AMA in call for Medicare rebate fix

The Australian Medical Association is calling for an overhaul of the way Medicare rebates are indexed yearly.

AMA president Steve Robson.

The Australian Medical Association (AMA) is calling for an overhaul of the way Medicare rebates are indexed yearly, with new analysis showing the federal government has shifted $8.6bn in medical expenses on to patients as a result of years of frozen and low rebate indexation.

In a new report, Why Medicare Indexation Matters, the AMA analysed rebates paid for the most common MBS item, a 20-minute level B GP consultation, and found that inadequate indexation had “saved” the government about $8.6bn over the lifetime of that item alone.

Medicare rebates have been frozen for most of the past seven years, and increased by only $2.70 during the past five years – half that of CPI and many times below the rising costs of medical supplies, equipment and wages.

“Our analysis shows that the government has been stripping healthcare funding from Australian taxpayers through poor indexation and shifting the cost of care on to the Australian population,” AMA president Steve Robson said. “Medical practitioners must either absorb the cost and risk becoming unviable or increase out-of-pocket costs for patients. This is not a sustainable solution.”

Medicare Benefit Schedule fees for doctors’ consultations are meant to be raised annually, according to the Department of Finance’s Wage Cost Index, a combination of indices relating to wage levels and the Consumer Price Index. However, doctors have long argued this method has never kept pace with the rising costs of running a medical practice, let alone inflation. “After years of frozen and low indexation, there is now a substantial disconnect between the MBS and the realistic cost of providing health services,” the report says.

The rate of bulk billing by medical practices has been declining steeply, with some GPs now charging gap fees for all patients. Patients routinely face out-of-pocket costs of $40 or more for standard GP visits.

A standard 20-minute consultation currently attracts a Medicare rebate of only $39.75, and the 2022 rate of indexation is a paltry 1.6 per cent, a fraction of the increase in cost of living.

Federal Health Minister Mark Butler has given no indication the Labor government would increase rebates, which are now critically low.

The AMA has launched a Plan to Modernise Medicare campaign, which calls on the government to implement a ­revised indexation tool to ensure rebates better reflect the rising costs of providing high-quality medical care and running a medical practice.

“The analysis of the Level B consultation item is a clear example of how years of frozen and low indexation of Medicare rebates has stripped healthcare funding away from medical practices and the Australian population. To offset this, medical practitioners have to either increase out-of-pocket costs for patients or reduce the time they spend with patients to remain ­viable,“ the report says.

“Mr Butler has talked about the dire state of general practice and acknowledged it needs urgent attention. The AMA’s analysis demonstrates very clearly what one of the core issues is and what needs to happen,” Professor Robson said.

The AMA estimates that improved indexation across the MBS could cost the government $4.98bn over four years.