Doctors accused of fraudulent billing while health insurers pocket record profits

Nearly 50 doctors in Victoria, including anaesthetists and surgeons, are facing serious allegations of fraudulent billing practices.

A former employee has accused the specialists of charging patients additional fees of up to $5,000 while claiming to participate in “no gap fee” arrangements with private health insurers. The allegations suggest the doctors also misrepresented their billing practices to Medicare, stating they were “bulk billing” patients while levying so-called “booking fees” or “administrative fees.”

“These allegations are deeply disturbing because of the trust patients put in their specialist doctors,” said Dr Rachel David, CEO of Private Healthcare Australia (PHA). “There is a huge power imbalance between patients and doctors. We know many consumers do not understand their medical bills, which means most people wouldn’t know if they were getting charged inappropriate fees or not.”

However, some healthcare professionals have turned the spotlight back onto health insurers. A Melbourne-based orthopaedic and spine surgeon Dr David Edis took to social media, writing, “I agree that if there are doctors committing fraud, they should be pursued and prosecuted to return the confidence in the system.

“However, we should not ignore that health insurers are deceiving their clients when they don’t cover treatment gaps when doctors don’t sign up to their version of fees, which can be less than 50% of AMA recommendations. Let’s debunk all the myths & secrets in the system before casting stones from our glasshouses!”

Dr Nicole Fairweather, a Queensland anaesthetist, echoed concerns about insurer practices, stating that private health insurers negotiate anaesthetics fees at just a third of the Australian Medical Association (AMA) recommended rates.

“I have zero time for anyone undertaking illegal, unethical or fraudulent billing practices,” she wrote on social media. “However, see this for what it is: A very clever doctor-bashing piece designed to sow seeds of doubt and mistrust in the profession and improve the ability of private insurers to take over our lives.”

Medical fraud and compliance expert Dr Margaret Faux disclosed that the names of all implicated specialists at the Mornington Peninsula medical clinic are known. Dr Faux suggested there may be grounds for a class action lawsuit to compensate affected patients if the allegations are proven.

Meanwhile, health economist Stephen Duckett called for transparency and accountability where doctors who are overbilling patients are named and shamed on a public register.

The controversy is further fuelled by survey findings released by PHA. Of 4,172 patients treated under “no gap fee” arrangements, 31% reported being charged additional fees, while 23% of those treated under “known gap fee” arrangements faced out-of-pocket costs exceeding $500.

Adding to the storm, an ABC Four Corners investigation aired earlier this year, alleged widespread overbilling in spinal surgeries. The report, based on data from 23,000 patients provided by six private health funds and analysed by Dr Faux, claimed that up to 80% of spinal surgery patients were charged for more complex services than provided, 10% were billed for longer services than performed, and 7% were charged for spinal fusions without a chronic lower back pain diagnosis.

Former AMA President Professor Steve Robson criticised the investigation’s methodology at the time, saying, “It would have been better for insurers to work with the Department of Health and Aged Care to look at the data, and have it properly assessed against MBS requirements – in consultation with clinicians who understand what is involved in a procedure.

“The ABC did not approach any of the relevant specialist colleges or societies for comment or input before publishing its story.”

Private health insurers have also come under fire for their financial practices. Brett Heffernan, CEO of the Australian Private Hospitals Association (APHA), recently highlighted the insurers’ record profits.

“It’s a matter of public record that health insurers reaped a record $2 billion profit last year, and this year are looking to rake in even more, having pocketed $800 million in the first quarter of 2024 alone. Damningly, over this period, the benefit payments to private hospitals actually fell. That tells you all you need to know.”

The AMA continues to push for reform, urging the federal government to mandate that private health insurers return at least 90% of their revenue to customers. As the fallout in the private healthcare sector continues, patients are caught in the crossfire of a fractured system.

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