Friday, October 2, 2015

Deceptive Surgical Billing Practices

Last year, the Royal Australian College of Surgeons issued a Press Release on the matter of excessive surgical fees.  The then President states “Although government data shows that almost 90 per cent of medical services in the private sector last year had no associated costs to patients we are still seeing reports in the media of excessive and even extortionate fees”.

How does the Government and other health organization’s get hold of this data? 

Lets look at the typical billing situation. When a surgeon bills a patient for a surgical service in the private sector, the entire fee is provided on an invoice with a breakdown of costs as appropriate.  The privately insured patient will take the invoice to Medicare Australia and their Health Fund.  Medicare and the Health Fund will pay 75% and 25% of the Medicare Benefit Schedule (MBS) Fee respectively. Most surgeons charge above the MBS fee and the difference between their surgical fee and MBS fee is the out of pocket gap payment that is the responsibility of the patient.  Obviously, data on the amount of the gap payment can be recorded. 

As a result of the publicity directed to the excessive amounts of gap payments, some surgeons had every reason to believe that information being collected about their practices had the potential to come back and bite them in the future. 

I used to think that this data was reliable. 

It never crossed my mind that surgeons would think of rorting this data collection to hide the fact that they were charging exorbitant fees.

I was contacted by an old friend who asked to catch up with me for a coffee.  Let's call him Bart (not his real name). Bart is smart man, and smells bullshit from a mile off. He had a story that he wanted run by me for my opinion. 

His wife had undergone surgery for breast cancer and had been referred to a plastic surgeon for breast reconstruction.   The surgical fee was quite large at $15,000 but he was prepared to pay this as the surgeon had come especially recommended by the oncologist, whose opinion they trusted unconditionally.  To be clear, he specified that he had no complaint or concern about the amount of the surgical fee. 

Bart wanted to reconcile why he was being given two separate accounts.  He was given one account for the value of $5000 which was to be the paperwork to be taken to Medicare and the Health Fund.  A further receipt was given for $10,000 which was attributed to gap payment.  This receipt made no reference to being a surgical service for which a rebate from Medicare or a Health Fund could be obtained.  Bart indicated that this seemed to be a bizarre way of doing things and had his suspicions that this might be something to do with deceptive practice.  It is easy to see how most people would not give it further thought since they have been billed exactly what they had been quoted. 

He saw my lights go on as he relayed this story to me.  It was plain obvious to me that this plastic surgeon was trying to deceive the Federal Government as to exactly what he was really charging the patient.  He was attempting to distract from any future attention that might be directed to him as a surgeon who was charging in the higher echelons for his surgical services.  As far as the government would be concerned, he was only charging $5000 for his surgical services in spite of the real fee being $15,000.

This is not illegal but I call it out for being a deceptive and unethical practice.

(The amounts are not the actual dollar amounts that Bart and his wife were charged but rounded to nearest sums to help illustrate the billing practice and to protect his anonymity.)


  1. Where money is concerned many of us are ethically "flexible". It's not that you choose to chege a fee, but there has to be a perception of fairness. It is not a free market, as specialists are referred to by another doctor, limiting the patient's choices and knowledge of the marketplace. Imagine if you could only buy cars from one dealer. What would that dealer do if they were unscrupulous?

  2. Where money is concerned many of our colleagues are less than ethical. The system of referral to a specialist also means the there is no free market for specialists, making the perception that the more expensive one is the better a false one (sometimes expoused by some of my patients). Imagine if you could ony buy a car from a designated dealer. You couldn't chose whether you are getting a Hyundai or Mercedes. The dealer would also know you are locked in and could charge what they want.