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Health insurance funds in Australia pay in the vicinity of $2 billion towards dental services annually¹. An intrinsic part of the way dental services are funded in this country, insurance monies do come with strings attached: Put simply, health funds hold the money, they pay out the money, and they prescribe terms and conditions on which that money is paid out.

The health funds would not be meeting their responsibilities if they didn’t do business with a degree of rigour. But for dentists – like any ancillary provider – this means not just having to comply to receive funding, but also the possibility of being audited for compliance after the fact.

Audit by a health fund can sometimes come as a surprise – even an imposition – to a dentist who has carefully treatment planned, completed work for a patient, and settled their account.

The fund’s right to audit and take other measures to ensure compliance with fund requirements, has contract at its core. Exact legal rights and responsibilities will be heavily dependent on the health fund you are dealing with, and the agreements, arrangements, and course of conduct (if any) you have developed with them. There are, however, some typical features found in the terms and conditions of common health funds.

It is more likely than not, that if you receive funds from a health fund, they will have carefully ensured for themselves the right to audit you from time to time – and recoup wrongly paid monies – so that everything runs as it should, for the benefit of their members.

What contract? I didn’t agree to this!

You might be the owner of a practice that has entered into an agreement with a health fund. This is the most straightforward scenario: Consult the agreement you signed, to understand the fund’s audit rights, and your obligations in respect of the same.

A related but different scenario is that you might be a dentist who works at a practice that has an agreement with a health fund. You may not have signed anything personally. In this situation, enquire after something termed a ‘Dental Provider Agreement’ or similar, entered into at a practice level.

This type of agreement typically sets out the terms on which dental providers at the practice will provide services to patients who are fund members; and also, the mechanism by which the fund will pay benefits to members.
To ensure individual practitioners at participating practices are covered by these arrangements, the approach taken by at least one of the prominent health funds, is this: The practice agrees to ensure that practitioners working at the practice are made aware of, and will agree to comply with, the terms of the practice’s agreement with the health fund.
The ‘privity of contract’ doctrine means that only parties to a contract can enforce it or be bound by its terms. But the health fund in the scenario we have described essentially sidesteps the need for the fund itself to have a direct contractual relationship with each practitioner. The fund relies on the practice to ensure that its practitioners do what is required by the health fund. For this to work effectively a suitable agreement is needed between the practice and each practitioner. Although beyond the scope of this article, as a guide, look for clauses which require the practitioner to follow reasonable directions, adhere to practice policies and procedures, keep good records, and provide information to the practice (for example).

Another scenario is that you may be a dentist who has never signed an agreement with a health fund, and whose practice has not signed an agreement with a health fund.

A fund paying out a benefit in these circumstances will probably have ensured they are doing so under a suitable set of terms and conditions, nonetheless.
Recall whether you have ever received notice of any ‘recognised provider terms and conditions’ or similar. Specifically, these types of terms and conditions should have been expressed to apply when a fund pays a benefit, and a provider accepts (or a patient claims) payment of a benefit.
A practitioner might rightly ask how it is that they can be bound by the terms of an agreement when nothing has ever actually been signed. The answer lies in some basic principles about the formation of contract: Generally, this requires offer, acceptance, an intention to be legally bound, and certainty of terms. Where the requirements are met, it is possible for a valid and enforceable contract to exist – even if not recorded in writing. This is a very fact specific exercise, however, as a party will generally not be bound by the terms of a contract if they did not have notice of those terms or have an opportunity to read them before entering into the contract. Relevant considerations may include: whether the party asserting the existence of, or seeking to rely on, a contract did what was reasonably sufficient to give the other party notice of the contract; and whether there was a consistent course of dealing between the parties.

If you have never seen, or even been notified of, a health fund’s terms and conditions, and your practice does not have an agreement with the fund, it is conceivable you might be able to refute the existence of a contract (or particular terms). This would require specific advice; and in any case, whilst it might be a strategy of some use regarding past payments, it is unlikely that you could continue to reject a fund’s terms and conditions on the one hand and continue receiving benefits from them on the other.

But what gives them the right to audit me?

The answer here depends on the health fund in question, and the nature of the agreement(s) with them. Assuming you have identified a relevant agreement or agreements, look for a framework of provisions resembling the following:

For each eligible service rendered by a practitioner the fund agrees to pay a benefit, subject to the terms of the agreement.
Payment of the benefit may be conditional on the provider supplying sufficient information to satisfy the fund of the circumstances of the treatment.
If the fund reasonably considers that a treatment has not been provided as claimed, or that an account or receipt is incorrect, it may have the ability to withhold payment of a benefit (pending satisfactory evidence, or correction of the error).
If the fund reasonably considers that an incorrect benefit has already been paid, or that a benefit should not have been paid or was otherwise paid in error, the fund may have the right ask for substantiating evidence or information; and/or it may be able to give notice requiring repayment of the incorrect amount.
To monitor compliance, and identify incorrect benefit payments, a health fund needs to have audit as a tool at their disposal. Expect to find an audit right (on the part of the fund), coupled with obligations (on the part of the practice or practitioner) to maintain appropriate records to substantiate services claimed, comply with reasonable audit requests, and provide information for audit purposes.
As with any contract, breach of an agreement with a health fund (whether that be a breach identified during an audit, or a breach of the audit procedures themselves) will usually result in termination if the breach cannot be or is not rectified. Post-termination, the end result for you and your patients will be that the payment of benefits will cease.

Can I sue them?

The sometimes-fraught relationship between dentists and health funds is not lost on us. Recall campaigns such as ‘Time2Switch’², and statements such as the following³: ‘While its role in providing rebates for dental, medical, and other services such as physiotherapy and optometry is now accepted as a standard part of modern practice, private health insurance is also responsible for causing problems for consumers and dental professionals alike with its lack of policy transparency and hard-to-understand rebate procedures’.

Be this as it may, in simple terms, to successfully sue another party, you need to identify a cause of action – a legal wrong, or facts giving you the right to seek relief through the courts. If you have an agreement with (or are covered by the terms of an agreement with) a health fund, and they are correctly applying the terms of that agreement to audit you, then you are likely to struggle to find a compelling cause of action.

We stress that this is necessarily a general discussion only. Legal rights and obligations will always depend on the specific terms of contract between health fund and practice/practitioner, and between practice and practitioner.

There are also invariably other rules and requirements to be aware of, and follow, such as:

fund rules registered with the Commonwealth Department of Health;
the terms of the electronic health claims system used by a practice.

Like all legal questions, you should therefore seek specific advice if you want to understand your own circumstances.

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If you would like to know more about rights and obligations regarding private health insurance - including Health Fund Audits - please contact our Health Law team on (08) 9321 0522.

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REFERENCES:

¹Australian Institute of Health and Welfare (2022) ‘Oral health and dental care in Australia’, AIHW, Australian Government, https://www.aihw.gov.au/reports/den/231/oral-health-and-dental-care-in-australia/contents/costs.

²‘Time2Switch’: https://www.teeth.org.au/time2switch/Home.

³‘Time2Switch. Redefining the relationship with private health insurance’, https://www.ada.org.au/News-Media/News-and-Release/Latest-News/Time2Switch-Redefining-the-relationship-with-priv

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