General practice tool kit

Your practice finances

Patient payments and insurance

Last revised: 24 Oct 2019

Insurance options

In Australia, there are various forms of insurance that provide full or partial payment of specified medical costs to eligible patients. These include:

  • Medicare (Australia’s public health insurance system)
  • private health insurers (eg Medibank Private Limited, Bupa, and many others)
  • injury compensation insurers and schemes (eg for work-related injuries and road accidents)
  • disability insurers and schemes (eg the National Disability Insurance Scheme, private insurers who offer policies for total and permanent disability cover).

Despite these numerous options, there are several services that general practices provide for which patients cannot receive cover and must pay the full cost themselves. For example, providing a medical clearance for a scuba diving course, or conducting a fit-to-drive assessment.

The Australian government administers the Health Insurance Act 1973 through Medicare Australia, a publicly funded insurance system that reimburses patients for a proportion of their personal medical costs. This reimbursement is sometimes referred to as a patient rebate.

Medicare determines which services are reimbursed and the amount to be reimbursed, and specifies these in the Medicare Benefit Schedule (MBS).

Anyone in your practice delivering health care services must have a thorough knowledge of the MBS to ensure that they:

  • comply with the legal requirements for billing
  • know about all the service claims your practice is eligible to make.

Bulk billing

Bulk billing means that you allow your patient to assign their MBS rebate to you as full payment for a service, which means the patient does not have to personally pay you for the service then claim for reimbursement from Medicare.

When you bulk bill a patient, you cannot charge any additional fee, including the cost of consumables (except for vaccines).

If your practice is unwilling or unable to absorb the cost of consumables for a service, you might consider directly charging your patient a fee for the service (which can be equal to or greater than the value of their MBS rebate). By directly billing your patient instead of bulk billing, you can include additional charges for the cost of consumables used in the service. Another option is to ask the patient to pre-purchase the required consumables and bring them to the consultation, in which case your practice can bulk bill the patient for the service without having to absorb the cost of the consumable.

You are not required to bulk bill any service, nor obliged to set your fees according to the value of MBS rebates. You can, however, bulkbill some patients for some services, at your discretion. Some GPs do this to help patients experiencing financial difficulties.

Case study: practice membership fee

If your patients rely on bulk billing, consider how you can continue to offer this and recuperate costs without losing eligibility for the bulk billing incentive.

You can adapt your billing models to suit you and your patients. If you predominantly bulk bill some or all of your patients, consider directly charging them for a service (at least) once, which allows you to charge an additional annual ‘practice membership fee’ as part of that transaction.

Practices that provide services eligible for a bulk billing incentive may be hesitant to charge patients an out-of-pocket cost because it means the practice forfeits the incentive payment. As a result, the practice would need to charge patients a higher out-of-pocket fee to make up for the loss of the incentive. However, an annual ‘practice membership fee’ may suit the GPs, the practice and their patients.

It could work like this: The practice raises an account for each patient for what would otherwise be that patient’s first bulk billed consultation of the financial year. After that, billing of any particular patient is at the GP’s discretion. The annual fee allows the GP or practice to recuperate the costs associated with providing high quality services, and all subsequent bulk billed services continue to attract the bulk billing incentive.

Example provided by Dr Emil Djakic, GP and Practice Owner in Ulverstone Tasmania.

Medicare Safety Net

The Medicare Safety Net is an additional form of cover for patients and families whose medical costs in a calendar year exceed a specified threshold called the Original Medicare Safety Net (OMSN) threshold.

Every time a patient or family member claims from Medicare, the Department of Human Services records the out-of-pocket cost. When the total of those out-of-pocket costs reaches the threshold in a calendar year, the patient or family receive a higher rebate for out-of-hospital costs they subsequently pay in that calendar year.

Extended Medicare Safety Net

Medicare also operates an Extended Medicare Safety Net (EMSN), which has a higher threshold than the OMSN. After a patient or family’s out-of-pocket expenses reach this threshold, they are reimbursed both the higher rebate under the OMSN, plus 80% of their out-of-hospital costs they subsequently pay in that calendar year.

Key resource

Medicare Safety Net

General practices also derive income from compensation insurance covering injuries and illnesses that are work-related or result from transport incidents, such as car accidents. Because the relevant insurance schemes are generally state or territory-based, payment schedules and reporting requirements can differ between schemes and jurisdictions.

Private health insurance covers part of the costs of in-hospital care and some ancillary services, such as services provided by physiotherapists, podiatrists, dentists and chiropractors, and items such as glasses and dentures.

Private health insurance does not cover services for which there is a Medicare rebate.

Some international travellers may be covered by private insurance for the general practice services you provide, but if not, they will have to pay for services directly.

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