14 Aug 2026Opinion pieces
Why payment integrity matters for every health insurance member
By Dr Rachel David
When Australians pay their health insurance premiums, they expect that money to be there when they need healthcare.
It sounds obvious. But it means health funds have a responsibility to make sure that money is being used for its intended purpose.
In the year to March 2026, health funds paid more than $27 billion to hospitals and other healthcare providers, including dental, optical and physiotherapy services.
When you are responsible for managing that much of your members’ money, you cannot simply pay every claim without checking that it is legitimate, the service was provided and the amount billed is correct.
That is why health funds invest in payment integrity and auditing of hospitals and other healthcare providers.
The vast majority of claims and providers are legitimate. But health funds also identify fraud, inappropriate claiming and billing errors, sometimes involving very substantial amounts.
Health funds estimate up to 3 per cent of claims may be over-billed each year, representing hundreds of millions of dollars in potentially inappropriate payments. If only 1% of that is fraud, it would be the equivalent of $270 million – enough to pay for more than 10,000 hip replacement operations.
And payment integrity isn’t just about protecting the fund. It can protect patients.
Take no-gap fee arrangements. Health funds negotiate higher payments with some specialists on the understanding the patient will not be charged a gap fee.
Yet The Age has reported allegations of specialists charging patients additional fees of up to $500 despite participating in no-gap arrangements. Sometimes these fees are labelled “booking fees” or “admin fees”.
One of our member funds has surveyed its own members who received no-gap private hospital services. One in three people reported subsequently being charged an out-of-pocket fee by their specialist.
When this happens, the health fund has to investigate: was the patient correctly billed? Was the specialist’s claim consistent with the agreement? And if the member was incorrectly charged, can the fund help them get their money back?
That is payment integrity in action.
It is also why health funds will not simply pay claims without scrutinising them.
Every dollar that is inappropriately paid is a dollar that cannot be used for legitimate healthcare. And widespread inappropriate claiming ultimately puts upward pressure on premiums and reduces the value of health insurance.
Of course, there must be strong safeguards around patients’ medical information. Medical records are highly sensitive, and health funds have obligations under Australian privacy and health records laws governing how this information is collected, used, stored and destroyed. If a health fund audits your health records, they do not use this information for anything other than payment integrity. There are strong laws guaranteeing that.
But protecting privacy and protecting members’ money are not competing objectives. Both are responsibilities of a health insurer.
Health funds are stewards of the premiums paid by more than 15 million Australians. Those members deserve to know that their money is paying for healthcare – and that their insurer will investigate when something doesn’t look right.
Payment integrity is not about avoiding legitimate claims. It is about protecting consumers and making sure every healthcare dollar is used properly.
The experience of the National Disability Insurance Scheme (NDIS) highlights the importance of payment integrity. Evidence presented to a parliamentary inquiry in 2026 indicated around 8.3 per cent of the $45 billion of NDIS expenditure in the previous financial year was attributable to so-called “integrity leakage”, including fraud and inadvertent non-compliance. That’s more than $3 billion potentially wasted.
The lesson is not that health insurance is the NDIS. It is that wherever large amounts of public or private money are being spent on healthcare and care, payment integrity matters.
It is about protecting consumers, protecting the sustainability of health insurance and making sure every healthcare dollar is used for its intended purpose.
That is a responsibility health insurers do not shy away from because they owe it to their members.