Double-dipping Medicare funding pool

This is the fifth article in a monthly series from members of the GPs Down Under (GPDU) Facebook group, a not-for-profit GP community-led group with 5800 members, that is based on GP-led learning, peer support and GP advocacy.

COST-shifting. Ask any doctor at the primary care coalface and they’ll tell you about the tension between public hospital services (funded by the states) and services provided in primary care (privately billed, but for which eligible services attract a Medicare rebate).

Funding rules for health in Australia are carefully laid out in the National Health Reform Agreement (NHRA). This makes it clear that states are to manage public hospitals and that charges against the Commonwealth are not to be raised; while the Commonwealth carries the lead responsibility for primary health care and other private health services.

But there is a loophole. NHRA clause G19(b) allows patients to claim Medicare rebates for their public hospital visits when they have chosen a specific named consultant who treats them “as a private patient”:

G19. An eligible patient presenting at a public hospital outpatient department will be treated free of charge as a public patient unless:

a. there is a third party payment arrangement with the hospital or the State or Territory to pay for such services; or
b. the patient has been referred to a named medical specialist who is exercising a right of private practice and the patient chooses to be treated as a private patient.

While Medicare in general does not require referrals to be “named”, NHRA clause G19(b) does, specifically to support patient choice. Meanwhile, NHRA clause G17(c) is very specific that referral pathways must not be controlled so that a referral to a named specialist is a prerequisite:

G17. Services provided to public patients should not generate charges against the Commonwealth MBS [Medicare Benefits Schedule]:

a. except where there is a third party payment arrangement with the hospital or the State, emergency department patients cannot be referred to an outpatient department to receive services from a medical specialist exercising a right of private practice under the terms of employment or a contract with a hospital which provides public hospital services;
b. referral pathways must not be controlled so as to deny access to free public hospital services; and
c. referral pathways must not be controlled so that a referral to a named specialist is a prerequisite for access to outpatient services.

This is why primary care doctors are frustrated with repeated requests from hospital outpatient departments for named referrals for specific consultants in public hospital outpatients. These requests are often crafted to imply that a named referral is a mandatory requirement for the patient to be seen – with the (sometimes explicit) corollary that failure to comply will deny access. Requests may offer patients the opportunity to be bulk-billed and not the choice to be treated as a private patient. Sometimes a named referral officer may claim to have contacted the patient and obtained their informed consent.

There’s another loophole: because Medicare does not require a named referral, once a named referral has been obtained, the patient’s choice of doctor is dismissed as an inconvenience and a clerk allocates the patient to any doctor or clinic that suits the State. The patient might even be treated by a registrar in “Dr X’s” clinic.

This cost-shifting from the State to the Commonwealth funding pool flies under the radar of both Medicare and the Professional Services Review (PSR) panel. The PSR exists to monitor appropriate billing of Medicare item numbers and has no oversight of the NHRA requirements. Medicare seems to lack any means to match data between Commonwealth and State activity, and is thus blind to this cost-shifting cash grab by state hospitals.

The biggest lever to improve Medicare rebates for primary care is the political desire to keep the populace happy. Primary care doctors are concerned that bulk-billing rates are being artificially inflated as public hospitals cost-shift into Medicare and bulk bill for outpatient services, which would be ineligible if a named referral had not been extracted.

But there ain’t no such thing as a free lunch! Medicare is not a magic pudding because there is a single, finite National Health Funding Pool.

Primary care doctors who are members of the 5800-strong GPs DownUnder Facebook group, are concerned that demands to legitimise public hospitals access to the community care end of the funding pool are increasing. Meanwhile, the most cost-effective component of the health system – primary care – remains stranded in the frozen shallow end of Medicare rebates. It just doesn’t pass the “pub test” that patients who choose to be treated as a private patient of a named specialist lose that choice as soon as the public hospital extracts the Medicare funding.

So, what exactly is the problem?

The terms of the NHRA (Table 1) seem to be flouted by public hospitals.

Table 1. Terms of the National Health Reform Agreement [NHRA]

Many primary care doctors are fed up. Not only are these requests an abuse of a loophole in the system, but they also mean increased (unpaid) paperwork for primary care. Receiving a request for a named referral is an unwanted administrative burden for the primary care specialist, who has already given consideration to whether a referral is needed and, together with the patient, elected to use the public hospital.

It appears to be a blatant rort of Medicare to support public hospital funding. The MBS is clear that the states are responsible for providing public hospital services and that these should be provided free of charge. There is provision within the NHRA – in NHRA G19(b) – for patients to elect to be seen privately (and a Medicare rebate claimed) under certain circumstances. However, this only applies if requested by the patient – not demanded by the hospital as a funding model.

We all understand that hospitals need the money, yet many of us are concerned. There is no doubt that primary care is incredibly cost-effective; a trip to the emergency department or public hospital outpatients clinic is estimated to receive at least $250 in funding, whereas a typical primary care specialist consultation of up to 20 minutes attracts a rebate of $37.05.

Raiding the imaginary Medicare magic pudding to prop up hospital services means there’s less in the pot for primary care to do its work.

Is there really a patient choice? 

Patients have the right to choose whether to be seen in the public system or privately. This decision invariably occurs at the initial point of referral – a primary care specialist performs relevant history and examination and, if required, may turn their mind to the need for a referral. The decision to refer as a public or private patient is made at the initial consultation.

It is somewhat galling to then receive a letter from the hospital “admindroids” stating that “your patient has elected to be seen privately by ‘Dr X’ and a named referral is required” even though the conversation between the hospital and patient has actually been something along the lines of:

“Hello Mr X, this is the public hospital outpatient clerk calling. I see that you’ve been booked to be seen in outpatients. The wait for a public patient is 24 months, but if you go back to your GP and ask for a named referral, you can be seen privately much sooner. Don’t worry, it’s free. You will be bulk-billed.”

This blurs the boundaries of choice, of denying access depending on public versus private, and wastes the time of the primary care doctor who has already made a valid referral.

The following text message sent from a tertiary teaching hospital outpatient department to a member of GPs DownUnder shows a real example of this happening. It seems clear that this is all about the money:

Dear Doctor,

We have contacted the following patient, who has chosen to be treated as a bulk billed patient in order to be seen quicker in clinic. As a result, we request an amendment to the presently unnamed referral for the following patient [patient name here]. For your patient to be treated in a bulk-billed clinic, please amend their referral to be addressed to any of the below staff specialists [specialist names here]. It would be greatly appreciated if you could return the amended referral at your earliest convenience. Failure to supply a correct referral will result in your patient not being seen. Each time outpatient services are bulk billed, the recovery of funding allows for the delivery of improved services to the local community and your patients.

Named Referrals Officer

It should be noted that named referrals do not necessarily mean the patient will see the named clinician.

Medicare does allow a referral to one specialist to be used to see another in same practice, but it’s drawing a long bow if the named referral is used to claim a bulk-bill Medicare rebate when the patient sees a registrar in training and the supervising consultant pops their head in for a few seconds, this is an abuse of the system.

Patients are threatened with denial of service. Demands for a named referral are typically couched in terms implying that the patient will not be seen unless a named referral is provided.

At this point many primary care doctors will just sigh and pick up their pen. After all, it’s just a signature. But to do so is unprofessional and implies tacit approval of this cost-shifting exercise by the hospital system.

What does the primary care community want?

In a climate where Medicare rebates for primary care remain woefully insufficient and any infringement of Medicare rules is likely to attract the attention of the PSR, perhaps it’s not unreasonable to expect the same restrictions as outlined in the NHRA to be adhered to by state governments.

As a minimum:

• ensure that any patient referred to a public hospital outpatient department is seen in a timely manner;
• insist that private (bulk-billed) outpatient services, where present, exist in parallel – not as a replacement for public outpatient services. The default setting should be “public outpatient services funded by the State”;
• mandate that priority of access is determined by clinical need, not referral status (private v public);
• that provision for a named referral is used only in specific circumstances, being a choice of the patient at the time of initial referral by their primary care specialist (not a default position demanded by the hospital to access funding).

The ultimate sanction by frustrated primary care doctors would be to copy any request for a named referral to the PSR panel, especially if it appears clear that the request is driven by funding needs.

Go HARD or go home

Primary care is under increasing pressure: funding cuts, lack of appreciation of the complexity of our work by hospital-based partialists and the ever-enduring perception by the public, by hospitals and by health administrators of being #justaGP. But perhaps it’s time for us to fight back.

To help with this, the GPDU group has developed a template for responding to requests for named referrals that can be stored as auto text in medical software and printed out with a simple mouse click – we have affectionately named this the “Hospital Admindroid Referral Deflector” (HARD) document. We encourage primary care clinicians to “go HARD” – install this auto text in your software and deploy at will:

Dear <insert admindroid name here>,

Thank you for your letter regarding <patient name> whom I consulted on <date>, at which time an informed choice was to be referred to the outpatient department as a public patient.

As such, I was surprised to receive your letter demanding a named referral and the implied threat that my patient would not be seen in a timely manner (if at all).

I should remind you that my patient has a valid referral and elected to be seen as a public patient. Their appointment priority should be determined by clinical need, not compensable status.

I am gravely concerned that the demand for a named referral is being used to control access to services and to double dip Medicare funding for public hospital services. I do understand that there are pressures on public hospital funding; however, there are also significant pressures on primary care services.

I suggest your hospital executive consider the relevant aspects of the Medicare Benefits Schedule (MBS) and National Health Reform Agreement (NHRA), as I am concerned that attempts to influence patient choice in order to access Medicare funding for outpatient services may be an issue for the Professional Services Review panel to consider.

Specifically, I need to remind your hospital of the following:

• “referral pathways must not be controlled so as to deny access to free public hospital services” – NHRA G17(b);
• “referral pathways must not be controlled so that a referral to a named specialist is a prerequisite for access to outpatient services” – NHRA G17(c);
• “an eligible patient presenting at a public hospital outpatient department will be treated free of charge as a public patient … the patient chooses to be treated as a private patient” – NHRA G19(b);
• “the major elements of Medicare are contained in the Health Insurance Act 1973, as amended, and include … free treatment for public patients in public hospitals” – MBS GN.1.2;
• “State and Territory Governments are responsible for the provision of public hospital services to eligible persons in accordance with the [NHRA]” – MBS p24 GN.6.16; and
• “public hospital services are to be provided free of charge to eligible persons who choose to be treated as public patients in accordance with the [NHRA]” – MBS GN.10.26, p 31.

I trust that this information is of use to you in re-evaluating your demand for a named referral.

In the meantime, I reiterate that my patient has elected to be seen as a public patient, has a valid referral for this and that their access to outpatient services should not be delayed nor prevented on the basis of whether referred as a public or private (bulk-billed) patient.

Please confirm that they will be seen forthwith.

Yours etc

cc. Patient,
cc. CEO Hospital,
cc. Local MP (optional)

Dr Tim Leeuwenburg is a rural proceduralist on Kangaroo Island, South Australia. He spends his time balancing primary care, emergency medicine and anaesthesia, as well as writing “roadkill recipe” cookbooks and fiddling with chainsaws. When not working, he is an active contributor to FOAMed (free open access medical education) and social media. He’s an administrator for the GPs DownUnder and Rural Anaesthesia DownUnder closed Facebook groups. He blogs at KIdocs.org and tweets as @kangaroobeach.