Out-of-pocket health costs: you need to know

Many health cost mysteries, including the financial relationship between doctors and health insurers, are unravelled in the easy-to-read Informed Financial Consent guide.

After featuring in last week's Connect E-News, we thought it worthwhile revisiting the 16 page guide - a collaboration between the Australian Medical Association (AMA) and other health sector bodies.

Did you know?

The Medicare Benefits Schedule (MBS) pays a benefit of:

  • 100 per cent for consultations provided by a General Practitioner (GP)
  • 85 per cent for all other services provided by a medical practitioner in the community; and
  • 75 per cent for all services that are provided by a medical practitioner during an episode of hospital treatment when the patient is admitted as a private patient.

According to the guide:

  • the MBS rebate was not designed to cover the full cost of medical services
  • indexation of MBS item rebates was frozen for several years, and only lifted in July 2019
  • any ‘gap’ between the MBS rebate and the doctor’s fee and hospital fees ends up being paid by other funders, such as private health insurers or the patient.

Private insurance facts

Each private insurer has their own schedule of benefits they pay, but this is not always publicly available.

For hospital treatments, the benefit amount paid to the patient will depend on arrangements between the insurer and the doctor, as well as the insurer and the hospital.

The law requires that private health insurers must pay 25 per cent of the MBS fee outside of a no or known-gap agreement.

These are common misunderstandings about private health insurance and private hospital treatment:

Myth 1: Private health insurance policies cover every medical treatment.

Reality: This is not true of all policies. Check with your insurer prior to treatment to understand your options/coverage. You should also check with your treatment provider to find out whether you can claim at the time of treatment, or if you need to submit your claim to the insurer after payment.

Myth 2: All policies remain the same over time.

Reality: What is covered by a purchased policy can change over time. Health insurers update policies annually, usually on 1 April. Stay in contact with your insurer to understand any changes to your policy.

Myth 3: If I have private health insurance, I don’t need to pay anything else.

Reality: Patients will sometimes have out-of-pocket costs, even when their policy includes the medical treatment they need. This is usually referred to as the ‘gap’ payment.

Other important facts about specialist fees

  • A single episode of care or medical service should not be subject to a booking fee or a split bill. The practice of ‘booking fees’ and split billing is not supported and may breach a medical practitioner’s agreement with the private health insurer. This includes where fees are not linked to an MBS or AMA fee item, or part of a single bill. Patients have the right to ask for an estimate of fees before they receive the service or agree to a proposed treatment.
  • Medical practitioners are legally able to request prepayment from a patient for a procedure. This is not the same as a booking fee or split billing. Medical practitioners should keep the time between prepayment and procedure to a minimum to reduce negative impacts on patients. The patient should also be made aware that they will not be able to make a claim in respect of that payment until the procedure has taken place.
  • For services delivered in a hospital, the amount that a private health insurer may decide to pay is based on their own medical benefits schedules and may not represent the amount a doctor believes is appropriate to charge as a fee.

You can learn more about the Informed Financial Consent Guide here.

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