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Rebates and Gaps

Anaesthetic fees are calculated using the Relative Value Guide, a system used by the Australian Society of Anaesthetists and Medicare to value anaesthetic services. Individual anaesthetists must set their fees independently, without collusion. The Australian Medical Association (AMA) publishes a List of Medical Services and Fees, which contains the maximum fees supported by the profession. Fees charged by anaesthetists from Associated Anaesthetists Group will be no greater than the AMA fees.

Rebates, by contrast, are set by Medicare and your health fund. The “rebate” is the amount that the patient receives back from Medicare and their health fund. Over decades, rebates have been subject to inadequate, and at times zero indexation. (For example, at the time of writing, 2016, there has been no indexation for the past four years.) The costs of running a medical practice, which take into account CPI, Average Weekly Earnings, office administration costs such as staff salaries, and medical indemnity costs, increase gradually but incessantly. This has led to increasing out-of-pocket, or “gap” costs for patients.

The Government publishes the Medicare Benefits Schedule, containing a list a medical services and fees – the “Schedule Fee”. The Schedule Fees represent the amount that the Government, having regard to budgetary and economic considerations, is willing to contribute to subsidise the cost of medical services, rather than the true value of the service. The Schedule Fees for anaesthesia are 24% of the AMA fee, a vast discrepancy that, due to historical anomalies, is greater for anaesthesia than for any other specialty.

All patients (excluding those, such as overseas patients, who do not hold a Medicare card) will receive a rebate of the 75% of the Schedule Fee from the Government. Insured patients will receive a rebate of the remaining 25% of the Schedule Fee from their health fund.

Rebates above the Schedule Fee are discretionary – i.e. the health funds are not legally required to pay them, and can attach conditions to such payments. These payments are made under the funds’ “no gap” or “known gap” schemes, and are given various proprietary names by the individual funds (e.g. GapCover, MediCover or EzyClaim rebates). For the purposes of this article, these discretionary rebates above the Schedule Fee will be called “GapCover” rebates.

All funds offer a “no gap” scheme. These apply if the doctor’s fee is equal to or less than the fund’s “GapCover” rebate, so there is no gap for the patient to pay. Most funds’ “GapCover” rebates are approximately 170% of the Schedule Fee, or 42% of the AMA rate. There are a few outlier funds that pay significantly lower “GapCover” rebates than average. These funds, Latrobe and the Mildura Health Fund, pay rebates that are approximately 120% of the Schedule Fee.

If the doctor’s fee exceeds the “GapCover” rebate, then the account will usually be processed under a “known gap” scheme. Under a “known gap” scheme, the patient pays the difference between the doctor’s fee and the “GapCover” rebate.

Out of dozens of funds, there is one, NIB, with no “known gap” scheme. For NIB members, once the doctor’s fee exceeds the “GapCover” rebate, the fund will not pay any rebates above the Schedule Fee. Therefore, for NIB members, when there is a gap, the patient pays the difference between the doctor’s fee and the Schedule Fee, so the gap will be significantly greater than for other funds.

Some funds – Medibank (including AHM), BUPA and HCF – have “known gap” schemes but these are subject to some restrictions. For these funds, the maximum “gap” allowed under their “known gap” scheme is $500. This means that once the doctor’s fee exceeds the “GapCover” rebate by more than $500, the fund will not pay any rebates above the Schedule Fee. Therefore, for members of these funds, it is not possible to have a “gap” that is just over $500. Once the predicted “gap” exceeds $500, it jumps significantly due to the paring back of the rebate. This restriction will only apply to the larger accounts, and will not affect the majority of accounts in which the “gap” is less than $500. This restriction can be confusing, and might be best understood with an example, using approximate figures.

Consider an account for anaesthesia for major and prolonged surgery for which the AMA recommended fee is $3240, but for which the doctor has charged $2000. The Medicare Schedule Fee for such an account would be approximately $800 and a typical “GapCover” rebate would be $1400. The doctor’s fee exceeds the “GapCover” rebate by $600. Under most “known gap” schemes (e.g. Australian Unity or any other AHSA fund), this would be the “gap” - $600. With Medibank, BUPA or HCF, however, because the predicted “gap” exceeds the $500 limit, the fund will not pay rebates above the $800 Schedule Fee. Therefore the “gap” will be $1200, not $600.

It is lamentable that these matters are as complicated as they are. Associated Anaesthetists Group (AAG) fully supports the government guidelines about “Informed Financial Consent” (IFC). These relate to the provision of information about medical fees to patients. AAG has been one of the most pro-active anaesthetic practices in the country in introducing IFC policies over recent years.

Our aim is to provide an estimate of fees to all patients as early as possible, and at least prior to hospital admission. As is clear from this article, providing information about rebates and therefore “gaps” is not always straightforward. We will attempt to provide details about health fund rebates. If you wish, you can take your estimate of fees, which will have attached the relevant item numbers, to your fund for them to provide you with more binding estimates.

In emergency cases, IFC prior to anaesthesia may not be possible, in which case our staff will contact you as soon as possible after the service to explain fees.

We encourage our patients to become informed healthcare consumers. We hope that this information has helped in that process. If you still have any queries, feel free to contact our rooms prior to going to hospital.

Of course, you are free to raise any questions about fees with your anaesthetist in person or the rooms by phone or email.