The Government’s move to investigate the outsourcing of Medicare payments is being presented as an attempt to modernize what is primarily an administrative process – one which can be done more effectively and efficiently by private sector organisations (for example see this editorial in the Sydney Morning Herald) than by a government agency. In question time last week, the Prime Minister argued that the proposal was about finding a ‘more efficient way of transacting with citizens, with patient, consumers’ and denied that it would have any impact on healthcare.
But is Medicare more than simply a passive payment system which can be handed over to an external (and quite probably non-Australian) company without any adverse impact on consumers? David Glance, Director of the UWA Centre for Software Practice has argued in The Conversation that the Government has a poor record in attempting to outsource the management of health-related data.
In the following piece, Margaret Faux, the founder and managing director of one of the largest medical billing companies in Australia, also challenges the Government’s position and argues that the proposal to outsource Medicare payments could lead to long-term and irreversible changes to the fundamental nature of Medicare.
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Margaret Faux writes:
If paying a Medicare claim was as simple as buying a stamp, we wouldn’t be having this conversation. And while some payments from Medicare to a GP are straightforward, an equal number of claims are complex and rely on the length of procedures, the number of illnesses suffered by a single patient, the complexity of the surgical technique, the number of patients seen on a ward round and the list goes on.
Each of these parameters has a unique set of rules when claiming the Medicare item numbers, and that is only for bulk billing. There are more rules when health funds are involved, not to mention Veterans, or those injured at work or on the road. These complexities are necessary to keep pace with the infinite variability of the human condition and the ever changing health care environment. People aren’t letters and medical treatments are not stamps.
It is breathtakingly naïve to think that any business that is well run could master these complexities or that good business processes are all that you need to run a health care system.
Too many codes
I’m heading to another meeting with the executives of a public hospital in the coming weeks to explain codes. Requests to attend such meetings usually come from frustrated clinicians who become concerned when they perceive that hospital administrators are unintentionally exposing them to Medicare compliance risk.
In my experience this is most commonly attributable to a failure to understand that the bedrock of Australia’s medical billing system is not ICD (International Classification of Diseases) and DRG (Diagnosis Related Groups) codes, but the MBS (Medicare Benefits Schedule). Unfortunately, confusion in this area is widespread and exists at the highest levels.
A few years ago I attended a meeting with a number of the most senior state health department officials to discuss medical billing. In a tense moment a public servant barked “Look, it all derives from the DRGs.” It doesn’t. And it wouldn’t have been so alarming had it not been for the fact that this person was then responsible for overseeing medical billing operations for private and ineligible patients in all of the state’s public hospitals.
Lack of understanding
The operation of Australia’s health funding arrangements is complex and poorly understood even by Australians. This is in no small part because twenty years after the introduction of the first MBS in 1975, Victoria adopted Casemix funding utilising ICD and DRG codes for hospital claims.
After Casemix success in Victoria, a newly named Activity Based Funding system was rolled out across the country and today, many hospitals use the ICD, DRG, ACHI code mix (yet another set of codes – the Australian Classification of Health Interventions – which were conveniently mapped using the MBS, but let’s leave those for another time, there are way too many acronyms in health) for all hospital claims. But medical claims for doctor’s services remain firmly rooted in the MBS.
It is here where one finds the source of much of the confusion – the difference between a hospital claim and a medical claim and which codes attach to which.
Hospital vs medical
A private patient admission in Australia involves two separate claims: the hospital claim for the accommodation and operating theatre fees, and the medical claims for services provided by the doctors. They are completely separate claims, have different sources of funding and require different administrative skill sets because an Australian clinical coder who codes the hospital claim, will often know nothing about Medicare billing.
Understanding these codes is useful when considering why some foreign companies with vast experience in their own more mature ICD based medical billing markets have already failed in attempts to replicate their experiences here. In the US for example, the coding of the hospital claim and the medical claims are part of the same ICD continuum and can sometimes be processed by the same individual. Whereas in Australia the two claims involve not only separate codes, but are governed by completely separate regulatory frameworks.
The medical billing market here in Australia is immature when compared to countries like the US, where sophisticated enterprise level software solutions have been developed for claims processing. This makes Australia an attractive new medical billing market for foreign corporations, but the government should be aware that bids from companies with substantial medical billing experience in foreign jurisdictions does not necessarily mean that they can easily translate their systems and processes to the Australian context.
I’ve been employing and training Australian medical billing staff for a long time and have become cautious about employing anyone with prior US medical billing experience unless I’m confident they understand that their experience will have little relevance in the work they will do, and can appreciate that our system is unique to Australia, because ICD fixation can really get in the way.
Medicare curriculum content
That said, there’s no denying that all of the named companies, both foreign and local, who are hovering for this work have deep pockets, the capacity to integrate new information, learn new systems and undertake massive projects. But the question remains; where will they learn about Medicare? Who’s going to teach them how it works and the millions of tiny details they will need to know in order to program the new software or run operations or both?
We currently do not have a national curriculum on Medicare claiming and compliance or anything resembling one, and yet over time Medicare claiming law has become as complex as other areas of law like taxation and corporations law. If you think about tax for a moment you find a robust supporting infrastructure comprising experts who have at the very least completed undergraduate studies in tax law or tax accounting.
These experts who act as our tax advisers and accountants can be relied upon for accurate and detailed advice and support because they have academic qualifications and are regulated and supported by professional bodies such as the Institute of Chartered Accountants.
Corporate knowledge
There is nothing like this when it comes to Medicare and much of ‘the knowledge’ does not even exist in a written form anywhere. It’s not in the MBS, nor is it in the Health Insurance Act 1973 (Cwth) or Regulations, there’s no one book to read or single website to visit, it’s just something those of us working in the area have learned on the job over many years.
Of course we don’t know yet exactly what is within the scope of the government’s plans, but there has been speculation that outsourced services may include functions which are currently performed by the Department of Human Services.
Imagine a doctor calling a newly outsourced Medicare provider liaison hotline to ask a common question about which referral to use when there are three referrals all open and valid after the patient came through the emergency department, but was referred in by the GP, but then the neurology team requested a rehab consult, but the rehab consultant to whom the referral was directed was on leave and the registrar did the consult in her absence.
Or a question from a GP about whether it’s OK to charge an administration fee when bulk billing, if the administration fee is not billed by the doctor but by a separate legal entity. Or an anaesthetic claim where the procedure was part cosmetic and part claimable and the anaesthetist asks how to split the claim legally when it’s not possible to just divide the time up because some of the MBS items claimed relate to patient comorbidities rather than the time taken, plus he also wants to bill on behalf of the anaesthetic assistant who isn’t yet registered for Medicare online claiming.
It’s all part of the daily grind in the world of medical billing and it’s sometimes challenging even now to get correct answers. But incorrect advice can lead to non-compliant claims and accusations of overservicing or rorting for which the most serious penalties are criminal sanctions. Australian doctors have sole legal responsibility for every Medicare claim submitted under their name and provider number and it is alarming to think that an organisation with zero knowledge might take up critically important roles such as provider liaison.
Conflicts of interest
One of the most important considerations for Australians in the Medicare outsource debate is the inevitable conflicts of interest which would be introduced with private sector involvement, particularly in relation to payment processing.
The reality is that the person who controls the release of the money wields enormous power, determining if, when and how much of the money is paid out. This is already a problem which is hidden from public view inside the private health fund schemes, where Medicare pays an amount of 75% of the schedule fee to the health fund, who must then pass it to the doctor with any additional amount.
Some funds pass the payments promptly, others pass the Medicare component only but hold their portion pending receipt of further information, and others routinely hold onto all of the money for weeks and sometimes months. What they do with the Medicare money during that period is purely speculative and there’s not much providers can do other than continually call to enquire as to when they can expect to receive payment.
The case for modernisation
Medicare does need to be modernised and upgrading legacy software is a logical part of this process, but critical functions such as actual payment processing must be retained by government where patients rather than profits will drive service delivery. There may also be other supportive functions that would lend themselves well to a centralised outsource delivery model such as manual data entry, however it is important to remember that anything outsourced, no matter how insignificant, will create some loss of corporate knowledge from within the department.
The private sector is good at some things like executing a standard service, say posting a letter, but when the service involves constant variability the private sector sees an opportunity to enhance profits. So be cautious with Medicare because once outsourced there’s no turning back.
Margaret Faux is a lawyer, the founder and managing director of one of the largest medical billing companies in Australia and a registered nurse. She is a research scholar at the University of Technology Sydney
