High cost of rebate freeze

THE federal government’s freeze on Medicare schedule fees will cost patients substantially more than the proposed and much-criticised $5 copayment plan, experts say, suggesting the policy’s likely impact has flown under the public radar.

After strong opposition from the public and the medical profession, the government this month axed its plan to compel GPs to charge a $5 copayment to non-concessional patients to cover a rebate cut. However, Health Minister Sussan Ley said the government would continue its policy of an indexation freeze for all Medicare rebates for GP and non-GP items until July 2018, in order to “ensure we protect Medicare for the long-term”. (1)

A study published online today by the MJA has examined the effect of the freeze on GPs’ income for an average 100 eligible consultations, using data from more than 80 000 patient encounters in the well-established Bettering the Evaluation and Care of Health (BEACH) program. (2)
    
It found that by 2017‒2018, GPs would be losing $384.32 per 100 consultations compared with 2014‒2015, based on consumer price index rises — an effective 7.1% reduction in GP rebate income. If the $5 rebate reduction had gone ahead it would have reduced GPs’ income by $219.53 per 100 consultations.

The authors wrote that to recoup income lost through the freeze GPs would need to charge non-concessional patients who are bulk billed $8.43 for each visit by 2017‒2018.

“Public discussion has mainly focused on the now retracted $5 reduction, and the freeze has received far less attention”, they wrote.

“Yet, with time, it will have a greater impact ... nearly double the amount of the rebate reduction.”

Although the freeze would result in Medicare savings, the authors warned that “patient out-of-pocket expenses will be higher than these savings because GPs will need to charge more than their lost income to recoup the additional implementation and operational costs”.

“Once GPs stop bulk billing non-concessional patients, they may take the opportunity to charge more than what is required merely to recoup their losses”, they wrote. “Further, there is no guarantee that copayments will only be charged to non-concessional patients.”

Professor Mark Harris, executive director of the Centre for Primary Health Care and Equity at the University of NSW told MJA InSight that he was concerned that consumers’ relief at the abandonment of the copayment “may obscure the larger but slower effect of the freeze”.

Professor Harris said it was hard to see that the freeze achieved “any rational policy objective”.

“It is unlikely to influence consumer demand in any positive way”, he said. “It may drive some practices to the wall, which will have the effect of reducing supply, especially in disadvantaged areas. This may increase demand on hospitals.

“It may lead to higher copayments, especially for non-concessional patients, and this is likely to disproportionately reduce demand for preventive care.

“It may also reduce morale within general practice and thus reduce its appeal as a career destination, both for doctors and nurses.”

Professor Dennis Pashen, president of the Rural Doctors Association of Australia, said the freeze was likely to create a major recruitment problem for medicine in rural areas.

“We are trying to attract young doctors into rural practice and unless we make it a viable business model we won’t be able to recruit”, he said.

“Rural doctors run the hospital services in their areas, and so if people are being forced to avoid the doctor they are going to end up in hospital outpatients with unmanaged chronic diseases.”

Professor Pashen said cuts to primary care would “not guarantee quality care, won’t guarantee a price signal, and won’t guarantee long-term health care costs go down”.

The AMA is pushing the government to dump the rebate indexation freeze “as soon as possible”, saying it could drive up out-of-pocket expenses for patients and hit private health insurance coverage. (3)

The study authors warned that GPs claiming the rural bulk-billing incentive item would face a greater relative loss in rebate income due to inflation than their metropolitan peers: 29 cents more per non-concessional patient in 2017‒2018.

The study took into account all surgery consultations, residential aged care facility visits, home and other institution visits, GP mental health care, chronic disease management items, health assessments and case conferences.

It did not consider the additional lost income to GPs through the freeze on other Medicare items such as procedures and practice incentive items, nor did it account for the administrative costs involved in implementing new billing methods.

A spokesperson for Ms Ley told MJA InSight the government’s experience with the proposed copayment had “galvanised” its resolve to consult on any future measures to ensure they had broad support from health professionals, patients, the public and Parliament before being implemented.

1. Minister for Health. Government continues Medicare consultation; 3 March 2015
2. MJA 2015; Online 23 March
3. Australian Medicine 2015; Online 16 March