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(Image: AAP)

Medicare changes that adjust how surgical procedures are defined will come into effect on July 1. The Medicare Benefits Schedule Review Taskforce recommended the changes and the Australian Medical Association is not happy, saying they’ll “cause chaos for patients”.

So, is this a routine, prudent update to Medicare, or a disaster that will harm patients? It depends who you ask.

Medicare 101

Doctors are tradies. They sell parts and labour to the patient at whatever price they see fit. The patient receives a fixed rebate from Medicare to cover part of the cost. Bulk-billing refers to the scenario whereby the doctor agrees to sell his or her labour for the price of the Medicare rebate — the middle man (ahem, patient) is cut out and the doctor takes the payment directly from Medicare, which is billed in the form of an item number.

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Let’s say the average GP sells a standard consultation for $75 and it lasts 15 minutes. The Medicare rebate is $38.75 and the patient is $36.25 out of pocket. If the GP bulk-bills that consultation, they are taking a 48% pay cut, although if the GP sees two patients in that same 15 minutes, and bulk-bills them, they’ll receive $77.50 and come out ahead.

So, when a doctor is bulk-billing there’s a financial incentive to see more patients in less time and that is exactly what has happened in general practice, to the point that it has a name — “six-minute medicine”.

Life in the fast lane

Bulk-billing general practices usually operate under the six-minute business model, which aims to see the most people in the least time. This provides the bulk-billing GP with an hourly wage equivalent to their private billing colleagues at no out-of-pocket cost to the patient. Everyone wins!

There is, however, a hidden opportunity cost of more referrals, imaging and pathology tests that may have been avoided had the doctor spent more time in the initial discussion and examination. These costs are borne by the patient, the taxpayer and the public hospital clinics clogged with potentially unnecessary referrals.

Surgical changes

The changes from July 1 deal mostly with abdominal and orthopaedic procedures. Surgical Medicare rebates are slightly different to those for GPs in that they’re largely defined by what’s done, rather than how much time is spent. Unlike general practice, surgeries can be billed to private insurers, which loosely mirror Medicare in their definition of procedures.

Consider a person who needs their appendix removed and the surgeon is bulk-billing the procedure (or “no gap” if billed to an insurance fund). Currently there are different item numbers the surgeon can bill to Medicare depending on whether the surgery is done by laparoscopy (keyhole) or open incision. This will change so that regardless of which method is used to remove the appendix, the amount paid is the same.

Other changes coming into effect aim to prevent surgeons from co-billing procedures that would have been done incidentally. For example, there’s currently an item number for diagnostic laparoscopy (keyhole procedure to look around inside the abdomen). If you’re doing a laparoscopic appendix removal, then technically you’re looking around inside the abdomen and can bill for that, but really you’re just there to remove the appendix. Now, you can’t bill Medicare for both at the same time. The bulk-billing surgeon is now receiving less payment than under the status quo.

Doctors want to help the hip pockets of their patients but not at the expense of their own income (excepting the Australian-of-the-year types) and the changes to Medicare will likely insult the current surgical business model. And we’ve seen in general practice, this will go one of two ways: either patients will have to pay or surgeons will act on the incentive to do more procedures, faster. The latter would come with an opportunity cost, at best to the taxpayer and at worst to the patient.

Mitchell Squire is a GP practising in Sydney.

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Peter Fray
Peter Fray
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