Billings – The Gap and Why

To understand ‘The Gap’, you need to understand the Medicare Benefits Schedule, the Medicare Schedule Fee, the Medicare Benefit or Rebate, and the fee charged by your doctor.

What is the Medicare Benefit Schedule?

The Medicare Benefit Schedule is a list of procedures compiled and updated by the Commonwealth Government. Each operation is allocated an Item Number and Fee – The Medicare Schedule fee. The Medicare Schedule Fee “represents the amount the government, having regard to budgetary and economic considerations is willing to pay” (Auditor General Report No 32 1990-91) – it is NOT a recommended Doctor’s fee but only what the Government is willing to pay. The Item Number on the account from the doctor will match a particular Medicare Schedule Fee. The Medicare Benefit (or rebate) is the amount Medicare refunds for the procedure. It is 75% of the Medicare Schedule Fee for hospital services (e.g. operations) and 85% of the Medicare Schedule Fee for out of hospital services (e.g. consultations). The fee charged by Sunshine Coast Brain & Spine is above the Medicare Benefit. It is based on recommendations made by the AMA (Australian Medical Association).

Gaps have become a problem as the Medicare rebate is not keeping pace with inflation. The Federal Government has failed to adequately increase the Medicare Rebate. The Medicare Schedule was established in 1985 but has not increased in line with inflation. The costs of running a quality medical practice have expanded phenomenally with computer software, hardware, information technology, insurance, staffing and Medical Indemnity.

    This graph shows the real reason for 'The Gap'.

    AMA-Gap-image-e1381976344308 (1)

    The graph below shows the change in general price levels compared to the Medicare rebate since 1985. As you can see from the graph, Medicare has not even come close to keeping up with inflation. If we continued to charge the schedule fee we would eventually be unable to practice as we would not be able to meet the business expenses. The rise in some of these expenses far exceeds the inflation rate e.g. Medical Indemnity Insurance.

    obstetrician_graph

    If the government does not increase the schedule fees ‘The Gap’ will continue to rise. The AMA has issued its own Schedule of Fees based on inflation rates and we use these fees as a guideline for billing.

      But I have Private Insurance!

      Yes, although most policies cover the myriad of expenses charged by the actual hospital including theatre and equipment, theatre nurses, a room/bed, medications and most prosthetics, these costs are quite considerable. Hospital Cover does not include Doctor Cover and as such, this is why there is a gap for fees charged by our practice. Please refer to your Private Insurance Policy for further information.

      What about 'No Gap' or 'Known Gap' Insurance

      In August 2000, the Federal Government passed legislation making it compulsory for health funds to develop no-gap or known-gap private health insurance policies in order to qualify to offer their patients a 30% rebate on health insurance premiums. Every health fund had to offer the rebate to remain competitive. However, the funding offered by the health funds is still inadequate and these offers raise the spectrum of ‘managed care’.

      What is 'managed care'?

      Managed care relates to the intervention of a third party (e.g. Health Fund) in the Doctor–patient relationship, or interfering with clinical decisions. This would mean a third party who is not medically trained, making medical decisions based on cost rather than on ‘best medical practice’.

      The concern about 'No-Gap' private health insurance products

      • They have the potential to interfere with a Doctor’s responsibility to recommend – in a patient’s interest – the best possible Doctor, hospital and clinically appropriate treatment
      • They have the potential to introduce dollar-driven third party intervention into the Doctor-patient relationship
      • They have the potential to severely restrict a patient’s future health care choices
      • They have the potential to take away a patient’s right to full freedom of choice of Doctor, hospital and treatment

      Terminology

      The Gap – Difference between a Doctor’s fee and the combined refund from Medicare and private health insurance

      Medicare Benefit Schedule – A list of procedures compiled by the Government. Each procedure has an Item Number and Medicare Schedule Fee – the amount the government will pay for an item number

      Medicare Benefit / Rebate – The amount Medicare will refund for a procedure

      AMA Fee – AMA recommended schedule of fees for Item Numbers based on inflation rates

      No-Gap – Where a specialist agrees to provide treatment with no gap for the patient to pay

      Known-Gap – Where a specialist does not provide a no-gap treatment but advises the patient of the estimated cost of the gap before treatment

      Managed Care – The intervention of a third party in the Doctor-patient relationship and/or in clinical decision making

      Medical Indemnity – Insurance paid to protect Doctors in case of medical litigation. Neurosurgeons pay some of the highest premiums because of the high risk and complicated surgery they are required to undertake

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