Have you ever negotiated the bill with your surgeon or specialist?

Robbie - could you explain what issues you have with the AMA indexation.
My understanding is that the indexation is 70% Average Weekly Earnings index and 30% Consumer Price Index. The AMA says that represents the average cost structures in medical practices. What issue do you have with this way of indexing. They are both indexes that are established by independent bodies.
Are you aware that the medicare benefits schedule hasn’t been indexed since 2013. Are you aware that the indexation prior to that (from 1985) only averaged 1.7% per year (as opposed to the AWE and CPI that increased 3% on average per year).
Over such a long time, the compound effect of insufficient indexation by the government (and health funds) has resulted in significant out of pockets to patients, as well as decreased income to doctors where they have elected to accept the scheduled or health fund rebates.
Neither of these seem to be the AMA’s fault - perhaps you could explain why you believe differently?

Most likely you are with a fund that allows known gap - most do these days. A surgeon can charge up to a certain amount and the health fund will still pay the same amount to the surgeon as a no gap account. For many funds this is $500 per episode of care, which is where your $500 out of pocket probably originated. If the surgeon were to charge an even higher fee, then the rebate from the health fund is much less and the out of pocket to the patient even more. In my opinion, known gap policies are an admission by the health funds that the medicare and health fund rebates are not keeping pace with inflation, and the funds are allowing doctors to make up the loss by charging a gap on top.

No, the $500 upfront I was required to pay did not represent the known excess on my private health insurance policy. That excess is $400 in my case, and i had already paid it for an earlier hospital admission.

1 Like

Thanks for that. I was unaware of the gap payment system @sydsim posted, just above. Was that it?

1 Like

Yes, that was it. My claims history that is available on my health fund’s website shows that the fund and Medicare, between them, covered the cost of the surgery in full. The extra $500 is not claimable anywhere. It may be that this $500 is, as others have suggested, a response by doctors to the freezing of Medicare rebates. Who knows?

2 Likes

I have struck this problem with an ophthalmologist whom I see annually. Each visit is charged at the initial consultation rate, never mind that the ophthalmologist uses records and notes from the earlier consultations as reference points for the current consultation for the same pair of eyes. I have heard that this is common with ophthalmologists, but have no evidence. Why isn’t Medicare cracking down on this one?

1 Like

I appreciated the problems more after you explained what could go wrong. Nevertheless, the healthcare companies could look at trying to prevent that from happening. The charges are utterly ridiculous and a healthcare company who can find a way to both reduce costs and keep up quality could be onto a winning strategy. I don’t think we should give up the cause and should keep pressuring the healthcare companies and specialists to get the charges down.

1 Like

I think not enough people complain. I only heard about it two years ago on one of the talk back shows on am radio

1 Like

Hello Simon,

Happy to elaborate without hopefully getting too boring for people!

Yes you are right, the broad conceptual foundation of the AMA methodology is sound and in fact the same as that for the MBS (at least originally). And CPI and AWE are independently developed, both by the ABS.

However, only one (CPI) is an index. Indeed, the ABS state in their own AWE publication (6302.0) that it should not be used as an index. It is highly volatile measure which, due to compositional changes over time and the presence of outliers (ie small numbers of very high wage earners resulting in an upwardly skewed sample), overstates wages growth. It has many uses, but indexation is not one of them. (An indication of just how skewed it is can be had by comparing the average annual salary, at around $82k, to the median,which is around $55k - that’s just under a 50% difference!).

The AMA (as you point out) use AWE to determine ~70% of their annual indexation figure.

The CPI is an index, but it is not really an index of medical business costs, or in fact any business costs. It is a measure of consumer spending costs - retail goods and services like groceries, clothing and so on. So again, not really suited for the purpose to which the AMA puts it, although perhaps less statistically egregious, since there are few alternatives.

If it were some sort of academic research exercise, where you wanted a quick rule of thumb on changes in fees or medical costs, then I haven’t got a problem at all with anyone using the measures outlined above - as long as they use appropriate attributions and caveats on the data. But we are talking about a system here that affects the health and lives of millions of people! Using such a theoretical construct, without the rigour of any focused empirical analysis (or even any attempt to conduct such analysis) tells me their focus is on maximising their claims for pay rises.

I am aware of the methodological differences between the Commonwealth and the AMA (as I alluded to in my original post) and Governments of all persuasions are not wholly innocent either. But whose figures are ‘right’? I can definitely say the AMA certainly are not, and the Commonwealth are very more than likely not.

Both sides have preferred to play the politics rather than genuinely seek a consensus based on sound (and dare I say boring!) analysis. And guess who ends up the loser(s) …?

3 Likes

I apologise but my entry requires a correction. I took the 70:30 split and the AWE from the AMA gaps poster. However, I have been informed that the AMA uses different ratios for different specialties, based on a PwC Practice Costs Survey, ABS data on private medical practices and AMA surveys of practice costs. Additionally, since 2000 it has used the Wage Price Index, which is presumably more robust than AWE and addresses some of your concerns with the AWE.
I agree that AWE may be skewed, but not for the reasons you state. The fact that the average and median are not the same is irrelevant - it just means that there is not a normal distribution of wages. However the change of these over time may skew the AWE. Different rates of change in different wage deciles may skew it. Compositional changes, for example in the average hours worked, would also skew the data, as it is not a per unit (eg. rate/hour) measure. I believe WPI tries to overcome these issues.
I would be interested in what you would use, rather than the WPI and CPI - is there a better index?
At least the AMA indexation is an objective measure of indexation. Indexation of the medicare rebate and health fund rebates have no objective determinant. Rather they are what the government and health funds are willing to pay, and they have always lagged behind what would be a fair indexation, whether you believe the AMA rate to be fair or not.
For example looking at the anaesthesia unit value over the last 5 years for the mbs and largest health fund, Medibank Private.
Jul 2012 MBS $19.45 MPL $32.20 AMA $73
Jul 2017 MBS $19.80 MPL $32.70 AMA $83
Annualised rate of increase MBS 0.36%pa MPL 0.31%pa AMA 2.6%
I work in the public sector where my own pay has had an annualised rate of increase of 3.02%pa over the same time.
So which of the four rates above is the fairest - 0.31, 0.36, 2.6 or 3.02???
With the indexation of medicare and health fund rebates so poor, unfortunately patient out of pockets have increased. However, given that 78.4% of all services billed under medicare are bulk billed, and 85.3% of privately insured in-hospital medical services involved no gap (June 2016 numbers), doctor’s income has decreased even more (in real terms).

Sadly, the government has run out of money. Not indexing Medicare is a least costly alternative - people don’t think about it much and it hardly influences election results. Harder times will come - our population is aging and more and more will need to be spent on Medicare. Perhaps the dreaded co-payment for bulk-billing doctors and specialists will become an acceptable alternative in time. The world is not the same as it was 30 years ago and we need to be innovative in our thinking as to how to solve our financial problems (debts and deficits.) The trouble with political parties is that they always think of the next election and not the best interests of the people of Australia.

1 Like

This is actually a medicare issue. The ophthalmologist has to have an annual referral to make it a medicare item. The item number has to be the annual one and not a repeat visit, which only give the ophthalmologist half the fee he would have received. This would mean he would have to increase your out of pocket expenses to actually make near to the same amount for his time, which is essentially what you are paying for. His/her expertise and time.
If you ask, many ophthalmologists will consider reducing the out of pocket fee. Not all, though. This is something we take into consideration when referring from the optometry practice in which I work.

1 Like

Hello Simon,

How do you define ‘fair’? What does that actually mean? The question of objectivity does not relate so much to the measure itself as to the purpose to which it is put. And I’d suggest the AMA’s methodology is far from objective or independent.

It is encouraging that they are now using WPI, but did they back out the distortions from the previous use of AWE? If not, then those distortions are still being compounded. Mapping the difference between rates of growth in median earnings versus average earnings back to 1985 would is one way (not the only one) to get an indication of how much should have been backed out to keep the stated methodology ‘pure’. Thirty-odd years of compounding will result in huge discrepancies in fee rates, as you demonstrate.

But again, this is all airy-fairy academic stuff. I believe you have answered your own question in relation to what should be charged. Given that (as you say) the vast majority of medical services are provided at either MBS rates or insurer rates, this would suggest that, at the bottom-line and in the real world, they are much closer to hitting the mark than the AMA rates are. No business will last very long if the prices they receive cover at best 40% of their costs.

Whether you consider it ‘fair’ or not really is going to depend upon which side of the fence you sit. But I don’t think the AMA helps with its bloated ambit claims based on a flawed indexation methodology.

2 Likes

About 18 months ago I was referred to a new specialist in Toowoomba whose English was much better than my (non-existent) Punjabi. Nevertheless, there was an obvious communication gap, especially when he persistently reflected back inaccurately what I had told him. After paying the $300+ initial consult fee, I went away feeling disserved. I wrote to him about it, and he defended himself vigorously in reply. He “protested too much” so I asked if there was a next step we could take to resolve our difference. He quickly refunded the full amount. I have had plenty of medical appointments over the years and this is the first and only time I have disputed a bill.

More recently, I had an abnormality on some consecutive blood tests, which triggered an automatic referral to another kind of specialist. This time the initial consult fee was to be over $400. By the time I could get in to see him the latest blood test would have been over a month old, and the main thing he would want to do is check it again. So I arranged with my GP to have another test just before the consult with the specialist came round. If the abnormality appeared again, at least the specialist would have up to date information. However, it turned out that the abnormality had disappeared (which can happen - it can just be a temporary anomoly), and with my GP’s blessing I was happy to cancel the appointment with the specialist, providing a spot for someone who really did need to see him (and saving me over $400!).

2 Likes

We always ask for the cost of the service whether it is just a consultation or a service. Then check with Medicare and Health fund what the rebates are, if the “out of pocket” expenses are to great, we will contact the doctor and ask if there is a possibility of a reduction in the cost. Most times we get a better price if we do not, then we move on. We even had one surgeon ring us back after we cancelled and gave us a fairer price. We have found there can be as much as $7500 difference (out of pocket) between the same procedures. Even for a consultation (of 10 -15 min) cost can be a outrages “out of pocket” I had one gastroenterologist quote a price of $350 dollars for my first consultation, of which medicare would refund $75, and the charge for the surgical procedure would be $3000. I then rang another gastroenterologist and his cost was $150 and would bulk bill for the surgical procedure. I decided to go with this surgeon and I am delighted with the end result. But I would like to make a point in regards to the auxiliary services e.g anesthetist , assistant surgeons etc., they can end up more expensive then the surgeon. It is also worthwhile checking in to these cost before proceeding, as this could add as much as $2000 “out of pocket”

5 Likes

Funny about that. I see a specialist in another specialty on an annual basis and she just charges the repeat visit fee each time. I have an ‘indefinite referral’ which may be the reason that she does this. However, when I took an indefinite referral to the ophthalmology practice, the staff said that they only accept annual referrals, which of course means that the ophthalmologist can charge a new patient, ie higher, fee. What a rort! Together with the expensive screening tests that the ophthalmologist uses, the annual visit sometimes doesn’t leave much change out of $1K, with very little back from Medicare and in the case of one test, nothing. I know that the fancy machines that the ophthalmologist uses are expensive, but they don’t seem to change from year to year. I will be seeing another ophthalmologist later this week, indefinite referral in hand, and will see how that visit goes, fees wise, as well as everything else.

I am staggered at the stories and comments here, in a health insurance system that internationally is regarded as free and universal.

Isn’t it totally crazy? It’s a market that’s not working efficiently for consumers (side question: should it even be a market?) which is why we’re looking into how we can make it more transparent!

Thanks all for your very insightful comments - this is such a minefield and I’m looking forward to doing some more work on it in the coming months!

1 Like

If you get help from government the answer will be to line item everything and put asterisks all though the complexity, as has been done with our transparent utility bills. This government feels anything more is unnecessary red tape, and we get a bill, we know what to pay, and what else could we ever want?!

From my perspective the single biggest problem is that surgeons and their support (anesthesiologists, labs, etc) may or may not have agreements in the same (eg your) fund and at present there is often no simple way to determine who those providers will be or which funds each may or may not have agreements with, and whether they are gap, agreed gap, or no gap, and one’s inability to state they must be in my fund or don’t use them.

A few years ago I questioned GMHBA about aspects of finding who is nogap, etc, and their reply was “provider privacy” (surely that must be it!) but you can ask each provider directly. I presume there is some competitive secrecy so some can charge what their customers will bear and others are more reasonable but don’t want to unnecessarily call attention to the greedy since they are all in the same union (AMA). At my last surgery I was presented with the financials for the surgeon and a statement that the anesthesiologist might be any from a list from different practices and whichever was available on the day would be the charges, and I could contact each of them for information. I was not impressed.

I do not understand why the medical profession thinks that is an OK way to do business, but it could be worse. We could have a dog eat dog system like the USA where it is literally everyone for themselves, whereas all we have to contend with are opaque fees, unknown providers, and the occassional fund network limitations.