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Regular reviews will help Australian practices remain compliant

Author: Zac Herps
5 min read
23 July 2020

Key Takeaways

  • Over the past six to nine months there has been an increase in the number of investigations into medical practices by Medicare and the Department of Health.
  • It is easy for doctors to focus on chargeable work and spend less time than on the management of their practice but in the event of an audit, management and record keeping processes will be critical.
  • Even if you are complying with all present requirements, we can help you prepare and respond to any investigations if the DOH comes knocking.

Over the past six months, there has been an increase in Department of Health (DOH) investigations into the operation of Australian medical practices.

Some of the key issues that have been targeted are:


Medicare and billing practices audit activity is focused on ensuring that Medicare Providers correctly bill for the services that they provide and to ensure that the Department of Human Services only pays for services which are generally accepted by the relevant profession, as medically necessary/ clinically relevant for the appropriate treatment of a patient.

With the introduction of the Shared Debt Recovery Scheme, both Doctors and medical practices where they work can be responsible for incorrect claims as we have previously discussed back in September 2019.

Audit activity can be driven by a number of investigative methods employed by the department, including:

  • Monitoring and comparing the claiming profiles of health professionals to identify inconsistencies. This is commonly done by statistical analysis and algorithmic “bot” searching for outliers within any particular speciality or stream of medicine;
  • Identifying unusual patterns of item usage and item combinations;
  • Identifying and applying patterns learned from previous cases of non-compliance; and
  • Investigating tip offs.

Perhaps the biggest change in recent times is the rise in identification of audit targets based on algorithms developed around “normal” billing patterns for particular specialties and practices.

If a Doctor or practice has billing patterns a number of standard deviations outside of what is generally considered “normal” for the type of medicine being practiced, it can cause that doctor or practice to be flagged for audit.

In some cases, the Doctor or practice will not be doing anything wrong and may simply have developed efficient systems or unique methodologies which allow them to practice very efficiently, but in those instances, practices will need strong records and the ability to demonstrate exactly how their practice is managed. If speed is coming at the cost of inadequate record keeping or patient record management, this can be a recipe for disaster.

Strict billing protocols and policies and procedures are required for all medical practitioners and practices including support staff that attend to patient billing on behalf of providers or the practice.


With the rise of Telehealth consultations as a result of Covid-19, we have seen both random and targeted audit activity to ensure that these services have been used and billed appropriately. It seems that the department is adopting all of the techniques set out above, along with randomised spot audits of both practices and patients.

It is also important to ensure that paper and electronic record-keeping standards are maintained, even when consultations are taking place by way of telehealth.


We have seen a significant rise in investigations surrounding pathology rents for pathology practices that are within or adjacent to other medical practices.

Rent or other benefits may, in certain circumstances, breach the prohibited practices provisions of the Health Insurance Act 1973 . Those provisions prohibit the offer or acceptance of benefits that would be reasonably likely to induce a requester of pathology services to request those services from a provider, such as rent that is well above market or the provision of other inducements.

It is important to be aware of the requirements and what types of activity may constitute prohibited benefits. The Department has provided the Red Book which provides guidance on how the laws affect both requesters and providers of pathology and diagnostic imaging services, and outlines the Department’s compliance and enforcement strategy.

The Red Book is available HERE

Practically, if you are looking at renting or subletting space to a pathology or imaging provider, it is important that you take the correct steps to ensure that you stay within guidelines but still achieve the best commercial result. To this end, your tender and negotiation process, record-keeping and documentation should be very specific to offer protection including from audit and to yield the best commercial outcomes for the business


Running a private medical practice is incredibly time consuming and stressful and the last thing you need is the DOH or Medicare knocking on your door asking you to explain how your practice operates and any arrangements that you have with other parties.

It is easy for medical practitioners to focus on their billing procedures and spend less time on other areas of their practice. When the DOH investigates, there are often other issues raised.

Potential penalties for both the practice and complicit doctors are significant. There is the potential for fines in the sum of hundreds of thousands of dollars or even millions of dollars to be paid all of which is avoidable with the right expert advice, process, documents and systems.

From working closely with our clients, Hillhouse Legal Partners has built a suite of policies and procedures that enable us to assist in the management and investigation of these issues, as well as helping improve your practice to best protect yourself and your business if and when audit activity or otherwise arises.

While we appreciate that it is easy to become complacent, the DOH has indicated it is taking these matters very seriously and, given their broad investigative powers, the potential risks should be heeded by all practitioners.

To ensure you are compliant, below are a few areas we would review and revise:

  1. Service agreements and services fees payable;
  2. Leasing arrangements to SMSFs and third parties including pathology and other allied providers and proper tender and negotiation processes for any new leases to these providers;
  3. Employment agreements for staff and contractors;
  4. Billing process, procedures and roles and responsibilities (linked to employment agreements outlined above);
  5. Doctor record keeping for patient consultations and procedures performed; and
  6. Warranties and indemnities given by contracted doctors and billing staff.

If you have any concerns as to the operation of your practice and its compliance, please get in touch for a no obligation discussion. We are here to help.

This story originally appeared on the Australian Doctor Magazine’s website To view the full story click here.

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.

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