‘I felt really betrayed’: Patients say they’re being overcharged due to a Medicare loophole
- Replies 0
Navigating the healthcare system can be complicated, especially when it comes to specialist referrals and Medicare billing.
What seems like a routine process for patients seeking ongoing treatment has, in some cases, led to unexpected financial burdens.
Now, concerns are being raised about whether certain billing practices are fair—or if they’re taking advantage of a system meant to support patients.
When Dagmara was diagnosed with melanoma five years ago, she never imagined she’d need to scrutinise her medical bills as closely as her skin.
‘I felt really betrayed, and I felt like they were taking advantage,’ she said.
‘I realised this is just the business for them.’
Under the current system, patients who need a specialist—such as a dermatologist—are required to obtain a referral from their GP.
The first consultation, known as an ‘initial attendance’, attracts a Medicare rebate of $84.15, while follow-up visits come at a lower rebate of $42.30.
However, referrals typically expire after 12 months, forcing patients to return to their GP for a new one if they wish to continue claiming a Medicare rebate.
This is where a loophole comes into play.
If a patient returns to the same specialist with a fresh referral, some clinics classify the visit as another ‘initial attendance’—even if the patient is receiving ongoing treatment for the same condition.
Dagmara discovered she had been billed as a new patient every year for five years, despite seeing the same doctor for most of her visits.
Documents confirmed she was charged between $260 and $342 per visit, leaving her about $200 out-of-pocket after the Medicare rebate.
‘Everything is extra, so you can easily get out with a $1,000 bill,’ she said.
Three of her five visits were with the same doctor, meaning she should have been billed as a returning patient.
The remaining two were with new specialists, where a fresh ‘initial attendance’ charge would be legitimate.
Despite querying Medicare, Dagmara’s clinic continued to insist the charges were correct.
‘It’s not only me, it’s thousands of people every year who have basically been treated as a cash cow,’ she said.
According to lawyer Dr Margaret Faux, who has a PhD in Medicare billing, this practice is illegal if a patient is still receiving treatment as part of a ‘single course of treatment’.
‘I’d say there’s a fairly significant amount of overcharging, price gouging, gaming because if you do have a new referral in your hand as a specialist, the temptation is strong,’ she said.
Dr Faux, who runs a business specialising in medical billing services, said Medicare billing issues were widespread.
‘A specialist will say, “well, that’s what the specialist who taught me did. They never got in trouble, and so I won’t either”,’ she added.
A 2020 Deeble Institute report echoed these concerns, finding that repeat referrals cost Medicare $220 million annually and patients an additional $74 million.
Report co-author Samantha Prime said the practice discouraged patient-centred care and could lead to people delaying treatment due to costs.
‘There is a bit of a perverse incentive within the system to maintain the status quo, because it allows for those initial consultations to be billed at a higher rate,’ she said.
A spokesperson for the Department of Health and Aged Care confirmed that under Medicare, an initial attendance should only be rebated once in a ‘single course of treatment’.
Australian Medical Association Vice President Dr Julian Rait acknowledged that Medicare could be difficult to navigate for both patients and doctors.
‘It’s confusing for patients and practices as well,’ he said.
He explained that in some cases, patients might develop a new condition between referrals, which would justify a new initial consult.
‘We would be open to working with the government to improve rules and make it less complicated,’ Dr Rait said.
Medicare’s referral system presents further complications, particularly with ‘indefinite referrals’—which are meant to provide ongoing access to specialists without the need for renewal.
These are commonly used for conditions such as diabetes or mental health disorders, but patients sometimes find that Medicare randomly rejects their rebate claims, leaving them with unexpected costs.
Dr Faux said the system lacked consistency.
‘So it might have been turned off after 18 months. Might be after three years. There is no rhyme or reason to it,’ she said.
Dr Rait noted that in his experience, indefinite referrals could sometimes be rejected after five years.
A Health Department spokesperson advised that if an indefinite referral was denied, the doctor or patient could contact Services Australia for more information.
Other barriers in the system further complicate access to care.
Some hospital outpatient clinics require patients to name a specific specialist on their referral, a process known as ‘named referrals’.
If a patient arrives with a general referral, they may be sent back to their GP for an amended letter—despite laws stating hospitals must accept patients regardless of whether a specialist is named.
Similarly, specialist-to-specialist referrals expire after three months, which often doesn’t align with the waiting periods for follow-up care.
The Deeble Institute report found that these restrictions led to unnecessary delays and increased costs for patients.
‘The impact can definitely be delayed care. The stress that it places our consumers under can be quite considerable, and it is unnecessary,’ Ms Prime said.
A spokesperson for the Consumers Health Forum of Australia said they regularly received complaints from patients frustrated by the cost and rigidity of the referral process.
‘What CHF would like to see is a move towards longer and more flexible specialist referrals, which could include longer/indefinite referrals for ongoing conditions,’ they said.
‘We still want to see more unnamed referrals happening. This will increase flexibility and enable consumers to more easily use a referral for a specialist of their choosing.’
To ensure accurate Medicare billing, the Department of Health said it was investing in education and consultation.
They also confirmed the establishment of a task force to review Medicare’s integrity, with doctors encouraged to self-assess and voluntarily repay any incorrectly claimed benefits.
Dagmara, however, simply wanted to be treated as a patient rather than a customer.
‘I look for somebody who cares about patients, and who understands the implication for me,’ she said.
With Medicare billing practices leaving some patients out of pocket, do you think the system needs a major overhaul? Let us know your thoughts in the comments.
What seems like a routine process for patients seeking ongoing treatment has, in some cases, led to unexpected financial burdens.
Now, concerns are being raised about whether certain billing practices are fair—or if they’re taking advantage of a system meant to support patients.
When Dagmara was diagnosed with melanoma five years ago, she never imagined she’d need to scrutinise her medical bills as closely as her skin.
‘I felt really betrayed, and I felt like they were taking advantage,’ she said.
‘I realised this is just the business for them.’
Under the current system, patients who need a specialist—such as a dermatologist—are required to obtain a referral from their GP.
The first consultation, known as an ‘initial attendance’, attracts a Medicare rebate of $84.15, while follow-up visits come at a lower rebate of $42.30.
However, referrals typically expire after 12 months, forcing patients to return to their GP for a new one if they wish to continue claiming a Medicare rebate.
This is where a loophole comes into play.
If a patient returns to the same specialist with a fresh referral, some clinics classify the visit as another ‘initial attendance’—even if the patient is receiving ongoing treatment for the same condition.
Dagmara discovered she had been billed as a new patient every year for five years, despite seeing the same doctor for most of her visits.
Documents confirmed she was charged between $260 and $342 per visit, leaving her about $200 out-of-pocket after the Medicare rebate.
‘Everything is extra, so you can easily get out with a $1,000 bill,’ she said.
Three of her five visits were with the same doctor, meaning she should have been billed as a returning patient.
The remaining two were with new specialists, where a fresh ‘initial attendance’ charge would be legitimate.
Despite querying Medicare, Dagmara’s clinic continued to insist the charges were correct.
‘It’s not only me, it’s thousands of people every year who have basically been treated as a cash cow,’ she said.
According to lawyer Dr Margaret Faux, who has a PhD in Medicare billing, this practice is illegal if a patient is still receiving treatment as part of a ‘single course of treatment’.
‘I’d say there’s a fairly significant amount of overcharging, price gouging, gaming because if you do have a new referral in your hand as a specialist, the temptation is strong,’ she said.
Dr Faux, who runs a business specialising in medical billing services, said Medicare billing issues were widespread.
‘A specialist will say, “well, that’s what the specialist who taught me did. They never got in trouble, and so I won’t either”,’ she added.
A 2020 Deeble Institute report echoed these concerns, finding that repeat referrals cost Medicare $220 million annually and patients an additional $74 million.
Report co-author Samantha Prime said the practice discouraged patient-centred care and could lead to people delaying treatment due to costs.
‘There is a bit of a perverse incentive within the system to maintain the status quo, because it allows for those initial consultations to be billed at a higher rate,’ she said.
A spokesperson for the Department of Health and Aged Care confirmed that under Medicare, an initial attendance should only be rebated once in a ‘single course of treatment’.
Australian Medical Association Vice President Dr Julian Rait acknowledged that Medicare could be difficult to navigate for both patients and doctors.
‘It’s confusing for patients and practices as well,’ he said.
He explained that in some cases, patients might develop a new condition between referrals, which would justify a new initial consult.
‘We would be open to working with the government to improve rules and make it less complicated,’ Dr Rait said.
Medicare’s referral system presents further complications, particularly with ‘indefinite referrals’—which are meant to provide ongoing access to specialists without the need for renewal.
These are commonly used for conditions such as diabetes or mental health disorders, but patients sometimes find that Medicare randomly rejects their rebate claims, leaving them with unexpected costs.
Dr Faux said the system lacked consistency.
‘So it might have been turned off after 18 months. Might be after three years. There is no rhyme or reason to it,’ she said.
Dr Rait noted that in his experience, indefinite referrals could sometimes be rejected after five years.
A Health Department spokesperson advised that if an indefinite referral was denied, the doctor or patient could contact Services Australia for more information.
Other barriers in the system further complicate access to care.
Some hospital outpatient clinics require patients to name a specific specialist on their referral, a process known as ‘named referrals’.
If a patient arrives with a general referral, they may be sent back to their GP for an amended letter—despite laws stating hospitals must accept patients regardless of whether a specialist is named.
Similarly, specialist-to-specialist referrals expire after three months, which often doesn’t align with the waiting periods for follow-up care.
The Deeble Institute report found that these restrictions led to unnecessary delays and increased costs for patients.
‘The impact can definitely be delayed care. The stress that it places our consumers under can be quite considerable, and it is unnecessary,’ Ms Prime said.
A spokesperson for the Consumers Health Forum of Australia said they regularly received complaints from patients frustrated by the cost and rigidity of the referral process.
‘What CHF would like to see is a move towards longer and more flexible specialist referrals, which could include longer/indefinite referrals for ongoing conditions,’ they said.
‘We still want to see more unnamed referrals happening. This will increase flexibility and enable consumers to more easily use a referral for a specialist of their choosing.’
To ensure accurate Medicare billing, the Department of Health said it was investing in education and consultation.
They also confirmed the establishment of a task force to review Medicare’s integrity, with doctors encouraged to self-assess and voluntarily repay any incorrectly claimed benefits.
Dagmara, however, simply wanted to be treated as a patient rather than a customer.
‘I look for somebody who cares about patients, and who understands the implication for me,’ she said.
With Medicare billing practices leaving some patients out of pocket, do you think the system needs a major overhaul? Let us know your thoughts in the comments.
