Too many standards to bear

7 minute read

Is Medicare’s guarantee to subsidise a service that is ‘clinically relevant’ going, going, or is it gone?

The threshold legal standard enabling a claim to be made against the Medicare scheme is that the service must be clinically relevant

This is defined as a service that is necessary for the treatment of a patient, as judged by peers. So basically, Medicare subsidises services that patients clinically need. 

All health financing systems have similar threshold standards, which are necessary to control expenditure and enable prosecution. These standards are not always well understood.

In a recent defamation case between two GPs, both doctors appeared to believe that because something can be billed, it should be billed, and if you don’t bill it, you are somehow missing out on legitimate revenue. This is of course completely wrong, demonstrating ignorance of the clinical relevance standard.

In every PSR case report, the director has found that this standard has been breached. Sometimes it’s for obvious things, like patients presenting with wax in their ear having examinations of the larynx, or a neonatologist doing unnecessary ward rounds on healthy newborns. But sometimes there are more subtle infractions. Not every patient with a chronic disease will need a chronic disease management plan, and not every patient who has one, will need it reviewed exactly three months after it was prepared.

In addition to being poorly understood, these standards are notorious for opening up cavernous interpretive spaces, and when more than one standard applies, it can be very difficult for doctors to know how to bill correctly.

Over many years a raft of additional standards have been added to Australia’s medical billing landscape, to the point where it would be almost impossible for doctors to know which standard applies to which patients, and what the standards mean.

Evidence from my research suggests doctors are unaware of these standards. For example, doctors demonstrated no understanding of the relevant standard applicable when billing Department of Veterans Affairs patients. 

DVA billing comes under a separate statutory scheme, with a different threshold standard to Medicare. The DVA standard is: “reasonably necessary for the adequate treatment of the patient”. As to what that actually means, no one knows, because it has no legal definition. 

Worryingly, the Professional Services Review has been given authority to adjudicate the issue. In 2019, the government quietly brought the entire veterans and military personnel regulatory framework within the purview of the PSR. So, we have the situation where a non-expert non-court has been granted legal authority to interpret laws that it has no experience interpreting, and the laws themselves don’t have a legal definition.

In addition, a few years ago, the US standard of “medical necessity” was slipped into the private health insurance regulations here in Australia, affecting doctors who provide admitted patient care.

One US study found that

The term medical necessity is rarely defined, largely unexamined, generally misunderstood, and idiosyncratically applied in medical insurance.

My research found that medical necessity has no settled definition in the US and is frequently litigated. Reviewing the definitions section of the relevant Australian regulation, I found it is not defined here either. 

As a result, in Australia, each inpatient medical claim can be subject to two different standards: clinical relevance and medical necessity. For example, a $100 gap cover claim for say, item 116, may now involve $75 (the Medicare portion) being adjudicated under the standard of clinical relevance, and the remaining $25 (the private health insurance portion) being adjudicated under the separate, undefined standard of medical necessity. 

It doesn’t stop there. Below is a table taken from my PhD, displaying a non-exhaustive list of the myriad standards in medical billing.

Different standards across the health payment landscape

Standard SourceComments
Clinically relevantMedicareOverarching requirement to bill.
Required to inform clinical decision-makingMedicareRequired to bill cardiac services only. Unclear whether this is different or in addition to clinical relevance.
Clinically appropriate timeframeMedicareRequired to bill cardiac services only. Unclear whether this is different or in addition to clinical relevance.
Medically necessaryPHINo known definition. A US standard also without a settled definition in that country.
Reasonably necessarySIRAApplies for injured workers in NSW.
Reasonable and necessaryCompulsory third party (CTP) Applies to injured motorists in NSW and is a higher standard than the SIRA standard.
Reasonably necessary for adequate treatment MRCA* & VEATreatment PrinciplesApplies when treating eligible veterans and military personnel. “Adequate treatment” is not defined. 
ReasonablenessMedicare via an MBSRT recommendationThe rules committee decided a consultation was only clinically relevant if the associated procedure had a value under $300. Above that amount, a consultation was not clinically relevant because that was “reasonable”.
AppropriatenessNPS Medicinewise, Choosing wiselyAdvocates “appropriateness” in its approach to decisions to treat. (Zadro et al. 2019)
Inappropriate practicePSR“Appropriate practice” is not defined.
Overservicing AHPRA (NSW)It is unclear how overservicing differs from inappropriate practice for billing matters.
Unsatisfactory professional conductAHPRAOverservicing may lead to a finding of unsatisfactory professional conduct.
Professional misconductAHPRAProfessional misconduct is a more serious offence usually beyond billing transgressions.
Adequate and contemporaneous recordsMedicareOverarching record-keeping standard to support all billing decisions.
Medical records standardAHPRAAdditional overarching standard imposed by “Good medical practice – a code of conduct”.
Clinical notes standardMedicareRequired when billing cardiac services only. Unclear whether this is different or in addition to adequate and contemporaneous records and the code of conduct.
Formal reportMedicareRequired when billing cardiac services only. Unclear whether this is different or in addition to adequate and contemporaneous records and the code of conduct.
‡ State Insurance Regulatory Authority
* Military Rehabilitation and Compensation Act (Cwth) 2004
 Veterans Entitlements Act (Cwth) 1986

The highly controversial changes made to ECG items a few years ago introduced yet more legal standards, which would be confusing for anyone. The Medicare scheme already imposes an overarching requirement to keep “adequate and contemporaneous records”, but when doing ECGs, doctors now have to also ensure compliance with new requirements for “clinical notes” and “formal reports”. 

But what is the difference between an “adequate and contemporaneous record”, a “clinical note” and a “formal report”? Do they overlap? Where are the boundaries? No one knows, and I pity the first doctor in front of the PSR or a court battling against an indeterminate penumbra of possible interpretations.

While attending a Choosing Wisely event a few years ago, the keynote speaker advised doctors to apply yet another standard – theirs was “appropriateness”And during a recent conversation with a NSW workers compensation insurer, while he waxed lyrical about the differences in the standard for workers compensation claims (reasonably necessary) versus motor accident claims (reasonable and necessary) I found myself thinking: how on earth are doctors meant to understand any of this?

The more mess we make in the regulatory layers of medical billing, the better for lawyers, who just love new legal arguments. In fact, the threshold Medicare standard of clinical relevance is becoming so eroded, that it is only a matter of time before skilled lawyers successfully argue it no longer applies. At that point the system will collapse.

Instead of spending the health budget on lawyers, a better and simpler approach would be to stop tinkering with Medicare and start by aligning all laws to the only standard with a defined legal meaning: clinical relevance. At least then we can teach doctors what it means, and they can go about their work holding one standard in their minds, instead of a dozen.

Dr Margaret Faux is a health system administrator, lawyer and registered nurse with a PhD in Medicare compliance, and is the CEO of AIMAC, which offers courses and explainers on legally correct Medicare billing

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