Rebate freeze means patients will pay full fees upfront

The word "co-payment" sits uncomfortably in the Australian context

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What’s in a name? The term co-payment is used widely throughout global health funding discourse to describe patient contributions for medical fees, but the word sits uncomfortably in the Australian context, writes Margaret Faux.

The Oxford dictionary describes co-payment in the following terms:

A payment made by a beneficiary (especially for health services) in addition to that made by an insurer.

It seems simple enough but consider this: if an Australian doctor accepts a payment made by a beneficiary (a patient) in addition to that made by the insurer (Medicare), when bulk billing, he or she may be committing a crime.

It’s partly a semantic argument because ultimately any net cost to the patient can legitimately be described as a co-payment, but there’s a very big difference for patients based on the way the message is sold.

It’s the difference between paying a smaller amount to top up the insurer amount, or paying both amounts first and then getting the insurer’s portion back later – and it matters a lot to patients.

And think about it, whatever your views on Tony Abbott’s Prime Ministership, he wouldn’t have put his government through the agony of the 2014 co-payment debate if co-payments were already legal.

In Australia, with the exception of health fund known gap schemes for private inpatient services, co-payments (meaning the patient pays a small amount to top up the insurer amount) are illegal – and the Medicare rebate freeze will not change that.

How bulk billing works

Section 20A of the Health Insurance Act 1973 provides that when bulk billing, the doctor must accept the patient’s Medicare rebate ‘in full payment’ for the professional service provided.

In the process of submitting the bulk bill claim the doctor makes a declaration to the Federal Government that she or he has not sought any other payment for the service being bulk billed. If other payments have in fact been sought, one of the common fraud offences in the Criminal Code may be triggered, typically that of obtaining a financial advantage by deception.

In 2006 one doctor was found guilty by a jury of 96 counts of criminal fraud for charging additional amounts when bulk billing, the payments in question being essentially characterised in the case as illegal co-payments.

In addition, various legal cases have considered what comes within the ambit of a professional service and have found that consumables, administration and other fees are also within scope and cannot be charged separately.

So basically, when a doctor bulk bills a patient for a single professional service no other amount can be charged, and it doesn’t matter what it might be called. Bandages, booking and administration fees are all listed on Medicare’s website as prohibited additional charges. The only exception is certain vaccines not listed on the PBS.

Separate fees cannot even be charged by other entities, because there’s a decided case on that too.

So an entrepreneurial practice seeking to game the system by having a corporate entity charge an administration or other fee whilst having the individual doctors within the practice bulk bill, is prohibited from doing so.

For example, if you go to the GP for treatment of a leg wound and leave with a dressing bandaged to your leg, it is illegal for the doctor to charge you separately for the dressings and bandages (if you are being bulk billed).

Similarly, if you go to say a rheumatologist with an arthritic joint and whilst at the appointment the rheumatologist administers a steroid injection into your joint, the steroid injection cannot be charged separately because it is part of the professional service – again this applies only in the context of bulk billing.

For most Australians, bulk billing feels like a simple transaction but it is in fact surprisingly complex. Whilst there are of course exceptions to the above, generally speaking, when you go to a doctor, if you walk out to the reception desk after your consultation and there is only one item number on your account, and you are being bulk billed, you should leave the practice having not paid a cent to anyone for anything.

The Medicare rebate freeze does not change this nor does it mean that doctors can start plumping up their fees creatively – the law of bulk billing must continue to be strictly applied.

So what does this mean for Australian consumers?

If doctors stop bulk billing, patients will pay full fees up front, not co-payments (as I have described them) because it’s the law.

In a minority of practices, a very old method of gap only claiming may be adopted, but this anachronistic hangover from the 70’s is not widely used because it involves cheques and takes months.

Real-world impacts

In my work, we deal with the impact on consumers of the use of the term ‘co-payment’ every day.

It occurs when understandably angry patients call us, outraged because they have received a bill for say $500 when the surgeon told them they would only have a $200 co-payment (I regularly implore clinicians to provide patients with accurate information or let us do it for them).

We find ourselves constantly explaining how the system works and helping patients to understand that they will ultimately only be left with a $200 out of pocket cost as per the surgeons quote.

But here’s the thing: many patients just don’t have $500 or whatever the full fee was.

We hear so many stories of patients putting savings aside for their surgery over many months, just so that they would have enough for the gap. They tell us that if they had known that they would have had to pay the full fee of $500 they would never have gone ahead.

They feel mislead, and well, we can’t blame – they were.

What the surgeon could have said was this: You will have to save up $500 for your surgery and pay all of it to me. Once paid, I will issue you with a receipt and you will then be entitled to a rebate from Medicare and your health fund totalling $300. The net amount you will be out of pocket will be $200.

It’s the clear, unambiguous truth and in our experience patients are grateful for it because they know where they stand and there are no nasty surprises when the bill arrives.

By continuing to use the term ‘co-payment’ in this debate, we are not only giving some legitimacy to what is essentially a bulk billing crime, but may also be doing Australian consumers a disservice by lulling them into a false sense of security (at least those who can afford to pay) that the rebate freeze is not such a big deal.

They may erroneously think that they might soon have to start paying something, a modest amount when they go to the doctor, perhaps $10-$20.

But that is not where the rebate freeze leads. The fact is that patients will have to pay full fees upfront if doctors stop bulk billing.

So when you go to the GP and the service is say an item 23, you won’t be handing over $20, you will instead need to have $57.05 cash in your pocket and only after you have paid the full amount, will you be entitled to a rebate of $37.05. But you still have to have the money first.

The federal government is relying on market forces to keep bulk billing rates high, but it’s a big gamble and a potentially dangerous one because of the obvious risks to health outcomes.

“Beyond dispute”

No government should be cutting health spending in areas which may compromise the health of citizens.

It is beyond dispute that imposing barriers at the front door to our health care system – our GPs – will stop some patients from seeking the care that they need.

As Dr Margaret Chan the Director General of the World Health Organisation said:

At a time when money is tight, my advice to countries is this: before looking for places to cut spending on health care, look first for opportunities to improve efficiency.

It’s a message unheeded by the current government.

But Australians have an opportunity to do something about it when they go to the polls on 2 July.

In the meantime, we need to be straight with consumers and tell them exactly what an end to bulk billing means.

• Margaret Faux is a lawyer, the founder and managing director of one of the largest medical billing companies in Australia and a registered nurse. She is a research scholar at the University of Technology Sydney.
• Follow on Twitter at @MargaretFaux
• This article was first published on the  Croakey website and is reproduced with permission of the author