Health Minister Mark Butler vows claims of billions of dollars being rorted each year from the Medicare system are being taken seriously.
Mr Butler said an investigation would be carried out following reports from the ABC and Nine newspapers that $8 billion was being rorted from the system.
The media reports alleged some practitioners were ripping off Medicare and charging for services that weren't delivered, with some doctors reportedly billing dead people and falsifying medical records.
Mr Butler said while there was fraud in the Medicare system, the $8 billion figure cited in the media was higher than he expected.
"It's way out of whack with any other figure that's ever been provided to government, including by the National Audit Office that only did a review of the program a couple of years ago, but I'm taking it seriously," he told ABC Radio on Tuesday.
"We want to make sure that we do everything we can as a government to ensure that every dollar is spent wisely."
Peak body the Australian Medical Association said the allegations of Medicare rorting were a slur on the profession.
The association's president Steve Robson said the vast majority of GPs did the right thing by their patients and indicated the $8 billion figure was "grossly inflated".
The health minister said he wanted to find out the truth behind the allegations of rorting.
The investigation into the rorting, carried out by the federal health department, will include an analysis of the work of experts who examined Medicare claiming and compliance measures.
"(The investigation) is a timely opportunity for us to have a thorough look at the way in which the audit and compliance system is working and ensuring ... we're getting the maximum value for money," Mr Butler said.
"Any single case of fraud or improper claiming, particularly right now given the state of crisis in general practices, is going to raise very serious levels of concern in the Australian population."
Australian Associated Press