multiple chronic health conditions, creating complexity that warrants longer consultations.
    • The Taskforce’s recommendation for a blended funding model which fosters a team-based culture of multidisciplinary care for patients should be pursued.
  • Fragmentation: As Dr Philip stated in his review, healthcare in Australia is fragmented and disjointed. The issue is worsened by the differing roles the States and Commonwealth play within the system, and greater collaboration is needed.
  • Call to action: Governments state and federal must recognise the scale of the problem, align their responses and take action. Just as COVID-19 presented a crisis in Australian Healthcare, the systemic foundation of our national healthcare delivery systems, Medicare, is also in crisis.


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Robinson, N. (2023 April 9). Medicare compliance targets altruistic doctors while real fraud goes unchecked. The Australian.

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