Medicare is broken — but there is more to the story

Australians love cars and rely on them every day. Imagine, then, a $30 billion scheme to subsidise automotive repairs. Mechanics, being the experts who completed years of training, would be tasked with deciding what work is appropriate in what circumstances and to bill “Autocare” accordingly.

Over time some prominent mechanics, researchers and motorist groups begin to ask questions. Is the scheme used judiciously? Why are there more mechanics in wealthy suburbs? Why are vastly different repairs conducted for the same problem? And why does this variation correlate with whether people have additional “private motor-repair insurance” (which is subsidised by the government)?

Meanwhile, people on low incomes who drive more problem-prone cars find it more difficult to access services and become reliant on the increasingly strained public transport system.

The questions culminate in a national TV report claiming that a third of all Autocare money is misappropriated through “over-servicing”, systematic billing errors and straight-out fraud. The Australian Mechanics’ Association and specialist groups like the Royal Australian College of Transmission Fluid Experts react with fury…

Let’s stop there.

The analogy isn’t meant to make light of the allegations this week on 7:30 and in Nine newspapers about the rorting of Medicare. It’s meant to illustrate how peculiar Medicare actually is as public policy, especially the trust placed in a single profession to ensure our money is spent on the right things.

We’ll get to that, but first let’s clarify some things about the story. Firstly, Medicare in this context is not the healthcare system. It’s an itemised fee schedule for services provided by specialist doctors in private practice. It doesn’t cover public hospitals, where most of our health dollars are spent, and whose staff (doctors as well as nurses) have borne the brunt of COVID-19. Public hospitals are funded through a different stream, and their medical staff are paid a salary, not per intervention.

Secondly, the allegations relate to three areas: deliberate fraud, systematic billing mistakes, and over-servicing. These are three distinct problems with very distinct causes. Plus there’s little information on how the report’s figure of $8 billion in “wasted” Medicare spending was calculated. At least some mention of data and methods would have been good given the size of the figure and the different nature of the causes.

Finally, the revelations are not new. Not only do reports of the problems identified by Dr Margaret Faux, the Medicare expert at the centre of the new investigation, go back to last year (remember the hysteria when some redundant and low-value Medicare items were scrapped?), but we’ve known about variability and questionable medical practice for decades. For someone who has done a fair amount of work examining the quality and safety of healthcare, the only thing that really surprised me about the report was the timing and the sensational way in which it was presented.

We have strong evidence that points to some major problems with the way medicine is practised:

• We see outrageous variations in practice that cannot be explained by patient differences. An adult living in Dubbo is 56 times more likely to undergo a heart perfusion scan than someone living on the outskirts of Adelaide, for example
• The decision to perform an angiogram appears to be driven more by whether a patient is in a private hospital than by their underlying cardiac disease
• Australians are almost twice as likely to be admitted for conditions that should be managed out of hospital than people in other developed countries
• A study by a group of respected Australian clinicians and researchers found that only 57% of adult patients received care that was “in line with evidence-based or consensus-based guidelines”. A follow-up study of children found compliance to be 60%.

The medical profession establishing the social legitimacy and authority it has is arguably its most remarkable achievement. But alongside findings such as those above, claims that “the doctor knows best” take on a different hue.

What’s really fascinating about the lack of consistency in the quality of care is that it is (thankfully) not deliberate. Providers are unaware that some aspects of their practice might be problematic, and indeed convinced that their work is in line with norms and standards. It could hardly be otherwise, could it? Otherwise we’d have to diagnose entire swathes of the profession as sociopaths.

Three main reasons explain this phenomenon.

First, we sometimes forget that medical professionals are human. Underneath their proven aptitude for acquiring an astounding level of skill, they are just as frail and susceptible to insecurities and unconscious biases as everybody else. Perhaps, it could be argued, even more. How likely are you to question the real-life effectiveness of a procedure you just spent seven years mastering? 

Part of this problem is how we select and train health professionals. I’m not talking about things like teaching anatomy, physiology and surgical techniques. I mean soft skills: listening, learning, humility, teamwork — perennially important but even more so now in the era of multi-morbidity and patient-centred care. Equally important is learning about error, bias and human factors. In this regard, medical education could do with a bit of humanities. (I’ve always thought The Magic Mountain should be essential reading for medical students.)

The human frailties are amplified by the fact that medical science is advancing at lightning speed. Nearly 30,000 systematic reviews are published each year! Nobody — no matter how successful their matriculation — can absorb even 1% of that on top of a clinical workload.

The second reason is fee-for-service (FFS). This is Medicare’s payment model and there’s hardly an independent expert that says it doesn’t need to be replaced with something that reflects modern health challenges and medical science. FFS rewards doing stuff, and the reward rises with the complexity of the procedure (and often the patient too). Choosing a more conservative (but equally effective) option is not rewarded as much. We observe a high association between over-servicing and FFS.

This is why “robot-assisted surgery” is promoted as if were resulting in better outcomes than the surgeon’s hand. (It doesn’t except in certain procedures, like a partial nephrectomy.) The patient is happy because they think they’re getting superior care, while the surgeon is happy because the patient is happy, they make more money and get to play with fancy tech — and probably believe that in their hands the robot performs better than in the clinical trials.

Perhaps the most curious thing about FFS is that the medical profession claims decisions are not influenced by remuneration (despite a rich literature demonstrating how it affects clinical decisions), yet any mention of changing the fee-for-service model is met with threats that it would compromise care quality. Which is it, guys?

The third problem is a lack of transparency and data. Medicare does not collect any systematic information on outcomes — how patients fare over time. To be fair, not many health systems do. Providers, therefore, have no way of knowing how their practice compares to their peers. Couple this with protections of patient confidentiality and you realise why only a slim majority adhere to best practice, or why we see a 50-fold variation between demographically similar postcodes.

For a profession claiming to be scientific, this attitude towards scrutiny is highly unscientific. It could do itself a favour and get behind ongoing calls to systematise the collection of data such as patient-reported outcome measures (PROMs).

But in many cases, there’s an irrational fear of such measurement. Instead of seeing it as an opportunity to improve their practice and their patients’ health, it is seen as an encroachment on professional autonomy. (I once had a brief conversation with a former president of the World Medical Association who was against using PROMs partly because “many things other than medical care determine a patient’s outcome”. To which I replied that we should perhaps adjust medical fees accordingly.)

Anyway, back to the $8 billion claim. The true amount is probably not that large — it would put us on par with the world’s most inefficient healthcare system. But there’s no question that a figure exists. And even if that figure is a third of the estimate reported this week (a more likely scenario, it’s still a lot of money), the fact is that Medicare is broken. It’s leaking money through conscious but, I would argue, predominantly unconscious clinical behaviour.

Fixing it in the short term needs more income equity across professions. In the long term it needs a change in medical culture, reaching right back to education and training, through to enforcing transparency that will enable continuous reflection and comparison of outcomes (and catch the bad apples quicker). It will also require the move away from fee-for-service to a blended payment model and payment reform (which we’re told doesn’t matter anyway).

Perhaps we do trust our medical professionals too much (or our mechanics too little). Many doctors, patients, consumers and others have been pointing to these problems for decades, backed by empirical evidence here and abroad.

Little has happened so far. Hopefully the $8 billion figure, even if a little sensational, will trigger some action.

Is Medicare broken? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.