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Fatal wound for Medicare? New fees for dressings “herald the end of bulk-billing”

In this comprehensive LongRead below, solicitor and Medicare scholar Margaret Faux and health informatician and clinical coder Heather Grain warn that the MBS Review Taskforce proposal for GPs to be able to charge co-payments for dressings will have big ramifications, heralding a much worse out-of-pocket payment crisis and “the virtual end” of bulkbilling.

They write that, just as with the coronavirus pandemic, we must respect the international evidence when reforming Medicare, “which overwhelmingly rejects co-payments as a regressive approach to health financing, representing poor health policy”, an approach that has already led to Australians paying some of the highest out-of- pocket payments in the world.


Margaret Faux and Heather Grain write:

Everyone hoped for a better start to 2021, but less than one month in and we have already witnessed sedition, insurrection, impeachment, bushfires, earthquakes, the COVID-19 crisis worsening in many countries, and now Medicare co-payments are back!

Though this time around they have been cleverly disguised as fees for ‘wound care consumables’ or, in common parlance, ‘dressings’.

The MBS Review Taskforce (MBSRT) has suggested GPs should be able to bulk bill and separately charge co-payments for dressings, which is currently illegal.

While there should of course be a mechanism to reimburse GPs the cost of dressings (and all consumables), the approach taken by the MBSRT fails to address the fundamental issue of reimbursing GPs appropriately based upon the cost of the service they provide, and is in fact nothing more than a dangerous and damaging co-payment proposal.

The MBSRT appears to have based its proposal principally on an existing mechanism that allows bulk billing GPs to charge separately for certain vaccines. It was no doubt a well-intentioned idea and one that appeared an obvious and simple solution to this perennial GP bugbear.

If we can do it for vaccines, why not for dressings?

Well unfortunately, Medicare delivers health services in accordance with a vast statutory scheme of unbelievable complexity and, to the untrained eye, this was an easy error to make.

What does the law say?

Section 51(xxiiiA) of the Australian Constitution is one of two principal heads of power enabling the Medicare scheme. It grants the Commonwealth Government power to make laws in the following terms:

The provision of maternity allowances, widows’ pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances.”

Note the positioning of the bracketed text. Those 11 words are the central force around which our entire health system orbits, but they only apply to medical and dental services, not to pharmaceuticals, which are positioned earlier in the clause. In a nutshell, the positioning of the 11-word caveat means the Commonwealth Government cannot control doctors’ fees, but can control pharmaceutical fees. The High Court has confirmed this on numerous occasions.

The vaccine exemption is located in Regulation 1.2.5 of the Health Insurance (General Medical Services Table) Regulations (No. 2) 2020 (the Regs) which states:

“1.2.5  Professional attendance services—matters included

(3)  However, a professional attendance does not include the supply of a vaccine to a patient if:

(a)  the vaccine is supplied to the patient in connection with a professional attendance mentioned in any of items 3 to 65, 5000 to 5267 and 90020 to 90096; and

(b)  the cost of the vaccine is not subsidised by the Commonwealth or a State.”

Take special note of the wording of sub-reg (b).

Why do co-payments work for vaccines?

Australians are truly blessed to be the recipients of a wonderful national immunisation program (NIP) that delivers a range of free immunisations to all Medicare eligible Australians from birth through to adulthood.

The combined effects of the law and the NIP mean the vaccination exemption has succeeded for all of the following reasons:

  1. Vaccines are pharmaceuticals.
  2. The Commonwealth Government has always been able to control prices on pharmaceuticals such as vaccines, including co-payments, unlike medical services, which it has no constitutional power to control.
  3. The exemption applies only to vaccinations not otherwise subsidised, but almost all vaccinations are subsidised through the NIP or State programs. In fact, the vast majority of vaccines are completely free.
  4. Vaccinations that aren’t subsidised are few, such as some travel vaccines, and even then there are certain restrictions on who can provide some of those vaccines. For example, only registered yellow fever vaccination providers can provide the yellow fever vaccine.
  5. Medicare benefits are not payable for most travel related attendances anyway. When you attend a specialist travel medicine clinic you will pay privately for both the consultation and any vaccines and cannot claim any of it on Medicare.
  6. Many vaccinations are administered through community health centres and schools.
  7. Oversight and compliance is tight through the Australian Immunisation Register which records all vaccines given to all people in Australia, whether the vaccines were subsidised or not.
  8. In the event egregious fees or gaps began to appear in relation to vaccines, the government can easily fix it with the stroke of a legislative pen.

In reality, the flu vaccine and few others come within the current exemption, and even then, the flu vaccine can only be charged if the patient does not meet relevant Federal or State vulnerability criteria.

Why co-payments won’t work for dressings

  1. Dressings are a component of medical services.
  2. The government has no power to control the cost of medical services.
  3. An equivalent ‘Australian Dressings Register’ would be impossible to implement and pointless anyway due to point 2, and the following.

How do you define a dressing?

Is a Band-Aid a dressing? What about a piece of gauze, Opsite, Duoderm, a Telfa pad, a 3 cm strip of Elastoplast or Micropore tape?

If a bandage is wrapped around a sprained ankle, can that be charged even though no wound was actually dressed? What about antiseptics such as betadine wash, or staples, scalpels, sutures, slings, plaster casts, silver, compression stockings, sterile fields, masks, sterile gloves, gowns, autoclaves, swabs, ampoules, stomal care consumables, creams, gels and lotions? Can they all be charged?

If the majority of patients attending the practice have blood taken and a gauze pad with tape is applied to the puncture wound, that’s potentially a $5 co-payment for most patients right there.

If a urine sample is collected, can the container with the little yellow lid be charged? It’s not strictly a dressing but it could be called a dressing on the invoice and well…who would know? Certainly not patients.

In 2020 the medical profession correctly demanded we respect science and evidence in our approach to managing the COVID-19 pandemic, and Australians fared well as a result.

We must also respect the international evidence when reforming Medicare, which overwhelmingly rejects co-payments as a regressive approach to health financing, representing poor health policy. And under Australia’s unique constitutional provision, co-payments on medical services cannot be controlled. Failure to understand this has already led to Australians paying some of the highest out-of-pocket payments (OOPs) in the world.

An alternative approach, via the SNOMED-CT code

Respecting data science is critical when considering how best to approach this type of common health data conundrum, noting the service codes in the MBS are currently Australia’s cornerstone health dataset.

A more responsible approach would therefore be to add a new MBS item number for GP dressings, but it must be done in tandem with the government obtaining improved visibility over the totality of the claim. Sort of like a quid pro quo arrangement where the government funds a new item number in return for new data. Here is how it could work.

Let’s say an entry in the GP’s clinical record said: “first degree burn to abdomen after spilling boiling hot tea.”

The world of technology and digital health can instantly pull that text from the record and convert it to SNOMED-CT codes, which are widely used international health terminology codes with the highest levels of specificity in the world. SNOMED-CT has already been adopted here in Australia to support our digital health strategy.

SNOMED-CT would return these two codes for the above text:

  1. 111716006 (epidermal burn of trunk – disorder)
  2. 242496000 (burn due to contact with hot drinks – event)

Now imagine the SNOMED-CT codes were dropped into a claim with MBS item 30003 (dressing of localised burns). The final claim transmitted to Medicare would look something like this:

  1. SNOMED – 111716006 (what happened)
  2. SNOMED – 242496000 (how did it happen)
  3. MBS – 30003 (how was it treated and billed).

Suddenly the claim provides critical information the government has never before seen, bridging the current gap between clinical data and billing data, combining both into a single fiscal claim.

The government can now see why MBS item 30003 was claimed (through the SNOMED codes) rather than the current situation in which it can only seeing what was claimed (the MBS code).

Further, if the patient is admitted to hospital with other injuries. When the patient’s admission is coded using the Australian hospital code sets – the International Classification of Disease Codes and the Australian Classification of Health Interventions (ACHI) – all codes will match because the corresponding ACHI code 30010-01 will align with its source MBS code, item 30003.

Finally, any new MBS dressing item should be added to the Regs in reg 1.2.11 where services able to be provided by persons other than medical practitioners are listed. This will protect GPs from prosecution for not personally providing the service, which is typically done by nurses. And to ensure the government upholds its obligations to dispense public money in accordance with provisions of the Public Governance, Performance and Accountability Act 2013 (Cwth), pricing of the rebate should also be evidence based and formula driven.

What are the downstream impacts of the MBSRT co-payment proposal?

The downstream damage and casualties if the current MBSRT co-payment proposal proceeds will be significant. Some of the more serious impacts are set out in the table below.

This $20 co-payment will end bulk billing

Co-payments masquerading as harmless dressings that will somehow benefit consumers and preserve the integrity and equitable distribution of the national health budget should fool no-one.

These are co-payments, pure and simple. And unlike 2014, this time they won’t be $5, these will have a starting price closer to $20. GPs online are already commenting that they can’t cover the costs of dressings for under $16.

Decades of imprudent tinkering and failing to understand the fundamental legal structure of Medicare have already caused untold damage to the scheme, evidenced by the ongoing OOP crisis. Somewhat curiously, the MBSRT strongly advocated an approach to addressing egregious medical fees and OOPs in its final report, but then proposed this, which will herald a much worse OOP crisis and the virtual end of Medicare’s lynchpin: bulk billing.

Responsible modernisation of Medicare requires modern ideas and digital initiatives, not the regurgitation and dressing up of previously rejected zombie policies. The MBSRT proposal to allow bulk billing plus co-payments for dressings should be firmly rejected and never see the light of day.

Margaret Faux is a solicitor and academic scholar of Medicare and health insurance law. Her PhD on Medicare claiming and compliance is currently being examined. Margaret is also a registered nurse and the founder and CEO of a MedTech company that provides medical billing and coding solutions globally, and online education about the operation of health systems. She has been administering Australian medical billing for over 30 years.

Heather Grain has more than three decades of experience as a health informatician, clinical coder, health information manager and digital health expert. She is the current chair of the international ISO TC215 health informatics semantic content working group, a former chair of the SNOMED international education working group and a co-chair of HL7 International’s vocabulary committee.  

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