Health insurance giant Bupa is offering doctors and medical specialists working at Healthscope hospitals up to $500 if they take their patients to other facilities as a dispute over funding escalates.

Bupa wrote to doctors on Monday offering the payment after Healthscope said it would terminate its funding contract with Bupa from February 20, a move that means its members will have to pay significantly higher costs if they are treated in one of its 38 hospitals.