Ep56: Billing in Byzantium

Ep56: Billing in Byzantium
11 March 2020

Fellows of the RACP can claim CPD credits via MyCPD for listening to this episode and using the resources below.

Australia has one of the best value health systems in the world, but also some of the most complicated health regulation. Between the federal Medicare scheme, the state hospitals, the private health insurers and the patient, it’s not always clear how a provider should invoice their services.

To explain some of the fundamentals our guest is former nurse and lawyer, Margaret Faux of Synapse Global Medical Administration. She also describes areas of ambiguity in the legislation and the Medicare Benefits Schedule which creates confusion as to when and where certain services can be billed, or which items should not be claimed together. While there are many traps for well-intentioned providers and loopholes for the less well-intentioned, there are some simple solutions that would make medical billing much more streamlined.


Margaret Faux (CEO, Synapse Global Medical Administration)

Written and produced by Mic Cavazzini. Tracks licenced from Epidemic Sound include ‘Organic Textures 2 – Johannes Bornlöf, ‘Temple of Runha’ – ELFL. Tracks licenced from Free Music Archive include ‘Here’s the Thing’ – Lee Rosevere, 'Secret Place' -Alex Fitch, ‘Electro Cool’—4T Thieves, ‘Please Listen Carefully’- Jahzarr. Image licenced from Getty Images

Editorial feedback for this episode was kindly provided by members of the RACP’s Podcast Editorial Group; Jenae Valk, Seema Radhakrishnan, Phillipa Wormald, Seema Radhakrishnan, Lisa Mounsey, Alan Ngo, Oliver Dillon, Rhiannon Mellor, Alexis Frydenberg, Duncan Austin, Keith Ooi, Sern Wei Yeoh.


Medicare Billing, Law and Practice: Complex, Incomprehensible and Beginning to Unravel [Faux, JLM]
Who teaches medical billing? A national cross-sectional survey of Australian medical education stakeholders [Faux, BMJ] 
You're likely guilty of this, so beware: the law trumps Medicare advice on bulk-bill vouchers [Faux, Australian Doctor]
Informed Financial Consent [AMA]
Australian health system: how it works [MyDr.com.au]
A minute with Margaret [Synapse, YouTube]
Out of pocket costs [Department of Health]
Medicare Benefits Schedule (MBS) Factsheets
Medicare Benefits Schedule (MBS) Review and Taskforce Reports


MIC CAVAZZINI: Welcome to Pomegranate Health. A podcast about the culture of medicine. I’m Mic Cavazzini for the Royal Australasian College of Physicians.

Australia and New Zealand both have efficient and high-quality health systems. Out of 11 comparable economies they rank first and third in terms of performance compared to spending. They each achieve this in quite different ways, however. While healthcare in New Zealand is almost entirely government-funded, Australia has a unique blend of public and private funding.

But this is underpinned by some of the most entangled health regulation in the world. Correctly navigating medical billing can be a bit of a minefield for consultants working across different settings. A quick explainer for listeners outside Australia. Urgent care in public hospitals is the remit of state health, and is pretty much free to the patient. The funding for these services, and hospital salaries too, does trickle down from the federal government but it’s titrated against reports of net hospital activity over a period of months.

In contrast, the Medicare Benefits Schedule is a fee-for-service scheme that subsidises consultations with general practitioners and specialists, non-urgent hospital interventions and many diagnostic tests and scans. Medicines listed on the Pharmaceutical Benefits Scheme are also paid for, in part, by Medicare. Practitioners who provide these services aren’t public servants—they work for themselves and in the last episode we went through some of steps of starting out in private practice.

The MBS describes close to 6,000 individual clinical services. Each one of these items has a dollar figure attached to it. We’ll get into how these are determined in the next episode, and also how MBS items are added or retired over time to keep up with changes in medical practice. Providers who do inpatient work can also take payment from private health insurers, but as we’ll hear later, the remit of these funds is very strictly controlled by the government. Between these rules and the ever-changing Medicare Benefits Schedule, there are many traps for well-intentioned providers, and loopholes for the less well-intentioned. To navigate all this, I spoke to Margaret Faux, a former nurse, turned lawyer, turned tech CEO of the medical administration company Synapse.

MARGARET FAUX: And I am also a PhD candidate, and I am almost finished a seven and a half year PhD. And the title of my PhD is ‘Claiming and Compliance Under the Medicare Benefit Schedule: a Critical Examination of Medical Practitioner Experiences, Perceptions, Attitudes and Knowledge’.

MIC CAVAZZINI: Wow, that is headline grabbing. Congratulations—Well, almost finished.

MARGARET FAUX: Well, I’m almost finished. I’m close. I’m close now. And if I want to stay married, it needs to be finished this year.

I should say that today’s podcast isn’t supposed to be a complete introduction to medical billing, nor should it be take as legal advice per se. Margaret Faux presents an academic critique of healthcare regulation, and the examples of non-compliant billing she gives point to holes in the system more than they do to outright fraud.

In a 2019 paper for the journal of Law and Medicine, Margaret Faux walks through the fundamental legislation that keeps Australia’s health system in balance. It all starts with the 1946 social services referendum which led to a section of the constitution covering funding of medical and dental services, as well as unemployment benefits and pensions and so on. But a single phrase in there prevents, and I’m quoting here, “any form of civil conscription.”

This basically means that the government can’t force a patient to see any given practitioner, as compared to the UK’s National Health Service where a person must register with one of the General Practices in their catchment. As Margaret Faux writes, the ‘civil conscription caveat’, “has effectively enshrined the small business nature of Australian medical practice, enabling medical practitioners to set fees as they wish.” So if I go and see a consultant in their rooms they can bill me whatever they want. There is a rebate from Medicare and I have to pay the remaining gap myself. The MBS describes an initial attendance with a consultant physician as item number 110 and the listed fee is $155.60. But the doctor doesn’t actually get all of that rebated from Medicare. For outpatient consults, only 85% of the MBS schedule fee comes back to the provider.

Doctors may choose to accept the government rebate alone and not charge any gap at all. This is called bulk billing, and it’s good news for me as I don’t have to pay anything out of pocket. All that’s needed from me in the bulk-billing scenario is my signature or digital authorisation. There are various reasons a provider could bulk-bill; They might do so specifically for patients with lower economic means, or in a partnership with a public hospital outpatient service, or they might simply practice in a very price competitive area. Only around 30% of specialist attendances are bulk-billed, but this shouldn’t be cause for outrage. As Margaret Faux explained to me, the MBS Schedule Fee isn’t supposed to reflect the full cost of a medical service.

MARGARET FAUX: And this is again, something that’s really poorly understood, not just by doctors, but I think by the whole of Australia. Medicare was never designed to pay doctors. It was designed to subsidise the medical costs incurred by Australians when they go to see their doctor. So it was never intended to pay everything. So that’s why you don’t get 100% of the schedule fee. The doctor will get 85% of the schedule fee in the outpatient context.
Except for GPs. Most GP services—which is a whole other story—are paid at 100%.

You have to understand that the federal government has no constitutional power, authority, to pay doctors. So even if the federal government wanted to pay doctors a salary, it can’t. So when Medicare was established, Medibank actually, with Gough Whitlam, it was a stroke of genius to make the Medicare rebate the property, and I use the word ‘property’ in the legal sense, the property of the patient. So it is for the patient.

MIC CAVAZZINI: Right. So by law I, as the legislation says, I am the ‘eligible claimant’ for the Medicare rebate. And until a few years ago, I used to pay the doctor up front and then claim the rebate back from Medicare myself—Medicare is not set up to pay doctors. So I have to give signed consent for a provider to claim the rebate on my behalf. But you’ve written that this requirement of a signature is anachronistic, and exposes Medicare to misuse. Can you explain why?

MARGARET FAUX: So the signature requirement on the bulk bill voucher is the only time the patient actually looks at something on a piece of paper or a screen, and actually press ‘Yes’. You know, “I’m assigning my benefit”. You cannot—you must not take the patient out of the transaction ever. They’ve got to be in it in some way. Because it’s the only way to protect against their billing of fictitious services. It’s the only way.

So the second phase of my PhD I’ve interviewed 27 doctors, a mix of GPS and salaried medical officers working in public hospitals. And I was re-listening to one just the other day. And this was a GP. And she said to me, “I now see how it can be exploited and have seen it when I take my elderly mother, and they don’t know that I’m a GP, because I don’t tell them. We’ve come out and there’s been a form, and I’ve thought, “That’s not the right item number. That’s not what happened”’. Even if you showed patients the piece of paper with the item numbers on it, they won’t know whether those item numbers are what happened. They have no way of knowing that.

So even with a piece of paper, it’s problematic, because the patients, particularly if you’re bulk billing, they’re not going to complain. So they’re just going to sign it and go. But mostly now, the experience of most people is that they don’t even get a piece of paper. So the reception staff will just say “That’s all done. I’ve put that through to Medicare for you. Thanks. See you later”. So the patient has no knowledge, no ability to know.

MIC CAVAZZINI: So, one of the most common mistakes in bulk billing is the failure to collect or to retain the patient’s authorisation signature. How often does this get called out, and will Medicare absolutely refuse to pay?

MARGARET FAUX: No, it will never be called out. And that’s in fact, again, how dilution of this requirement has rendered the system more vulnerable to abuse. If you look on the Medicare website now, it says there in black and white, ‘you do not need to retain a copy of the signed voucher’. So, yes, you have to get the patient’s signature, that law has not changed, you must get the signature. But once you’ve got it, you do not need to retain that voucher, so think about that. You know, that is just insane. So to your question, no, that can never be now prosecuted, and it should be able to be prosecuted, and it can’t. Because you can say, “Well, it says on your website, I don’t have to keep it. So it went straight in the shredder, go for your life”.

MIC CAVAZZINI: Margaret Faux says she’s often asked what the big deal is whether a service is logged as a bulk bill or not, given that Medicare outlays the same amount of money either way. The distinction is important, however because it gives the government a sense of how sufficient a job Medicare is doing at covering healthcare expenses. If the bulk billing rates are overestimated, this blinds the government to how much money the public is actually spending on healthcare. And providers recording bulk bills while taking further payment, might also earn government incentives they’re not really entitled to.

For similar reasons of data tracking and system planning, consultants shouldn’t just default to the generic MBS item 110 if there are unique attendance items for their specialty. Palliative medicine, addiction medicine and pain medicine are just three examples. And for subsequent attendances there are also distinctions between items 116 and 119, the latter being more suited to a quick visit on a ward round that doesn’t involve significant examination or change of management.

Every item number has a narrow set of conditions that must be met. For example item 132 for longer and more complex attendances is remunerated accordingly, but the visit must last at least 45 minutes and the patient must express at least two morbidities. The corresponding follow up is item number 133, but that can’t be charged more than twice in any 12 month period. Getting these wrong doesn’t mean you’ll be instantly hit with the weight of the law, but claims may be rejected and a lot of time is wasted chasing these up. 

MARGARET FAUX: Another really common area that confuses a lot of doctors is the supervision rules. So there are some item numbers in the Medicare schedule that don’t have to be physically done by a doctor, but do have to be supervised by a doctor. So a common example is an ECG. Doctors don’t do ECGs, and nor should they. They are highly skilled, highly paid individuals, we should be using them for the high-level stuff. But what has happened is, they think genuinely don’t have to be there to supervise it; A nurse does it, and as long as they’re available on the phone somewhere, they can still claim that service. And some doctors have thought they can supervise from outside the country. Doctors have very little understanding about the basics of Medicare. There’s no national curriculum, and that means that everybody has learned it the same way, which is just –


MARGARET FAUX: Hearsay, on the job, making it up

As well as the lack of education about medical billing, Margaret Faux says that sometimes the language in the MBS and the legislation is too ambiguous, and leaves the door open for inadvertent or intentional misuse of items.The small print attached to MBS items sometimes runs for pages, but even before you get to the schedule there are problems.

The Health Insurance Act which governs it has dozens of instances of the phrase “a medicare benefit is payable in respect of a professional service that is rendered by” a medical practitioner or rendered to a patient or whatever. If that’s not clear enough, the glossary only defines a professional service as “a clinically relevant service.” This vagueness leads to great variation as to what practitioners understand a service item description to include.

One problematic case is that of Dr Suman Sood, a GP abortion doctor who in 2006 was charged with 96 counts of Medicare fraud. She had bulk billed a procedure while charging for additional services alongside it. But according to Margaret Faux says, a literal reading of the MBS item number would not lead to an assumption that Dr Sood was double-dipping as alleged by the prosecution. Some of you might have heard that Dr Sood has made other court appearances relating to poor clinical or ethical judgement, but these aren’t relevant to the facts of the fraud case.

MARGARET FAUX: So Dr Sood’s case just struck at the heart of some of the things I was investigating, so obviously, I went down that path and looked at it in a lot of detail. So she was prosecuted and found guilty of criminal fraud. And what she did was she bulk-billed a termination of pregnancy, and on the same day, she, separate to that, charged a fee called a counselling and theatre fee. There was no question that the counselling took place. There were good records that the counselling services were being provided by appropriately-trained nurses and that they were doing their job well.

So the question for the court was they had to determine the meaning of three ubiquitous words in the entire scheme; “in respect of.” What is in respect of a professional service? Where does it begin and end? And if you don’t define it, you cannot assume.

MIC CAVAZZINI: Maybe we should spell out that in this case, the item number, 35643, talks about and only talks about “Evacuation of the contents of the gravid uterus by curettage or suction curettage.” Full stop.

MARGARET FAUX: Correct, Thank you. That’s it. Full stop. That is what it says. So on what basis will Dr Sood have thought that counselling is part of that, that the costs of running operating theatres is part of that? Now, what’s interesting about that, is that operating theatre costs have been charged separately in this country since the ’90s. That’s what health funds do and that’s a part of activity-based funding in the public system—it’s always separate.

I think that the outcome of that case has actually just made things a whole lot more confusing for us. And Justice Adams, who was one of the justices on the Court Of Appeal, dissented in the strongest terms as to the majority decision of the court, and he basically said, “You are asking doctors to interpret law, which they have neither the knowledge or skills or training to do, when even ex post facto, three Supreme Court Judges don’t agree”. And he said that it is unfair to put the doctors in that position and render them liable to criminal responsibility, particularly where there’s nowhere to go for them to find out the answer, prior to embarking on that course of conduct.

MIC CAVAZZINI: And so you and the dissenting appeals court judge have the opinion that by ruling against Dr Sood, it’s actually weakened the significance of those words—that anyone can actually trust what’s written down in black and white?

MARGARET FAUX: Correct. How can you trust what’s written down in black and white? Whilst the MBS Review Task Force is doing some good work in rewriting the clinical descriptions and so forth, that’s not going to help this problem. You can see that right. So that description might still be the description, because the obstetricians and gynaecologists have looked at it and said, “Yep, that’s right. That’s what we do when we do a DNC. That is it. We don’t need to change that one”. But can you see that we haven’t solved the problem? So you can’t rely on what is written there. You can’t.

In fact there is a lot of under-billing is something, a strong theme coming out of my PhD. A lot of doctors just are constantly reporting. They don’t claim things if they’re not sure, or they can’t be bothered, so there’s a lot of that. And what it does is it pushes doctors to not bulk bill too. Because they think “Well, I’m just not going to bulk bill, it’s too risky.”

MIC CAVAZZINI: There’s more chance of error.

MARGARET FAUX: Well, “I’ll charge a private fee, because then I can charge for other things”, and that pushes up out-of-pocket costs. And so what you have to do is try and put a structure around them, that contains the ones that are more prone to pushing the system as far as it can, whilst allowing the others to practice good medicine.

MIC CAVAZZINI: In 2017 the Professional Services Review noticed that some practitioners were billing for subsequent attendances on the same day as they were billing for a procedure, which in their words is “considered to be integral to the procedure and not a separate service”. But to your legal eyes, the MBS has never really satisfactorily defined where one service ends and where the next one starts.

MARGARET FAUX: Correct. Correct. And that, therein lies the problem. Semantics matter. Words matter. The description of the service matters. So if the service is a colonoscopy and there’s nothing in there to indicate anything beyond the colonoscopy, in whose opinion is it that the consultation is included? The procedure’s the procedure. Sometimes it will be clinically relevant to do a consultation, and you should be paid for it.

Where does professional service begin? Does it begin when you park your car? A general practice said to me recently, “Can we charge for parking?”. And then you go in and see the GP. Does the professional service only start then? And when does it end? What about if you’ve shut the door, you’ve finished with the doctor, and on the way back to the reception desk, another real example, the practice nurse sees the bandage that she put on your leg last week, and it’s falling off and it’s disgusting, and she puts a bandage on your leg. Is that a separate service?

So when you get to the front desk and you’re bulk billed, you’ve been charged for bandage, maybe they charged you for parking as well—has a crime been committed? And because we don’t know, we have never defined a professional service, the start point and the end point, and specifically articulated what comes within it, there’s a lot of ambiguity around what is or isn’t compliant medical billing. Everything’s open to interpretation.

Let me give you an example that’ll be really relevant to physicians. So a physician contacted us just, like this happened in the last week. “What can I claim for a home visit? What item numbers can I claim?”. So I said to the team, “Let’s look at item 132”. So physicians listening to this will know about item 132, because it’s a complex initial consultation.

So I said to them, “What does it say about where you can do that service?”. And I said, “Does it say anything about where you can do the service?”. And they said, “I can’t see it”. I said, “Okay, read item 110, the short consultation. What does that say?”. “It says ‘at consulting rooms or hospital’”. I said “Okay. Is that home?”. “No”. “Okay, let’s go back to item 132”. “Oh, it doesn’t say consulting rooms or hospital”. “No it doesn’t. Go back to 2017”. And they look at that item number in the book. And the description of that item number then said ‘surgery or hospital’. It was changed, and no one knows when. But it doesn’t say that anymore. So you tell me, is that an error by Medicare?

MIC CAVAZZINI: Was it intentional?

MARGARET FAUX: Was it intentional? So there’s just one example, really common example, where the physicians are going, “Is that legal? Is it illegal? Can I do that at home? I couldn’t. But now I can. Are we sure?”. And there is no way to go to find that out. There is inconsistencies between the law and the MBS book, and the MBS online version. So the three things which should all be very clearly aligned and should be saying the same thing. They don’t.

MIC CAVAZZINI: To go back to Dr Suman Sood, her conviction was eventually overturned though not through any clarification of the constraints of a professional service and the bulk billing rules. Rather, the Court of Appeal found the trial judge had misdirected the jury on certain processes. The take home message from this discussion is that you shouldn’t assume billing practices are correct because other colleagues are doing the same.

And just because claims have been approved in the past doesn’t mean that they will continue to be in future, as the Department of Health turns its compliance lens to each specialty in turn. MBS Online has a factsheets page with updates on changes to the item numbers as they are revised, and we’ll discuss the compliance and auditing process in the next episode.

As we’ve said, Medicare only provide a subsidies clinical fees and the Australian Medical Association, actually publishes a list of service fees in parallel to the MBS which it thinks more accurately reflects the cost of doing business.So for an initial referred consultation with a physician, the rate recommended by the AMA is $345. That’s almost 190 bucks higher than the MBS rebate, and I would have to pay that gap entirely out of my pocket. Despite my expensive private health insurance policy, my fund won’t cover consultation fees at all.

They’re not playing Scrooge, though. Private insurers are forbidden by legislation to pay for outpatient consults, and that’s actually very well thought out. If funds were able to meet whatever a consultant asked, there would be the temptation for providers to nudge fees higher and higher in a widening spiral. This would be especially problematic in general practice, since this is the front door to the health system for most people. You’d end up with some providers only accepting patients who were covered by private insurance. If you need evidence that a two tiers could emerge like this, a recent NSW parliamentary enquiry has found that some procedures in public/private hospital partnerships are made available only to private patients and recommended that future hospitals remain exclusively public or private.

Let’s shift the scene to inpatient care, where private health funds come into their own. At minimum, they’re required to pay 25% of the MBS schedule fee for a given item number, since Medicare only covers 75% for inpatient services.  As an example, let’s take a common procedure like a colonoscopy examination which is described in item numbers 32222 up to 32226.This diagnostic procedure has a schedule fee of $339 and don’t forget the 70 cents, but if the gastroenterologist wants to charge more than that, there are two insurance schemes that could kick in.

First is the “no gap” arrangement. For each item number, health funds would pay a bonus of 10 to 40% above the MBS rate. In the colonoscopy example, let’s say my fund is happy to cover a bill up to $450. So the full MBS fee plus a “no-gap bonus” of almost $102 goes to my doctor and I don’t pay anything out of pocket.

The other Gap Cover scheme is confusingly called a “known-gap” arrangement. $450 is still the limit that my fund will cover, but they give the gastroenterologist leeway to charge a bill up to $950. For most services, most private health funds assure patents that the out-of-pocket cost won’t be more than 500 bucks if the provider uses their known-gap scheme.

These gaps should be spelled out clearly to a patient, in advance, through an informed financial consent document. I’ve linked to some templates by the Australian Medical Association at our website. This is even more imperative if the provider wants to charge a higher fee still, because in that case then the health funds backs out, and won’t pay a cent more than their minimum required contribution to the MBS fee.

To go back to our diagnostic colonoscopy, the AMA recommends a fee of $985, which is 35 bucks over the known-gap threshold. If the funds drops their assistance, first I’ve got to settle the full bill before chasing up the basic Medicare rebate. Then I’ll end up $646 out-of-pocket rather than $500. For these reasons, the private health insurers do their best to encourage providers to operate within the terms of their gapcover schemes.

And the funds take a very dim view of providers who charge the patient more than what they’re claiming from the fund and from Medicare. These bills are sometimes labelled ‘booking fees’, ‘administration fees’ or ‘presurgical fees’. Whatever the name, any service not identified with an MBS item number is explicitly forbidden in the terms and conditions of funds like Medibank, BUPA and HBF. Information provided to patients on a Department of Health website similarly warns “Your doctor should not charge you fees that aren’t related to your treatment… Doctors sometimes split bills to work around gap cover agreements.”

But Margaret Faux says there are some entirely appropriate reasons for issuing separate invoices. Say that along with a consult you sell a patient some tools for monitoring their condition- that’s got nothing to do with the MBS and should be billed separately. And even if an extra bill is being charged for the ‘privilege’ of booking elective surgery down the track, it’s not clear that the private health funds have any rightful influence over what’s going on in a practitioner’s rooms.

MARGARET FAUX: This is a really interesting area, because it’s something that the health funds have really been talking about a lot in the last 12-18 months, saying, “By participating in our no gap schemes,” which is the inpatient service, “We feel we have the right to control what you, the doctor, charge while you’re in your rooms—if you’ve charged a gap and we find out about it, we’re going to deny you access to the no gap scheme.”

So what the private health insurers are trying to do is get control of out of pocket costs. Can’t blame them for that. It’s not the right approach. And fundamentally, it’s not working. They don’t have any jurisdiction over that part of what happens to you. The only authority, if you like, that the doctor has to comply with there, would be Medicare. Medicare specifically says and has always said, “If you are billing non-clinically relevant services, that is a private matter between you and the patient, and that invoice should not be sent to Medicare.”

So there is a huge misconception out there that split bills are always illegal rorting, and sometimes they are. But very often, they’re not. You can charge for things that are not clinically relevant. Medicare correctly says “Your booking fee, or whatever it is. Don’t send it to us. You charge it separately.” So you’ve got this situation where the doctors are basically between a rock and a hard place.

MIC CAVAZZINI: The funds can themselves rock the boat in other ways. In 2018, for example, Bupa announced that it would only cover gaps if patients were treated at a Bupa-contracted facility, which is a pretty forceful nudge to the market for inpatient care. Is that legal? Has that changed?

MARGARET FAUX: Again, really good question Mic, and this is another area that I’m interested in, because we don’t have managed care in this country, OK. So managed care put really simply is you put the payer in between the patient and the doctor. So the payer is actually deciding clinical matters, or determining “I’m not paying for that. Have you thought about this?”, you know, those types of things. And I think we’re very lucky here in Australia.

Clinical decision making happens between a doctor and a patient in this country, and that is a good thing. So it is a sort of a part of the managed care concept, where it’s like, you have to go to the hospitals we say you have to go to, and we control the doctors who work at those hospitals, because we say to them, “You can only use gap cover schemes for patients in these hospitals, or you can’t work in these hospitals”. And they contract the hospitals in that way. So they’re trying to control some of that process.

Now, here’s my problem with it as a lawyer. The gap cover benefit is the patient’s benefit, right? So again, the patient pays their private health insurance premiums, the patient pays their taxes. The only person putting money into the whole health funding equation is patients, it’s us, it’s our money. So the gap cover benefit is designed for the patient.

MIC CAVAZZINI: It’s your policy.

MARGARET FAUX: It’s your policy.

MIC CAVAZZINI: You should have the choice of where to apply it.

MARGARET FAUX: Correct. So again, the law across that, as you would expect, Mic, now you’ve spoken to me for a while, it’s not in one place. It’s never in one place. It’s not like there’s a section of an act that says, ‘here’s the rule’. It’s partly contract-based; It’s partly in the private health insurance legislation; in the gap cover legislation, all that suite of legislation; as well as contracts. It’s definitely opaque, and currently untested.

MIC CAVAZZINI: The 36 health funds in Australia are all competing to put attractive products to the consumer market. But these have to be put before the Health Minister, and once approved, the funds have to stay within these goal posts. Again, the tight regulation of their gap contributions is an important pressure valve on fee inflation in the sector.  It’s not an easy marketplace for consumers to navigate, and it can be very confusing for patients to receive bills from several different providers for the one procedure. Particularly when a patient comes through a public hospital but is asked after admission whether they want to be seen as a private patient.

That would be an advantage for the providers, of course, who are then able to access payments from a private health fund. But the advantage to the patient may not be so apparent. It’s not like elective surgery where a private patient might choose a surgeon who’s available with little delay, or who works at a hospital with five-star beds. In a mixed public private setting, the patient might end up getting exactly the same care either way. But if the provider now charges within a known-gap scheme or perhaps even more, the patient might be surprised to suddenly have unexpected out-of-pocket costs.

It is entirely up to the patient whether they want to employ their private insurance policy, and there are specific forms that a patient or guardian must sign before providers start claiming. Margaret Faux has some great YouTube videos for consumers on navigating all this called “A minute with Margaret.” I asked her run through some of the questions a patient can ask the health provider on the way in.

MARGARET FAUX: It’s different for surgeons, and elective surgery in particular, because the first time a patient sees a surgeon, if you’re having elective surgery, is you go and visit them in their rooms. And that is the time when you should be saying, getting as much detail as you can about fees and charges, not just for the surgeon but if possible, saying what do you know about the anaesthetist? What about an assistant surgeon? All of that information, gather as much as you can. You could also say to the doctor, “Will you treat me as a no gap patient?”, and if the doctor says yes, well, that’s great.

But that’s one doctor. The problem is when you go to hospital, you might go in with a broken bone and end up having a little cardiac thing. And then the broken bone doctor doesn’t charge you, but then the cardiologist comes along and does, or vice versa. Sometimes it’s really hard Mic, because the first time a physician sees a patient can very often be in a hospital bed. Now, that patient really, it’s too late, then. Patients need to be asking the questions if they can, if they’re conscious, and not in too much pain, they need to be asking the questions at the point of admission. “Can you guarantee me that if I elect to be private, I will not receive a bill from anyone for anything,” other than perhaps I might have to pay an excess on my private health insurance because that’s what I signed up for with them. Maybe I’ve got a $300 excess.

So it’s actually something I’m making recommendations for reform in my PhD. Doctors need patients, and we need patients to want to use their private health insurance because that benefits doctors too. But we have to protect patients from out-of-pocket costs where possible. So one of my recommendations for a form deals with that.

MIC CAVAZZINI: And from the patient’s point of view, you said in one of your little videos that we won’t end up with a utopian system where patients only receive one bill when they leave hospital. Explain this bureaucratic quagmire.

MARGARET FAUX: Look, it that isn’t going to happen anytime soon. Mostly, again, it comes back to the constitutional provision in Section 51(23)A. Doctors are private business owners. So for example, if you look at it in a surgical environment, so there might be a surgeon, a surgical assistant, there could be pathology, there could be diagnostic imaging. Separate to that there’ll be a hospital accommodation and operating theatre bill and so forth. All of those people or organisations are independent business owners, they each have a contract with the patient. They do not have a contract with each other.

Now, the simplistic answer, and solution to that problem is ‘Well, just make them have a contract with each other.’ Let’s just do something overarching that gives them all a contract with each other. Well, the problem there is that it has tax implications. So the surgeon collects all the money from the patient and the anaesthetist, surgical assistance anybody else will have to invoice the surgeon afterwards and it will be a taxable supply then, because you’re no longer providing as an anaesthetist, a service to a patient which is tax free, GST free, I should say. So that is not a simple thing.

MIC CAVAZZINI: No one’s putting up their hands to organise that.

MARGARET FAUX: To deal with that, yeah.

MIC CAVAZZINI: So, Synapse. Your company’s raison d’étre is to rebuild trust between the different stakeholders in health. So describe what is this mistrust that you observe between consumers, the service providers and the payers?

MARGARET FAUX: Okay. So we believe that most payers want to pay. They just want to know that they’re paying for the right things at the right price. We also believe, and I know from my 30 years’ experience, that most doctors or providers are trying to do the right thing by payers if only they knew what that was. It is quite common for a medical practitioner to have the experience of submitting a claim that is paid one day and then not the next day. What’s happening in the moment with things like the MBS Review Task Force is they’re just changing item numbers constantly, there’s constant change. And it’s very difficult to keep up with it. And the change is inconsistent with the hospital billing codes.

Now in Australia, there are Medicare benefit schedule codes. But we also have other codes, International Classification of Disease Codes that are used in hospitals. But every transaction is based on coded data. Code sets are updated, they have to be. Medical technology is just racing ahead. So we discover new things, new treatments, new tests that we have to do. So there will always be updates and changes, but the changes are happening so rapidly, and that’s actually out-of-keeping with international best practice standards.

So what’s happened over time, is that the rules become so complex, so byzantine that providers just throw anything at the payer and think, “Look, I don’t know if this is right or wrong, but this is what I did. So I’m going to submit that and see if it gets paid or not”. And, of course, the perception at the other end of those claims, if you’re the payer, and you are receiving claims, when you see that those claims are wrong, you build this perception that everybody’s trying to rip you off. And what happens then is payers start resisting payment and using all sorts of strategies and tactics to delay payment, and you can’t blame them.

And of course, when the payment stops flowing, in a healthcare system, patients feel the brunt of it. Because what happens is, providers start saying, “Look, you pay me up front, and you sort out your rebates yourself. I’m sick and tired of fighting with payers”. So I remember thinking some years ago, wouldn’t it be better if we just got this whole thing right from the start? That we didn’t let claims go through unless they were right. So one of the key things we’ve done at Synapse is we’ve built Australia’s very first medical billing rules engine to enable compliant billing.

MIC CAVAZZINI: So they’ll enter two or three item numbers for services they have provided on that day, and there’ll be a little flag that comes up says, “Nuh uh, those two are incompatible”?

MARGARET FAUX: Exactly. It’ll say “Uh uh, you can’t have those together” or “Oops, you’ve already claimed one of these in the last 12 months”, or “Oops, you’ve put two item numbers, two consultations in the same day”. Very common, very common, particularly for people in acute settings like intensiveness cardiologists. So we’re up to 18,000 rules at the moment. I think that once we get to about 50,000 rules, I think we will have most of the rules that affect most of the people most of the time. So the average rate of rejections it varies across specialties, but probably 10 to 20% is fairly normal. And now with our app, we’ve got it down to sort of 0.2% in some sites and that’s just better for everyone. It’s better for everyone. Patients payers and providers.

MIC CAVAZZINI: Many thanks to Margaret Faux for giving so much of her time to this episode of Pomegranate Health. The views expressed are her own, and may not represent those of the Royal Australasian College of Physicians.

You can find more information about Margaret’s billing engine at SynapseMedical.com.au. The MBS Online factsheets and other resources mentioned today are linked at our website racp.edu.au/podcast. That’s also where you can claim CPD credits for listening, sign up to our mailing list, and see all the amazing members of the editorial group who helped me out with this story.

If you found this story useful, please share it with your colleagues, and do send any feedback to podcast@racp.edu.au. I’m Mic Cavazzini. Thanks for listening.



Thank you for posting your comments

21 May 2024

Rahul Handa

Excellent talk Very informative

24 May 2023

Ramesh Arora

listening to this in an era close to retirement!

14 Jul 2020

Stephen Langford

This is a very good overview of the complexities of private billing of particular value to new Fellows who have trained in the public hospital system and don’t understand Medicare and the MBS system or its history. The guest Margaret Faux is excellent and really knows her stuff. Made the clear point that Medicare does not pay doctors but subsidizes patients. My only suggestion is it could have further clarified that private practice costs for non-proceduralists are well in excess of MBS subsidies and that private billing, such as at the level of AMA fees, is the only way to sustainably run a private practice. It can avoid problems trying to ‘game’ the items to recover more. With current CoViD19 and the potential to use more telehealth for reviews, it is even more important to avoid bulk-billing and just create and charge non-rebateable private fees for service. Physicians are independent professionals like lawyers, accountants etc. and have to calculate a fee level to cover costs and provide sustainable income. Coming from closeted well paid salaried service in government hospitals, this is not clear to many new trainees and Fellows.

26 Mar 2020

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