Modernising Medicare: Don’t reinvent the wheel, just use the co-payments we already have.

 Margaret Faux writes:

It seems that despite overwhelming opposition to the co-payment plan, the Abbott government is determined to press ahead, though success in the Senate may be challenging.

Most Australians by now would agree that a considered and coordinated multipronged reform approach is more likely to produce sustainable outcomes and ensure the long term viability of Medicare than blunt quick fixes such as GP co-payments. But if we must make a sudden cut to costs, a much better place to start than primary care might be our current aftercare arrangements. It’s an outdated concept where savings in the vicinity of $400 million per annum could be achieved without too much fuss and with no loss of income for doctors, pensioners or the poor.

First, let us briefly consider more broad reaching solutions that are likely to produce sustainable controls on Medicare costs. There are numerous areas that could be included in any  proposals for system reform including; patient education, doctor education, regulation of an emerging medical billing industry and adapting the Medicare Benefits Schedule (MBS) to accurately reflect modern clinical practice.

It is patients who are the target of the governments co-payment plan yet they are notably absent from the current debate. Evidence suggests that by involving patients in all aspects of their healthcare, including its administration, and providing education to assist patients to better understand the cost of health services, savings can be achieved.

In 2008 the Garling Report suggested there was a need for patients to be made more aware of the real cost of funding the healthcare system, to shift ingrained perceptions that all health services are ‘free’. The report specifically noted that some private hospitals already provide patients with a statement on discharge, which details the cost of all products and services provided during the admission, with a nil balance payable. A broader use of this practice was suggested as being worthy of adoption and would cost little to implement. Complimented by public campaigns to raise awareness of the cost of Medicare, we may see real results.

There is also emerging evidence that educating doctors may be an effective way of achieving significant cost savings. Just like the patients they serve, when doctors are fully informed of the real costs of the services they are providing and the finite resources available, they respond appropriately.

Finally the complexity of Medicare has also created opportunities. A new market has emerged which can loosely be described as a medical billing industry. Anyone can declare themselves a medical billing expert, without having any domain knowledge, and start a business providing outsourced Medicare billing services to doctors. Businesses of this nature are on the increase in a completely un-regulated environment, where millions of tax payer dollars are spent with every press of the ‘transmit’ button. Regulation, accreditation and standards are required in this new market to ensure accountability and accurate, compliant and responsible management of Medicare claims.

But all of these areas require long term vision and cultural change, and the government is keen to get some runs on the board. So right now, what might work is to completely remove aftercare from Medicare and use the co-payment scheme that we already have to ensure doctors are not adversely affected. Yes, we actually already have a co-payment system for some services – it’s called known gap claiming.

Aftercare is basically post-operative treatment. It was introduced in Gough Whitlam’s original 1975 Medibank scheme and it’s still there, forty years later, contained in Section 3(5) of the Health Insurance Act 1973. The Act provides that fees for all surgical operations include a component for the post-operative treatment of the patient, irrespective of who provides it, usually right up to final wound healing and return to normal duties.

This was entirely appropriate in 1975 when patients remained in hospital until the stitches were out, but has little relevance today when surgery which previously required a two week hospital stay is now done on a day surgery basis, and hospitals are discharging patients quickly, to complete their recovery at home.

For Medicare purposes, unless the MBS item has a specific aftercare exemption, anyone who provides a service to a post-operative patient is not entitled to claim a benefit for the service provided. So with technological advances in surgery over many years enabling early discharge, aftercare has fallen to others such as GPs, who do not receive the 25% aftercare component contained in each Medicare rebate for surgical services. The MBS has always stated:

When a surgeon delegates aftercare to a local doctor, Medicare benefit may be apportioned on the basis of 75% for the operation and 25% for the aftercare.

It’s another complex area of Medicare because it is not always easy to determine what is and isn’t aftercare, consequently accuracy in claiming can be challenging.

If you look at the annual cost of the Category 3 services in the MBS and the T8 surgical operations in particular (most of which have aftercare components), Medicare contributed $1.6 billion in the year July 2013 to June 2014. If the 25% aftercare component was removed from these services, the savings would have been somewhere in the vicinity of $400 million.

To ensure surgeons are not out of pocket, the existing known-gap schemes of the private health funds, which are already widely used by procedural clinicians, could be used to require patients to pay the shortfall.

Put simply, this arrangement would mean that the total amount paid to the doctor would not change, but Medicare would contribute less for the service, the private health fund the same amount and the patient more. Given the known gap schemes only apply to privately insured patients who have elected to have private inpatient services, the only patients affected would be those who are better able to pay than pensioners or the working poor.

Surgeons would retain all claiming options including bulk billing and no-gap claiming (a different system again) but would simply require patients to pay a known gap to retain their current incomes. Or, as many surgeons already do, they can continue to charge their usual fee and the patient would receive a smaller rebate. For example: if Medicare currently pays $400 for a surgical service, the health fund $200 and the patient $100, under the new arrangement Medicare would contribute $300, the health fund $200 and the patient $200, arriving at the same $700 total.

Obviously, it requires further examination to determine potential downstream effects. Two health funds currently do not have known gap schemes (though they are not the major funds) and the issue of whether claiming by other providers who would now be free to charge for post-operative treatment might increase beyond what is already being claimed incorrectly, would need careful analysis. While there may be more potential impacts that would require analysis, it seems worthy of consideration given that it uses what is already there, targets private tertiary care instead of primary care, requires much less legislative intervention and appears to potentially facilitate significant government savings.

We need to modernise Medicare to ensure it keeps step with advances in clinical practice, and reviewing dated concepts such as aftercare is an important part of this process. This would also serve to properly acknowledge the important work of GPs and all healthcare providers involved in the care of surgical patients, and would retain the universality of Medicare, clearly Australia’s proudest achievement in health.