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Mind the gap..

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I have been fortunate enough to reach this point in my life without being floored by unexpected medical costs. I’ve held private health insurance since I transferred from my parents account at 18 and although have had to call on it on several occasions, the out-of-pocket expenses incurred have been manageable.

Until recently. My partner had to have plastic surgery on his hand after a kitchen incident (not going into details) and less than 10% of the surgeon’s cost was covered between the Medicare rebate and private health. What had gone wrong? Had we unknowingly selected one of those price-gouging surgeons Four Corners reported on a while back? Checked the website and no – he charges the Australian Medical Association’s recommend fee. And this is when I realised there was a large gap in my knowledge of how the medical system works.

From the Australian Medical Association:
• The Government sets the rebates for medical services in the Medicare Benefits Schedule (MBS). When you have hospital treatment as a private patient Medicare will pay 75% of the MBS fee and your private health insurer will pay 25%.
• Gaps occur when your specialist and other doctors involved in your care charge more than the Medicare rebate. Your insurer may pay more than 25% of the MBS fee if your doctor participates in its no-gap scheme arrangements.
• If your doctor does participate in the insurer’s no-gap scheme arrangements, you will have no gap to pay. If your doctor doesn’t, then you will be required to pay a gap fee
• In recent years, Governments have not increased Medicare rebates in line with indexation. So, while the costs of running a medical practice have increased, reimbursement has not.
• As a result, some doctors need to charge a fee above the MBS. As well, some doctors offer different levels of services, or undergo additional training so feel it is appropriate to charge a fee that is commensurate with that.
• The AMA publishes the List of Medical Services and Fees annually to its members. Unlike the MBS, the list is indexed to the Consumer Price Index and is more reflective of the cost of providing care. It is a guide only and your doctor may charge above or below the AMA Fees List

In some cases, the difference between the AMA fee and MBS is minimal, in others not so much. You are given an informed financial consent to sign before surgery, but when unplanned complications occur, the difference between having an unexpected cost that is 75% covered by Medicare and insurance and one that is only 10% covered is huge!

The AMA says, “Government’s indexation of Medicare rebates has never kept pace with the rising cost of medical practice. On average, average weekly earnings and CPI increase by 3% per year. Practice costs rise by a similar amount.

“Medicare rebates only increased between 1.2% to 2.5% from 1995 to 2012. From 2012-2017 all MBS rebates were frozen with no indexation. Indexation only recommenced in 2017, when GP bulk-billing incentives were indexed at 1.4% and then in 2018 with GP standard attendances and specialist consultations indexed at 1.5%.”

There is a wealth of information online about managing health insurance gaps, including a handy 16-point checklist from Choice and the Medical Costs Finder website, where you input your postcode and select from a list of procedures to see what the average cost and out-of-pocket expenses are.

Now access to all this information is great. But do you know when I found it all? After realising we were potentially up for much higher out-of-pocket expenses than we were expecting. And here’s where the system really fails, I think (other than the government being hopelessly out of touch with the actual cost of things).

Sure, you can shop around for surgeons. Crunch the numbers between the surgeon’s fee and the Medicare benefit; see if your surgeon has any kind of clandestine no-gap scheme arrangement with your health insurer. But I would say most surgery occurs with some sense of urgency – a traumatic injury or a disease diagnosis that needs attention and decisions now. Or at least now-ish. You are usually pointed in a particular direction by your GP, who suggests who can lop that bit off of you, or sew it back together the best. You are ill! Even with a trusted advocate to assist you with all this, there’s not usually the time for maths. Or the headspace for an existential crisis while you evaluate how much a repaired body part is worth, or if you could survive a few more days partially-constructed until (fingers crossed!) you can get admitted for treatment in the public system.