Bookkeeping for doctors: MBS Billing, systems & compliance essentials

Medical professionals operate in a highly regulated and fast-paced environment. 

Whether you're a general practitioner, specialist, or allied health practitioner, managing your financial records and Medicare billings accurately is essential. 

Good bookkeeping for doctors ensures your practice runs smoothly, legally and profitably, allowing you to focus on patient care rather than paperwork.

Why MBS billing compliance matters

The Medicare Benefits Schedule (MBS) is the backbone of medical billing in Australia. It outlines the item numbers and explanatory notes that define how medical services are billed to Services Australia. Accurate use of MBS codes is critical for:

• Legal and financial compliance
• Audit readiness
• Maintaining professional standards
• Delivering quality health care

Every health practitioner must understand the requirements of the MBS item numbers they use. However, practice managers and admin staff also play a vital role in overseeing billing systems and ensuring claims are submitted correctly.

Staying up to date on changes to Medicare services and third-party billing codes is essential. These codes evolve frequently, and using medical software that automatically updates fees each year can help you to maintain compliance and reduce errors.

Common MBS billing mistakes and how to avoid them

Errors in medical billing can lead to rejected claims, delayed payments and compliance issues. Here are some of the most frequent mistakes:

• Incorrect item number: Using the wrong code for a medical service.
• Incorrect use of multiple or associated items: Not following rules for co-billing or same-day service limits.
• Bulk billing or private billing errors: Charging additional fees incorrectly or misapplying bulk billing.
• Missing or invalid referral details: Using expired or incorrectly dated referrals.
• Incorrect patient or provider details: Errors in Medicare numbers, names, or provider registration.

Prevention tips

• Understand MBS item descriptors and explanatory notes thoroughly.
• Verify referral validity and patient records before billing.
• Use updated practice management software with built-in compliance checks.
• Train staff regularly on billing practices and Medicare updates.
• Maintain clear clinical documentation to support claims.
• Consult official resources like MBS Online.

Services like Business for Doctors  (Business for Doctors - Working together to build stronger businesses) offer training and support to help medical practitioners and their teams stay compliant and confident in their billing systems.

Billing techniques for medical practitioners

Doctors use various billing methods depending on the service and patient eligibility:

• Bulk billing: The doctor bills Medicare directly and accepts the Medicare benefit as full payment. The patient pays nothing out of pocket.
• Private billing: The patient pays the full fee and then claims a rebate from Medicare. There may be a ‘gap’ between the fee and the Medicare rebate.
• Bulk billing with a healthcare card: An additional incentive is applied for eligible patients.
• Third-party claims: Includes claims for health insurance, Insurance Commission of Western Australia ICWA (motor vehicle accidents), and workers compensation.

Understanding which billing method applies to each patient and service is key to maintaining accurate Medicare billings and avoiding compliance issues.

Claiming Medicare rebates

Submitting claims correctly ensures timely reimbursement and reduces the risk of rejection. There are two main methods:

Tyro EFTPOS with Medicare EasyClaim:

This integrated system allows patients to receive their Medicare benefit instantly. It processes payments whether the patient is paying in full, partially, or being bulk billed. It’s fast, efficient, and reduces administrative burden.

Practice software batch claims:

Alternatively, practices can batch claims at the end of the day using their software. This method allows time to correct errors before submission. However, once claims are sent to Medicare, correcting mistakes becomes more difficult and may require submitting a claim adjustment form.

Correcting billing errors

If an incorrect billing code is used, contact Medicare to reverse the charge. If the error is discovered after Tyro finalisation, you must submit a manual form to Services Australia to rectify the issue. This ensures compliance and protects your practice from audit risks.

Clinical software integrations

Integrating clinical and practice management software streamlines billing and reduces errors. These systems embed MBS item numbers, billing rules, and claim submission processes directly into the provider’s workflow.

Popular platforms like Cliniko (Allied Health Practice Management Software - Cliniko) are widely used by allied health practitioners such as physiotherapists and chiropractors. Cliniko integrates with Xero (Software & Solutions for Small Businesses | Xero AU), a leading accounting software, to manage bookkeeping for doctors, payroll, and financial reporting.

Benefits of integration

• Reduces manual data entry
• Improves billing accuracy
• Enhances audit preparedness
• Keeps systems current with Medicare updates

Challenges to watch for

• Invoice mismatches between Cliniko and Xero
• Modifying paid invoices in Cliniko after syncing to Xero
• Manual reconciliation of payments and credits
• Archived invoices in Cliniko not automatically voided in Xero

Tip: Ensure invoices paid in Cliniko are also marked as paid in Xero. Manual adjustments may be needed to align medical records and financial data.

Using clearing accounts

When using separate systems for patient billing and accounting, clearing accounts can help manage transactions effectively. Here’s how:

• Record transactions (e.g., patient payments or insurance reimbursements) in a clearing account.
• Reconcile these entries before transferring them to the main accounts.

This ensures accuracy and simplifies tracking across systems.

Bookkeepers - Supporting doctors behind the scenes

Behind every successful medical practice is a skilled bookkeeper. Bookkeepers handle:

• Accounts payable and receivable
• Service fee calculations
• Payroll and taxes
• Personal services income (PSI) calculations

These tasks are essential for maintaining clean financial records and ensuring compliance with health insurance and tax regulations.

Efficiency tools for bookkeeping

• Dext: automates receipt capture and invoice processing, reducing manual entry and improving accuracy.
• Batch payments: Streamlines payments for suppliers, payroll, reimbursements, and taxes. Payments are reviewed and approved by the doctor or practice owner before final authorisation.
• Employment hero: ideal for larger practices, this platform manages payroll, onboarding, recruitment, benefits, timesheets, rosters, and multi-level approvals.

These tools enhance the efficiency of bookkeeping for doctors, allowing medical practitioners to focus on delivering high-quality health care.

Best practices for bookkeeping in medical practices

To ensure your practice remains compliant and profitable, follow these best practices:

• Use certified software for Medicare claiming and financial reporting.
• Keep systems updated and staff trained in billing procedures.
• Maintain accurate patient records and medical records.
• Reconcile accounts regularly and monitor for discrepancies.
• Consult with professional bookkeepers or advisors familiar with medical billing and health service regulations.

Final thoughts

Ultimately, bookkeeping for doctors is about peace of mind. Whether managed internally or outsourced, strong financial systems ensure:

• Accurate and timely payments.
• Compliance with complex Medicare billings and regulations.
• Clean records to support strategic business decisions.

Doctors deserve to focus on their patients—not their payment files. Investing in robust billing systems and bookkeeping processes is an important strategic decision.

You don’t have to tackle this on your own. RSM’s WA Health team includes experienced bookkeepers and accountants who understand the unique challenges of the health sector and are here to help. Whether you need support with forecasting, cashflow management, pricing strategies, benchmarking, or staying compliant, our national Health Services specialists offer practical, expert advice to make planning easier and more effective for you and your team.

Please contact Kelly Watson or your local RSM advisor should you have any queries.