Exposure of medical service providers’ unsatisfactory billing practices, has been gaining strong momentum. These practices take multitudinous forms: billing for services not provided; providing medically unnecessary services; upcoding; unbundling; and double billing. These practices are not unique to Australia. They are widespread and more complex in the United States and are monumentally taxing on their public purse, estimated at $60 billion per year compared to an estimated $2 billion per year in Australia. There are also other less well-known practices such as provider-patient collusion and sophisticated kickback schemes by and between different types of providers.

What is unique to Australia however, is the poor compliance framework within which the providers operate and seek reimbursement.

The oversight agencies such as Medicare Australia appear more consumed with detection, typically through audits – the coverage of which has increased this year from 0.7 per cent to 4 per cent of the total provider population. While detection is unarguably important, less overt attention is directed towards prevention. But even the increase in audit coverage appears anomalous because the law remains ambiguous as to the rights and responsibilities of Medicare Australia and providers in relation to gaining access to the information necessary to perform audits (although in most instances providers are cooperative). Further, Medicare Australia’s 2008–09 National Compliance Program, which details their approach, is a mere 28-page booklet of which over a quarter is devoted to full-page photographs and other items of non-substance.

While the booklet makes much of the measures Medicare Australia will take to detect fraud, there is no mention and no imposition of measures to prevent it. In the United States, there is a virtual requirement for all types of medical providers (doctors, hospitals, hospices, laboratories, teaching institutions, long-term care facilities and others) seeking reimbursement, or those who are bulk-funded by the government, to develop their own effective compliance programs. Unlike Australia, the US government provides detailed guidelines specifically applicable to each provider type. All healthcare compliance programs in the United States, regardless of the provider type, must share seven sacrosanct elements. They: (1) call for the development and distribution of written policies and procedures and standards of conduct; (2) appoint a compliance officer and a compliance committee; (3) develop an appropriate education program; (4) provide for internal monitoring and auditing; (5) build internal structures to enable reporting and investigation of concerns or allegations; (6) provide for enforcement and discipline; and (7) have a system to respond to detected offences and must allow for corrective plans or initiatives.

Australian Standard 3806, first introduced in 1998 and last revised in 2006, largely reflect these elements. It is one of over 7000 Australian Standards created by Standards Australia, the peak non-government standards body, with the input of some 8000 technical, business government and other experts. AS3806 assists both public and private sector organisations in developing and implementing effective compliance programmes and is of cardinal relevance to those who operate under a legislative or regulatory framework. It has also become a benchmark for Australian regulators when assessing an organisation’s compliance programme.

It is doubtful whether providers have adopted AS3806 if they even know of its existence. In any case, it is inappropriate for governmental health agencies to rely, if they do, on AS3806 because it is so broad that it applies to virtually any industry. The health sector is inherently and uniquely complex and would require a significantly higher level of tailored guidance. Further, it is alarming that the Australian Standards, even though they have no statutory recognition unless enshrined into statute, are available only for purchase, especially given that the Australian courts, as do the United States courts through their Federal Sentencing Guidelines, view compliance programs as having a mitigating effect on penalties and sentences.

For those providers resolved to resorting to improper practices, no compliance program will matter and only significant penalties or prosecution will be the appropriate response. The difficulty is in separating inadvertence from intent.

The consequence of these provider practices is not limited to the perpetrator’s unjust enrichment. It affects every Australian. Not only is waste, fraud and abuse unlawful or otherwise unethical and takes critical resources out of our health care system, it contributes to the rising cost of health care for all Australians and harms the short-term and long-term solvency of essential governmental health programs. It is time for Australia’s federal and state governments to respond with the imposition of vigorous measures, not only on themselves but more importantly, on the providers. Specialist enforcement personnel or agencies need to be enhanced, evidence-gathering powers need to be clarified and strengthened and penalties are in need of review with a number of those convicted of fraud receiving light penalties.