Quick Post: In defence of the Level A metric for spotting healthcare waste

It’s been a weird 24 hours.

A piece I wrote for AusOpinion was circulated quite widely, even being cross posted at The Guardian.  A former public servant turned adviser has reheated a policy proposal from the early ’90s to introduce a co-payment for bulk billed services of $5.  The theory is that because healthcare is free (in some circumstances) people don’t value it and therefore waste it.  The major point is simple: where is the evidence that there’s waste arising from patient demand?

To show the problem, I drew attention to the rates of Level A consultations with a GP (specifically, consultations where the patient went to the clinic during standard hours).  Level A consultations are for simple and straightforward things.

Last financial year, there were less than 3 million Level A consultations of this kind.  As you can read in the article, this is tiny in the scheme of things.

But using the billing data in this way caused considerable grief for a number of respondents.

Overwhelmingly, the response was that the information must be wrong because everybody had anecdotal evidence of waste.  One lawyer even told me that the tests performed by his doctor when he went in for vaccinations were completely unnecessary.  A nurse told me that people with scraped knees, weight gain, and pimply noses were seeking medical attention.  One ‘GP’ told me that doctors routinely charge Medicare too much (this doctor then went on to say that they had never heard of Medicare audits and didn’t know what Professional Standards Review was).

Here’s a quick overview of how Medicare auditing works.  There are two main ways of getting pinged.  The first is to have a billing profile which is different to the billing profile of your peers.  The theory is simple: two doctors in similar circumstances should see similar kinds of problems and, therefore, deliver similar kinds of services.  For example, if one doctor is ordering lots of CT scans and billing them to Medicare, Medicare will send them interesting letters and seek to review their notes.  If one doctor is billing lots of higher level consultations, Medicare will pick this up.  The second way is to bill more than 80 services to Medicare per day for 20 days or more.  This is called the 80/20 rule.

If abuse of the system were as rampant as people’s intuitions appear to be, we’d know about it.  If people are billing scraped knees and pimples as Level B consultations, we’d know about it (bets are on that the doctor suspected something else).  If doctors are billing unnecessary tests as a matter of habit, we would know about it.

So my response to these challenges has always been the same: show me some evidence that there’s waste in the system.  Nobody has been able to provide anything beyond bizarre (and probably false, as the above shows) anecdotal stories.  One person said that their evidence was ‘a priori’ — suggesting that the person didn’t know what the term meant.

It is nonsense — utter and complete nonsense — to say that we can save money by reducing waste that we can’t demonstrate exists.  If you want to oppose the $5 GP fee, just tell advocates to prove that the problem exists that they’re trying to solve.  Tell them to list the MBS item codes that they think are too high and ask them to demonstrate at what level they think the codes should be billed.

Author: Mark Fletcher

Mark Fletcher is a Canberra-based PhD student, writer, and policy wonk who writes about law, conservatism, atheism, and popular culture. Read his blog at OnlyTheSangfroid. He tweets at @ClothedVillainy

3 thoughts on “Quick Post: In defence of the Level A metric for spotting healthcare waste”

  1. Funny that the people claiming that there is wide-scale rorting of the system by doctors are using that as a justification for charging poor, sick people extra money. Instead of, you know, suggesting we fix the rorting and stop doctors pocketing the extra.

  2. Here here!

    Although your arguments are sound, they lead to the obvious conclusion – this isn’t about saving money or stopping waste. It is an idealogical (ie “a priori” with no need for “evidence”) recommendation by someone who only cares about money. $0 means no cost right?…..yeah right…..

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