Why doctors will stop bulk billing

Patriotism is supporting your country all the time, and your government when it deserves it ~ Mark Twain.

Although federal health bureaucrats seem to think bulk billing rates will increase, about 30% of GPs say they will stop all bulk billing soon. In a previous post I explained why. As a result of government policy to freeze patient Medicare rebates, doctors are faced with three options. They can:

  1. take an estimated $50,000 pay-cut;
  2. see more patients more often;
  3. charge more.

Some will choose option 1, because they don’t want to or cannot charge their patients more, and are also unable to work more. The reality is however that most GPs will not be able to afford this option.

Others will go for option 2: they may, for example, see 7-8 patients per hour instead of 4-5. They may decide to work more days and longer hours. The question is of course: how safe is this?

Can doctors continue to offer good care when they are churning through high patient numbers? It will certainly feed the epidemic of burnout, depression and suicide among doctors and medical students.

What the Medicare rebate freeze is all about
Medicare is shaping up to be a major election topic. Still, the freeze on the patient Medicare rebate is a complex topic for many. It was a lot easier to understand when Medicare was called the Health Insurance Commission, but the principle is still the same: Medicare pays a contribution towards the doctor’s fee on behalf of the patient. Many GPs have accepted this contribution as a full payment, which is called bulk billing.
The ‘indexation freeze’ everybody is talking about means that this Medicare contribution will not be increased annually, in line with the increasing cost of living. The shortfall will have to be made up by patients which means that the out-of-pocket expenses will go up as doctors stop bulk billing. The freeze on the patient Medicare rebate was introduced by the Labour government in 2013, and will continue under a Coalition government until 2020 and possible longer. The rebate has not kept up with costs and inflation for a much longer period.

3-tier system

Then there is option 3: doctors will charge more, which will increase out-of-pocket costs for patients. As RACGP president Dr Frank Jones mentioned in this interview, we may see a 3-tier system in Australia soon:

“Dr Jones warned poorest patients would feel the impact of the freeze hardest, while there was a risk doctors would churn through appointments more quickly.

He predicted it would lead to a three-tier billing system: doctors would bulk bill their most disadvantaged patients, charge other health care cardholders a concessional rate, and private patients would be charged the Australian Medical Association’s recommended fee.”

In 2015 the RACGP surveyed GPs on how they planned to manage the patient rebate freeze. Of the 566 members who responded, the majority (57%) said they would have to increase out-of-pocket costs for patients.

GPs said they would have to do this either because the practice would stop bulk billing and begin charging a gap or co-payment (30%), or the practice would increase out-of-pocket costs for non-concessional cardholders (27%). Only 8% indicated that they would not increase out-of- pocket costs for their patients.

How fees will go up

It is to be expected that many practices will start cost-cutting: staff levels may be minimised and investments in new equipment, training & education, IT or buildings may become a lower priority. This is a risk for the quality of care.

Practices will determine a fair and equitable fee based on their increasing practice costs, professional time and services. The RACGP and AMA support GPs to set fees that accurately reflect the value of the services they offer, such as the recommended fees in the Australian Medical Association’s List of Medical Services and Fees.

Practices will review their patient demographics and billing profile and optimise the utilisation of MBS items. Pensioners and/or health care card holders may be charged an extra fee which will be much higher than the bulk billing incentive of $9.25.

Practices may decide that certain services will attract fees, for example dressings and other consumables, treating doctor’s reports, off-work/off-school certificates, phone/video consultations, data entry or certain surgical procedures.

Updating practice management software to streamline Medicare claims and EFTPOS payments may be required in some cases. Expect notices to go up in surgeries across the country to tell patients about the changes in billing policies. Unfortunately there will also be some practices that will have to close their doors.

9 thoughts on “Why doctors will stop bulk billing

  • Good video and explanation, Edwin. I would like to suggest one change to make it more accurate, and one extra bit of information.

    The statement “Medicare has set a list of fees it is prepared to contribute towards medical services” is not accurate. It is a common misperception amongst doctors that the public servants at Medicare set policy, set the amounts of the Medicare benefits and write the Medicare Benefits Schedule. They don’t do any of those things Medicare is a claims payment agency, whose task it is to administer the Medicare Benefits Schedule and to pay claims as efficiently as possible.

    It is the Minister for Health who writes the Medicare Benefits Schedule, makes the rules and decides on the amounts of the Medicare benefits.

    The extra bit of information is that the Medicare benefit was created to help patients with the cost of their care. The Medicare benefit is legally payable only to the patient and not to the doctor. That is why when patients are being bulk billed, they have to legally give away their right to their Medicare benefit by ‘assigning’ it to the doctor. They are saying to Medicare “Please pay my Medicare benefit to the doctor instead of to me”.

    In view of the above, I would like to suggest that your statement that I have quoted may be better as something like:

    “The federal Minister for Health decides how much the government will provide to you through Medicare to help with the cost of your health care”.


    • Thanks Oliver as always good feedback. You are right. This is actually an old video, I made it in 2013. The graph shows that the patient rebate goes up slightly whereas this will now be a flat line until at least 2020. We need a whole new video to explain the issues!


  • The AMA has published a graph comparing the numerical increase (as a percentage) of average weekly earnings [AWE] and the consumer price index [CPI – GST adjusted] with the increase in MBS fees – since the initial datum of Medicare in 1985 until now. In short it discloses, that depending how you assess the final computation, The purchasing power of $100 dollars of MBS fees in 1985 is, in today’s money, somewhere between $50 to $33 – when compared to today’s ‘average weekly earnings’. And we are not talking about GP remuneration – ‘before tax personal income’. This reduction of comparable cash flow must also cover all business and clinical costs in running a GP practice.
    The reduction in effective buying power of the GP MBS fees, compared to the increase in average weekly earnings is profound. [See analysis in the footnote]

    How have we coped?
    Substantial reduction in the average GP consultation time. Tony Abbott implicitly acknowledged that when he attempted to impose a ‘floor limit’ of 10 minutes for billing an Item 23. He did not want us to make equal money by proportionally reducing the consultation duration from 20 minutes to 7 minutes, for a reduction in general practice cash flow of two thirds. The increasing commonly imposed reduction in consultation time has partially compensated for the reduction in the purchasing value of the MBS fee.
    Billing care and mental health plans. There is a lot of chronic and complex illness in the community, and unlike other jurisdictions (such as Canada) where the diseases eligible for care plans are strictly defined and very limited, the limiting criteria for care plans in Australia are imprecise and ambiguous – and not ‘time limited’. That has made auditing care plans a problematic task for the Federal Health Department.
    PIP, SIP payments, introduced for specific purposes, commonly paid to ‘the practice’, commonly – in a ‘corporate’ – held by the corporate and not passed on in any proportion or amount. Can be altered or withdrawn at any time, not uncommonly there are performance targets that must be met to obtain the benefit. The ‘performance’ is at a cost to the practitioner.

    A federal Member of Parliament (not a Parliamentary Secretary, or Minister – who are paid at a substantially higher level) now attracts a yearly income of almost $200,000, that does not include a generous electoral expense account, nor superannuation, nor the equivalent business costs of rental for the Parliamentary office – nor of substantial other shared work areas in Parliament, of insurance, third party insurance, personal staff (income and overhead costs) including Work Cover, annual and sick leave. In General Practice, all these costs come out of billings, before personal – before tax – income is even considered.

    Any suggestion that the present GP fee schedule is generous is ludicrous. THAT SHOULD BE SHEETED HOME TO SUSSAN LEY, THE MINISTER OF HEALTH.

    Apparently she is annoyed that we have not exuded gratitude on her (implicit) claim that our circumstance will be substantially improved by the transition of the greater part of general practice from the fee for service, to the capitation model, It is now implied that this ‘paradigm shift’ will rapidly result in much better clinical care, and consequent major saving of health care costs, the saving to be shared between the government exchequer and the medical profession. Does that mean we will be paid substantially more for doing the same hours of work? The claimed savings are theoretical and hypothetical. The model does not provision the start up and ongoing costs of the substantial bureaucracy that must be created to supervise and monitor ‘capitation’ payments. There has been no human consideration, nor modelling nor costing of this ‘paradigm shift’ in the Australian milieu. We certainly have not been told – in dollar terms – how much better off we will be. There is a stark disjunction between Sussan Ley’s perception of ‘the Health Care Home’ and the model mooted by the RACGP. The College’s model is a human and physical resource that will provide more integrated clinical care of significant complex and chronic illness. I am not sure that capitation was ever formally proposed. The Health Minister’s model is focused on achieving financial economies, some to be shared with the profession, it appears only as a reward for clinical success in significantly improving the quality of care – as that improvement results in cost savings.

    In this new model, how will the average (time) quantum of clinical work needed for the average patient in tier one, tier two, tier three be determined? As that work is shared between GPs, admin staff, nurses, and employed or contracted allied health? How many staff (units) will be needed per patient? What will be the quantum of the ‘quarterly capitation’ payment – for tier one, tier two, tier three.

    Apparently this will all be worked out – as we go along!

    A call to ‘ethical austerity’, the acceptance by GPs of a unique, substantial professional parsimony – in comparison to the incomes of other doctors, equivalent Public Servants, Members of Parliament, and Ministers of the Crown (including Sussan Ley) – has already been noised abroad. Not by politicians, but by persons in receipt of academic incomes (who deign to pontificate about GP responsibility) and a past President of the RACGP, who have supervised the testing and operation of the initial model ‘Health Care Home’. Is this the quantum of professional income that Sussan Ley, the Minister of Health, has in mind for GPs staffing Health Care Homes?

    “…the realities of the broader environment were also highlighted by one stakeholder concerned with the fit, longer-term, between the local innovation and the small business environment.’

    ‘This is hard medicine and you’re going to be paid about a third to a half of what you would earn in another setting. This is not an attractive equation unless you’re particularly motivated about the reasons you get into medicine…so selling what this model is to people who would then be prepared to work in it is tough.’

    The reality is that the Coalition wants medical practice to return to the paradigm – in place until Gough Whitlam – that doctors will charge more to those who make good money (the quantum will be much more – as is the case now in specialty practice) to subsidise the clinical care of those who ‘cannot afford to pay’. What the Coalition now clearly understands (a lesson of Tony Abbott’s demise) that any obvious or direct government initiative to achieve this return to the past paradigm will cost it government. So a circumstance that – by the slow erosion of the purchasing power of the present fees, we will be forced to introduce private fees to the ‘better off’ proportion of our patient base, on our own initiative – is the Coalition’s strategy to present the wider imposition of private fees as a GP initiative, not the government’s. The blame is on us, not them. That the present fee quantum remains generous, we are greedy doctors.

    I think our response should be to present our circumstance as already one of exigency. As a consequence we no longer integrate the care of complex problems. It takes too long. Now one problem one dealt with in one consultation. That inevitably puts patients into hospital ED’s, implicitly and explicitly. The government now wants that to change. And with the model proposed, based on the decade long Inala clinical ‘pilot trial’ cited as its basis, we GPs have been explicitly informed our remuneration will reduce to a half or a third of what we now can currently generate.

    This is analysis could be put to both the Coalition and the Labor Parties at this time. Hawke, Keating and Blewett themselves broke the promise they made to us in 1984 – that fees would climb pari passu with the cost of living and average weekly earnings. (I heard Blewett make that promise with my own ears.)

    (I will send you the references when I have a direct email link.)

    Glenn Rosendahl


    The primary data extracted from the graph:
    AWE increased by 340%.
    CPI increased by 260%.
    The MBS fee schedule has increased by 175%.
    The MBS fee schedule is an average of the fee increases of specialist and GP fees. I understand for numbers of years specialist fees have increased at a higher rate than GP fees, so for GPs the following analysis understates the loss.

    Calculated analysis
    $100 of the MBS fee schedule in 1985 has became $175 in 2014.
    $100 in costs [consumer price index] in 1985 became $260 in costs in 2014.
    The average wage of $100 in 1985 became an equivalent wage of $$340 in 2014.
    Using the consumer price index (essentially ‘the cost of living’) as the datum for comparison:

    The average worker (employee working for wages) obtained a net increase in buying power of $340 divided by $260 – that is – 1.31. An increase in effective buying power of 31%. The business of general practice suffered a net decrease in buying power, calculated as 175 divided by 260 – that is – decimal 0.67 – a decrease in effective buying power of 33% (100% minus 67%),

    Some would say the appropriate comparison is to compare the percentage increase in income of the average worker (131%) to the percentage decrease in the cash flow to the business of general practice (67%) and subtract the latter from the former. This comes to about 50% reduction (136% minus 67%)

    You can use this, properly formatted, if you wish. It was first published in Aus Doc as a comment to a recent article. Judge for yourself if it warrants wider circulation.
    I have more analysis I can send you.

    Liked by 2 people

  • It’s interesting that many people speculate that bulk billing will soon come to a halt. I had never thought about the doctors view of bulk billing. I agree that it can decrease the quality of care available due to the high amount of patients. I hope that doctor’s aren’t suffering mentally from the high volume of care they are giving. It saddens me to think that those that are serving could be suffering greatly.


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