Go to top of page

Director's Comments

Medicare, Australia’s universal, taxpayer-funded medical insurance system, was established in 1984. The scheme is administered and financed by the Australian Government. In 2018–19, Medicare paid subsidies of over $24.1 billion for 424.2 million medical services for the Australian population of over 25.2 million people.

Medicare operates on the basis of a ‘clinically relevant service’, defined in the legislation establishing the scheme as:

… a service rendered by a medical practitioner that is generally accepted in the medical profession as being necessary for the appropriate treatment of the patient to whom it is rendered.

PSR was established in 1994 and provides for peer review Committees to assess concerns of inappropriate practice in relation to billing under the MBS or prescribing under the PBS. The touchstone of PSR reviews is ‘inappropriate practice’, which is defined in s. 82 of the Health Insurance Act 1973 as conduct in connection with rendering or initiating services such that a Committee could reasonably conclude it would be unacceptable to the general body of the practitioner’s peers. This broad test is applied by expert Committees constituted with peers drawn from the same specialty or profession of a practitioner under review.

The Department of Health has initial responsibility for monitoring compliance of practitioners who provide services under Medicare and the Pharmaceutical Benefits Scheme. It undertakes a variety of compliance activities such as random audits, and also investigates suspected fraud. Department of Health staff evaluate unusual patterns of practice revealed by data analysis of Medicare payments. The kinds of practice that bring a practitioner to the attention of the Department include:

  • rendering a statistically abnormal volume of total and daily services
  • initiating a high volume of diagnostic imaging and pathology services
  • unusual prescribing habits or
  • other unusual practices.

Each year Health Department medical officers interview several hundred practitioners to gain further information about their practice as part of the Practitioner Review Program. A small proportion of these practitioners will be referred to the Director of PSR.

Once a matter has been referred to the Director of PSR, the Director decides whether she will commence a formal review. If a decision is made to conduct a formal review, the Director has the power to require referred practitioners to provide clinical records or other documents to facilitate that review.

Practitioners referred to PSR in 2018-19

During 2018–19, the Agency received a higher number of referrals compared to historical averages. The Agency also finalised significantly more matters than in previous years.

There was considerable diversity in referrals. Referrals were received for general practitioners, other medical practitioners, medical specialists (in the fields of rehabilitation medicine, respiratory and sleep medicine, radiology, dermatology, endocrinology, oncology, internal medicine, haematology and psychiatry), nurse practitioners, optometrists and dentists.

Legal issues

Practitioners involved in the PSR process can seek judicial review in the Federal Court.

In 2018-19 PSR successfully defended a Federal Court case that addressed the issue of urgent after hours services and of a prescribed pattern of services (Nithianantha v Commonwealth [2018] FCA 2063).

A requirement of MBS item 597 was that the practitioner had to be satisfied that the patient’s condition ‘requires urgent treatment’. Dr Nithianantha submitted that it was enough if, when he formed the opinion that urgent treatment was required, that opinion would have been acceptable to his peers ‘in the circumstances that existed and on the information available when the opinion was formed’, even if it turns out that the patient requires treatment for a different, non-urgent condition which is diagnosed during the consultation. The Court rejected that approach, and said that the term ‘requires’ in this context was not susceptible of meaning ‘might require’. The Court said that before the consultation, the practitioner can only form a view, having regard to the circumstances which have been conveyed to him or her by someone who may not be the patient. The best the practitioner can do at that point is form a view of what might be required at that time, not what is required. What is required can only be determined following consultation which can, if necessary, include examination. Since this matter was heard by the Court, the urgent after hours items were changed with the relevant phrase amended to ‘requires urgent assessment’, nevertheless, this still can be determined only following consultation with the patient and not before it.

In relation to the prescribed pattern of services (the so-called ‘80/20 rule’), Dr Nithianantha had put the case to the PSR Committee that there was an absence of other medical services for his patients in the remote rural town in which he practised, and that this constituted an exceptional circumstance. The Committee had rejected that case on the basis of oral evidence given by the practice manager of the only other general practice in that town. In court, Dr Nithianantha submitted that the Committee had failed to consider whether the services of the other practice were a readily and reasonably available alternative for Dr Nithianantha’s patients; that it could not make that inference from the practice manager’s evidence; and that it had failed to consider whether another medical practitioner was available on each of the 28 days on which he claimed exceptional circumstances. The Court rejected each of these submissions. The Court held that the Committee was correct in its view that once the evidence establishes that the practitioner had rendered 80 or more attendance services on 20 or more days in a 12 month period, there is a practical onus on the practitioner to establish that there was an absence of alternative medical services for the practitioner’s patients on any of those days if that is the exception to the 80/20 rule relied on by the practitioner. The Committee was entitled to form the view on the evidence before it that Dr Nithianantha had not established such an absence of alternative services.

PSR also responded to three further legal challenges. In one matter PSR consented to the making of an order by the Federal Court revoking an amended section 93 referral, effectively reinstating the original section 93 referral to a PSR Committee. In another matter, a practitioner has sought to challenge both the Draft and Final Reports of a PSR Committee. In a third matter, an interlocutory judgment was delivered (Karmakar v Minister for Health [2019] FCA 868), granting the practitioner a further and final opportunity to amend the originating application to the Court before it would hear an application by the Minister and the Director of PSR for summary judgment in their favour and to have the matter struck out. In granting that further opportunity to Dr Karmakar to amend her application, the judge expressed doubts concerning the basis on which her application had been brought, saying that it ‘overwhelmingly required a particular reality check’.

Pharmaceutical referrals

PSR received referrals relating to concerns over the prescribing of several practitioners. Prescribing referrals were in two main areas: Schedule 4 and 8 medications and antibiotics.

Concerns leading to a finding of inappropriate practice in relation to prescribing Schedule 4 and 8 medications were made when practitioners prescribed high volumes of multiple schedule 4 and 8 medications without checking for doctor shopping behaviours, exploring non-drug management options, seeking specialist or multidisciplinary help in management and/or ignoring addictive behaviours such as repeated lost prescriptions or consistently returning for repeat prescription early.

Concerns leading to a finding of inappropriate practice in relation to prescribing antibiotics were made when practitioners repeatedly prescribed second and third tier antibiotics such as amoxicillin and clavulanic acid and intravenous cephalosporins in primary care settings when there was no evidence of resistance to narrower spectrum medications such as penicillin or amoxicillin alone, without clavulanic acid, or there was no clinical indication for an intravenous antibiotic as patients were systemically well with simple conditions such as a urinary tract infection.

MBS Chronic Disease Management items

Chronic Disease Management (CDM) items (721, 723, 732) continued to be another common reason for referral. In the past year concerns identified by PSR leading to a finding of inappropriate practice included:

  • no contemporaneous documentation to support billing the items
  • documentation that was an identical copy of prior billed items without significant change
  • concerns the patient was not present when items were billed
  • concerns the patient did not have an eligible chronic disease or terminal illness
  • no evidence of patient consent
  • concerns the practitioner was not the usual care provider of the patient
  • concerns there was no evidence the patient was evaluated to develop individualised management goals
  • no evidence of two-way communication with teamcare members to address management goals or
  • concerns reviews were not clinically indicated and/or the patient was not present.

Consultation items

Consultation items were another common reason for referral to PSR. Common concerns leading to a finding of inappropriate practice included:

  • no contemporaneous documentation to support billing the item
  • documentation that was an identical copy of prior pasted consultations without substantive change
  • concerns the patient was not present when items were billed
  • after-hours items that were not performed in an after-hours period
  • clinical content that was not sufficiently complex to justify billing consultations requiring 20, 40 or 60 minutes
  • poor medical records that would not enable another practitioner to rely on the record to safely assume patient management
  • concerns over a lack of clinical input due to a poor history, failure to examine key systems, misdiagnosis, excessive use of pathology or imaging without clinical indication and/or prescribing concerns
  • consultation items co-billed with procedural items without evidence of a separate consultation and
  • missing referrals requesting a consultation service in the case of specialists.

Urgent after hours

PSR continued to resolve a number of matters related to urgent after hours consultations. High levels of inappropriate practice were identified in referred practitioners with adverse findings ranging from 30% to 100% with a mean of 70%. The main reason for findings of inappropriate practice related to a determination that the consultation did not relate to an urgent matter, the standard of clinical input fell below that expected of the general body of practitioners and concerns over prescribing. Urgent items were billed for patients with upper respiratory tract infections, viral gastroenteritis, medication reviews and chronic health conditions.

Sleep studies

PSR reviewed a small number of practitioners in relation to sleep studies. Concerns identified were that the sleep study was not clinically indicated, was not performed with an appropriate level of supervision, was not performed or scored appropriately and/or was not adequately reported. In regard to the concerns about poor reporting, it was observed that in some cases reports were 'obstructive sleep apnoea' centric and focussed on a need for CPAP, yet failed to mention other clinically important abnormalities apparent from patients data including the presence of chronic hypoxaemia and significant abnormalities of the cardiac ECG, brain EEG or limb movements.

In response to PSR reviews, the Director met with senior representatives of the profession. The response of the profession has been exemplary with considerable engagement by practitioners to address concerns and improve the quality of conduct and reporting of sleep studies. This has also been facilitated by the MBS Review that has added clarity to the item descriptor. The profession is to be commended for rapidly and positively responding to concerns.

The only outstanding area that the profession might like to consider is independence from companies that sell sleep equipment. PSR noted that some referred sleep physicians were employed or contracted by companies that were subsidiaries of larger corporations that sold sleep medicine equipment. In some reviewed cases sleep study reports were printed on the back of letters directing patients to these suppliers. Whilst this observation did not form the basis of any finding of inappropriate practice, the sleep medicine profession might like to reflect upon whether such associations are in the interest of the philosophy of medical independence.

Skin medicine

PSR received a small number of referrals in relation to skin medicine item numbers. Referred practitioners were classified as belonging to the 'Other Medical Practitioner' or 'Specialist General Practitioner' classification rather than 'Specialist Dermatologist' category. Concerns identified were non contemporaneous records, concerns a billed service was not provided, concerns over identical pasted text across multiple entries in the same medical record and/or across multiple different patient records, concerns over consent, concerns over a lack of clinical input, concerns over poor or illegible recordkeeping, concerns over billing for cosmetic procedures and concerns over the use of the Medicare Safety Net.

In response to PSR reviews, the Director spoke at skin medicine conferences. Engagement by the profession was excellent and the concept of documenting consent in medical records and improving the quality of medical records has been embraced. The MBS Review has also added clarity to some item descriptors. The profession is to be commended for rapidly and positively responding to concerns.

Employer or corporate referrals

The PSR is now better able to review employers of healthcare practitioners (including corporate healthcare entities) to ensure clinically relevant and appropriate behaviour occurs. PSR progressed a corporate matter in the year under review.

PSR evaluates whether the employer has engaged in inappropriate behaviour by reference to s. 82(2) of the Act which provides for a finding of inappropriate practice against the employer or ‘an officer of a body corporate’ who ‘knowingly, recklessly or negligently’ causes or permits a practitioner ‘to engage in conduct that constitutes inappropriate practice’.

Random samples of records

PSR relies on securing a random sample of records from which it can extrapolate findings across a full year. In the past the random sample was identified by the Department of Human Services. However, this year this duty was transferred to the Department of Health. Unfortunately the preparation for the transfer disrupted data acquisition, resulting in significant delays. A process that previously took only two weeks took in excess of three months. Given Director’s stage reviews have a maximum statutory time frame of only 12 months, the delays resulted in consequential time limitations in other aspects of the Director’s reviews and caused disruption to workflow. PSR worked with the Department of Health and this issue has now been resolved.

PSR also sought advice from an Australian expert in statistical sampling to determine the optimal way to sample data to secure a random sample suitable for extrapolation in the case of an employer or corporate Committee where multiple practitioners might provide services. The PSR agreed to adopt the advice in the expert report and Committees established to review corporate or employer cases will be able to utilise the recommended sampling methodology.


In 2018–19, PSR has successfully managed an increasing workload and simultaneously achieved all qualitative key performance indicators.

PSR now tackles a large number of matters across many professional areas. It is making efforts to increase its engagement with stakeholders. This engagement has demonstrated that the Australian healthcare community are committed to maintaining the principles of the Medicare and the Pharmaceutical Benefits Schemes and that the majority of practitioners act appropriately in billing and prescribing.