‘Dear Dr’ letter is all it takes to cut costs
A secret trial has delivered a 19.5 per cent reduction in urgent after-hours Medicare billing — saving the federal government about $12 million — simply by sending carefully worded letters to the doctors making the highest number of claims.
The Weekend Australian used Freedom of Information laws to reveal the extraordinary results of the first trials of behavioural economics, or nudge theory, in the Department of Health.
A minute to former department secretary Martin Bowles — initially withheld under FOI but obtained this week on appeal — shows the secret trial was running for a year. “The cost of after-hours services by health professionals who provide care at night, on weekends and public holidays has grown by 140 per cent between 2005-06 and 2014-15,” the document states.
“A potential driver of this growth is incorrect claiming by health professionals or those companies that employ them. There may be a financial incentive to claim routine items as higher paying ‘urgent’ items.”
There have long been concerns over the growth in urgent after-hours billing and home visit doctor services more generally. While some stakeholders wanted Medicare restrictions, the Behavioural Economics and Research Team decided to instead try writing to the doctors involved.
The top 1200 doctors who claimed urgent after-hours items were identified and sent letters to “voluntarily acknowledge incorrect claiming of urgent items and to encourage a shift in their claiming behaviour away from urgent items to standard items”.
As part of the trial, BERT wrote different letters to three different groups to determine the best approach. The wording was redacted from the FOI documents but the letters to the control group achieved a 14 per cent reduction in claiming, the letters to the “social norms” group achieved a 24 per cent reduction, and the letters to the “firm messaging” group achieved a 21 per cent reduction. The minute states that, separately, 18 health professionals confessed to $1.08m in incorrect claiming.
“Six months after the first letter was sent, all health professionals who received the letter had significantly reduced their claiming of urgent after-hours items by 19.5 per cent,” the minute states. “This equates to an estimated $11.7m in behavioural savings (or $9750 per letter sent).”
The minute, signed by Mr Bowles, has been stamped with a smiley face and the words “Nice work, thanks!”
The trial came before the budget ramped up compliance efforts in anticipation of being able to generate an extra $103.8m over four years.
Medicare funded more than 3.4 million home visits in 2015-16, at a cost of more than $341m to taxpayers. Of that amount, afterhours services took up $28.9m but that was dwarfed by urgent afterhours services ($245m).
A review of the Medicare Benefits Schedule has recommended the government tighten rules on urgent after-hours items and allow billing only by “a GP who normally works during the day (and) is recalled to work for management of a patient who needs ... urgent assessment”.
‘All health professionals who received the letter had significantly reduced their claiming’ MINUTE TO EX-DEPARTMENT SECRETARY MARTIN BOWLES