Demystifying Medicare reports

Advisers should have a good understanding of the issues around Medicare and PBS reports within the risk insurance advice process to add value to their advice proposition, Col Fullagar writes.

After an insurer is advised of a pending claim, generally the first overt action taken by them is to advise the initial claim requirements; typically, for example:

• A claim form completed by the insured/policy owner;
• A medical attendant's claim form;
• Proof of age; and, almost invariably
• The provision of a Medicare/Pharmaceutical Benefits Scheme (PBS) report authority.

Notwithstanding the Medicare/PBS authority is not always used by the insurer, the fact that it is so often required warrants an adviser having a working knowledge of the circumstances surrounding these reports so it enables the client to complete the authority on an informed basis.

For ease of reference, this article will focus on the Medicare report with a postscript being provided in regards to the PBS report.

History of Medicare reports

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Medicare is a publicly funded, universal health care system operated by the government authority, Medicare Australia.

Through Medicare, residents can obtain free treatment in public hospitals and subsidised treatment from medical practitioners, eligible midwives, nurse practitioners, and allied health professionals who have been issued a Medicare provider number.

The plan was introduced as Medibank in 1975 by the Whitlam Government and it was renamed Medicare in 1984. At the same time, Medicare began to retain computerised records of claims lodged with it for benefit payments. A Medicare report provides details of these claims; however, the reports do not include information about:

• Services that may have been provided to public patients in hospitals;
• Outpatients in public hospitals or at the emergency department of a hospital; or
• Services for which a claim on Medicare has not been made, e.g. a patient may pay for a service and not seek a rebate.

Individuals can obtain a Medicare report in respect of themselves or they can provide an authority to enable a third party to obtain a copy of their Medicare report.

Information contained in Medicare report

A Medicare report is generally made up of several sub-reports that provide the following information:

• Details of specialists, laboratories, etc. that have undertaken the examination or testing of a patient (rendering provider);
• Details of the doctor who referred the patient to the specialist, laboratory, etc. (ordering provider);
• Details of how payment for the service was made, for example, cash, cheque, bulk bill, or by a private health fund;
• Identification coding by way of an item number (a five to six alpha/numeric code) and abbreviated description of the service provided. While the glossary of codes is lengthy, only those applicable to a particular report are included with that report. Examples of codes are:

​- 00005 — standard consultation;

- 1170H — ECG;

- 65007 — full blood examination; and

• The focal point of the Medicare report, which is an information report that includes the date of the service, the item number, the charge made and benefit provided and the rendering provider.

By reviewing the dates and types of consultations, tests, etc., a working comprehension of the client's medical history can be obtained.

Care needs to be taken, however, because the specific reasons for consultations are not shown and thus the visual impact of the report can be misleading; for example, sometimes 10 or more entries may appear as parts of a blood test.

While this may initially give the impression the client underwent a large number of medical services, in fact, the blood test may simply have been part of a single, routine annual check-up.

Reasons for obtaining a Medicare report

There are various reasons an insurer might obtain a Medicare report:

• If there are concerns about the validity of the claim and/or whether a claimant fully complied with their duty of disclosure at the time of application;
• If an income protection claim duration is longer than would normally be expected for the particular sickness or injury. This may bring into question the effectiveness of and compliance with the treatment and/or medical advice or, again, the overall validity of the claim;
• To ensure the claimant is under the regular care of a medical practitioner; and
• To obtain a better understanding of an unusual or complex claim, for example, a younger person suffering a stroke or claims arising out of multiple, non-specific conditions.

In some situations, however, it appears that Medicare reports are being obtained by insurers for less than robust reasons.

Instances have been reported of insurers/reinsurers insisting that for any claim where the insured event occurs within the first three years of policy duration or where the benefit amount is in excess of a certain amount, a Medicare report must be obtained going back several years prior to the policy start date.

If there is doubt surrounding the validity of the claim, the Medicare report request may represent a prudent assessment requirement. If the report is simply being obtained in order to undertake a "fishing expedition" in the hope of finding something/anything that can be used to question the claim validity, these actions may well be seen as questionable.

Obtaining a Medicare report

If the client is agreeable (on an informed basis) to providing the insurer with a Medicare authority such that any report requested is sent direct to the insurer, it is worthwhile for the client, through the adviser, to request the insurer to provide them with a copy of the report as and when it is received by the insurer.

As an alternative to providing the insurer with an authority, there is generally nothing to stop a client contacting Medicare direct and obtaining their own Medicare report. If the insurer subsequently requires a copy of the report, one can be passed on to them.

If this is the preferred course, the client should inform the insurer to ensure there is no duplication of any request to Medicare.

An astute and experienced adviser should have a reasonable idea of when a report will be required by an insurer such that the advantages of a client obtaining a report direct would include:

• The saving of time as the client can lodge ahead of the insurer deciding a report is needed; and
• Enabling the client to review the report and provide an explanation to the insurer of any consultations the reason for which are not immediately clear or for which it is reasonably thought, the insurer may ask questions.

A copy of the requisite Medicare third party authority can be obtained via the website link: http://www.humanservices.gov.au/customer/forms/2690

Restricted use of Medicare report

When it is received from Medicare, the report will have a covering letter which will generally include the following statement:

"Please note that there exists a prohibition on the further use and disclosure of this information … and (you) must not divulge this information to a third person …"

Some insurers have taken this to mean that a copy of the Medicare report cannot be provided to the client and/or the adviser without the permission of Medicare.

To the extent that the client is the one who provided the authority enabling the insurer to obtain the Medicare report, this is clearly a fallacious assumption. In fact, when confronted with this response from one insurer, an approach to Medicare resulted in the clarification below:

"… you may divulge this information to the client … who has provided Medicare Australia their ‘informed consent' in the form of an authority to release their information to the third party concerned."

Delays

Delays in obtaining Medicare reports can vary from a few weeks to several months depending on the duration of the report and pressure on Medicare services at the time.

Older records, i.e. those going back more than five years, are not as readily available, resulting in longer delays in obtaining these reports.

These delays can be financially prejudicial to the client and can even be devastating in some situations, for example, a terminal illness or business insurance claim.

In order to reduce wait times and also costs to Medicare (there is no charge made for a report), Medicare has indicated that it will only make available records going back more than five years in "special" circumstances.

Thus when insurers request a report going back more than five years, it is necessary for details of the "special circumstances" to be provided so that Medicare can assess the merit of the request.

There is therefore similar merit in the adviser obtaining a copy of the insurer's letter of request to Medicare so that a check can be made of what reason has been provided, for example, instances have been encountered where a client disclosure breach has been alluded to by the insurer when there was arguably no reasonable evidence to support the allegation.

If an insurer is undertaking investigations of a client's health history without due cause, this may well constitute a breach of privacy or, at the very least, it would be disrespectful to the client.

Medicare report at time of application

Some advisers hold a view that because of the potential delays arising at the time of a claim, Medicare reports should be obtained by the insurer or the applicant at the time of applying for insurance cover.

While this idea may initially appear to hold some logic there are several potential complications, including:

• This action could cause lengthy delays in the new business process and, in turn, increase the risk of an applicant suffering an insurability changing event in the meantime;
• The wait time for Medicare reports would likely become even longer than it is currently, which would only exacerbate the problems arising out of these delays; and
• An applicant is required under the duty of disclosure to reveal only those medical consultations which they, or a reasonable person in their circumstances, believe to be relevant to the assessment of the particular risk i.e. disclosure of all consultations may not be required. Thus, providing a Medicare report which details all consultations with the application may lead to confusion and/or even longer delays while the insurer reviews and potentially questions the content of the report.
• An alternative of holding off obtaining a Medicare report until after the application is completed may resolve some of the above issues but it may also give rise to new issues; for example, the client may review the report after the policy has completed and realise, on reflection, that a potentially material matter was inadvertently not disclosed; the manner of how this would be progressed could be complex.

Recently, a viable alternative to the above became available.

Online Medicare report

It is now possible for an individual to register online and obtain a Medicare report for the last three years — follow the link below:

http://www.humanservices.gov.au/customer/services/medicare/medicare-onl…

The report can be obtained, at the latest, within a matter of days and because it is obtained by way of a download, this does not exacerbate any existing delays.

Bearing in mind the above, a reasonable question to ask might be:

"To assist in the completion of the personal statement within an application form, is there merit in the adviser asking the client to go online and obtain a three-year Medicare history and use this as a memory jogger? Following on from this, is there merit in subsequently providing a copy of the Medicare report to the insurer?"

What are set out below are some thoughts for consideration and discussion rather than a comprehensive treatment of the question and advice to govern what action to take. For the latter, a formal legal opinion would be required via the licensee.

In response to the first part of the question, there does appear to be merit in obtaining the three-year online Medicare history as it should better enable the client to recall matters relevant to their duty of disclosure such that the risk of being considered to have fallen foul of it at a later date will be reduced.

The mechanics of this for the adviser may be to work through the entries on the report with the client such that the client could recall them and then assess whether they did or did not come within the confines of the duty of disclosure.

A risk, and there may be others, might be any delay that elapses while the report is obtained. This risk, although apparently slight, could be mitigated by obtaining the report earlier in the advice process and/or offsetting this risk against otherwise risks that might have arisen if the above actions are not taken.

The response to the second part of the question is not necessarily as straightforward i.e. should a copy of the report be provided to the insurer?

As mentioned, the client is only required to provide information caught up by the duty of disclosure.

If the insurer was provided with a copy of a three-year Medicare report, the insurer may be tempted to seek medical information additional to that which would have otherwise been provided i.e. to effectively go beyond the duty of disclosure.

This could lead to delays in application completion and thus risk exposure again arising out of insurability changes during the period of the delay.

Notwithstanding the above, it should also be borne in mind that, depending on the particular question in the application, the duty of disclosure may extend back further than the three years covered by the online Medicare report.

PBS report

The PBS report is similar in kind to a Medicare report; however, it details subsidised prescribed medication made available to the client.

The report includes:

• The prescribing and supply dates;
• The drug code and description;
• The quantity of repeats; and
• Name of prescriber and name and address of pharmacy.

Summary

Like so many other aspects of the risk insurance advice process, issues revolving around Medicare and PBS reports can be subtle and potentially far-reaching.

As intimated at the start of this article, these issues more than warrant the adviser having a working knowledge of the circumstances surrounding these reports so the client can be enabled to make decisions concerning them on a fully informed basis.

Yet another adviser value-add component of the advice process.

Col Fullagar is the principal of Integrity Resolutions Pty Ltd.