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 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!

“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.”

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.

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.

“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.

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!

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

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…:

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.

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.

For more insights visit our blog.

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

Chartered Accountant, Chartered Tax Adviser, 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 (

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.

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