Medical centre chain rorted Medicare as authorities ignored tip-offs

Key points

  • New documents show collapsed bulk billing medical centre chain Tristar systematically rorted Medicare over a number of years.
  • This came despite authorities being tipped off to the problem on numerous occasions.
  • Whistleblowers say the Tristar business model was based on hiring GPs on visas and taking 30 to 50 per cent of the billing income.

One of the country’s biggest bulk billing medical centre chains and mental health providers systematically rorted Medicare over a number of years while authorities failed to act on a series of tip-offs and red flags, leaked documents show.

The company, Tristar Medical Group, collapsed in May this year, leaving hundreds of patients without access to medical services and owing creditors $23 million.

Leaked billing and medical documents obtained by this masthead show some GPs overstated the length of patient consultations to claim a higher Medicare rebate and billed for some services without adequate patient documentation, which is illegal.

Some GPs charged Medicare for up to 18 hours of face-to-face patient consultations a day when the clinic was open for 10 hours.

One doctor in Bendigo raked in almost $1 million, with nearly 90 per cent generated from Medicare billing, documents show.

Another high-billing medic revealed that on one day, the doctor worked less than six hours, saw 50 patients, with 14 of them involving mental health consultations and long consultations, which require at least 20-minute bookings to meet Medicare requirements. This left 80 minutes to service 36 other clients, equivalent to less than 2.3 minutes a patient.

One of the country’s biggest bulk billing medical centre chains and mental health providers systematically rorted Medicare, it is alleged.Credit:April Lombardo

Former Tristar employees and associates who asked not to be named for fear of reprisal said concerns had been flagged with relevant authorities on multiple occasions from November 2018, but all failed to act.

The revelations are part of a Sydney Morning Herald and Age investigation into Medicare and its watchdog, the Professional Services Review (PSR), which exposed errors, fraud and over-servicing by doctors, surgeons, hospitals, radiology and pathology of up to 30 per cent, or an estimated $8 billion a year, some of which was never detected by the PSR.

The investigation sparked fierce debate, with medical lobby group the Australian Medical Association (AMA) attacking the media reports, claiming only a tiny minority of medical professionals abused Medicare.

Federal Health Minister Mark Butler.Credit:Dominic Lorrimer

News of the Tristar scandal comes during an inquiry into Medicare, launched last month by Health Minister Mark Butler in an attempt to quell growing calls for a royal commission into Medicare.

One former associate of Tristar who requested anonymity said he tipped off the Department of Health and Aged Care on November 27, 2018, telling them it was “attempting to defraud the department of health”.

His email said Tristar had been asked to repay money it had received from the department after failing to meet certain criteria for a Practice Incentive Program, which provides funding for general practices to help them improve health outcomes for patients. He told this masthead the repayment was hundreds of thousands of dollars.

In an attempt to avoid the repayment, he said he had been asked by a Tristar official to be “creative” and “find a technological reason for why Tristar hadn’t met its criteria”.

His message included a plea to the department to protect him, saying, “Tristar has a history of torturing their staff, especially whistleblowers”.

He said the department’s compliance operations branch made initial contact but didn’t follow him up. He left Tristar a few months later.

Another former employee said in September 2019, November 2020 and then in March 2022, weeks before Tristar’s collapse, he sent multiple warnings to corporate regulator ASIC alleging Tristar was trading while insolvent, staff weren’t being properly paid and questionable Medicare billing.

On May 28, days after Tristar collapsed, he fired off a final email to ASIC saying, “I have been trying to advise since 2020. A deeper dive may have saved lots of challenges.”

The former employee said he also reached out to Services Australia (formerly the Department of Human Services), which is responsible for the Medicare billing infrastructure.

“I have copies of booking documents, daily running sheets and for the doctors billing 900k per year it would mean them working 16-18 hrs per day 7 days per week when clinics were only open 12 hours a day,” he said.

“The Fair Work Ombudsman (toothless tiger) also come up short and now after the fact are doing a bigger investigation despite countless Tristar employees making notifications. A sick system that has failed many,” he said.

The Department of Health and Aged Care confirmed it received a tip-off in November 2018, but said privacy provisions meant it could not discuss any investigations or compliance concerns.

“The department takes allegations of Medicare non-compliance by health care providers very seriously and all tip-offs are reviewed in accordance with the department’s compliance assessment system,” a spokesperson said. “Claiming of a Medicare benefit for a service without the person’s knowledge or consent should be reported to the department.”

ASIC declined to say whether it had received any reports of misconduct at Tristar or whether any action had been undertaken.

At its peak Tristar was one of the country’s largest privately owned bulk billing health care providers, employing more than 440 staff and 165 GPs across 59 bulk-billing clinics in rural and metropolitan areas across NSW, Victoria, Queensland and the Northern Territory.

Its liquidators, McGrathNicol have studied the financials and believed it may have been insolvent from at least June 2019, which is just before a Tristar employee warned ASIC of solvency issues.

In a report, McGrathNichol said Tristar had failed to lodge tax returns since 2019, its payroll tax and PAYG was in arrears since 2018, as was elements of superannuation. All of these are breaches of its statutory obligations which should have been a red flag to authorities.

McGrathNicol concluded that Tristar’s collapse was due to “failed clinic expansion resulting in trading losses, poor financial management and a high amount of non-business expenses.”

It noted that the $12.3 million of related party loans from 2017 onwards was a “key reason for the failure.” They included $6.4 million owed by a director, $3.3 million to related individuals and $2.6 million to related entities.

Tristar did not respond to a series of questions about the management of Tristar and inappropriate Medicare billing by some of the doctors.

In some cases, doctors were being paid double the usual rate for a full-time GP, leaked documents show.

“Some of these rates were extremely high,” said an ex-Tristar employee with access to the company’s internal billing records.

Ex-employees of Tristar said concerns over suspicious billing had been repeatedly raised internally with the company’s managers.

The Tristar business model was based on hiring GPs on visas and taking 30 to 50 per cent of the billing income, depending on the seniority of the doctor.

“It means people just aren’t asking questions when they have this income stream,” one former employee said.

While some doctors were making high incomes over-billing, others weren’t being paid.

Former Tristar GPs spoke of extreme pressure to meet high targets for Medicare billing which meant a high volume of patients.

The Rural Doctors Association of Australia said it had been made aware of doctors at Tristar being placed under pressure to provide more revenue.

“You have a situation where the business model is based on doctors, many of whom are from overseas and tied to their employer by visas, being put under a great deal of pressure to bill a certain amount of money,” said the lobby group’s chief executive, Dr Peta Rutherford.

“There are meant to be mechanisms within the Medicare system to prevent this happening,” Rutherford said. “The bulk billing, corporate, high through-put [business model] is often one of those models that triggers those alerts, but not every case is fully investigated.”

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