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Wednesday, 11 September 1985
Page: 425


Senator WATSON —by leave-Report No. 236 of the Parliamentary Joint Committee of Public Accounts is the third report on aspects of medical fraud and overservicing. Throughout the course of some of our earlier inquiries into medical fraud and overservicing pathology emerged as an area for serious concern and examination by the Committee. In fact, there has been a rapid growth in the pathology industry over recent years in terms of the number of services rendered, the volume of Commonwealth benefits being paid and the increase in the number of providers.

I would like to emphasise two things at this point. Firstly, while the activity of some pathology practices may be suspected of being fraudulent, there remain many pathologists of unquestionable integrity who provide a high standard of care. The majority of professional pathologists and those allied to the profession would welcome the introduction of a high quality and nationally consistent pathology accreditation program. However, pathologists operate in an environment where for the unethical the possibility exists to make extra money. It is up to the Parliament-it is up to the Government-to ensure that those loopholes are closed.

Philosophically, the Liberal Party of Australia endorses and encourages entrepreneurial endeavour, but in the sense that it is applied in this report, that activity, I must emphasise, is indeed repugnant. While we may support entrepreneurial zeal, my Party recognises that where such practices involve exploiting the public purse there must be some looseness in the system. Such entrepreneurship must be controlled by a greater degree of vigilance on behalf of or through the Government agencies. Where there is significant outlay from the Commonwealth without commensurate benefit to the consumer we need to exercise caution. While doctors continue to be reimbursed from public moneys I believe the Opposition will continue to be concerned about how those costs are incurred.

Quite a lot of publicity has been given lately to the almost supermarket or shopping arcade approach of extravagant palatial premises or medical centres with pathology attachments to those centres. While it is true that these pathology practices, with their improved facilities, attract patients such clinics cannot be allowed to offset unnecessarily high overheads by overservicing. This is the crunch. The current legislative arrangements tend to encourage fee splitting of pathology services and while those arrangements stand, overservicing and poor quality treatment of patients in some cases will continue. I think the Health Insurance Act should be amended specifically to prohibit fee splitting.

In the course of its inquiry the Committee became aware of a disconcerting development in pathology. Section 16C (1) (b) of the Health Insurance Act provides for the corporate status of pathology practices. Some service problems are now emerging with the infiltration of entrepreneurs and commercial laboratories into the pathology industry. I will quote briefly from the report in which one pathologist has described the emergence of depersonalised medicine. I think this is significant. The report states:

It was only when the automated machines came on the market that a few very clever, let us not denigrate their intelligence, a few extremely clever medical entrepreneurs saw their opportunity. They had a vision of buying some expensive machine, putting a person in front of it making a million dollars-and they did. The little people will get squeezed out because they do not have that mentality. You probably know, I do not have to tell you, that all the big commercial laboratories are owned by non-pathologists. There is not a one that is owned by a pathologist. They are owned by medical entrepreneurs and I guess there is a place for them if that is what the public wants.

The Committee has been greatly concerned that these pathology laboratories, operated by commercial non-pathologists who value profit maximisation and market control over the care of their patients, may perpetuate and even institutionalise overservicing. This, I believe, is indeed serious. Another disturbing element has been the tendency for pathology services to be performed either by the approved pathology practitioner or on his behalf. The Health Insurance Act allows for legalised fee splitting whereby an approved pathology practitioner effectively sub-contracts tests to another approved pathology practitioner, a laboratory or some other establishment on return for fee splitting the medical benefits schedule fee with that other organisation or person. The fee splitting situation was described to the Committee in the following terms:

The proliferation of unregisterd laboratories which perform the work for doctors who have registered as APPs is only just beginning. These laboratories perform the work for 60 per cent of the MBS fee, leaving 40 per cent for the doctor who decided the test was necessary.

The Committee has recommended that the Health Insurance Act be amended to prohibit such fee splitting. There is no benefit to the Commonwealth and there is certainly no benefit to the customer or the client in these situations. This substantial 40 per cent discount offered by some private laboratories to other approved pathology practitioners indicates that Medicare fees for many pathology services may be inappropriately high. The widespread application of advanced technology, I believe, has greatly reduced pathology costs but Medicare benefits do not appear to have been proportionately reduced.

Strict penal provisions incorporated into the Health Insurance Act would also limit the practice, which appears to be widespread at present, of incorrect itemisation of specialised pathology rates being charged, instead of the Medicare rate accorded to the OP-other pathology-rate. In conclusion, while some pathologists run their practices as if they were money factories, it is doubtful that the welfare of their patients is their uppermost concern. Overservicing appears to be a profitable means in some cases of paying for extravagant types of premises. I believe that the whole system needs review and cleaning up and I commend the report to the Senate.