5 Tips To Help Psychologists Navigate Medicare System

Australian Psychological Society

Ahead of the APS Business of Psychology Symposium, a clinical psychologist and business consultant shines light on some common aspects of the Medicare system that can cause confusion.

Whether you’re running your own private practice or working within someone else’s, there are important factors to keep in mind when navigating the Medicare system.

Ahead of her appearance at the APS Business of Psychology Symposium in May, Dr Clair Lawson, clinical psychologist, practice owner and business consultant, walks us through five often misunderstood aspects of the scheme.

1. Requirements around referrals

There is often confusion from both GPs and psychologists about what constitutes a valid referral, says Dr Lawson.

“The most common one I see is people accepting a mental health care plan as a referral. A mental healthcare plan is actually a GP’s assessment and treatment plan for that client,” she says. “The [mental health plan] has to include a request for services, such as “Please see for assessment and treatment of X” for it to be considered a valid referral.

“Medicare may apply financial penalties and require practitioners to repay funds if, during an audit, a practitioner is discovered to have delivered services under Medicare without a valid referral.”

2. Understanding your reporting requirements

At the end of a course of treatment, Medicare requires psychologists to provide a report to the referring practitioner and obtain a new referral for the next course of treatment.

“Typically, a course of treatment is six sessions and then there are usually four subsequent sessions, if required, because clients are only given 10 subsidised sessions per year,” says Dr Lawson.

If a psychologist does not file that report and continues seeing that client and is then audited, they would potentially need to repay any rebates that have been paid for any sessions that have occurred past the sixth session.

“Even though the client has received the rebate in their pocket, the psychologist is the one who needs to pay it back.”

This is why it’s critical to have a good system in place to track which session you’re up to.

“Some of the practice management software that’s available can help with that, but my recommendation is to have multiple methods of tracking. [Then], if you happen to enter the session information incorrectly in the software, you’ve got a backup. I usually recommend that psychologists put [the session number] in their notes.”

When it comes to writing the actual report, one thing that sometimes trips psychologists up is when they ask for another course of treatment referral, they’ll often ask for “a review”.

“But GPs see the word ‘review’ as meaning something very different to a referral. It can cause issues because there are rules around how frequently GPs can complete what’s called a ‘review’ because it’s a different item number under Medicare. Whereas the number they use for writing a re-referral doesn’t have any rules around how frequently it can be used.”

This is why Dr Lawson suggests taking the time to use the same phrasing and language as GPs to avoid your client having to go back and forth to get the referral they need to continue their treatment with you.

She also suggests making sure your report isn’t too long.

“GPs are super busy. They don’t always have time to read [reports]. So it’s about being concise and clear in those letters.”

3. Avoid being flagged for an audit

It’s worth understanding some of the behaviours that can trigger an audit from Medicare, says Dr Lawson.

“Unusual patterns of billing will usually trigger an audit. So being aware of what may be considered unusual billing practices is important. For example, if a psychologist processed a large number of bulk- billing claims all at once, then that might be a red flag for Medicare because that’s an unusual behaviour.”

Another red flag is if a psychologist is overusing the ‘out of consulting rooms’ Medicare item number. This item is available to support clinicians seeing clients outside of a clinic setting and it attracts a higher rebate.

“An example of incorrect use would be using the ‘out of consulting room’ item when a psychologist is choosing to work from a school or conduct a home visit service rather than having a fixed consulting room.”

This Medicare item number should only be used when clinically necessary, she says. For example, if a client has social phobia, you might start your sessions in their home before you start getting them to come to your clinic.

Using the ‘out of consulting rooms’ item number should not be used when regularly seeing a child in a school setting, unless seeing the child in that setting is essential to achieving the desired clinical outcomes.

While most audits will be sparked by concerns around unusual billing practices behaviours, Medicare sometimes conducts spot checks that could encompass any psychology practice, says Dr Lawson.

With this in mind, her advice is to be proactive and conduct self-audits.

“In my team, once a month [we] randomly select 10 files or 10 clients and go through a systematic process of checking that all Medicare requirements have been met.

“That gives us an opportunity to correct things if we find something is missing. It also shows us [any] areas we’re struggling with in terms of compliance. Then they can go, ‘I’m frequently seeing people for seven sessions and I haven’t written the report. So I need to go back and look at my system for tracking session numbers because it’s not working for me.'”

It’s also important to know which psychology services Medicare won’t cover, so you’re not putting these through the rebate program accidentally.

“One of those would be family therapy. It’s covered under eating disorder treatment plans but not under a mental health treatment plan. Couple therapy is also not covered, as well as anything that’s not evidence-based.”

4. Understand the implications for different funding sources

Dr Lawson says it’s important to remember that there’s legislation attached to the delivery of the Medicare scheme.

“It’s insurance, so if you’re not following the rules, it’s actually considered insurance fraud.”

Medicare is not the only source of funding that psychologists can utilise. Other funding sources that psychologists can utilise include:

  • The Department of Veterans’ Affairs

  • Workers compensation insurance

  • Motor vehicle accident insurance

  • Private health insurance

“These are all governed by legislation too and have slightly different rules about how you can deliver services, when and how many you can deliver.

“The general processes in terms of having systems in place for tracking and auditing yourself still applies for each of the other funding sources.”

5. Don’t rush your treatment plan

Due to Medicare-subsidised sessions being cut from 20 to 10 sessions in 2022, Dr Lawson says it’s not uncommon for psychologists to assume this means they need to cram an entire treatment plan into 10 sessions, which can put both client and psychologist under unnecessary pressure.

It can also set unrealistic expectations with the client that complex mental health conditions can be treated quickly.

“Instead, we need to see it as the government making a contribution to therapy, and we need to use similar language when speaking with clients.”

For example, say you’re treating a client with obsessive compulsive disorder.

“You might say, ‘My assessment says you’re experiencing OCD. The evidence tells us this is probably going to take somewhere between 12 and 18 sessions to achieve your goals. Medicare is going to provide you with 10 subsidised sessions to help you along the way, but we’ll need to continue once those rebates stop.’

Dr Lawson recommends being clear with the client at the beginning of therapy to ensure that appropriate expectations are set.

“It’s about having a conversation at the beginning and having the mindset that you can’t do everything in 10 sessions.”

This also ensures the client has all the information they need to financially plan for any future sessions that will likely be required.

“The other option that psychologists have, but don’t frequently use, is to combine individual therapy and group therapy. Clients have access to 10 sessions, but they can also access 10 group therapy sessions in a calendar year.

“OCD is an area that can be very effective in group therapy because clients have that feeling of ‘Someone else gets this. I’m not the only one.’ Group therapy can also be really effective for borderline personality disorder, insomnia, anxiety, depression and PTSD.”

This means psychologists could develop a group program to augment the individual therapies that they’re providing, especially if they have multiple individual clients who are managing complex mental health conditions.

If you’d like to hear more from Dr Lawson about navigating Medicare, sign up to attend the APS Business of Psychology Symposium from 10-11 May in Melbourne, where she will be sharing more useful information.

“There’ll be lots of opportunities for discussion and questions,” she says. “So people will get the opportunity to get what they need from the session.”

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