DoHDA might be concerned about the use of AI billing tools, but it doesn’t have an enforcement plan at the ready.
A new Australian National Audit Office report reveals that both the Department of Health, Disability and Ageing and Services Australia have been growing increasingly nervous about the potential for AI-powered tools to contribute to MBS misuse.
The report, Artificial Intelligence and Medicare Benefits Integrity, examined the ways in which DoHDA was preparing internally and externally for the rise of artificial intelligence.
Internally, as published in The Medical Republic yesterday, the audit showed that DoHDA briefly used an AI-powered fraud detection tool, which it ultimately ditched due to the intense resourcing requirements it demanded.
While there was quite a bit of detail on DoHDA’s moves to harness AI technology for itself, there was less information about how it envisioned AI’s impact on the wider health landscape.
“At a high level, [DoHDA] and other Australian Government entities have identified risks associated with AI use in healthcare settings, including in health provider billing,” the audit said.
“These AI risks include: potential for bias; erroneous outputs; patient data exposure; low practitioner AI literacy; insufficient performance monitoring; and patient consent issues.
“Services Australia has expressed concern to [DoHDA] about providers using AI to test MBS eligibility for multiple items and suggest billing options.
“[DoHDA] has not yet systematically identified, assessed and established treatments for AI risks.”
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This inaction was despite a March 2025 legislation and regulation review finding that AI posed “significant, and potentially irreversible risks like physical harm, death, and the long-term pollution of health records”.
Further to this, the ANAO audit found that approximately 20% of medical software websites referred to using AI in products and that practice management and MBS billing software website “often refer to optimising billing processes, identifying missed billing opportunities, increased billing volumes, and in one case, suggesting the most lucrative combination of MBS item numbers”.
Unfortunately for the department, though, there was not much it could actually do to even identify potential cases of misuse, much less prevent them.
“[DoHDA] advised the ANAO in March 2026 that it cannot analyse claiming by health providers using AI-enabled prompted billing software due to a lack of data to confirm whether a health provider has used an AI billing assistant,” the ANAO report said.
“[DoHDA] stated that it knew of free software, offered without any proof of identity that may have been used to commit fraud, that Services Australia and [DoHDA] have no visibility of software products once in use, and there are no regulatory requirements in place to enforce compliance.”
The other potential AI-related misuse cases DoHDA identified included the use of provider numbers by non-clinicians, weaknesses in identification and authentication pathways, vulnerabilities within MBS payment systems, and exploitation of automatic payment risk.
Again, despite these risks having been identified at a high level, DoHDA had not acted to formally start identifying instances of AI-related misuse in the MBS.
The audit office recommended that the department begin working to identify and assess the risks association with the use of “artificial intelligence in healthcare settings, including from health providers using artificial intelligence in Medicare Benefits Schedule claiming; whether current regulatory and other controls are effective in mitigating risks; and possible treatments for artificial intelligence risks outside of tolerance”.
DoHDA accepted this recommendation.
