Estimates
11.5 billion dollars!!!!
Imagine how many hip replacements or other necessary services
we could provide with all that money.
Value of common Medicare fraud, waste and abuse
*these figures were valid as at February 2023
| Description | Example | Provider Type | Assumptions and Evidence | Methodology | Value |
|---|---|---|---|---|---|
| Fraud | Bulk bill and charge separate gap | GP | SHOW ALL (10) | 20,000 x 20 x 39.75 x 240 | $3,816,000,000.00 |
| Fraud | Bulk bill and charge separate gap | Allied Health | SHOW ALL (6) | 24677 x 3 x 65 x 240 | $1,154,883,600.00 |
| Fraud | Bulk bill and charge separate gap | Specialists | SHOW ALL (4) | 7664.60 x 7 x 100 x 120 | $643,826,400.00 |
| Fraud | Fake referrals | Specialists | SHOW ALL (6) | 40% of $2.8b | $1,120,000,000.00 |
| Waste/abuse in hospital | The service was provided but the patient did not need it. It is illegal to bill to Medicare for unnecessary services. | Specialists | SHOW ALL (4) | 30% of total Medicare benefits paid for in hospital services. So 30% of ~$3,151,414,032 | $945,424,209.60 |
| Waste/abuse outside of hospital | The service was provided but the patient did not need it. It is illegal to bill to Medicare for unnecessary services | Specialists | SHOW ALL (3) | So 30% of $10,343,346,998 | $3,103,004,099.40 |
| Fraud | Up-coding - adding item numbers for services not provided or more complex or longer than the service provided | Specialists | SHOW ALL (10) | So, 29% of 13 billion | $3,770,000,000.00 |
| Fraud | Cosmetic services being billed to Medicare by faking something medical | Everyone | SHOW ALL (6) | Say $0.5b | $500,000,000.00 |
| Fraud | Illegal billing to Medicare in public hospitals resulting in duplicate payments | Public hospitals | SHOW ALL (3) | 3 x $300m | $900,000,000.00 |
| Various other abuses | All remaining examples from the list of 25 common types of misuse in my PhD, and errors, have not been included in this table. | Everyone | SHOW ALL | Say $0.5b | $500,000,000.00 |
| TOTAL | $16,453,138,309.00 | ||||
| Deduct 30% for overlap (where more than one fraud is committed simultaneously) | $4,935,941,492.70 | ||||
| GRAND TOTAL | $11,517,196,816.30 |
Assumptions and Evidence
- Official government statistics suggest around 85% of GP services are bulk billed which means the patient does not pay a gap, yet Australians are saying the opposite – that there are virtually no bulk billing GPs and they always pay. This must be explained to the Australian people.
- A recent study by Cleanbill was reported in the media. It is more reliable than the government statistics because the researchers called every GP clinic and asked their fees and whether they bulk billed. 21,000 GPs were included in the study covering 70% of Australians, making it the most comprehensive study every undertaken. The researchers found that just over 40% of GP services are actually bulk billed.
- Section 20A of the Health Insurance Act 1973 (Cwth) is the bulk billing law. Separate charges are illegal.
- Tony Abbott tried to introduce a co-payment in 2014. He would not have done that if co-payments were already legal. Two criminal cases reported in my PhD thesis, confirm this is fraud, a crime.
- Phenix Health, one of the largest telehealth providers in Australia, was reported in the 2022 media coverage. Phenix Health was a client of my company until I became aware that they were charging separate gaps and then bulk billing patient through our online Medicare billing platform. There were over 35,000 claims billed through our system for Phenix Health.
- Confirmed by the DOHAC very recently with this new education flyer – https://www.health.gov.au/resources/publications/medicare-bulk-billing-and-additional-charges?language=en. The last sentence of the flyer confirms that if a separate gap is charged, then “the Medicare benefit is not payable”. In essence this means that the GP can keep the gap, but cannot also have the bulk bill amount, which is retained by the government – hence a saving.
- The Cleanbill study did not ask how the GPs bill, just whether they bulk bill or not and what their gap fee was.
- The only explanation for the huge discrepancy between the government figure and the Cleanbill figure is illegal gaps being charged. There is no other explanation, and it is an open secret that this conduct is widespread.
- Assume half of the 21,000 in the study are therefore illegally charging gaps and simultaneously submitting a bulk bill claim. This is a representative sample that can be extrapolated across all GPs. There are approximately 40,000 GPs so half is 20,000.
- Assume the lowest paying and most common possible service which is item 23 at $39.75, and a very conservative 20 patients per day for 240 days per year. This makes allowance for part time workers and generous leave, noting that General Practice operates 24/7.
Assumptions and Evidence
- Medicare statistics suggest 51% of allied health services are bulk billed, yet Australian consumers are reporting they cannot afford psychology and other allied health fees. Therefore assume a lower rate of fraud.
- There is only one bulk billing law in Australia, which is section 20A of the Health Insurance Act 1973. All of the above therefore applies equally to allied health providers.
- My experience working with allied health providers and their professional associations who regularly ask me to “please explain that bulk billing and charging a gap is illegal because they’re all doing it.”
- Emails provided to me by allied health providers confirming ‘everybody does it. Are you sure it is illegal?’
- Assume largest groups only, so, Psychology, Pysiotherapy, OT, Dieticians and Speech Therapy. This totals 123,384 practitioners, so assume 20% charge illegal gaps. 20% of 123,384 = 24,677
- Assume 3 patients per day with long appointment of an hour. This allows for some part-time practitioners, as most would see more than 3 patients per day. It also allows for the fact that some services are not Medicare but PHI. Medicare rebates range from $55-$112 so assume a low average of $65, and 240 days per year.
Assumptions and Evidence
- Medicare statistics suggest 34% of specialist services are bulk billed.
- All of the above applies
- Based on my experience certain groups charge illegal gaps calling various things such as booking fees, administration fees, deposits etc. Difficult to quantify but assume similar to allied health so, 20%.
4. Specialists spend less time in their rooms than GPs. So assume 7 patients per day at an average cost of $100 for 120 days per year. This allows for the fact that much more of their work is billed through PHI schemes and inpatient services. So include 38,323 specialists from AIHW workforce data. 20% is 7,664.60
Assumptions and Evidence
- Medicare statistics cite the value of Medicare rebates for Specialist attendances at $2.8b.
- Specialists will routinely create a fake referral unpon the expiry of a 12 month GP referral, rather than send the patient back to their GP.
- Fake referrals are also very commonly created when a shorter, 3 month specialist referral expires.
- The referred rate is not payable without a valid referral, meaning instead of claiming item 110 ($160), 116 ($80), the only amount payable are items in the range 53-59 which pay at about $20.
- Assume the rate of this phenomenon is very high based on my four decades of experience, suggest 50%
- Reduce to 40% to allow for the reduced fee payable noting that many specialists do not know that they can claim items 53-59 so would not do so.
Assumptions and Evidence
- Over 30% of services are unnecessary: Scott IA: Audit-based measures of overuse of medical care in Australian hospital practice, 11 July 2019. https://doi.org/10.1111/imj.14346. So, conservatively use 30%.
- In hospital Medicare expenditure from APRA Quarterly PHI Statistics – https://www.apra.gov.au/quarterly-private-health-insurance-statistics, which includes a Medicare only split of the Medicare portion paid under gapcover schemes.
- Section 3 Health Insurance Act – only clinically relevant (meaning necessary) services are able to be claimed to Medicare.
- Monthly PSR reports confirms this. Every month providers are required to refund Medicare because some of the services they provided and billed were not clinically necessary.
Assumptions and Evidence
- Assume over 30% of services outside of hospital are also unnecessary, so conservatively use 30%.
- The Lancet – Evidence for overuse of medical services around the world https://www.sciencedirect.com/science/article/abs/pii/S0140673616325855
- Medicare statistics filtered to – out of hospital services/removed all provider types except specialists.
Assumptions and Evidence
- Synapse’s SIRA report was leaked to the media and reported in the Sydney Morning Herald https://www.smh.com.au/national/nsw/systemic-failures-costing-icare-billions-of-dollars-20200816-p55m6h.html. In that project we analyzed line by line 32,000 lines and found 33% were non-compliant. Our estimates were conservative. We advised SIRA that it was likely much higher but we would need the clinical records to corroborate our findings.
- What was not reported by the media is that we also ran the same services through our Medicare billing rules engine to see how much would have been picked up by Medicare. The practitioners who bill to SIRA bill the exact same services to Medicare all the time. We do this work. We found that if the claims had been processed by Medicare 29% would have been non-compliant, ddemonstrating that Medicare’s system can’t detect most non-complient claims either.
- DOH Feb 2019 webinar, which explained the department’s 3:1 ripple effect methodology. There was one full year of data which was 2017/18 in which $48.7m was recouped, but that led to $148.5m in behaviour change.
- The 2004 Deloitte report put the leakage figure at 10%. Applying the department’s own “ripple effect” this was in fact 30%.
- The 2004 Deloitte report only sought to quantify what can be seen/what exists in the data. It did not attempt to quantify what cannot be seen such as bulk billing and charging illegal gaps, fake referrals etc.
- Since 2004 there have been massive increases in complexity, more allied health services added to Medicare, telehealth, increased corporate sector involvement and Activity Based Funding (commenced 2011). Over the same period there has been a corresponding decrease in reliable advice and support for providers who now teach each other to pack and stack as many Medicare services as possible onto each patient.
- Insiders have leaked that the DOH was quite recently advised that computer algorithms were finding 10% of what exists within the data. Again this excludes the same invisible frauds described above, that the data simply cannot show.
- Use pain medicine as an example of unnecessary services being billing to Medicare. In public hospitals there is much lower use of pain stimulators than the private sector where a huge market of unnecessary services are illegally billed to Medicare.
- Assume 29% (based on our detailed SIRA analysis) of specialist services include upcoding or adding item numbers for services not provided etc.
- Medicare rebates paid for specialist services is approximately $13b
Assumptions and Evidence
- Confidential sources disclosed that one of the clinics in the cosmetic surgery expose was defrauding Medicare at least $15,000 per week
- All records I reviewed in the cosmetic surgery expose had illegal claims to Medicare – includes pathology, radiology, dieticians, anaesthetics, psychology, surgical assistants – everyone.
- My submission to the AHPRA enquiry https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/AHPRA/Submissions
- Other submissions to the AHPRA enquiry also cited Medicare fraud https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/AHPRA/Submissions
- Difficult to quantify but conservatively estimate that 30% of rhinoplasties, abdominoplasties, breast reductions, and blepharoplasties are cosmetic, and should not be billed to Medicare. In addition, GPs routinely bill item 23 or 36 when the true reason the patient attended was for cosmetic botox. I saw this everywhere in the records I reviewed in the cosmetic surgery expose.
- The cosmetic industry is a multi-billion dollar industry. Difficult to quantify but see this report on cosmetic surgery statistics https://www.thevictoriancosmeticinstitute.com.au/2020/01/cosmetic-surgery-statistics-australia-around-the-world/. Service volumes are high as are rebate amounts on the surgical items.
Assumptions and Evidence
- In 2011 the audit office of NSW found that public hospital doctors were billing for services not provided at a rate of up to
18%, and estimated this was replicated across NSW. Here is the link https://amp.smh.com.au/healthcare/doctors-bill-hospitalsfor-work-they-havent-done-20111214-1ouy4.html The report refers to VMOs, and much of their activity is billed through the
MBS, certainly in outpatient clinics. For the above reasons about increased complexity and reduced reliable advice and support
since 2011, and no action taken by NSW health, this has worsened over the last decade. My company has direct daily
experience of this worsening problem - Commonwealth auditor general’s report 2019 https://www.anao.gov.au/work/performance-audit/australian-government-funding-public-hospital-services-risk-management-data-monitoring-and-reporting suggest up to $300m. Noted that this was likely an underestimate.
- My company works extensively in public hospitals. The highest rate of non-compliance we have seen is 90% in one department, with the lowest 20%. In our experience working with public hospitals around Medicare billing and compliance, the average non-compliance is 40%. We agree that the AG estimate is low. It is difficult to establish the basis for the $300m, but we would at least triple that figure with numerous examples reported in my PhD, some of which suggest triple dipping. This has been corroborated by further leaked information following the Medicare stories. It is now common for Australians living in our most impoverished postcodes to pay illegal fees at their local public hospital emergency departments, while their city counterparts do not.
Assumptions and Evidence
Specifically State WC duplication is not included and would be significant.
Additionally there is duplication ocurring with the NDIS and Medicare, and DVA and Medicare.
If every doctor made $100 worth of errors per week that equates to over $1b.
So, assume a very conservative estimate of half a billion dollars across all other categories.
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