Will 1 July Medicare changes lead to higher out-of-pocket costs?

Article published 9 June 2021

Will 1 July Medicare changes lead to higher out-of-pocket costs?

Medicare sets a schedule of fees for medical services, called the Medicare Benefits Schedule (MBS). The MBS fee is the government’s standard cost of a particular medical service.

The Australian Government will pay specialists generally 75 or 85 per cent of this standard cost. The patient, or their health fund if they have one, pays 25 or 15 per cent, unless bulkbilling applies, which is now more common for GP consultations but rare for specialist consultations.

Specialists can and do charge patients whatever fee they wish, which means that patients not only pay 25 or 15 per cent of the MBS fee but also the gap between the MBS fee and what the specialist actually charges. Private health cover eliminates or reduces that gap. State governments pick up the tab on this gap for patients who are treated in a public hospital.

The Australian Government has allowed a large gap to grow between the MBS fees and what is actually charged, in part by freezing indexation of the MBS fees for specialists from 2012 to 2020, but also because it allows specialists to set their own fees.

As part of the Government’s response to the recommendations of the five-year MBS Review Taskforce, there will be changes to the classification of medical treatments listed on the MBS. This will lead to MBS fee increases and reductions. All up, more than 900 procedures including hip, shoulder, hand, cardiac and other surgeries are impacted.

MBS fee increases and reductions will affect the gap between the MBS fee and the actual fee. In the case of MBS fee increases, who will pay for the increase? The Australian quotes Rachel David, chief executive of Private Healthcare Australia, as saying: “Stories that Australians could face massive out-of-pockets are just not true. The things coming off are either obsolete, never used or being replaced. There is no way people will be left out of pocket as a result of these changes.” Ms David is referring to people with private health insurance, obviously.

But private patients without health cover will likely be out of pocket and so may state governments that pay the fee gap for patients treated in public hospitals.

For more information please call our media contact on 0410 612 182 or contact us