Wasted Medicare billions need to return to budget: Finance Minister

Finance Minister Katy Gallagher says billions of dollars leaking from Medicare each year need to return to government coffers as Labor prepares May budget reforms of a healthcare system no longer fit for purpose.

Doctors’ groups said on Tuesday they would work with the government on recommendations to rein in up to $3 billion a year in wasted Medicare spending, largely the result of billing errors and non-compliance in an overly complex system.

Finance Minister Katy Gallagher has acknowledged the stress GPs are under and says health practitioners “overwhelmingly do the right thing”.

Alex Ellinghausen

But they signalled their support would come with conditions, including no more red tape for doctors already struggling in an under-pressure primary health system.

A government-commissioned report by health economist Dr Pradeep Philip this week warned the $38 billion universal healthcare system was so poorly structured and loosely scrutinised that the gate had been left “wide open” to fraud.

Gallagher acknowledged the stress GPs were under and said health practitioners “overwhelmingly do the right thing”.

“But where we do see instances of errors, mistakes being made, inappropriate billing, for whatever reason … obviously, we have got to ensure that we are returning that money to [the] budget,” she said.

The health system – among the government’s top five budget pressures – is already targeted for a shake-up in May, when Health Minister Mark Butler has promised to reveal how the government intends to bring Medicare into the 21st century.

Philip’s report flagged several areas requiring urgent action, such as a continuous monitoring system that sends SMS alerts to patients when claims are made in their name and a simplified Medicare billing system. He said Medicare needed a state-of-the-art computer system that could identify inappropriate billing and issue red flags before a payment was made.

Other recommendations include establishing a new Medicare oversight committee.

“The outcome should be a decrease in [errors] and increase in detection of fraud,” Philip said. “We do know there’s conservatively about $1.5 [billion] to $3 billion leakage in the system right now, and that could get much worse quickly.”

Former Health Department secretary Stephen Duckett said he was not surprised by Philip’s findings.

“The payment design was of the ’60s. None of the stuff the banks [are doing now] existed in those days, and it hasn’t kept up. I suspect it’s the tech capacity of the ’80s rather than the 2020s,” he said.

“I’ve referred to this as malign neglect. They’ve just let the system run down … Health policy for decades has been adding a new item to the Medicare Benefits Schedule. We need to be more sophisticated than that.”

The Medicare watchdog’s former head, Tony Webber, said Philip’s suggestions particularly billing notifications and simplifying Medicare Benefits Schedule items – were sensible.

“All that stuff should be done, certainly in the interim, to improve compliance and visibility to the patient, in particular,” he said.

“My feeling, however, is it’s a little like rearranging the deck chairs on the Titanic. The system itself is not working. These recommendations, while I agree with them and think they will have some value, I think the whole system needs to change.”

Royal Australian College of General Practitioners president Nicole Higgins said she would work with the government on broad reform, and agreed that waste in Medicare was due to an outdated system.

“Medicare is now 40 years old, and it has been neglected by successive governments. We support very much the move away from post-activity compliance to looking at the front end: making sure we educate doctors [and are] able to prevent things before they become a problem.”

But there was more work required to understand how Philip’s specific recommendations would affect data sharing and doctors’ administration burden, she said.

Australian Medical Association president Steve Robson said his organisation had historically supported legislative changes to improve Medicare compliance.

“However, the sad reality is that past governments have been obsessed with cost-cutting and unwilling to make the necessary investments,” he said.

“We are taking a closer look at the recommendations to assess them in detail. But broadly speaking, we are committed to working with the government to ensure Medicare and its compliance frameworks are fit for purpose.”

Opposition health spokeswoman Anne Ruston said reducing non-compliance needed to be part of Medicare reform, and she would support sensible measures to strengthen the system.

“However, we are yet to see any urgent or tangible plan from the government following the release of their Strengthening Medicare Taskforce report, and we call on them to follow up their words with real action,” she said.

“The upcoming May budget is a great opportunity for the Labor government to stop focusing only on political commentary and instead start building on reforms to the system.”

Butler said he was considering the Philip report’s recommendations and would work closely with stakeholders but did not give a timeline.

“Many of the recommendations are wide-reaching and would require legislative and technological changes to the delivery and oversight of Medicare services,” he said.

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