By Lisa Cox and Dan Harrison
The federal government has dumped its plan to charge patients a $7 fee to see a doctor, Prime Minister Tony Abbott has announced.
However, doctors will be invited to charge a $5 "discretionary" fee for consultations with non-concessional patients to recover income lost through a $5 cut to the Medicare rebate.
In a press conference in Canberra on Tuesday afternoon, Mr Abbott conceded the unpopular proposal - first detailed in the May budget - did not have the support to pass the Senate.
The government will stick, however, with its plan to reduce the Medicare rebate GPs receive for common consultations by $5 for adults who are non-concession card holders from July 1 next year. Under the new plan, children under 16, pensioners, veterans and people in aged care and nursing homes will be exempt.
Prime Minister Tony Abbott, pictured with Health Minister Peter Dutton, has conceded the government's planned $7 GP fee will have little hope of passing the Senate.Credit: Alex Ellinghausen
Doctors can either absorb the extra $5 cost per patient within bulk-billing, or charge a $5 "discretionary" fee.
Under the changes to the proposal, the fee will no longer apply to pathology tests or diagnostic imaging services and the current rebates and bulk-billing incentives will continue to apply.
"Look, it's been pretty obvious for some time that we were going to have to improve the position that we took to the budget," said Mr Abbott, who was joined by Health Minister Peter Dutton for the announcement.
"I thought the position that we took to the budget was a very good position but I think this is a better one and obviously there are a range of conversations that we have with a range of different people in terms of coming up with this improved position.
"As I said to you a week or so back in this very spot, it was a bit ragged but we've got to a better position and that, in the end, is what people want. They want us to have the best possible policy in the circumstances in which we find ourselves."
Mr Abbott said the budget saving under the previous policy would have been $3.6 billion over four years, while the savings under this revised policy it will be $3.5 billion.
Rebates for all other Medicare services will also be frozen over the estimates period to make up some of the budget shortfall that will come from dumping the $7 fee.
Mr Abbott said this was a measure Labor had had in place for some time.
Responding on Twitter, Australian Medical Association president Brian Owler welcomed the "protection for vulnerable patients" in the new proposal, and the exclusion of diagnostic imaging and pathology.
But he expressed concern about the plan to freeze rebates until 2018.
Doctor groups have long argued that existing Medicare fees are too low and doctors will be forced to charge higher gap fees.
The decision to drop the $7 fee follows a turbulent fortnight in which the government struggled to communicate a clear message on whether it would shelve the GP fee policy or try to bypass the Senate and introduce it through other means, such as regulation.
Late last month, Mr Abbott told his colleagues he intended to knock "one or two barnacles of the ship" before Christmas.
The announcement comes just days after Mr Abbott was forced to announce changes to his signature paid parental leave policy, and presented an improved pay offer to Defence personnel.
"I've had members of the community coming to me saying we support the idea of more price signals in the system, that's an economic reform, but can't it be better for children and for pensioners?" Mr Abbott said.
"And that's exactly what [Health Minister] Peter Dutton and I are announcing today.
"A system which is better for children and for pensioners, a new and improved proposal which indicates that this is a government which is always capable of listening, learning and improving."
Changes will also be made to GP consultation items which currently provide the same Medicare rebate for a six-minute doctor visit as that of a 19-minute consultation.
Mr Abbott said doctors would have to consult patients for 10 minutes or more to reduce "the phenomenon of six-minute medicine, sausage machine medicine, some clinics where patients are churned through".
Opposition Leader Bill Shorten said he remains opposed to the charge.
"Labor does not believe you pay a tax to go to the doctor," he said.
"This is a GP tax which Tony Abbott can't bring through the front door so he will bring it around the back door."
Terry Barnes, former senior adviser to Mr Abbott during the Howard government and key proponent of a GP co-payment, backed the change, saying: "This is a much better attempt at establishing the price signal principle, much fairer, and cleaner to administer - especially by GPs.
"It's welcome that the government has accepted that establishing the principle is the most important thing if Medicare is to be kept sustainable," he said.
"As for cutting the rebate for non-concessionals, it simply means that bulk-billing for non-eligible persons will disappear sooner rather than later."