New Medical Practice Payroll Tax Ruling: How you pay your contractor doctors may affect your bottom line

New Medical Practice Payroll Tax Ruling: How you pay your contractor doctors may affect your bottom line


Did you know that payroll tax applies to your medical or healthcare practice? 


This article was first published by the Medical Republic on 24th of September 2021.


The latest $795,292.95 payroll tax decision is Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2021] NSWCATAD 259 (3 September 2021) reveals a clearer way in which State Revenue offices makes sure to collect revenue from sources other than income taxes. If you are not aware, or if you haven’t been paying attention, continue reading to learn how this affects you.


The latest medical practice payroll tax case is the Thomas decision. It is about a general practice with three locations that has engaged contractor GP doctors who were paid 30% of the patient fees they had generated. 


Dr Thomas was billing, on behalf of his doctors, patient fees and charging a flat 30% service fee on everything the doctors had billed.


Despite the contractors holding themselves out as individual sole traders, co-located on the same premise, their income was deemed to be a relevant contract and subject to payroll tax.


Sadly, Dr Thomas had lost his case. He was hit with an eye-watering payroll tax bill. 


For over three decades across Australia, I have seen this common type of arrangement. Many unknowingly share similar errors. Engaging lawyers and accountants can be a grudge purchase. Alternatively, something to put into the ‘I am too busy’ or ‘it’s too hard’ basket. With the benefit of hindsight, it may be a cheaper alternative to do something now while you can. 


The case is a timely warning to reexamine your agreement and practice arrangements today.


This alarming decision sets a new NSW Tribunal precedent that many other hungry State Revenue Offices will be watching with interest. 


It is clear it is next to impossible for an experienced well-trained barrister to help practices comply. The rules are opaque. They seem to have more mutated interpretations than the coronavirus and we might have stumbled on a Delta variant.


This is my optimistic assessment. Being subject to an audit can be a financially debilitating and demoralising experience. They can be never-ending. Some practices I know have been waiting for up to 8 years for a multi-million decision. In one case, a practice website triggered a full-scale investigation because it said “Our Doctors” and “Our AGPAL accredited general practice”.


Your next level option is going to Court. This is rare. It takes a special kind of person(s) who is prepared to put everything on the line. You need to be pretty sure of yourself. We thank those who are for their courage. We can learn from you. We all should do our utmost to help them. 


In the end, we need everyone’s help to lobby for change. 


  1. I did not know payroll tax applied to my practice?



Having written extensively about medical practices and complying with payroll tax before, this decision may come as a shock to you as it has to me. 


It’s important for those who practice as an independent medical or allied health contractor to know what type of practice they work with and what that means for them and their practice. 


For my regular followers, you know I do not like the ”C”contractor word. When it comes to statutory authorities, this can be like holding out a red rag to a bull. We prefer the name Tenant DoctorTM  as a more appropriate description. 


Primarily because the practice should act as the landlord providing support services and the practitioner is the tenant who purchases these services based on a percentage of the individual practitioner’s gross billing.  


If you happen to work at a large group practice (circa greater than 4 to 5 full-time equivalents, it is time to take careful notice. 


One day, do not be surprised if your practice charges you a higher service fee to cover any payroll tax owed. For contractors, depending on your practice size and location, this can be up to 4.95% of what you are getting paid each month.


It is time to reexamine your agreement and practice arrangements now.


2. The new payroll tax case that will affect many practices





COVID-19 has certainly hit the hip pockets of State Revenue Offices around the country. NSW and Victoria have been hit the worst. At first glance, this latest decision appears to be the Delta variant of all decisions depending on who you talk to. 


After working with many solicitors and barristers who have front row tickets to this and other similar payroll tax matters, it seems in this decision how you pay your doctors may irrevocably get you caught up in an audit and there is no clear solution.


If upheld, this decision could mean Uber, Deliveroo, building contractors and many other industries could easily be caught. This decision appears overwhelmingly too broad, unworkable and therefore appealable in a Court if you have the deep pockets to go with it.


The various State payroll tax laws are no different to the MBS interpretation rules. Currently, there are no clear Court precedents for general or medical practices, other than possibly confusing State Tribunal decisions. In 2016, the closest more authoritative Court case appeared in allied health called the Super Optical Court case. This had begun to reveal some key practical issues for practices to review.


The latest decision leaves open a new world of avoidable uncertainty. It can only fuel a hungry State Revenue Office to go after low-hanging fruit practices that have paid little attention to the ever changing interpretation of rules. You would be naive to think a well-written contract was a silver bullet solution. In this decision, the opposite may be true.


Unchallenged, it will have a significant systemic impact on general practice compliance costs and practice morale, valuations and succession planning. In these COVID times, our community’s front line GP defence teams are once again being hit with a greater threat, but this time it is from within. 


Ultimately, practices will be forced to pass these costs to patients. Those on razor thin profit margins will be forced to significantly cut costs, merge or close. It is a problem that does not appear to be going away anytime soon.


Interestingly, smaller practices may stand to benefit over large practices. I would not be surprised to see GP contractors moving to smaller practices, if larger practices do not proactively address these concerns today.


Nobody is really immune, you still have to properly protect yourself and ensure you do not unintentionally self-incriminate. It is not easy and you are not alone. 


Your accountants and legal advisers are also struggling to get a grasp of this problem.


3. How the new ruling could affect your medical or healthcare practice



The recent Thomas decision is a less authoritative Tribunal decision. It has not dissimilar arrangements, from a favourable general practice decision called Homefront Nursing Pty Ltd v Chief Commissioner of State Revenue, from the 25th of July 2019. 


A key takeaway from those involved in this case was their failed defence in arguing the effect of bulk billing and Medicare assignment of income. 


As established in the Homefront Nursing home case, when GPs bulk billed Medicare and assigned the patient responsibility to the Government and not the practice, it appears to have been a key argument demonstrating the doctors individual clinical practice was separate from the practice who was in the business of providing practice management support services for a percentage of the doctors gross fees.


Unfortunately, in the Thomas case, this argument appears to have fallen on deaf ears. 


Curiously, the judge spent little time explaining his reasons for knocking back the Homefront Nursing defence. 


He simply relied on the Super Optical case. He relied on the “flow of funds/payment” argument. 


This established, that if there is any flow of funds between the practice and the provider or anyone associated, this will be deemed a relevant contract where obligations are imposed, such as restraints of trade. The High Court had refused to hear the matter. In other words, only local State politicians can change this ridiculous outcome. 


This has caused much confusion and angst amongst professional legal and accounting circles. 

Many feel the jury is still out on this one. I am less inclined to think so. The possible solution remains in your practice agreements and systems.


Deemed “relevant contract”


In the Thomas decision, this case would deem your contractors as employees if you have a “relevant contract” with them. The barrister from the case has advised me, the employee or contractor test is totally irrelevant. It is about how providers are paid and any obligations that are attached to the payment.


How the doctors are paid between associated bank accounts creates the problem. It deems a “relevant contract” for payroll tax purposes. 


Ultimately, this leaves a practice and contractors open to a large retrospective payroll tax bill. I have seen some go back up to five years and be tied up for many years. 


Practices face a significant payroll tax dilemma. They will feel forced to include their normal employee staff pays, e.g., for administration and nursing staff with how they pay their doctors or healthcare workers. This means each month they would need to add and submit each provider’s patient fees net of service fees charged against their individual gross patient billings.

  

If they exceed their relevant State’s payroll tax threshold (which varies from state from $650,000 p.a. to over $1.5m p.a.), payroll tax will be payable. Payroll tax on wages, fringe benefits, and now how much you have paid your contractors can vary depending on location and threshold from 0% to 4.95%


Getting contractor doctors to bank patient fees in their individual name will not save you



It does not matter if patient money is first banked in the contractor’s own bank account or the money is held in trust on behalf of the provider. Practices engaging in auto debit arrangements for a provider’s gross fees can be caught under the anti-avoidance provisions. If there is a doctor/director or employee connection, you will fall foul of the rules.


The banking arrangements trigger the deemed relevant contract provisions that may give rise to unexpected payroll tax liability.


This seems to fly in the face of how accountants, solicitors, and real estate agents’ trust accounts work. One may argue if this is true, surely payroll tax should apply to them as well as Uber, building contractors and other industries that have intra payment systems.


The ramifications are serious. There are practices with over 60 doctors and providers. Technically, each of them would have to have a separate EFTPOS/Credit card merchant facility at the front desk. This is impractical. As a former trust account and banking auditor at KPMG, this would open the practice to fraud. It would be impossible to introduce affordable watertight fraud controls.


Group practices with in excess of 4 full-time equivalent GPs or high billing specialist practices need to be very careful.  


No obligations are key to any arrangement



A key takeaway from this case is to remove obligations on the provider which may be deemed a relevant contract (a second supply). The first supply was the provider providing clinical services to individual patients. 


The second supply which appears to be the problem are obligations the provider has to the practice. In past articles, we have given numerous warnings about what not to put into your contractor agreements. These were raised again in this case: 


“Para 38 The terms of the Agreement indicate that the Doctors agreed to:


Rosters

(1) provide the Services on a five day per week basis, including weekend rotation (cl 2) and in this regard agreed to meet roster commitments (cl 3.8) and to provide advance notice of planned vacations (which were limited to four weeks in a 12-month period and which had to be approved by the applicant (cl 6));

Marketing

(2) promote the interests of the applicant (cl 3.4) including not channelling patients away from the applicant (cl 3.8);

Following protocols

(3) abide by the applicant’s operating protocols and to complete all necessary documentation for that purpose (cl 3); and

Restraints of trade

(4) a restrictive covenant, which would become operational upon the Doctor leaving the particular medical centre owned by the applicant, with such covenant to have an “exclusion zone” of 5 kilometres from that medical centre and to be in place for two years after the Doctor’s departure (cl 7).

The bottom is your contractors should not be providing services to the Practice! So be careful about asking them to turn up to clinical meetings to do care plans. Revise your agreements today.” 

Doctors need to be seen to be working in other non-associated practices

Another eyebrow raiser, it might be a good idea to let your doctors work in friendly rival practices and keep a record of it.

Reporting Contractor income and expenses 

It was noted that contractor income was recorded in the financial statements and tax returns. This is not a great idea if you are trying to establish two separate and independent businesses. Interestingly, the payroll tax office had directly contacted the accountant for information to check whether practice was registered for payroll tax.

I can hear what people are thinking. Are you serious? I am, that is the challenge. Many of these key issues can be mitigated. 

4. Tips on how to stay compliant with the law and avoid penalties



  1. Don’t panic

Take a deep breath. You are not alone. Do not automatically notify your local payroll tax office. Think carefully. Find out more. You may find out your arrangements are not that bad, but could do with some fine tuning;


  1. Remember, Court cases are more authoritative than Tribunal cases

One lawyer I had spoken to described this decision as “superficial”. It can or should be Court appealed. From time to time, flip-flop decisions do occur. The Super Optical, Homefront Nursing and this Thomas case illustrate how contrasting decisions can be, even though the facts may appear similar. Be prepared to keep clarifying your arrangements when necessary. 


  1. Seek experienced professional accounting and taxation advice 

The devil is in the details. There is no such thing as a silver bullet. The right contract is a small part of the answer. You have to walk the talk. A common mistake is only a piecemeal and not a holistic approach is taken. It goes beyond a cleverly written practice agreement. 


It must complement your policies and procedures, administrative and accounting systems. You need to walk the talk. The Courts take a holistic view. 


Many practices use Mum and Dad and or traditional accountants and legal advisers. Many are totally unaware of the increasing complexity and nuances of the healthcare industry. You may find they are not obliged to let you know unless you ask. After all, this is a State and not a Federal tax.


You may be better served with specialist medical and health accounting and legal advisers who work exclusively in this area. 


  1. Tax audit insurance cover 

It may be a little too late if an audit investigation has started. It becomes a lot harder to unsay or undo things and blame people for not letting you know. Tax audits can become quite expensive. However, cost effective tax audit insurance is available so your advisers can better respond to any concerns. 

Note, as we have been receiving reports from some Medical Defence Organisations, that they are no longer offering this cover. So do not forget to ask your accountant if they offer any insurance cover.


  1. Write to your professional adviser: seek written advice

If you do not know what to ask or where to start, complete this free self-assessment checklist and provide your responses to your accountant and or legal adviser: review the article Don’t use the C word.


Be prepared to budget for it. The checklist creates an automatic agenda of key issues for you to send and discuss with your advisers. Confirm any important answers and decisions in writing. Be prepared to budget and implement changes where necessary;


  1. Remember, payroll tax is tax deductible

Depending on your circumstances, you may not have to immediately write a check to get a tax deduction. Seek professional legal and accounting advice before acting on this information.


  1. This is a political issue: it is a serious public interest issue

I have seen first hand practices being forced to charge already anxious patients more at the front desk. Furthermore, nobody wants to buy a practice that could be at risk to a lengthy and expensive payroll tax audit.


If the Thomas decision is upheld in Court, the viability of many practices across Australia is at systemic risk. We need all our GP practices focussed on fighting the virus and not be distracted fighting mercurial State payroll tax rules. 


  1. You can help change the law: Take the GP and healthcare provider Payroll Tax National Survey 

Thank you for taking the time to complete this survey. This will be used to lobby State and Federal politicians. Thank you to Health and Life – Chartered Accountants and medical and health practice advisers for assisting The Medical Republic with this national survey.


Click here.


This article was first published at the Health and Life Blog: New Medical Practice Payroll Tax Ruling: How you pay your contractor doctors may affect your bottom line


About me: David Dahm BA (Acc.), CA., FCPA, CTA, FFin, CPM, FAAPM, FAIM, FGLF.

Registered Tax Agent, Former AGPAL Surveyor 10 years of service 

David Dahm is CEO and founder of the national medical and healthcare chartered accounting firm Health and Life and global Founder and CEO of the not-for-profit project the International Healthcare Standards and Ethics Board (www.ihseb.org)


After a serious work related car accident in 1989, and nine operations later, I continue to be a patient and provider advocate. I enter my third decade as a national Chartered Accountant for Medical and Healthcare practices in Australia. I am a former 10-year Australian General Practice Accreditation surveyor. I come from a medico family. I have served on the AAPM national Board and was the inaugural national Chair of the Certified Practice Manager CPM post nominal.  I continue to provide accounting tax and practice management advice to many practices all over Australia. 


You know who you are and I thank you for this real honour and privilege to serve you and your community through you. Note, I am not a lawyer. Please seek appropriate legal and accounting advice. This information is for general information and discussion only.

Is ‘consent’ the o-ring of Medicare audit?

Is ‘consent’ the o-ring of Medicare audit?

There’s a tiny technical glitch underpinning the legal integrity of Medicare auditing that could one day blow the whole system up. 

Medicare audit anxiety is a real thing that affects most doctors who provide (bulk-billed) “free care” to their patients.

Medicare rules keep changing with little notice or clarity.

Should the Medicare cops come knocking on their door, we know now that there is virtually nothing a GP can do about it but humbly pay it all back and wear any humiliation that accompanies the government default notice on their use of MBS items.

The way the current system works has been described as like getting a speeding ticket from a hidden camera when nobody will tell you the speed limit until you get caught.

Once you do get “caught” you have to pay back two years’ worth of speeding fines based on your gross income. It does not matter if you were actually in the car speeding.

According to two surveys, it looks like a large proportion of doctors are withholding services either regularly or from time to time for fear of a Medicare audit.

In The Medical Republic’s recent landmark national GP survey of more than 1,400 doctors conducted just a few weeks ago, it was found that over 84% of GPs, regularly, or from time to time, don’t perform certain services because of anxiety over the PSR.

But  “Medicare audit anxiety ” is not a recent phenomena. The fear effects of Medicare audits on doctors practising behaviour can be traced back as far as the mid-1990s.

Back then I helped establish a Women’s Health clinic for a client (at a time where male doctors dominated the workforce). Within 12 months of the clinic’s commencement, the only dedicated female doctor clinic received a Medicare audit letter for “performing too many Pap smears”.

Karmakar vs Minister for Health

The recent Karmakar case informs much about how hard it has been for individual GPs to try to fight the system, and how little has changed in 25 years as far as the power of the system over an individual doctor.

Most commentary has that this case puts beyond doubt that the PSR and Medicare can’t be fought in court and that instead someone has to work on changing the law.

In some ways the government bought itself cover on this whole problem via the  2011 Federal Senate PSR Inquiry. Nothing came of it as far as GPs are concerned despite quite a bit of protest from the sector.

A High Court finding and a finding of this inquiry, that this legislation exists to protect the taxpayer,  appears profoundly misguided in the context of  TMR survey results, which suggest the law may well be systemically harming patient care.

In the absence of a provable counterargument, the High Court has deemed that a focus on how well taxpayers funds are spent must take priority on how optimally doctors treat their patients.

Importantly, while Justice Logan’s judgement in Dr Karmakar’s case was clear in terms of law, he took the trouble to point out that there may be a public interest issue worth pursuing outside the domain of the PSR and the law as it stands.

A faulty o-ring in a complex system?

But there may be a small legal loophole that has still not been explored in the legal domain.

One question in the TMR survey departs a little from the core anxiety topic to explore how much a typical GP understands about their requirement to get consent from a patient for each billing item in Medicare to transfer their rights to the bulk billing rebate over to the GP.

The answer to the question is quite revealing (see below).

Essentially, most GPs either don’t even know the requirement exists, or they make an assumption  (one that has been has been pushed at them by the government)  that their practice receptionist pushing ‘yes’ on the billing terminal, constitutes implied consent.

It’s a convenience for everyone. But it’s a potentially big issue for the government one day.

The government understands that it must have the consent transferred formally from the patient for Medicare bulk billing to the doctor, for bulk billing to be a legal transaction. But they also understand that asking every patient to sign a DB020 form, which is the only real legal manner in which this consent could be given, is highly impractical. So the government has suggested that a GP can obtain ‘implied consent’ for this transaction via getting a verbal OK from a patient or by the act of pressing ‘yes’ on a billing terminal.

No one wants the major form of consent tested legally. It wouldn’t stand up in court. And working out what to do after that could become very messy, for the government and GPs.

But the fact that 50% of GPs aren’t aware of the rule at all (and therefore we probably can assume don’t do anything regarding consent) and of the 50% that do understand the rule only 9% say they obtain proper consent via the signing of a DB020 form, suggests very strongly that the vast majority of all MBS claims made for bulk billing over the years have been done, technically, without proper legal consent.

Wouldn’t it be interesting to see this technicality tested by a GP one day in the Federal Court?

The problem is that it could end up backfiring on GPs, as it could force a change that would introduce a horrific new piece of red tape that the profession doesn’t need.  But the concept that the government is winning all its cases based on an assumption that all the bulk billing transactions that a doctor has done have legally been transferred to the doctor from the patient, when they clearly haven’t, is an interesting one.

Source: Audit anxiety damages patient care, landmark survey finds, August 2021

Driving without road rules

Assume you are a good ethical doctor.

After many hard-earned years of study and work, you have just set yourself up in a brand new state of the art practice yourself.

You deserve it! Your patients and friends are impressed with your commitment. Everybody is cheering you on including your suppliers and the Government!

To help pay for your high-quality practice, you decide you want to make your services (bulk-billed) free to the patient.

The Government loves your choice. The punters (voters) and politicians love it.

For the long hours you put in, while fighting a tsunami of problems while your income goes backwards, you should be in line for a citizens award for your free services to humanity.

Unfortunately for you (the good doctor), you have taken up driving and know one has provided you with any road rules.

When you work this out, all you want to know is one simple thing: is going over 130km going to get you into trouble with the police?

The problem is, that for three decades nobody has been prepared to write a book of rules, so nothing is really clear. You have to do some guessing and assuming of what you think people want.

The federal government admitted in federal parliament 10 years ago that there is no commonly peer reviewed, agreed detailed driver education or published (clinically relevant) standards by which you can guide your practice of billing.

No standards on how to drive safely or what the speed limit is!

Worse, there is no appetite or urgency to give answers when people’s lives are at risk. The Government, their professional drivers’ association and the law firmly state it is not their job to interpret or even set the speed limit. They collectively state it is up to you to interpret with your peers. 

For decades fellow drivers have been given the same Government run around on the phone.

They get a different answer every time they ring. In the end, you get an answer in writing. After the pleasant exchanges on an official Government letterhead, they say we cannot tell you the speed limit, ask your friends.

In the meantime, you naively ask your trusted makeshift peer review group on social media. After all, they appear to be your more knowledgeable and experienced driving buddies. You even attend an ‘expert’ seminar on the road rules put on by someone who has spent quite a bit of time interpreting what they think the rules are and how you can apply them.

With good intentions but questionable authority, they tell you of their war stories.

Nobody in the room informs you that ultimately, the road rules can be changed without anyone’s knowledge.

The most common reason a road rule might be changed, is cost, not practice of medicine.

The ‘secret’ road rules are about managing a budget, not about managing the quality of practice. And because they are secret, anyone who thinks they have it worked out, eventually can come unstuck, along with their friends who they’ve told about their formula.

As the secret rule set changes, eventually one of your fellow drivers gets booked in a high profile court case. You and all your colleagues take some notes and start driving a lot slower on particular item roads. You change how you might normally practice.

For those that get prosecuted, only the headlines and not the details are reported in the news. Your fellow drivers might presume you are reckless which isn’t good for your reputation. Saying you are a good and ethical driver is no defence. You can’t present a fair defence including you were not even in the driver’s seat when the final penalty is imposed.

There is notable conspicuous silence from the driver’s associations.

This serves to undermine the legitimacy of any credible defence. Is it because some of their well-intentioned civic-minded members are tapped on the shoulder by the Government to be peers in the process of prosecution? After all, the government needs some peers to help them determine that you have done the wrong thing (just three peers per case will do it apparently).

It is only when you are booked that you find out that for the last two years, you have been living 200m from a hidden speed camera. And you only got booked when you sped enough times in one month to get noticed. But you are going down for all the fines now in that past two years, not the one you finally got notice for.

The Government then retrospectively and legally (statistically) prosecutes you for the last two years based on your driving habits in the last two weeks.

From this one month of speeding small sample size (fewer than 25 medical records), they may extrapolate your violations by 10 fold whether you were driving (bulking billing or not) over two years. These significant hypothetical fines are based on a small snapshot in time.

Once you get picked up, expect your car to be tested for defects (i.e. clinical relevance, contemporary notes, what do your PSR peers think). This is where the heat is on. Saying it was an emergency and you had no time is not an excuse.

Facing such a daunting process, this will naturally slow down the way you drive and your destination.

It’s understandable that doctors may be withholding care.

What’s in a small technicality (if it’s not really that small)?

Sometimes in the eyes of the law, a little technicality can throw out an entire case.

Every time a question about having a patient-signed consent form is raised in the media, Medicare loses their marbles over this issue.

You need to prove you have received informed consent for bulk billing to work.

Lawyers would have a field day arguing what constitutes consent in terms of bulk billing. Pressing a button on a billing terminal or suggesting your receptionist obtained verbal consent very likely does not legally constitute consent. Even getting a patient to sign a D020 may not constitute consent if they don’t know what they are signing.

What would your patients say if they were in the witness box about consent being obtained from them? They would not have a clue what you are talking about.

I am yet to see a lawyer prepare a written answer to this question.

We sought the advice of Hamilton Bailey lawyers and it seems there may be a legitimate argument out there to be heard.

Hamilton Bailey said it would be interesting to note a judge’s views on the following questions:

  • Is there a requirement to pre confirm that the doctor was bulk billing each patient with appropriate consent?
  • If consent is deemed not to be appropriate, does this invalidate or curtail the PSR laws?
  •  This point was not clear in the Karmakar case. The judge did not express an explicit view.
  • Would evidence that bulk billing consent has been given (rather than it be assumed), first need to be established before any Medicare investigations or subsequent prosecutions and/or liability could proceed?
  • Would a private billing (non-bulk billing) doctor have more or fewer rights if they did not bulk bill? 
  • Could it be as simple as: if you stopped bulk billing, most of your Medicare audit issues would be solved, as for most things you would be outside the legal jurisdiction of Medicare.
  • What about if it were found that in nearly all conditions, patient consent has never been formally assigned? Would that have the same effect?

 

Time might tell whether these questions might constitute a sort of ‘0-ring’  problem for Medicare. Or an opportunity for some downtrodden defence lawyer of a GP.

For those that are into technical arguments, the starting point is to look at the S.20A Health Insurance Act 1973 that outlines proof of consent.

Doctors must receive a signed bulk billed patient consent form. Essentially what this means is that the doctor has agreed with the patient to assign the responsibility for the payment of their bill to the Government.

The doctor agrees the Government is legally allowed to pay you what they feel like.

Technically, you have agreed that it is a “Good Samaritan” gesture (you have agreed to provide your services for free) and no longer have a legally enforceable contractual agreement or debt with the patient or the government.

In other words, where a doctor agrees to bulk-bill, they have legally waived their rights to collect any income from anyone; the patient and/or the government. There is no legal obligation to pay. It is now at the Commonwealth’s discretion. You have just given up your fundamental Constitutional right to claim property i.e. your money as your own.

Remember the movie the Castle…:

“ acquisitions by the Commonwealth other than ‘on just terms. S. 51(xxxi) of the Constitution is not allowed.”’

If the Commonwealth did not observe this rule, it may be considered theft.

I am not sure if doctors were over this technical point they would agree to bulk bill in the first place. Most informed people would at the least be very wary of what was going on.

This principle was established in the 1994 High Court Health Insurance Commission v Peverill case.

The importance of this case could legally mean that if the PSR has found you guilty of inappropriate practice ( for example on only 25 medical records) the Department could claw back two years of your income without securing evidence that you did secure appropriate consent.

But is it sufficient to presume that informed bulk billing consent has been provided to each patient they seek to make money from?

Many lawyers would argue this should involve more than a simple tap and/or signature at the front desk.

Legally this means that if the patient needs to be informed for it to be valid, then doctors have agreed to bulk bill.

Where to from here?

You could consider reducing or stopping bulk billing as one option. It’s not as crazy as it may seem. It will depend on where you are now, how attached your patients are to your service and how you communicated the change.

Most patients, after paying your medical fee via EFTPOS or their credit card, remain out of pocket for long. Ironically, the technology now exists for them to be out of pocket literally for seconds, but the government won’t introduce these systems because it would likely induce a lot of GPs to try kicking the bulk billing habit.

An understanding patient cohort and straight through billing via new web based payment protocols would also allow you to charge over and above the Medicare rebate in much smaller increments over time, which could change your whole financial paradigm?

To achieve the above, on the day of the consult, you could charge medical benefits only but make sure the patient does not assign the debt to the Government. This means the debt remains the ultimate responsibility of the patient and not the Government.

Medicare will usually pay the patient back into their nominated bank account or other practical means, within 24 hours for any Medicare rebate owing. It could do it instantly these days using cloud based billing systems, but it won’t because this would make it much easier for all GPs to do the above.

A more sensible way forward.

There is a more certain win-win solution out there if GPs want it: establish an independent not for profit peer-reviewed international healthcare standards and ethics board.

A similar one exists in the accounting profession and the concept has been adapted. The next thing doctors and healthcare workers should be pushing from the ground up is their professional memberships to provide real protection for their patients and providers and a fair go.

The International Healthcare Standards and Ethics Board project is something that has been endorsed by a leading international expert Professor Bill Runciman and has the support of Professor Ian Olver. It’s worth a look at.

This article had its origins in an article first published at healthandlife.com.au 

David Dahm is a Registered Tax Agent, the CEO and founder of the national medical and healthcare chartered accounting firm Health and Life and global Founder and CEO of the not for profit project the International Healthcare Standards and Ethics Board (www.ihseb.org)

Disclaimer: Please seek appropriate legal and accounting advice. This information is for general information and discussion only.

Stay safe, stop bulk billing! A simple cure for Medicare Audit Anxiety?

Stay safe, stop bulk billing! A simple cure for Medicare Audit Anxiety?

This article was first published by Health and Life on 28th August 2021.

As accountants to many doctors, we have a saying at our firm “You save lives, we save livelihoods”. 

 

Medicare audit anxiety is a real thing. This is affecting doctors who want to provide (bulk billed) “free care” to their patients.

 

In these COVID times, doctors are wary of providing too many long consults to patients and overprescribing. 

 

The Medicare rules keep changing with little notice or clarity. Without warning should the Medicare cops come knocking on their door, there is nothing your GP can do about it but humbly pay it all back without any warning. 

 

I think there may be an Achilles Heel opportunity for doctors to address their concerns and stop withdrawing essential care.

 

I understand the current law is like getting a speeding ticket from a hidden camera. The problem is nobody will tell you the speed limit until you get caught. 

 

Once you do get “caught” you have to pay back 2 years worth of speeding fines based on your gross income. It does not matter if you were in the car speeding. 

 

All you want to do is give out free (Government paid bulk-billed consults) rides to your customers and not accept a cent more. That is what everybody wants! Right?!

 

This may not sound fair or true. But it is and it can be life-threatening to your patient. It can bring unnecessary harm to you and the practice.

 

The Government and the doctors have known about it for decades. This seismic problem is systemically harming both doctors and patients.

 

According to the most recent surveys, it seems that doctors are secretly withdrawing essential care. you, as a patient, may need. 

 

Can you imagine if a patient actually knew there was up to 84% chance of a doctor withholding care? 

 

Not because the patient did not need it, but because their doctor feared a Medicare audit! 

 

In a recent landmark national GP survey (1,400 doctors) it was found:

 

“Over 84% of GPs, regularly, or from time to time, don’t perform certain services because of anxiety over whether the PSR might deem they’re performing those services to be inappropriate.”

 Source: Audit anxiety damages patient care, landmark survey finds, August 2021

 

I would be deeply concerned if I was a female in need of medical care. 

 

A practical example: let’s say I had just mustered up the courage to have a pap smear, only to be knocked back by the doctor for a non-medical reason.

 

Surely that is interference in the private medical practice, namely the doctor-patient relationship, that was deemed to be not constitutional according to the 1980 RACGP v Commonwealth 

 

 

I had first stumbled upon this matter and subsequently raised this ‘Medicare audit anxiety problem’ in the mid-1990s. This was after I assisted in establishing a Women’s Health clinic for a client (at a time where male doctors dominated the workforce). Within 12 months of the clinic’s commencement, the only dedicated female doctor clinic received a Medicare audit letter for “performing too many pap-smears” 

 

I am certain that the logic behind a female patient preferring to consult on such a matter with a fellow woman, is not lost on the reader.

 

I examine the questions not addressed and the fallout from the recent  Dr Karmakar case. 

 

In addition to any lobbying efforts that are required, there may be a small but significant legal loophole that has not been explored.

 

For nearly 30 years and after testifying at the 2011 Federal Senate PSR Inquiry I am disappointed to say nothing has changed, except the Government’s appetite to not want to address this matter at any cost. For me, in relation to her ‘dream team’, Dr Karmakar’s case was meant to highlight this problem

 

For the academics, back in 2011, If I had coined the phrase “Audit Anxiety” you can read my actual testimony on page 5 in the Federal Hansard.

 

 

Source: Proof Committee Hansard SENATE, COMMUNITY AFFAIRS REFERENCES COMMITTEE, Professional Services Review Scheme, FRIDAY, 23 SEPTEMBER 2011

CANBERRA page 5 – Note Hansard typographical error replace order with Audit”

 

Historically there has been a vacuum of professional silence. The appetite for medico-political or legislative change appears to be deafening and conflicted. At times it feels that the representatives are afraid to offend and are keen to secure seats and sell tickets to a Titanic problem that they can only fix and not the Government. Hubris may be the real enemy; this remains uncertain.

 

The Dr Karmakar decision ratifies my ongoing fear about this unfair law that systemically harms patients and GP’s. 

 

The High Court’s earlier decision that this legislation exists to protect the taxpayer appears profoundly misguided when you read the latest landmark survey reports into Medicare Audit Anxiety. Doctors are withdrawing necessary care out of fear of a Medicare audit. 

 

There seems to be some truth (yet to be confirmed) that suggests the law is systemically harming patient care. 

 

In the absence of a provable counterargument, respectfully, the High Court has deemed a focus on how well taxpayers funds are spent must take priority. They have had to assume peer review is open and transparent and the standards have been endorsed by the medical profession.

 

However, I am encouraged by Justice Logan’s comments in her case on the issue, that there may be a public interest issue worth pursuing outside the PSR area. 

 

Since the decision of notable concern is the problem has worsened.

 

The recent landmark Health Ed (1,400) survey results come to the same conclusion but at an increasing level. We had initiated the first national Medicare Audit Anxiety Surveys in 2016

 

To be quite honest the results were not a surprise, except it may now provide palpable proof the laws are harming patient care and our doctors’ welfare.

 

Other key findings of the report are revealing.

 

 

 

Source: Audit anxiety damages patient care, landmark survey finds, August 2021

 

“One of the things that’s coming out from [these cases] is that practitioners will continue not to know what their requirements for item numbers are. If they get it wrong, they could be facing a half-a-million-dollar bill.”Jeremy Knibbs

 

Guess what Jeremy, knowing this, despite everyone’s good intentions, nothing has changed in over 20 years! 

 

In the 2011 Federal Senate PSR Review Inquiry on the 25th of October tabled in it’s report:

 

“The Senate Committee endorsed peer review as the underlying principle of the PSR Scheme”. 

 

My position was cited for the need for clear public MBS rulings to help with interpretation. 

 

Source: 2011 PSR Senate Inquiry statement final report: Review of the Professional Services Review (PSR) Scheme) Chapter 2 Audit Procedures page 17

 

On a different tangent, Jeremy Knibbs makes another important point in his article: Audit anxiety damages patient care, landmark survey finds, August 2021. This is worth exploring further.

 

 

This current position of the Government and the profession is that it is not their responsibility to interpret the Medicare item numbers!

 

 

Source: RACGP advice on MBS rejected by doctors, Medical Observer, 7th October 2011

 

From the same article, Jeremy Knibbs, a well-known editor and publisher for The Medical Republic further sparked my curiosity. He made an insightful comment about patients not signing or appropriately consenting to be bulk billed. Is there a possible loophole where you could avoid unwarranted attention from a Medicare audit?

 

“An interesting piece is that most GPs either don’t know that they are required to get proper consent from a patient for each billing item in Medicare or if they do know, they aren’t doing it in a way that legally the government could ever really enforce if push came to shove and some clever lawyer asked the government to prove that assignment of the rights to bill the Medicare item directly to the doctor was ever actually given.” Jeremy Knibbs

 

 

Source: Audit anxiety damages patient care, landmark survey finds, August 2021

 

Does stopping billing provide legitimate protection?

 

For the non-lawyers amongst us (including myself), I had coined, a few years ago, the following Medicare speeding ticket analogy. This may further explain the complex nature of the current Medicare laws.

 

The Medicare Speeding Ticket Analogy 

 

 

Assume you are a good ethical doctor. After many hard-earned years of study and work, you have just set yourself up in a brand new state of the art practice yourself. 

 

You deserve it! Your patients and friends are impressed with your commitment. Everybody is cheering you on including your suppliers and the Government! 

 

To help pay for your high-quality practice, you decide you want to make your services (bulk billed) free to the patient. 

 

The Government loves your choice. The punters (voters) and politicians love it! After all, it is all about being in (em)power(ed)!  You are applauded by politicians for being a great role model citizen!  

 

For the long hours you put in, while fighting a tsunami of problems while your income goes backwards, you should be in line for a citizens Award for your free services to humanity!

 

Unfortunately for you (the good doctor), this is like naively driving and not knowing or being told the road rules. 

 

When you work this out, all you want to  know is one simple thing: is going over 60km going to get you into trouble with the police and the law? 

 

The problem is, that for three decades nobody will give you or anyone else the answer. Like others before you they have tried everything, even going to the media!

 

All they found was a well-intended Government and their poorly trained decorated  peers admitting in Federal Parliament 10 years ago that there is no commonly peer reviewed, agreed detailed driver education or published (clinically relevant) standards. 

 

No standards on how to drive safely or what the speed limit is!

 

To add insult to injury, there is no appetite or urgency to give answers when people’s lives are at risk. They all acclaim this is in the “too hard basket”! The Government, their professional drivers’ association and the law firmly state it is not their job to interpret or even set the speed limit. They collectively state it is up to you to interpret with your peers. 

 

For decades fellow drivers have been given the same Government run around on the phone

 

They get a different answer every time they ring. The well-intended Government employee frustratingly continues to put them on hold while they are trying to make a life or death decision. In the end, after some time you get an answer in writing and guess what?! After the pleasant exchanges on an official Government letterhead, they say we cannot tell you the speed limit, ask your friends!! 

 

In the meantime, punters are getting frustrated at the doctor, because they are taking too long to make a decision. Ultimately, he succumbs to the madness, as the next person waiting at the traffic light is about to enter a road rage fit! 

 

In the meantime, you naively ask your trusted makeshift peer review group on social media. After all, they appear to be your more knowledgeable and experienced driving buddies and friends. This includes their mechanics (practice manager and other self-proclaimed billing experts with Phd’s). Giving you an insider’s view, by name dropping their high profiled well-heeled legal this provides you with some uneasy comfort.

 

With good intentions but questionable authority, they impressively tell you of their war stories. What they do and how they never have got into trouble. They have found the secret sauce.

 

Unfortunately, complexity breeds ignorance. Nobody in the room realises that ultimately, the cards are always stacked against them. Never try to be too clever or conscientious. Not entering the Medicare casino may be a better bet. 

 

For everyone else who wishes to play, the police keep warning you not to speed! Whatever that means!!

 

In the meantime, you love the freedom and instant importance (popularity) the drive gives you. The only problem is increasingly the unclear rules in recent weeks and months keep changing. Suddenly there are more speed cameras on the road. You get news one of your fellow drivers got slammed in a high profile court case. Reality starts to set in. 

 

For those that get prosecuted, only the headlines and not the details are reported in the news. Your fellow drivers presume you are a reckless idiot, and some do know they are speeding too. Saying you are a good and ethical driver is no defence. In fact, you cannot present a fair defence including you were not even in the driver’s seat when the final penalty is imposed.

 

For fellow drivers, this may not be a concern other than the salacious social media gossip that entails anyone who seeks to defend themselves. 

 

There is notable conspicuous silence from the driver’s associations, who they all assumed would represent any concerns. This can only undermine the legitimacy of any credible defence.

 

Enjoying the kudos, is it because some of their well-intentioned civic-minded members are tapped on the shoulder by the Government? After all, they are needed to enable this process, in a world of plausible deniability.

 

In the meantime back where you live you suddenly get pinged for a speeding fine. 

 

You did not see the camera in the bush, and the next minute the police are at your door. They just want a “friendly chat”. You are not clear whatever you may say will be held against you. You do not want to sound difficult. You are a good person. You are happy to answer any of their questions. After all, what could go wrong?

 

You find out that for the last two years, you have been living 200 metres down the road from a hidden speed camera. You cannot see the camera and even the camera does not know the exact speed limit it needs to consider it as “breaking the law”. Only when you speed enough times in a month do you get noticed or someone vexatiously dobs you in or out of concern.

 

What you soon realise, after a couple of years without warning, you get hit with a retrospective speeding ticket based on your driving habits in the last two weeks. The Government then retrospectively and legally (statistically) prosecutes you.  

 

From this small sample size (fewer than 25 medical records), they may extrapolate your violations by 10 fold whether you were driving (bulking billing or not)over two years. These significant hypothetical fines are based on a small snapshot in time. 

 

Once you get picked up, expect your car to be tested for defects (i.e. clinical relevance, contemporary notes, what do your PSR peers think). This is where the heat is on. Saying it was an emergency and you had no time is not an excuse.

 

Facing such a daunting process, this will naturally slow down the way you drive and your destination.

 

I hope you understand why your doctors may be withdrawing essential care.

 

Back to the Karmakar case!

 

 

Reflecting on the Karmakar case, it is worth asking if there are any notable omissions and admissions. 

 

Sometimes in the eyes of the law, a little technicality can throw out an entire case from the outset.

 

One that comes to mind is bulk billing. 

 

Every time a question about having a patient-signed consent form is raised in the media, Medicare loses their marbles over this issue and they keep stating you must have a signed and or consent from the patient. 

 

You need to prove you have received informed consent. Lawyers will have a field day arguing what constitutes consent. Signing and pressing something without the patient understanding may not legally constitute consent. What would your patients say if they were in the witness box?

 

I am yet to see a lawyer prepare a written answer to this question. I have left this as an open challenge to any budding, qualified and experienced lawyer. I am keen to hear other legal views. 

 

We have sought the advice of Hamilton Bailey lawyers. A big shout out to Lukasz for his assistance on this matter, and it seems there may be a legitimate argument out there to be heard.

 

It would be interesting to note the judge’s views on the following questions:

 

  1. Is there a requirement to pre confirm that the doctor was bulk billing each patient with appropriate consent? If consent is deemed not to be appropriate, does this invalidate or curtail the PSR laws? This point was not clear in the Karmakar case. The judge did not express an explicit view.

 

  1. Would evidence that bulk billing consent has been given (rather than it be assumed), first need to be established before any Medicare investigations or subsequent prosecutions and/or liability could proceed?

  1. Would a private billing (non-bulk billing) doctor have more or fewer rights if they did not bulk bill? 

 

Could it be as simple as: if you stopped bulk billing, would your problems instantly disappear? 

Time will tell whether these questions if asked, become an ‘Achilles heel’ opportunity for the next brave doctor who dares to take the system on. 

For those that are into technical arguments, the starting point is to look at the 

S.20A Health Insurance Act 1973 that outlines that proof of consent.

 

Doctors must receive a signed bulk billed patient consent form. Essentially what this means is that the doctor has agreed with the patient to assign the responsibility for the payment of their bill to the Government. 

 

The doctor agrees the Government is legally allowed to pay you what they feel like. Technically, you have agreed that it is a “Good Samaritan” gesture (you have agreed to provide your services for free) and no longer have a legally enforceable contractual agreement or debt with the patient or the government. 

 

In other words, where a doctor agrees to bulk-bill, they have legally waived THEIR rights to collect any income from anyone; the patient and/or the government. There is no legal obligation to pay. It is now at the Commonwealth’s discretion. You have just given up your fundamental Constitutional right to claim property i.e. your money as your own. 

 

Remember the movie the Castle…:

 

“ acquisitions by the Commonwealth other than ‘on just terms. S. 51(xxxi) of the Constitution is not allowed.”’

 

If the Commonwealth did not observe this rule, it may be considered theft. 

 

I am not sure if doctors knew this technical point they would agree to bulk billing in the first place. Any informed person would not. 

 

This was established in the 1994 High Court Health Insurance Commission v Peverill case

 

The importance of this case could legally mean that if the PSR has found you guilty of inappropriate practice within e.g. 25 medical records, the Department could claw back two years of your income without securing evidence that you did secure appropriate consent. I am not sure it is sufficient to presume that informed bulk billing consent has been provided to each patient they seek to make money from.

 

Many lawyers would argue this should involve more than a simple tap and/or signature at the front desk. 

 

Legally this means that if the patient needs to be informed for it to be valid, then doctors have agreed to bulk bill. 

 

On a final note, the bigger implication is: how do they claim back money based on an extrapolated statistical calculation of no fewer than six-figure sanctions based on fewer than 25 medical records (Health Insurance (Professional Services Review — Sampling Methodology) Determination 2017 section 8) over two years without having to miraculously presume each of those patients had consented to bulk billing?

 

I apologise for the technical detail but it is important to put it out there for you to share with your lawyers if you are considering mounting a defence. 

 

Where to from here? 

 

The simple solution, for now, is to reduce or stop bulk billing if you are confident that patients will value your services. If not, build a strategy so you no longer have to fear the bulk billing clinic down the road and a Medicare audit.

 

Remember patients, after paying your medical fee via EFTPOS or their credit card, they do not remain out of pocket for long.  

 

On the day of the consult, charge medical benefits only. MAKE SURE THE PATIENT DOES NOT ASSIGN THE DEBT to the Government. This means the debt remains the ULTIMATE responsibility of the patient and not the Government.

 

From personal experience, Medicare will usually electronically pay the patient back into their nominated bank account or other practical means, within 24 hours for any Medicare rebate owing

 

Technology today makes this a simple and easy process your receptionist can do for your patients. 

 

As a doctor, if you are ever forced to pay back any money to Medicare you may still have the ability to recover the money from your patient! Make sure your terms and conditions are clear and in writing.

 

This may be the smartest and quickest way to get paid and improve your cash flow and reduce your audit concerns.

 

Is there a better alternative!

 

There is a more certain win-win solution out there if GP’s want it… but you have to demand it. It is to establish an independent not for profit peer-reviewed international healthcare standards and ethics board. 

 

A similar one exists in the accounting profession and the concept has been adapted. The next thing doctors and healthcare workers should be pushing from the ground up is their professional memberships to provide real protection for their patients and providers and a fair go.

 

The International Healthcare Standards and Ethics Board project has been endorsed by a leading international expert Professor Bill Runciman and has the support of Professor Ian Olver. So this is more than just a fanciful idea. It can become a critical mechanism to solve our most critical problems during these COVID times. 

 

Contact me if you would like to help out. Simply sharing this article with your patients as to why you do not wish to bulk bill will make a significant difference.

About me: David Dahm BA (Acc.), CA., FCPA, CTA, FFin, CPM, FAAPM, FAIM, FGLF.

Registered Tax Agent, Former AGPAL Surveyor 10 years of service 

David Dahm is CEO and founder of the national medical and healthcare chartered accounting firm Health and Life and global Founder and CEO of the not for profit project the International Healthcare Standards and Ethics Board (www.ihseb.org)

 

After a serious work-related car accident in 1989, and nine operations later I continue to be a patient and provider advocate. I enter my third decade as a national Chartered Accountant for Medical and Healthcare practices in Australia. I am a former 10-year Australian General Practice Accreditation surveyor. I come from a medico family. I have served on the AAPM National Board and was the inaugural national Chair of the Certified Practice Manager CPM post-nominal. I continue to provide accounting tax and practice management advice to many practices all over Australia. 

You know who you are and I thank you for this real honour and privilege to serve you and your community through you. Note: I am not a lawyer please seek appropriate legal and accounting advice. This information is for general information and discussion only.

1st July 2021 new 2.5% Award and 10% Super pay rise or freeze?!

1st July 2021 new 2.5% Award and 10% Super pay rise or freeze?!

This article was first published by the Medical Republic on 13th July 2021.

From 1st July 2021Medicare rebates on average went up by 0.9%, Fair Work wages up by 2.5%, COVID19 skyrocketing cost$ and more over time is now a criminal offence (Vic other States coming). Something will have to give.

It has been another tough year for medical and healthcare practices. Practices continue to find their weary COVID-19 feet.

We control what we can. The new challenge is how to deal with the new statutory employment remuneration increases deemed by the Fair Work Commission and Employer Superannuation Scheme that employers are obliged to observe.

For most medical and healthcare practices, wages represent over 60% of a practice’s overheads.

COVID-19 has placed acute pressure on practice workloads and incomes. The plethora of changes to Medicare rules, systems and patient expectations have severely impacted a general practice’s bottom line and staff overtime.

The last thing most practices want to do is reduce staff hours or not provide a pay increase. Such drastic changes may hurt staff morale unless they are handled carefully.

Snap lockdowns and the fear of a lockdown has taken a toll on the front line staff. Significant amounts of overtime, job description revisions and expectations means practice staff are naturally expecting an increase. The absence of a cash boost will be felt this time around.

It is clear: unless practices have been carefully monitoring both the financial and non-financial impact of COVID-19, they may find a significant decrease in profitability of up to 5% to 10%.

In the meantime, use this 2021 End of Year Payroll Checklist to perform a quick check that you have updated your payroll systems and contracts correctly.

Three major factors impacting the sustainability of your practice:

1. Fair Work CPI 2.5% wage increase

Did you know that from the 1st July 2021, your staff may be legally entitled up to a 2.5 % pay rise? It is important to refer to the specific Awards such as the Medical, Nursing and Health Support Staff Awards.

A common error is that a practice may still have to pay an increase even if their staff are being paid above the Award. The only exception is if you have a valid and up to date signed individual flexibility employment contract in place with each staff member.

2. Employer super to increase from 9.5% to 10% per annum

The other big news is the 9.5% employer super will increase to 10% commencing 1st July 2021. There are legal options to salary sacrifice and absorb increases if your practice is feeling the pinch.

3. Mandatory electronic ATO report of underpayment of wages starting from 1st July 2021

Mandatory report of overtime and degrossing income means by 1st January 2022 your practice may be facing a Fair Work audit for under payment of your staff wages regardless of whether you believe you are paying them the right salary or above the Award.

We have produced a Medical and Healthcare Employment Compliance Self Assessment Checklist to help you check that you have ticked all the right boxes. The devil is in the details. Having a poor system that does not map the correct and up to date signed employment contracts to your payroll system is the most common error.

Avoiding fines of up to $660,000 per incident means now is a good time to double check you are recording your pays the right way. Many nationally high profiled law firms, practices and businesses have been caught. They had assumed but did not check whether the systems and procedures were up to date and working.

Our article “Overtime is no longer a badge of honour” covers the most common errors and ways you can find out if you have a similar problem.

These challenges represent an important opportunity to positively engage your staff to enhance recruitment and retention, which will aid in improving the sustainability of your practice.

If you are unsure about where to start, our newly revised employment kit provides practices with a better employment package template for key staff in the short and long term. These templates are developed to provide a solid career structure, which includes employer-paid training.

Three key strategies to overcome the impact of a staff pay increase

1. Reduce your reliance on medicare by improving the quality and type of services you offer

Performance and industry benchmark

The first step is to know your numbers then decide what to do next. Think about providing higher Medicare dollar value services, promote annual patient care cycles, alternative incomes e.g. consumables, vending machines in the waiting room and reducing bulk billing on services patients value e.g. procedures.

Make sure you have the most efficient and effective practice systems in place before finalising any employment arrangements. Many of our clients start with an evidenced-based industry benchmarking review before making any big decisions. This reduces any unnecessary staff unrest as an objective external measure has been used to decide future roles and responsibilities.

Improve workflows and or outsource

The other key areas are either improving systems/workflows (see our slide deck on How to increase my income). Our “Overtime is no longer a badge of honour” article will provide you with some practice ideas on how you can make your practice more efficient without having to reduce your staff wages or hours. Also, check our blog.

Consider fixed fee outsourcing important areas but non-core areas such as financial benchmarking, bookkeeping or doctor’s pays with our Doctors Pay Calculator Software or outsourcing service.

Finance and accounting requires a high level of training, experience and skills in an ever-demanding high compliance function. It becomes next to impossible for a practice to keep up with the changing technology, laws and regulatory requirements.

Due to new technology, practices can now cost-effectively outsource many of these key functions. This will enable timely and accurate financial reports. With financial reports, you no longer have to wait until the end of the year for your accountant’s annual financial statements. For many, this will be 12 months too late.

For example, smart practices use our live monthly financial benchmarking tool as a global position satellite to know what their next move is by knowing how similar practices to their own are trending.

Restructure your business and legal structure

Restructuring your practice now may be an effective way to increase the profitability of your practice. Most practices report operating a profit margin of 2% to 7% p.a with accounting firms who specialise in medical and healthcare practices. Our clients enjoy operating profit margins between 20% to 30%. This is significantly higher due to experience in implementing better governance structures, business models and practice controls. Our uniquely live practice benchmarks prove our clients do achieve these results on a consistent basis.

2. Review your employment contracts and pay arrangements

The key here is to make sure that after considering all the above factors.

As the famous Stanford business Professor Jim Collins book Good to Great “you have to make sure you have the right staff on your bus, sitting in the right seats”.

Only then can you check you are paying your staff correctly. Our Medical and Healthcare Employment Compliance Self Assessment Checklist will ensure you have identified the most important issues for the practice to consider.

3. Freeze staff wages or reduce staff hours and or increase productivity

If restructuring your practice or increasing efficiency is not an option (other than cashing out unpaid leave), unfortunately freezing staff wages or reducing hours may be an option as long as you are paying staff above the Award rates. Clearly, compromising your standards is not in the patient’s or practices’ interest.

The 2.5 % increase can be absorbed in over-award payments if you have documented your employment arrangements correctly. Clients who have correctly implemented our latest “Employment Kit” update (see below) released last year should have this option available.

5 Steps: Implement sustainable and legally binding employment arrangements

Step 1: Ensure the correct Awards apply to your staff

These are the latest Awards commencing 1st July 2021

1. Medical Practitioners Award 2020

2. Nurses Award 2010

3. Health Professionals and Support Services Award 2020

4. Pay Guides:

       Health Professionals and Support Services Pay Guide 2021

       Nurses Pay Guide 2021

Step 2: Acknowledge there has been a remuneration increase in the relevant Award (if applicable) and new 10% employer superannuation rate commencing 1st July 2021

A 2.5% increase in new Award rate increases for the Medical, Nursing and Health Support Staff Awards is effective from 1st July 2021. If you pay staff above the Award, unless there is a current and signed employment contract (this may not be correctly worded so you may still have a problem), the practice may remain liable for underpayment of wages.

Check that all work classifications, overtime and allowances payments have been agreed in writing and any above Award payments exceed any of these minimal Award entitlements. Seek professional advice in relation to Award free staff.

Prepare to update and reconfirm your employment contracts in writing and ensure they are signed off by your staff member. First, check you can afford the pay increases as detailed in points 1, 2 and 3 above;

Step 3: In principle reconfirm your employment arrangements with existing staff

Decide in principle whether your staff will be receiving a pay increase. Ask yourself: Are any staff in part or are all statutory and/or performance increases will require the staff member to sacrifice salary or agree to some other alternative arrangement? Will there hours be reduced or increased, leave cashing out etc.

Before formalising an employment contract, an exchange in writing via an email of any key terms of your arrangements subject to a signed formal contract should be agreed to first. This will save a lot of time and money especially when external advisers are being involved.

Step 4: Simplify your employment agreements: Individual Flexibility Agreements(IFA’s)

Consider simplifying your contracts. By using our Employment Template Kit, you can roll up all Award overtime, allowances and penalty rates into a single hourly rate. The example below illustrates this point. This type of contract is called an individual flexibility agreement. Each of the above Awards permits such an arrangement to occur.

An example is the Health Professionals and Support Services Award 2021:

“Clause 7.3 The agreement between the employer and the individual employee must:

(a) be confined to a variation in the application of one or more of the terms listed in clause 7.1 Notwithstanding any other provision of this award, an employer and an individual employee may agree to vary the application of certain terms of this award to meet the genuine individual needs of the employer and the individual employee. The terms the employer and the individual employee may agree to vary the application of are those concerning:

(1) arrangements for when work is performed;
(2) overtime rates;
(3) penalty rates;
(4) allowances; and
(5) leave loading.; and

(b) result in the employee being better off overall than the employee would have been if no individual flexibility agreement had been agreed to.

Clause 7.4 The agreement between the employer and the individual employee must also:

(a) be in writing, name the parties to the agreement and be signed by the employer and the individual employee and, if the employee is under 18 years of age, the employee’s parent or guardian;

(b) state each term of this award that the employer and the individual employee have agreed to vary;

(c) detail how the application of each term has been varied by agreement between the employer and the individual employee;

(d) detail how the agreement results in the individual employee being better off overall in relation to the individual employee’s terms and conditions of employment; and

(e) state the date the agreement commences to operate.

Clause 7.5 The employer must give the individual employee a copy of the agreement and keep the agreement as a time and wages record.

Clause 7.6 Except as provided in clause 7.4(a) the agreement must not require the approval or consent of a person other than the employer and the individual employee.

Clause 7.7 An employer seeking to enter into an agreement must provide a written proposal to the employee. Where the employee’s understanding of written English is limited the employer must take measures, including translation into an appropriate language, to ensure the employee understands the proposal.

Clause 7.8 The agreement may be terminated:

(a) by the employer or the individual employee giving four weeks’ notice of termination, in writing, to the other party and the agreement ceasing to operate at the end of the notice period;…”

Use this Medical and Healthcare Employment Compliance Checklist as a starting point.

Step 5: Confirm you have sustainable and legally binding employment arrangements?

It is important to consult an accountant first to ensure you can afford to pay your staff correctly. Do not forget your staff represents 60% of your total overheads. Furthermore, due to the new ATO gross pay degrossing and data matching rules, make sure they have checked your employment contract information can be correctly entered onto your payroll system.

Then seek legal advice from a lawyer to ensure legal compliance and finalise any agreements.

Order Employment Template Kit

To fast track the process you can order an Employment Template Kit.

The revised templates provided in our employment kit will help identify, train and reward your key staff plus offer flexible working arrangements without significant risk to the practice. It is a win-win for everyone. The content of the employment kit includes useful legally prepared individual flexibility employment templates, job descriptions, standing orders and an employment salary bonus scheme for your staff.

The employment template kit has been prepared by lawyers and kept up to date by Hamilton Bailey lawyers.

This cost-effective peace of mind solution will enable you to continue to reward your staff on merit and provide high-quality services thereby minimizing patient fee increases. If you have any queries, before making any changes, please contact us at no obligation, by email at pa@healthandlife.com.au on 1800 077 222.

To order click here Employment Template Kit or Upgrade.

Good staff employment contracts are good for staff morale. Generally, staff prefer to work with practices that are open and transparent. This can only build trust and prevent any further feelings that they have been taken advantage of in these unprecedented and changing times.

Disclaimer

We strongly recommend you consider reconfirming your employment agreements in order to implement these changes at your next semi-annual staff performance appraisal. We continue to provide this unique and exclusive template in Australia. Please note we are not lawyers. It is important you seek independent legal advice before implementing any ideas from this article or related links referred to. The purpose of this article is so you can ask better questions from your advisers.

This will enable you or your practice to save thousands of dollars on expert advice and time. Most importantly, this process will only add to your staff morale and recruitment and retention strategies. This may be a perfect solution for your practice if your staff are concerned about their future wages or working conditions.

About me: David Dahm BA (Acc.), CA., FCPA, CTA, FFin, CPM, FAAPM, FAIM, FGLF.

Registered Tax Agent, Former AGPAL Surveyor 10 years of service

David Dahm is CEO and founder of the national medical and healthcare chartered accounting firm Health and Life and global Founder and CEO of the not for profit project the International Healthcare Standards and Ethics Board (www.ihseb.org).

After a serious work-related car accident in 1989, and nine operations later I continue to be a patient and provider advocate. I enter my third decade as a national Chartered Accountant for Medical and Healthcare practices in Australia. I am a former 10-year Australian General Practice Accreditation surveyor. I come from a medico family. I have served on the AAPM National Board and was the inaugural national Chair of the Certified Practice Manager CPM post-nominal. I continue to provide accounting tax and practice management advice to many practices all over Australia.

You know who you are and I thank you for this real honour and privilege to serve you and your community through you. Note: I am not a lawyer please seek appropriate legal and accounting advice. This information is for general use and discussion only.

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Overtime is not a badge of honour: it is a warning sign!- Part One

Overtime is not a badge of honour: It is a warning sign!

This is Part One of the article Overtime is not a badge of honour: it is a warning sign!

This article was first published by the Medical Republic on 15th June 2021.

Overtime and staff burnout is your greatest challenge and opportunity. Three game-changing things you can do to stop it.

This is part one of our three-part article on how to ethically and legally comply with the new ATO and Fair Work Overtime Award “robo debt red tape” compliance tool. I look at the top 6 common mistakes practices make. The No. 1 Mistake: “We are OK: We pay way above the Award rate!”.

From 1st July 2021 wage theft is deemed to be a crime. Be prepared to do time in Victoria, Queensland is underway.

COVID-19 has put many practice staff under the pressure for longer than expected work hours. In addition to changing job descriptions and hours of work are leading to staff burnout and staff leaving that could lead GP practices’ viability under enormous stress.A new threat is that The Australian Taxation Office has new payroll disclosure rules commencing on the 1st July 2021. It will be mandatory from 1st January 2022. The ATO’s “softly softly” approach to Single Touch Payroll will not last long. It is important to revisit your payroll data. They are taking a closer look at how you pay your employees. They have a keen eye for unpaid overtime and ‘wage theft’. “Off the Clock” or “fake timesheets” violations are not a great idea.

The remarkable convenience of digitisation of your payroll is a game-changer. It is naive not to think that the Tax Office and Fairwork would not use this as a cheap back door to ensure compliance. Do not be surprised if within the next 12 months you receive a Medicare-like ‘please explain’ letter. Although, it may be a bit too late to do something, I am attempting to give you a 6 month head start.

Even large national law firms that thought they had done the right thing with their high-profiled advisers have been caught. In many big law firms, despite being paid (up to $500,000 p.a.) over the Award, their legal staff had worked so many extra hours it brought them under the minimum wage rate they were entitled to.

The Tax Office and Fair Work are after small to medium enterprises. Smaller practices are less well-resourced. You are not “too small for them to care”. This may provide a false sense of security. Technology and times have changed from my father’s day of hanging up your “shingle”.

https://get.pxhere.com/photo/consoling-depression-stress-doctor-therapist-sad-man-talking-friend-office-people-men-hand-shoulder-problem-friendship-failure-cartoon-worker-communication-sitting-console-depressed-stressed-support-table-product-sharing-gesture-font-chair-illustration-art-graphics-event-electric-blue-conversation-t-shirt-job-brand-rectangle-collaboration-logo-animation-room-employment-clip-art-elbow-symbol-leisure-management-1639034.jpg

Smaller practices are a “low hanging fruit”. They are an opportunity to establish an exemplary case to encourage compliance. Expect automated Medicare-like ‘please explain’ letters for possible non-compliance. Now is not the time to go cheap on the biggest investment (overheads such as wages) and risk your practice. The good news is – there is a way out.

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