‘All options on the table’: Labor takes on specialist doctors’ fees
Out-of-pocket costs for specialist doctors are crippling consumer budgets. Now Labor is declaring ‘all options are on the table’ as it contemplates unprecedented action.
The Albanese government has declared “all options are on the table” to rein in skyrocketing doctors’ fees in a potentially historic test of the commonwealth’s power to regulate Medicare, as medical colleges warn specialists that major consequences could flow from unethical billing practices.
Health Minister Mark Butler has asked his department to provide wide-ranging advice on reform options available to the commonwealth to stymie patients’ rising out-of-pocket costs as Labor vows to make seeing a specialist more affordable in the face of evidence that some Australians are avoiding seeking care and cannot afford rising gap fees.
Medicare data shows the average gap fee charged to patients has risen from $49.56 in 2010-11 to $117.18 in 2023-24 – more than triple the rate of inflation.
In the face of rising concern, the federal government is preparing to require doctors to disclose their fees on the nation’s Medical Costs Finder website, and for the first time has specifically stated that its reform plans could extend beyond fee transparency.
That raises the potential prospect of unprecedented legislative action to exert greater control over Medicare and doctors’ billing, in line with a recommendation from a recent Grattan report for the federal government to deny specialists who charged extreme fees the right to bill Medicare on behalf of their patients.
Any attempt at more direct regulation of doctors’ billing practices would raise constitutional issues that go to the heart of how far the commonwealth’s power may extend to regulate Medicare.
“Making specialists more affordable is a second-term priority for our government and I’ve asked my department for advice on options to start to get this huge growth in out-of-pocket costs back under control,” Mr Butler said.
“It’s causing real harm to Australian patients, not only their pockets in terms of the costs they’re having to pay, but we know that lots of Australians simply now can’t afford to visit their specialist. It’s having a huge impact on their health.
“I’ve asked the department to consider opportunities for reform in this area and I’ve been clear with the doctors’ groups that all options are on the table.”
Historically federal governments have considered any direct regulation of doctors’ fees to be constitutionally barred, despite pouring billions into Medicare rebates to patients to support access to consultations and surgery. Patients have been left to shoulder the growing burden of the rising cost of care amid what is now a total disconnection of Medicare Schedule Fee rebates to the costs of providing medical services, and a critical lack of access to public surgery outpatient clinics and surgical lists.
The Council of Presidents of Medical Colleges, which represents most of the nation’s medical colleges, has pledged to work with the federal government to address the issue as it warns those in its own ranks that are charging patients multiples of the MBS fee to consider the consequences for the entire profession.
“No Australian should face financial hardship to see a specialist and when and where they need one,” said CPMC president Sanjay Jeganathan.
“Every patient should be able to access affordable, high quality specialist care.”
Dr Jeganathan said a small percentage of specialists were charging extreme fees, a practice the CPMC and the colleges “totally opposed”.
“You have to be ethical in your billing,” he said. “You have to have transparency in the fees.
“These specialists are outliers in what they charge, and that’s where I think we need to really concentrate to make sure that patients are not adversely punished for seeking healthcare, because healthcare is an essential.
“My message to specialists is that if you don’t sort things out, someone else will sort it for you – that is a real risk. These specialists really need to consider whether their behaviour is going to lead to those consequences.
“At the end of the day, you’re dealing with a patient who is sick; you’re not in mergers and acquisitions in a financial firm. So always put patients first and have a compassionate approach to patients’ individual circumstances.”
When Medicare was originally legislated, the intention was that the government would cover 85 per cent of the Medicare schedule fee for medical services outside hospital, with private insurers legally barred from covering any gap fees. The public hospital system is free to patients who cannot afford private specialists but many cannot access it, leaving those of limited means having to rely on the private system where they have faced rising out-of-pocket costs.
As well, a failure to adequately plan for future workforce requirements has left Australia short of specialists especially in rural and regional areas.
A recent report by the Grattan Institute found that one in five Australians who needed specialist care – 1.9 million people a year – delayed or skipped getting it, risking delayed diagnoses, missed treatments and avoidable illness. Two-thirds of specialist consultations now attract a gap fee, compared with only one in five visits to a GP.
Dermatology was the speciality that was most often charging more than triple the Medicare schedule fee, followed by sport and exercise medicine and obstetrics and gynaecology. Specialists in psychiatry, endocrinology, cardiology, pediatrics immunology and neurology who were charging excessive fees charged the highest out-of-pocket costs per consultation. The average out-of-pocket cost for a single consultation with an extreme-fee-charging psychiatrist was $670 in 2023.
Grattan’s analysis found that one in 10 low-income patients who were billed paid almost $500 a year in gap fees and that patients were reporting taking on debt, seeking financial aid, or cutting back on other essentials such as groceries to pay high out-of-pocket costs.
Much of the blame in this regard lies with state governments, who have presided over the severe under-resourcing of public outpatient clinics. With negotiations in deadlock over the next National Health Reform Agreement, the focus is falling on this failure of the states that has fuelled the flight of specialists from the public system and left those on low incomes often with chronic disease with no alternative but to go private for essential care at a cost they cannot afford.
Private Healthcare Australia says it is seeing the impacts on its members.
“There is very real consumer concern about this,” said the group’s chief executive Rachel David.
“It has hit people pretty hard in a cost-of-living crisis in a way that’s very noticeable around the family dinner table.
“Whoever has looked at it has found that this is dampening demand for specialists, perhaps as high as one in three people given a referral not attending their appointment. It’s actually impacting consumer behaviour in a way that is measurable.”
Grattan called for the federal government to remove public funding from specialists who charged extreme fees and name them publicly, as well as legislating to claw back Medicare funding from specialists who charged extreme fees.
That now appears to be an option the federal government is actively exploring. Contemporary legal analysis of the constitutional restriction on the commonwealth’s power to compel doctors to provide particular services or become employees of the commonwealth indicates that federal government power to regulate the medical profession may be wider than previously appreciated.
University of Melbourne health economist Yuting Zhang, whose team has published gap-fee data on the Health Analytics, Leadership, and Economics (HALE) Hub, said there was wide variation in specialist fees and some evidence of severe overcharging by a minority of specialists.
“The thing that is very unique in the Australian market, is that specialists can charge whatever they want,” Dr Zhang said. “There’s no control and no regulation. There is a huge amount of market failure.
“Medicare rebates are taxpayers’ money. There is a need to have some kind of rules around
that that go beyond the policing of fraud.
“Saying that doctors can access a Medicare rebate and the doctor charges patients the rest seems a bit strange way of setting up healthcare.”
Health economist Stephen Duckett is arguing that government policy to deny access to Medicare to doctors who charged excessive fees would not offend the Constitution’s civil conscription clause contained in section xxiiiA.
“That doesn’t affect what a doctor can do; it just says that if you do this then there’s a consequence, and the reality is it won’t affect most doctors because most specialists don’t charge more than three times the MBS fee so it’s not an effective restriction on the vast majority of practice,” Professor Duckett said.
But the major risk for any government that sought to directly regulate doctors’ fees would be that some doctors may opt out of Medicare entirely, creating a two-tier system that undermines the insurance scheme’s central philosophy.
Dr Jeganathan said any move to cap doctors’ fees would be unjustifiable given the system-wide factors that are leading to upward pressure on costs, especially for patients who cannot afford to pay yet cannot access public hospital services.
“If you’re looking at capping fees and all that, you need to have an entirely different approach,” Dr Jeganathan said. “Government cannot be doing that. I think it should be an independent body who need to review fees.
“Our approach, is to work very collaboratively with the governments to help them understand the holistic picture. It is critical to enhance outpatient access to public hospital clinics, to offer a genuine choice for patients. We also support having total free transparency and ethical billing built into each and every medical specialists’ billing code of conduct. These are things we are happy to work with the government on, and how we embed them into practice.”
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