Issue 10 / 23 March 2015

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


What do you think will be the main outcome of the freeze on indexation of Medicare rebates?
  • Big drop in bulk billing (63%, 111 Votes)
  • Fall in doctors’ income (32%, 56 Votes)
  • Little change (5%, 9 Votes)

Total Voters: 176

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10 thoughts on “High cost of rebate freeze

  1. Peter Barry says:

    The erosion of the Medicare rebate will force doctors to increasingly abandon bulk billing for their concessional and non concessional patients.   This will be in line with the government’s intention that there be a price signal on GP medical services.  

    It is possible that the government will allow doctors to charge a gap of their choosing and still retain the right to bulk bill, though their may be some upper limit on the gap amount allowed when doing this.   I suspect it may be up to $10 for non concession card holders and up to $5 for card holders and children.  

    In any case, all the opprobrium for out of pocket costs will now fall on the beleaguered GP with the government smirking in the background at their incredible wiliness.   There will be no longer a direct contribution by GPs to the much touted medical research fund but any fall off in the rate of consultations will benefit the budget bottom line in addition to the significant savings from freezing the rebates. 

    If such a system is introduced, it is likely that the number of consultations free of any patient gap payment will fall to less than 50% of the total within three years.  

    This is probably the best deal the AMA could negotiate, but in return for its acquiescence the AMA should insist that the rebate freeze be stopped one year earlier than proposed and that a full work-value study be held in the twelve moths prior with the findings to be reflected in the new fee schedule. 

  2. Van N Le says:

    Medicare schedule fees for Non-VR GPs has been allowed to be frozen for nearly 25 years since 1991. There was not much talk about it. What is the difference now ?

  3. Richard Pearson says:

    Needed now is a change to Medicare legislation – Health Insurance Act 1973 (Cth) – to allow private health insurance cover for gap payments on doctors bills outside hospital.

    To help preserve fiscal viability of Medicare the 2014-15 federal budget planned for a gp co-payment. This was very unpopular. Since then, Medicare rebates for doctor items are frozen until 2018. All to preserve, not destroy, Medicare. 

    The effect over time will be necessity for doctors to avoid bulk-billing consultations except for  ‘safety net’ cases. Some corporate practices will need to change their Medicare bulk-billing business model.

    What will happen over time is an increasing gap from the Medicare rebate level to the actual fee charged.

    Fees paid for doctor consultations would then fall into 3 groups:

    1. Medicare bulk billing would remain as a discretionary safety net;

    2. Some will simply pay the uninsured gap that might be half the fee or more over time;

    3. Those with private health insurance will get an additional refund towards cost of the gap fee from their private insurer on top of the Medicare basic rebate.

    This will preserve the integrity of Medicare, with only the loss of a socialist-inspired imperative for it to be a total monopoly. It allows freedom for medical practitioners to levy fees according to the needs of their practice. And, it will create the needed budget savings.




  4. Dr Rohan David Wilmott says:

    This is essentially a way for the right wing of the Liberal party, who have always hated Medicare as a concept, to force GP’s to have to increase fees and gap payments thus becoming the unwilling instruments in the breakdown of Medicare.

    It is particularly spineless, as they are trying to put the medical profession into the role of the “nasty greedy doctors destroying the system” rather than they standing up as the real agents of destruction. In this they share the same guilt as the Republicans in the USA who principally hate Mr Obama because he tried to provide basic access to healthcare for all.

    When the government eliminates excessive waste in their systems and public service, when they stop spending much more on war than peace, and when they spread the tax burden to the very wealthy, then we as a nation should listen. Until then, I suggest the cry should be “Shame”! 

    Bulk billing is not really the issue – the rebate is a matter of insurance that the Australian Government denies to any other body, that they are shamelessly price-fixing. They are trying to use this as a tool for philosophical conflict, hiding behind sham budgetary excuses. 

    We, as a profession, should resist this malign adventure, and strongly encourage our patients to do the same, via lobbying their politicians, and at the ballot box. 

    I’ve heard said “all politicians are bast**ds, and all doctors are too, EXCEPT my doctor!”  so, we win by 1 vote!!  I suggest we use it.

    We have top quality health care in Australia, accessible to all, and General Practice is the most effective way to maintain good health and to keep costs down – it is not the principal cause of the Health Budget blowout! 

  5. James Kidd says:

    Many of the comments made are an afront to me as I have not bulk billed any patient during my long time general practice. I do not agree that they were in any way disadvantaged. The routine was those who could afford it were charged 80% of the AMA fee. If I saw more than one child only one was charged for. I rarely charged  a pensioner, didn’t charge for scripts or drug addicts when I found they could easily cash the Medicare cheque. I did house calls up to the day I retired.

    All patients were treated the same and I had few bad debts as we guided those who needed help with Medicare forms. When a seven doctor medical centre opened opposite I was told the my my practice would be decimated for about one year before it recovered. In fact it increased by 25% from a high base that year.

    Some of us have been saying since Medibank  began that it was not sustainable and that bulk billing would eventually, even with reduced payment of benefits, be crippling from over use.

    If a doctor provides the service then the patients will come!

  6. Elisabeth Walsh says:

    “Let’s look at the big picture… the two big issues are equity and economic efficiency?”

    Seriously? Why the lack of focus of the vocal majority on the QUALITY of our health care system?

    Having regularly sampled the UK’s and the US’s health care systems over the past 30 years, my extended families and I have noted the significant decrease in quality and efficacy of Australian health care.

    If you want elective surgery here, you can still get high quality care, only if you are able to pay for it. But if you need medical care to manage a scheduled acute/chronic health issue, even as a private patient, the level of care in Australia is now much lower. We have fallen to the standards of the NHS (previously behind us) and are now well behind the much higher standards on offer in the US.

    My father had the luxury of staying with my brother to access the latest and least invasive treatments for a chronic condition. Australia is lagging further behind with cost benefit analyses being hastily overlooked given a bottom line cost mentality.

    If we want to keep up, we must pay more.

  7. Saul Geffen says:

    This is what happens when you refuse to accept that patients should pay for your service, at the point of service.

    Everytime you say the “government should pay” you mean taxpayers should pay. Stop bulk billing those who can afford to pay. Value your time. Stop spending 6 minutes for benign self limiting conditions that don’t need your treatment.

  8. John Boyd says:

    This move is clearly part of an agenda of destroying Medicare, to be replaced with some sort of American style reliance on private insurance. As usual, GPs at the front line of medical care cop the brunt of the so-called ‘reform’.

    Let’s look at the big picture. Surely, the two big issues are equity and economic efficiency. Essentially, with Medicare and a predominantly public health system, it is not a welfare program, but is in effect a national insurance scheme. The ‘premiums’, through the Medicare levy, as well as taxation, are based on ability to pay, unlike private health insurance with fixed premiums, regardless of income. In line with some polls, as well as previous experience, it seems likely that people would accept an increase in the Medicare levy, largely on the basis that it is clear where the money goes. A strong public health system is the only way to keep total health expenditure down to a manageable level. And GPs are at the front line, and should be protected.

  9. Dr Gregory Schmaltz says:

    The lesson of the story is that doctors opposed to private billing will pay for it through their wallets.  I wonder why so many find such difficulty charging a fee with a gap similar to the cost of a single prescription which was given at the consultation to concession and non concession patients?   We need to stop worrying about costing patients a few dollars here and a few dollars there and be more concerned about tens of thousands of dollars lost from our net incomes!  The patients will come up with the sum when they want to see the doctor, or they will go to Emergency and wait if they don’t want to pay anything but that is not and should not be the problem of general practice, it is the problem of the successive governments who refuse to properly index the Medicare rebate schedule.

  10. robert marr says:

    GPs will be forced to stop bulk billing if the rebate is frozen.

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