This is the fifth article in a monthly series from members of the GPs Down Under (GPDU) Facebook group, a not-for-profit GP community-led group with 5800 members, that is based on GP-led learning, peer support and GP advocacy.

COST-shifting. Ask any doctor at the primary care coalface and they’ll tell you about the tension between public hospital services (funded by the states) and services provided in primary care (privately billed, but for which eligible services attract a Medicare rebate).

Funding rules for health in Australia are carefully laid out in the National Health Reform Agreement (NHRA). This makes it clear that states are to manage public hospitals and that charges against the Commonwealth are not to be raised; while the Commonwealth carries the lead responsibility for primary health care and other private health services.

But there is a loophole. NHRA clause G19(b) allows patients to claim Medicare rebates for their public hospital visits when they have chosen a specific named consultant who treats them “as a private patient”:

G19. An eligible patient presenting at a public hospital outpatient department will be treated free of charge as a public patient unless:

a. there is a third party payment arrangement with the hospital or the State or Territory to pay for such services; or
b. the patient has been referred to a named medical specialist who is exercising a right of private practice and the patient chooses to be treated as a private patient.

While Medicare in general does not require referrals to be “named”, NHRA clause G19(b) does, specifically to support patient choice. Meanwhile, NHRA clause G17(c) is very specific that referral pathways must not be controlled so that a referral to a named specialist is a prerequisite:

G17. Services provided to public patients should not generate charges against the Commonwealth MBS [Medicare Benefits Schedule]:

a. except where there is a third party payment arrangement with the hospital or the State, emergency department patients cannot be referred to an outpatient department to receive services from a medical specialist exercising a right of private practice under the terms of employment or a contract with a hospital which provides public hospital services;
b. referral pathways must not be controlled so as to deny access to free public hospital services; and
c. referral pathways must not be controlled so that a referral to a named specialist is a prerequisite for access to outpatient services.

This is why primary care doctors are frustrated with repeated requests from hospital outpatient departments for named referrals for specific consultants in public hospital outpatients. These requests are often crafted to imply that a named referral is a mandatory requirement for the patient to be seen – with the (sometimes explicit) corollary that failure to comply will deny access. Requests may offer patients the opportunity to be bulk-billed and not the choice to be treated as a private patient. Sometimes a named referral officer may claim to have contacted the patient and obtained their informed consent.

There’s another loophole: because Medicare does not require a named referral, once a named referral has been obtained, the patient’s choice of doctor is dismissed as an inconvenience and a clerk allocates the patient to any doctor or clinic that suits the State. The patient might even be treated by a registrar in “Dr X’s” clinic.

This cost-shifting from the State to the Commonwealth funding pool flies under the radar of both Medicare and the Professional Services Review (PSR) panel. The PSR exists to monitor appropriate billing of Medicare item numbers and has no oversight of the NHRA requirements. Medicare seems to lack any means to match data between Commonwealth and State activity, and is thus blind to this cost-shifting cash grab by state hospitals.

The biggest lever to improve Medicare rebates for primary care is the political desire to keep the populace happy. Primary care doctors are concerned that bulk-billing rates are being artificially inflated as public hospitals cost-shift into Medicare and bulk bill for outpatient services, which would be ineligible if a named referral had not been extracted.

But there ain’t no such thing as a free lunch! Medicare is not a magic pudding because there is a single, finite National Health Funding Pool.

Primary care doctors who are members of the 5800-strong GPs DownUnder Facebook group, are concerned that demands to legitimise public hospitals access to the community care end of the funding pool are increasing. Meanwhile, the most cost-effective component of the health system – primary care – remains stranded in the frozen shallow end of Medicare rebates. It just doesn’t pass the “pub test” that patients who choose to be treated as a private patient of a named specialist lose that choice as soon as the public hospital extracts the Medicare funding.

So, what exactly is the problem?

The terms of the NHRA (Table 1) seem to be flouted by public hospitals.

Table 1. Terms of the National Health Reform Agreement [NHRA]

The terms of the NHRA and Medicare principles:
  • eligible persons are to be given the choice to receive, free of charge as public patients, health and emergency services of a kind or kinds that are currently, or were historically provided by hospitals;
  • access to such services by public patients free of charge is to be on the basis of clinical need and within a clinically appropriate period; and
  • arrangements are to be in place to ensure equitable access to such services for all eligible persons, regardless of their geographic location
The Medicare Benefits Schedule (MBS) offers more explicit advice:
  • “The major elements of Medicare are contained in the Health Insurance Act 1973, as amended, and include … free treatment for public patients in public hospitals” (MBS GN.1.2)
  • “State and Territory Governments are responsible for the provision of public hospital services to eligible persons in accordance with the [NHRA]” (MBS GN.6.16)
  • “Public hospital services are to be provided free of charge to eligible persons who choose to be treated as public patients in accordance with the [NHRA]” (MBS GN.10.26, p 31)

Many primary care doctors are fed up. Not only are these requests an abuse of a loophole in the system, but they also mean increased (unpaid) paperwork for primary care. Receiving a request for a named referral is an unwanted administrative burden for the primary care specialist, who has already given consideration to whether a referral is needed and, together with the patient, elected to use the public hospital.

It appears to be a blatant rort of Medicare to support public hospital funding. The MBS is clear that the states are responsible for providing public hospital services and that these should be provided free of charge. There is provision within the NHRA – in NHRA G19(b) – for patients to elect to be seen privately (and a Medicare rebate claimed) under certain circumstances. However, this only applies if requested by the patient – not demanded by the hospital as a funding model.

We all understand that hospitals need the money, yet many of us are concerned. There is no doubt that primary care is incredibly cost-effective; a trip to the emergency department or public hospital outpatients clinic is estimated to receive at least $250 in funding, whereas a typical primary care specialist consultation of up to 20 minutes attracts a rebate of $37.05.

Raiding the imaginary Medicare magic pudding to prop up hospital services means there’s less in the pot for primary care to do its work.

Is there really a patient choice? 

Patients have the right to choose whether to be seen in the public system or privately. This decision invariably occurs at the initial point of referral – a primary care specialist performs relevant history and examination and, if required, may turn their mind to the need for a referral. The decision to refer as a public or private patient is made at the initial consultation.

It is somewhat galling to then receive a letter from the hospital “admindroids” stating that “your patient has elected to be seen privately by ‘Dr X’ and a named referral is required” even though the conversation between the hospital and patient has actually been something along the lines of:

“Hello Mr X, this is the public hospital outpatient clerk calling. I see that you’ve been booked to be seen in outpatients. The wait for a public patient is 24 months, but if you go back to your GP and ask for a named referral, you can be seen privately much sooner. Don’t worry, it’s free. You will be bulk-billed.”

This blurs the boundaries of choice, of denying access depending on public versus private, and wastes the time of the primary care doctor who has already made a valid referral.

The following text message sent from a tertiary teaching hospital outpatient department to a member of GPs DownUnder shows a real example of this happening. It seems clear that this is all about the money:

Dear Doctor,

We have contacted the following patient, who has chosen to be treated as a bulk billed patient in order to be seen quicker in clinic. As a result, we request an amendment to the presently unnamed referral for the following patient [patient name here]. For your patient to be treated in a bulk-billed clinic, please amend their referral to be addressed to any of the below staff specialists [specialist names here]. It would be greatly appreciated if you could return the amended referral at your earliest convenience. Failure to supply a correct referral will result in your patient not being seen. Each time outpatient services are bulk billed, the recovery of funding allows for the delivery of improved services to the local community and your patients.

Named Referrals Officer

It should be noted that named referrals do not necessarily mean the patient will see the named clinician.

Medicare does allow a referral to one specialist to be used to see another in same practice, but it’s drawing a long bow if the named referral is used to claim a bulk-bill Medicare rebate when the patient sees a registrar in training and the supervising consultant pops their head in for a few seconds, this is an abuse of the system.

Patients are threatened with denial of service. Demands for a named referral are typically couched in terms implying that the patient will not be seen unless a named referral is provided.

At this point many primary care doctors will just sigh and pick up their pen. After all, it’s just a signature. But to do so is unprofessional and implies tacit approval of this cost-shifting exercise by the hospital system.

What does the primary care community want?

In a climate where Medicare rebates for primary care remain woefully insufficient and any infringement of Medicare rules is likely to attract the attention of the PSR, perhaps it’s not unreasonable to expect the same restrictions as outlined in the NHRA to be adhered to by state governments.

As a minimum:

  • ensure that any patient referred to a public hospital outpatient department is seen in a timely manner;
  • insist that private (bulk-billed) outpatient services, where present, exist in parallel – not as a replacement for public outpatient services. The default setting should be “public outpatient services funded by the State”;
  • mandate that priority of access is determined by clinical need, not referral status (private v public);
  • that provision for a named referral is used only in specific circumstances, being a choice of the patient at the time of initial referral by their primary care specialist (not a default position demanded by the hospital to access funding).

The ultimate sanction by frustrated primary care doctors would be to copy any request for a named referral to the PSR panel, especially if it appears clear that the request is driven by funding needs.

Go HARD or go home

Primary care is under increasing pressure: funding cuts, lack of appreciation of the complexity of our work by hospital-based partialists and the ever-enduring perception by the public, by hospitals and by health administrators of being #justaGP. But perhaps it’s time for us to fight back.

To help with this, the GPDU group has developed a template for responding to requests for named referrals that can be stored as auto text in medical software and printed out with a simple mouse click – we have affectionately named this the “Hospital Admindroid Referral Deflector” (HARD) document. We encourage primary care clinicians to “go HARD” – install this auto text in your software and deploy at will:

Dear <insert admindroid name here>,

Thank you for your letter regarding <patient name> whom I consulted on <date>, at which time an informed choice was to be referred to the outpatient department as a public patient.

As such, I was surprised to receive your letter demanding a named referral and the implied threat that my patient would not be seen in a timely manner (if at all).

I should remind you that my patient has a valid referral and elected to be seen as a public patient. Their appointment priority should be determined by clinical need, not compensable status.

I am gravely concerned that the demand for a named referral is being used to control access to services and to double dip Medicare funding for public hospital services. I do understand that there are pressures on public hospital funding; however, there are also significant pressures on primary care services.

I suggest your hospital executive consider the relevant aspects of the Medicare Benefits Schedule (MBS) and National Health Reform Agreement (NHRA), as I am concerned that attempts to influence patient choice in order to access Medicare funding for outpatient services may be an issue for the Professional Services Review panel to consider.

Specifically, I need to remind your hospital of the following:

  • “referral pathways must not be controlled so as to deny access to free public hospital services” – NHRA G17(b);
  • “referral pathways must not be controlled so that a referral to a named specialist is a prerequisite for access to outpatient services” – NHRA G17(c);
  • “an eligible patient presenting at a public hospital outpatient department will be treated free of charge as a public patient … the patient chooses to be treated as a private patient” – NHRA G19(b);
  • “the major elements of Medicare are contained in the Health Insurance Act 1973, as amended, and include … free treatment for public patients in public hospitals” – MBS GN.1.2;
  • “State and Territory Governments are responsible for the provision of public hospital services to eligible persons in accordance with the [NHRA]” – MBS p24 GN.6.16; and
  • “public hospital services are to be provided free of charge to eligible persons who choose to be treated as public patients in accordance with the [NHRA]” – MBS GN.10.26, p 31.

I trust that this information is of use to you in re-evaluating your demand for a named referral.

In the meantime, I reiterate that my patient has elected to be seen as a public patient, has a valid referral for this and that their access to outpatient services should not be delayed nor prevented on the basis of whether referred as a public or private (bulk-billed) patient.

Please confirm that they will be seen forthwith.

Yours etc

cc. Patient,
cc. CEO Hospital,
cc. Local MP (optional)

Dr Tim Leeuwenburg is a rural proceduralist on Kangaroo Island, South Australia. He spends his time balancing primary care, emergency medicine and anaesthesia, as well as writing “roadkill recipe” cookbooks and fiddling with chainsaws. When not working, he is an active contributor to FOAMed (free open access medical education) and social media. He’s an administrator for the GPs DownUnder and Rural Anaesthesia DownUnder closed Facebook groups. He blogs at and tweets as @kangaroobeach.



I am frustrated with repeated requests from hospital outpatient departments for named referrals
  • Strongly agree (69%, 115 Votes)
  • Agree (16%, 27 Votes)
  • Neutral (7%, 11 Votes)
  • Disagree (4%, 7 Votes)
  • Strongly disagree (4%, 6 Votes)

Total Voters: 166

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23 thoughts on “Double-dipping Medicare funding pool

  1. Public Specialist says:

    I hate pointless paperwork as much as anyone else. Unfortunately, there are NO public outpatient clinics in the specialty I work in, only privatised bulk-billed ones, so the only alternative for the patient is not being seen at all…

    staff specialists exercise their right of “private practice” and as a result receive a lower base salary. The private clinic billings are used to top up salaries after all costs are taken out. Anything remaining after that is used by the department with very strict limitations – so usually for ancillary outpatient services like support nurses, research, etc.

  2. Anonymous says:

    Great article Tim! The issue of Medicare billing for public outpatients has recently been discussed at our LMA meeting. Could I have permission to reprint your article in our monthly newsletter as you have covered the points very eloquently?

  3. Roger Paterson says:

    Excellent article and good discussion. Especially the point that states aren’t required to provide outpatient services. (Really?) If so, getting referrals isn’t illegal, but still, named referrals shouldn’t be necessary. But the critical question is: why doesn’t the federal government take over all public hospitals and ensure equity of services? There is no way that the states can honestly say that public hospital services are “timely”, and there is huge variation between facilities within a given city. It’s a mess and is driven by ideology and money, not by the needs of the community.

  4. Cate Swannell says:

    FROM THE EDITOR: To Peter Bradley … re bots: far more often than you might think. Re anonymity: we’re asking doctors to comment on topics that are often controversial. Offering anonymity encourages them to comment. We won’t be changing either policy soon. Thanks for the feedback, though. CS

  5. Peter Bradley says:

    I have already posted on here re this issue. However, I am also on a number of other forums, (yes I know it should be fora, but it sounds odd), and it strikes me that the number of folk who post on here as ‘anonymous’ is not only made too easy to do, but is selected by the majority, rather then the preferable minority. Why the fear of standing by what you post..? Not doing so removes a lot of the point on the post, but even more importantly, makes it almost impossible, without do lots of ‘copy, past, and inverted commas’, to make it clear to whom one is replying. If there is a name, one can just open a reply with @whoever, and then it is clear who it is addressed to. Just sayin’

    However, like most of you, I’m sure, I just hate that CAPTCHA thing to actually post the damn thing. I mean, how likely is it a robot is going to bother..?

  6. Anonymous says:

    Does a bird poo in it’s own nest? It’s time for the ACCC to shine a light on GP’s working instead of specialty Registrars in numerous specialist public hospital outpatient clinics,paid on basis of % of Medicare consultation items. The GP’s are exposed to potential clawback of the payments they recieve, with no liability carried by the public hosptial, under the Health Insurance Act, 1973.

  7. Dr Tacye Todd says:

    In addition to the practices mentioned above, I have now come across a new one. Our local public hospital has taken to sending me faxed letters asking me to sign and fax back, pre-filled with the name of the consultant and the clinic they want a referral for. Trouble is, I did not refer the patient in the first place and have no idea why the patient is to be seen in that particular clinic and for what condition! I can only assume that the patient has been referred from within the hospital, and they haven’t bothered to pass on to me any clinical information regarding my patient that might actually enable me to look after that patient in between their hospital visits. As far as I’m aware, I would be committing medicare fraud if I was to comply with these requests, as I haven’t seen the patient or had any opportunity to assess whether a referral is appropriate.

  8. Anonymous says:

    I think it important to also understand that, in many instances, the doctors these patients are seeing in these ‘medicarised clinics’ are paid only by receiving the medicare funding from these consultations and not paid by the hospital itself. The system is in place as the state has not provided the funding for another specialist session. When a named referral has not been provided, many doctors end up seeing these patients without a referral and not being paid for their efforts.

    I understand your frustrations, but believe this problem should be addressed from above. The hospital administration will not blink an eye to this kind of retaliation to the system.

  9. Anonymous says:

    Interesting to hear the other perspective thank you. In NSW many public hospitals do not have an outpatients option in my specialty. I am fortunate that we do. The registrars that come to us struggle with patient assessment due to their lack of exposure. In other centres if you want to be seen by a surgeon you go privately and often also pay a gap. The public clinic offers no gap consultations and training for registrars. Referrals are triaged on their clinical need and not by whether or not they have a consultants name however as we bill medicare we do ask for a specialist name on the referral. My understanding is that the hospital is not funded for outpatient services other than the emergency department so without the medicare billing I suspect our outpatients would be closed or significantly reduced. In outpatients clinics my registrars are given the opportunity to fully assess patients before I review their findings, I find this enhances, not hinders, the patients assessment. Two heads are better than one, and the registrars assess the patients very carefully before discussing them with a consultant. (We don’t have registrar clinics….).

  10. Anonymous says:

    It is staggering the amount of time/energy spent on where the funding comes from. It is a fairly simple equation in that state funding should be per capita of population or alternatively get rid of states (in terms of health budget) altogether.

  11. Neville Steer says:

    Excellent summary Tim. As you observed, GPs are pressured to comply with this rort to ensure access for their patients so your letter template is going to be very useful.

  12. Anonymous says:

    “In the same tone, perhaps GP registrars shouldn’t be allowed to bill Medicare either, since in a good proportion of the cases, they don’t discuss the patient’s with their supervisors either.”

    Perhaps, just maybe, it has something to do with the fact that GP registrars’ only source of funding is from the Medicare payments they generate ? Or that their Supervisors are also only getting a Medicare income? Or that they are seeing un-referred patients in total compliance with legislation ?

    You statement shows a massive lack of understanding of how funding in a GP clinic works and of the legislative requirements to claim from Medicare

    “Why do GPs always want to care so much about what other people are doing or not doing? Decreasing the funding pool for others doesn’t mean the primary care funding pool will increase”

    Did you actually read the article ? There are these things called laws that we need to comply with. Last time I checked they were not optional – for GPs and others.

  13. Anonymous says:

    Not only is there the frustration of redoing a referral but I often find names of specialists are not provided. More time -generally unpaid- is then wasted trying to find the correct specialist.

  14. Vineet Jadhav says:

    Very well written and brave article, good to see some one has finally has come to comment on this.I liked the idea of the template, as in the recent months, I have been thinking on the lines of creating one, with a standardized response.

  15. Anonymous says:

    In the same tone, perhaps GP registrars shouldn’t be allowed to bill Medicare either, since in a good proportion of the cases, they don’t discuss the patient’s with their supervisors either.

    Why do GPs always want to care so much about what other people are doing or not doing? Decreasing the funding pool for others doesn’t mean the primary care funding pool will increase. This isn’t a zero sum game!

  16. Ian Haywood says:

    As a hospital consultant (in Victoria) it was made fairly clear that without Medicare funding the outpatient service would simply be closed.
    If it’s any consolation I get the same “refer to Dr. X” letters when I refer to public outpatients as a private specialist.
    The Federal-State funding agreements specify bed numbers and ED services but public hospitals have no legal requirement to provide outpatient services at all.
    It’s a big problem for training as we now see a generation of HMOs/registrars with little ambulatory care experience and struggle as they progress further through the system.

  17. Greg the Physician says:

    Excellent article describing the current situation in public hospital clinics. The situation regarding billing for registrar outpatient clinics also requires clarification. Registrars are required to see outpatients for accreditation of training, and for the hospital to bill Medicare on the basis that the consultant treated the patient seems to be another loophole in the funding arrangements. If the consultant actually assesses the patient himself/herself as well and confirms the registrar’s management plan, I would not object, although there really should be a distinct item number for this situation. I do not understand why a consultant/specialist fee should be able to be charged if only the registrar assessed the patient and then had a brief discussion with the consultant, sometimes after the patient has left the clinic. Just to complicate things further, there are registrar clinics in the private sector and there is considerable uncertainty regarding Medicare billing arrangements (if any exist) in this setting, even when the consultant also assesses the patient and checks the registrar’s management.

  18. James Leyden says:

    Absolutely brilliant article!

    Imagine what could be achieved if the salaries of the “Named Referrals Officers” around the country were used for something real…..

  19. Anonymous says:

    I agree with the article. and the sentiment. The aim however should be to the COAG agreement and the Federal Minister of Health, In our area ( central Sydney) the local public hospitals are seriously squeezed for money, and are using this method to recoup needed cash. The problem of the hospital getting the taste for forbidden Medicare cash is that it is hard to lose,. We need to feed the state more legitimate Medicare funding to support this. Dare I say resume the discussion to increase the Medicare Levy , which would allow kids with autism back into the NDIS as well as fund public hospitals by increasing the funds available to COAG?

  20. Peter Bradley says:

    This is a very concerning issue, especially as while decreasing the potential funding pool for primary care, it inflates the perceived bulk-billing figures, something the politicians place a lot of stock on when assessing the ‘success’ of Medicare. This must be stopped. I suggest we no longer adopt the ‘frustrated angry, but go along with’ stance, but go for the throat of the issue by actively and formally lodging a legal complaint to govt regarding this duplicity. A chance for the AMA to really make a difference to us GPs.

  21. Anonymous says:

    Fantastic article. Well written and agree with it all. Medicare fails to audit hospitals daily loosing billions in wrongly diverted funds. Created a whole industry of admindroids wasting more tax payers money as whole 10 storey high state health buildings and business models are run in this blatant scam that if GPs did it there would be an outcry! Unbelievable example of state health monopolies imposing their will, maybe we need the ACCC to investigate these state monopolies.

  22. Anonymous says:

    This is extending further. Patients with private insurance are being asked in my institution at the time of admission to the public hospital, to help the hospital by electing to be admitted as a private patient, with excess waived.

    The single benefit to the patient in this circumstance is to choose their doctor. This right is being hidden, patients are admitted as a private patient under the “consultant of the day”, and are not explicitly told that as a private patient they can choose their doctor. Even if they are happy with the doctor allocated to them, if they are subsequently re-admitted under the same unit in the same hospital, they will be allocated the “consultant of the day” even if that is not the same doctor under whom they were admitted privately during their last admission!

  23. Thinus van Rensburg says:

    Tim in our area the requests for a named referral is long before the patient’s first visit and there is no contact of any sort with the patient to check if they chose to see a private doctor. At a meeting with ACT health executives and GPS in 2017 statements by GPS were met with derision by the senior Government representatives and they still insisted that they would be requiring named referrals.

    There is also the matter of the insistence of following the pattern of validity of referrals that is prescribed in the MBS. This means numerous requests for repeat referrals – referrals that very often are not read at all but merely filed by clerical staff as it’s only deemed role is to get accessible to Medicare Dollars

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