Medicare: focus areas for compliance activities. Are you at risk?
Avant is seeing more members contact us about Medicare compliance letters as the Department of Health, Disability and Ageing (DHDA) uses early intervention strategies to address billing concerns.
Sunday, 8 February 2026
Receiving such correspondence can be a source of significant anxiety. Understanding what triggers these letters and how to respond appropriately is essential for maintaining compliant practice.
The purpose of compliance letters
DHDA’s Benefits Integrity Division systematically reviews claims made for Medicare Benefits Schedule (MBS) items. These reviews allow the department to implement a range of compliance activities, with prevention and education being the primary objective. Early intervention letters are intended to identify and address potential compliance issues before they escalate to formal audits, Practitioner Review Program processes, a Professional Services Review or, in the small number of cases where practitioners are intentionally non-compliant, prosecution.
These letters are generated using data analytics that compare Medicare claiming patterns with various data sources. The department monitors billing behaviours across multiple dimensions, comparing individual practitioners against their peers and analysing claiming patterns for anomalies.
What might trigger a compliance letter
Based on the department’s compliance priorities, several types of billing may attract compliance attention. The DHDA is particularly focused on specialist and consultant physician claiming of attendance items, bulk billing practices that include additional charges, and claiming for services while overseas.
The department cross-checks Department of Home Affairs movement records with Medicare claiming data to identify practitioners who may have billed for services while appearing to be outside Australia. This reflects a fundamental requirement that Medicare benefits are only payable for clinically necessary medical services provided in Australia to eligible persons.
High-volume billing patterns also attract scrutiny. The ‘80/20 rule’ defines automatic inappropriate practice thresholds. A practitioner who provides 80 or more professional attendances on each of 20 or more days within a 12-month period is deemed to have engaged in inappropriate practice under the Health Insurance Act 1973. The ‘30/20’ rule for telehealth attendances is similar.
Opportunistic billing and emerging business models are under particular focus. The department has identified concerns with ‘single-issue’ models and corporate structures that may pressure providers to meet potentially clinically inappropriate billing targets.
Common compliance issues
Based on Avant's experience handling Medicare issues – which, for our members, represent approximately five per cent of all medicolegal matters – the two main allegations relate to incorrect claiming where the requirements for item numbers have not been met, and the volumes of services billed.
Non-compliant billings may involve a lack of clinical necessity, or where services are not considered to be clinically relevant by peers, or insufficient clinical detail is provided. All of which mean the doctor has failed to meet all of the relevant MBS item requirements.
Just over half of Medicare compliance claims involve a repayment of benefits by the doctor.
Responding to a compliance letter
If you receive a compliance letter, the most important advice is straightforward: don't ignore it! These letters provide an opportunity to address the department’s concerns early, before the issue progresses to more serious compliance action.
The worst response is to ‘bottom-drawer’ the correspondence. Early engagement demonstrates good faith and provides an opportunity to clarify any misunderstandings, correct inadvertent errors, or voluntarily acknowledge and repay any incorrect payments.
How Avant can help
Avant members who receive a compliance letter should contact us as soon as possible. We understand these letters cause considerable concern and stress amongst practitioners. Our experienced advisers can help you understand the specific concerns raised, review your billing practices, and formulate an appropriate response.
We can assist with analysing whether your claiming patterns align with MBS requirements, reviewing your clinical records to determine if they adequately support the services claimed, and preparing submissions to the department where appropriate.
Proactive compliance strategies
Review our billing practices
The best time to review your billing practices is before you receive a compliance letter. Regular self-audit can identify potential issues early. Consider asking yourself: How do your billings compare to your peers? When did you last review the MBS item descriptor and explanatory notes?
Maintaining clinical records
Maintaining detailed, contemporaneous clinical records is essential for both patient care and compliance defence. Records should clearly identify the patient, include separate entries for each attendance, document the date of service, contain sufficient information to explain the service provided, and be created during or immediately after the consultation.
Connect with peers
Professional isolation increases compliance risk. Connect with peers, consult widely, and stay informed about changes to Medicare requirements through departmental resources and professional organisations.
Use your provider number
Remember, if you hold a provider number, you are responsible for all services billed under that number, regardless of whether you directly submitted the claims or whether services were bulk-billed. Maintaining control of your billings and knowing what has been claimed under your provider number is fundamental to compliance.
View our webinar
Experts from the Department of Health, Disability and Ageing join our panel to discuss Medicare compliance activity.
Psychiatrist ordered to repay $100,000 in Medicare billings after records found inadequate
A psychiatrist’s consultation records were so poor, they breached professional standards and Medicare record-keeping obligations. There were no records for many consultations. Records that did exist either failed to justify services billed or prescriptions issued, or would not allow another provider to assume patient care.
The doctor was ordered to repay $100,000 in Medicare benefits received and banned from billing certain item numbers for one year.
Key messages from the case
Doctors who claim for services under the Medicare Benefits Schedule (MBS) must keep adequate and contemporaneous records. The records need to show the doctor provided a service that satisfies all the elements of each item number. Inadequate records can result in orders to repay benefits in full and bans on billing certain item numbers in future.
More ways we can help you
The case discussed in this article is based on a real case. Certain information has been de-identified to preserve privacy and confidentiality.
IMPORTANT: This publication is not comprehensive and does not constitute legal or medical advice. You should seek legal or other professional advice before relying on any content, and practise proper clinical decision making with regard to the individual circumstances. Persons implementing any recommendations contained in this publication must exercise their own independent skill or judgement or seek appropriate professional advice relevant to their own particular practice. Compliance with any recommendations will not in any way guarantee discharge of the duty of care owed to patients and others coming into contact with the health professional or practice. Avant is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.