Fraud prevention and compliance – Increased billing assurance for the Medicare Benefits Schedule

Final Report – Extract Executive Summary

Page last updated: 09 February 2016

Report Note: Due to machinery of Government changes, the Health Provider Compliance function transitioned to the Department of Health on 5 November 2015, therefore references to the department refer to the Department of Human Services.

Executive Summary

The 2012-13 Budget measure, ‘Fraud prevention and compliance – Increased billing assurance for the Medicare Benefits Schedule (the Large Practices Project), was implemented by the Department of Human Services (the department) over a three-year period from 1 July 2012 to 30 June 2015. The Budget measure was proposed in recognition of the Medicare compliance challenges associated with the changing nature of health practice, from small owner-operated medical practices to larger business enterprises. The Budget measure provided $7.6 million and aimed to achieve savings of $20.7 million.

While the department was responsible for delivery of the Large Practices Project (the project), there was extensive consultation and collaboration with other stakeholders, including the Department of Health, health sector peak bodies and practice staff.


The objectives of the project were to understand and address compliance challenges for large health practices in billing accurately under Medicare. For the purpose of the project, a large practice was defined as a practice where four or more health practitioners at the same location rendered services that were claimed under Medicare.


The project comprised four sub-projects:

Sub-project 1: Data and systems
    • To conduct data analysis and identify gaps.
    • To design, build and test a prototype database for large practices.
Sub-project 2: Develop capability and trial systems
    • To conduct research by survey of practitioners and practice managers on factors influencing Medicare billing accuracy.
    • Through stakeholder consultation and co-design, to develop and trial a new systems-based approach to billing assurance in practices (the Medicare Billing Assurance Toolkit).
Sub-project 3: Education and communication
    • To review and update existing Medicare billing education resources
    • To design a new webpage to educate practitioners about their responsibilities when billing under Medicare.
    • To send letters to practitioners to provide compliance education and encourage behaviour change.
Sub-project 4: Practice-based practitioner reviews
    • To identify possible inappropriate practice by reviewing all practitioners at a single location where there were concerns of possible over-servicing, and following interview, to address remaining concerns through behaviour change or referral to the Director of Professional Services Review.


The department collects Medicare data about claims by individual patients for services rendered by individual practitioners. Unlike the Pharmaceutical Benefits Scheme (PBS), the department has limited visibility of financial, business and geographical associations between practitioners and/or business owners in relation to payment of Medicare benefits. Despite these limitations, the department identified approximately 12,000 large practices in Australia, of which 65 per cent have four to seven health practitioners.

Survey responses from 786 practice managers and practitioners confirmed that business models of general practice are changing and highlighted that:
    • practice managers or their staff have more responsibility for Medicare billing than expected;
    • while the level of Medicare knowledge is the most significant factor influencing accurate billing, the majority of practitioners learn about billing accurately under Medicare through informal means, including on-the-job; and
    • practice or business protocols affect accurate Medicare billing.
Findings did not support the initial assumption that a large practice, by virtue of its size, was more at risk of non-compliant Medicare billing. Accuracy in Medicare billing was influenced by a range of attitudinal and behavioural variables characteristic of individual practices, irrespective of their size. Therefore a large practice where accuracy was paramount and billing assurance valued could be very compliant. However, if the opposite attitudes and behaviours existed, then an increased number of practitioners at a practice may increase the overall risk of non-compliant billing from that site.

A total of 40 large practices across Australia volunteered to participate in the trial of the Medicare Billing Assurance Toolkit (the Toolkit). Feedback from the post-trial questionnaire showed that 61 per cent of trial participants found the Toolkit helped to reduce the risk of incorrect billing in their practice; and 57 per cent of trial participants made changes to their systems, protocols or procedures as a result of using the Toolkit.

During the project, practitioners and practice managers confirmed an eagerness for education to help them to bill accurately under Medicare. There were over 19,000 views of the online education resources developed or enhanced under the project. These include the ‘Billing accurately under Medicare’ webpage, ‘Billing accurately under Medicare’ vodcast, and the ‘Responsibilities for billing accuracy’ eLearning topic. The purpose-designed education letter with individual practitioner’s Medicare data that was sent to a targeted audience was more effective than the general education letter sent to all practitioners.

Large practices in metropolitan areas accounted for the majority of practices (88 per cent) where Medicare claims data indicated possible over-servicing by four or more general practitioners in the practice. Practice-based Practitioner Review Program (PRP) interventions were conducted at 30 large practices. Of the 207 health practitioners interviewed, 189 (ninety one per cent) addressed the department’s concerns at interview or after a period of review. The department requested the Director of Professional Services Review to review the provision of services of 18 practitioners (nine per cent).

In summary, three strategic risks for Medicare compliance were identified:

    Regulation risks due to possible policy, legal and system gaps in the current Medicare regulatory framework in relation to practices as business entities with responsibilities and accountabilities for Medicare compliance.
    Intelligence risks due to gaps in practice level data available to the department that may enable the detection, analysis and appropriate treatment of non-compliance by health practices.
    Knowledge risks due to gaps in the knowledge of practice staff and health practitioners about Medicare billing that hinder their ability to comply with Medicare requirements.

Savings Achieved

The department achieved up to $71.5 million in savings over the three years of the project. Of the total savings, 96 per cent ($68.4 million) was attributed to behaviour change following the practice based PRP interventions.

There was a significant increase in behavioural change savings per PRP interview conducted under the project, compared to the 2010 PRP savings assumption on which the Budget measure was based. For each practitioner interviewed under the project there was an average estimated saving of $185,000 per practitioner, compared to a saving of $76,000 per practitioner in 2010.

In addition, a peer group effect was measured for the first time. Analysis showed an estimated average saving of $75,000 from behaviour change of each practitioner who was not interviewed under the PRP, but who was located in a large practice where other practitioners underwent a PRP interview. Subsequent analysis showed that a practice-based approach (conducting PRP interventions on multiple practitioners in one practice within a short timeframe) achieves behaviour change savings of approximately $27,000 more per practitioner attributed to peer influence, compared to peer influence when only one practitioner at the practice is interviewed under the PRP.

No savings were identified as a consequence of sending the general education letter ‘Billing accurately under Medicare’ to over 104,000 health practitioners in 2013. Savings of approximately $2.5 million were associated with behaviour change following mail-out of a targeted education letter in May 2014 to 262 general practitioners.

The savings approach used to identify behaviour change for the practice-based PRP sub-project was reviewed by PricewaterhouseCoopers in June 2015, as part of a broader review of the savings methodologies in use in the Debt, Appeals and Health Compliance Division.


Health practices across Australia are adopting multi-practitioner and multi-disciplinary business models. Practice managers and business owners appear to be taking a greater role in Medicare billing. However the department’s compliance focus has traditionally been directed at individual practitioners due to the nature of Medicare data and legislation. A practice-based approach would enhance the department’s capability to detect and address possible inappropriate practice and to achieve behaviour change. While individual practitioners still need to be aware of their responsibilities and accountabilities when rendering services under Medicare, more education is needed for practice managers and owners. The Medicare Billing Assurance Toolkit is a fine example of how the department can, through research and close collaboration with the profession, develop tools to assist health practices minimise their risks and bill correctly under Medicare. Ten recommendations are provided in relation to a practice-based approach to Medicare compliance.