Medicare

Melanie Conn

The 2023–24 Budget’s $5.7 billion Strengthening Medicare package provides funding to address immediate challenges as well as lay foundations for future reform. This delivers on the government’s $750 million Strengthening Medicare Fund election commitment (p. 14) and follows the release of the Strengthening Medicare Taskforce report earlier this year.

Unless otherwise specified, page numbers refer to Budget measures: budget paper no. 2: 2023–24.

Tripling the bulk billing incentive

The largest individual element of the package is $3.5 billion over 5 years from 2022–23 to triple the bulk billing incentive (p. 147). This incentive is paid on top of the standard Medicare benefit when doctors bulk bill children under 16, pensioners and other Commonwealth concession card holders (more than 11.6 million people, according to the government). A bulk billing incentive was first introduced for GPs in regional areas in 2004. It has evolved since then, including to apply incentives that increase based on remoteness (introduced from 1 January 2022).

The government is tripling the incentive ‘to address the sharp decline in bulk billing over the past few years’. Concerns about declines in bulk billing have been building for some time, including reports of practices no longer bulk billing vulnerable patient groups. As explained in the Department of Health and Aged Care’s factsheet (p. 2):

Tripling the bulk billing incentives will support GPs to continue to bulk bill Australians who feel cost of living pressures most acutely.

It will be of particular benefit to people who live in regional, rural and remote communities, where access to primary care services is limited, and to concession card holders who generally use more GP services and have higher levels of chronic and complex health conditions and socioeconomic disadvantage.

Figure 1 provides an indication of how the Medicare benefits a GP could receive will change for a standard Level B consultation (up to 20 minutes) when they bulk bill an eligible patient. From 1 July 2023, the usual annual indexation will occur (indexation of 3.6% is being applied to most items). From 1 November 2023 the bulk billing incentive will triple. In metropolitan areas, benefits will rise from approximately $46 to $62; in very remote areas, the increase will be from around $52 to $81. For context, the average patient contribution (or out-of-pocket cost) for a level B GP visit when doctors choose not to bulk bill is nearly $41, meaning the doctor’s income for the consultation would be, on average, around $80.

Figure 1 Indicative Medicare benefits for a standard GP consultation eligible for the bulk billing incentive

Notes:

From 1 July 2023, annual fee indexation of 3.6% is being applied to GP attendance items, as set out in the Health Insurance Legislation Amendment (2023 Measures No. 1) Regulations 2023.

Bulk billing incentives vary based on remoteness. The Department of Health and Aged Care uses Modified Monash Model classifications. To date, the department has published information on the tripled bulk billing incentive rates for metropolitan areas (MM1) and very remote communities (MM7).

The 1 November bulk billing incentive rates as outlined by the department appear to be approximately 0.5% higher than a direct tripling of the rate as at 1 July. This potentially is related to the change in indexation methodology outlined in the Budget (discussed below). The item 23 benefit is shown as unchanged between 1 July and 1 November, but may be affected by the indexation methodology change.

Sources: Department of Health and Aged Care, Building a stronger Medicare, Budget 2023–24 factsheet, (Canberra: Department of Health and Aged Care, 2023); ‘Medicare Benefits Schedule – Item 23’, Department of Health and Aged Care; Health Insurance Legislation Amendment (2023 Measures No. 1) Regulations 2023.

While the bulk billing incentive only applies to children under 16 and concession card holders, it may have flow-on benefits to other patients. With an increase in the remuneration received for seeing vulnerable patient cohorts, doctors may face reduced pressure (at least in the short term) to further increase out-of-pocket charges to other patient groups. That said, doctors are free to determine their fees, and as some stakeholders have pointed out, practice owners could simply retain the extra income or indeed use the increased revenue from existing bulk billed patients to reduce their hours of work rather than bulk bill more patients.

Unsurprisingly, doctors’ groups have welcomed the tripling of the incentive, with the Australian Medical Association (AMA) stating ‘this targeted support is much needed and will make a real difference, especially in rural and regional areas’. The Consumers Health Forum has also welcomed the changes, noting they ‘incentivise GPs to provide extra care to pensioners and children … at no cost.’

Change to indexation

Budget strategy and outlook: budget paper no. 1: 2023–24 explains that the government has revised the indexation methodology (that had been in place since 1996) for certain payments, including the Medicare Benefits Schedule (MBS), to better align with changes in economic conditions. This parameter variation provides additional indexation funding of $4 billion over the forward estimates above the indexation increase which would otherwise have been delivered in the 2023–24 Budget (pp. 104; 199). Of this, $1.5 billion relates to increased indexation in the MBS (p. 106). As a parameter variation, this funding is not identified as a measure in Budget paper no. 2 and is not part of the $5.7 billion headline package figure.

Implementation of the indexation change will likely occur through regulation, similar to the Health Insurance Legislation Amendment (2023 Measures No. 1) Regulations 2023 introduced earlier this year that provided for an indexation increase from 1 July 2023 of 3.6% for most MBS items (in line with the previous methodology). While the Budget papers do not specify a start date, the peak body for general practitioners has stated it expects the second indexation boost to occur from November 2023. The AMA has also welcomed the change. It has been advocating for changes to the methodology, arguing that ‘years of inadequate indexation has meant that the Medicare rebate no longer bears any relationship to the actual cost of providing high-quality services to patients’.

Digital health

The Budget provides around $950 million for digital health infrastructure (p. 149).

While previously the Australian Digital Health Agency has received short-term funding, this Budget provides $325.7 million over 4 years from 2023–24, and approximately $79.9 million per year ongoing, to establish the agency as an ongoing entity (p. 149). This includes funding for a review of the agency’s enabling legislation to ensure it remains fit for purpose.

While the agency is a corporate Commonwealth entity, under the Intergovernmental Agreement on National Digital Health, states and territories contribute 50% of its operational costs (with the Commonwealth providing the other 50%). The Intergovernmental Agreement is being renewed for 4 years, with a $126.8 million contribution from the Commonwealth (p. 7). This renewed agreement, when available, should provide further detail on funding commitments from the states and territories and how this interacts with the Commonwealth’s commitment to provide ongoing funding.

There is also $429 million over 2 years from 2023–24 for My Health Record (p. 149). Ahead of the Budget, the Minister for Health and Aged Care observed that ‘My Health Record is now old technology’, and that it needed to be more compatible with information and billing systems used by practitioners, and make better connections between different parts of the health system (p. 6). While much of the funding is likely to be directed to continuing the overall system, there is also funding for modernisation, including a new National Repository platform. There is also investment to improve sharing of pathology and diagnostic imaging information and to increase allied health professionals’ connection to the system.

A further $69.7 million over 4 years from 2023–24 (and $4.2 million per year ongoing) is provided to respond to recommendations on digital reform made in the Strengthening Medicare Taskforce report (pp. 8–9) and the Independent Review into Medicare Integrity and Compliance.

Encouraging multidisciplinary and wraparound care

Several elements of the package seek to encourage more multidisciplinary care as recommended by the Strengthening Medicare Taskforce report (pp. 6–7).

$445.1 million is provided over 5 years from 2022–23 to increase funding for the Workforce Incentive Program – Practice Stream, to support practices to expand multidisciplinary teams (p. 148). The additional funding will both increase the maximum incentive payment (from $125,000 to $130,000 per practice, per year) and make more general practices eligible for the maximum payment. Services Australia advises increased payments will commence in August 2023.
$79.4 million is provided over 4 years from 2023–24 to support Primary Health Networks to commission allied health services to improve access to multidisciplinary care for people with chronic conditions in underserviced communities (p. 148).
$27 million is provided over 4 years from 2023–24 to trial integrated primary care and support services and joint commissioning across primary health, First Nations health services, disability, aged care and veterans’ care services in up to 10 locations considered to be ‘thin markets’ (that is, where there are not enough providers or services available to meet needs) (p. 150).

There is $19.7 million over 4 years from 2023–24 (and $3.2 million per year ongoing) to implement MyMedicare, allowing patients to voluntarily register with their preferred practice, GP and care team (p. 149). This appears to build on previous funding for voluntary patient enrolment (for example, the 2021–22 Budget committed $50.7 million for systems to support the use of voluntary patient registration services, p. 122).

According to the Minister for Health and Aged Care:

… the true power of MyMedicare is not what it is … but what it allows. MyMedicare is the foundation upon which we can build a range of blended funding models to better serve the needs of patients that fall through the cracks of our 1980s Medicare.

For example, the Budget provides $98.9 million over 4 years from 2023–24 to connect frequent hospital users to a general practice (through MyMedicare) to receive comprehensive, multidisciplinary care in the community, and reduce the likelihood of hospital re-admission (p. 148). According to the minister, there are more than 13,000 patients who present to hospital 10 or more times each year who could benefit from this initiative, with the GP they register with receiving incentive payments to deliver tailored care to keep them healthy and out of hospital.

In addition, the Budget provides $5.9 million over 5 years from 2022–23 for patients registered with their GP through MyMedicare to access longer telehealth consultations subsidised by the MBS from 1 November 2023 (p. 149), with the increased bulk billing incentive also available for eligible patients (p. 147).

The AMA has welcomed the MyMedicare program, noting in particular that the government:

… importantly has learnt from past mistakes, such as the Health Care Homes Trial, preferring a blended funding model in which additional funding is made available on top of existing fee for service arrangements. This also means that [voluntary patient enrolment] will be tailored to the Australian context and will not follow the capitated model used overseas in countries like the United Kingdom.

Addressing fraud and non-compliance

As a separate measure, the Budget provides $29.8 million over 4 years from 2023–24 (p. 151) for the response to the Independent Review into Medicare Integrity and Compliance (Philip Review). The Philip Review found that ‘Legislation, governance, systems, processes and tools are currently not fit for purpose and, without significant attention, will result in significant levels of fraud’ (p. 4).

The funding will establish a taskforce in the Department of Health and Aged Care to identify and disrupt fraud and non-compliance, and to produce policy and legislative amendments. The measure description flags that additional measures to improve Medicare integrity in response to the Philip Review may be forthcoming, following consideration of broader policy aspects. This is to be expected given the complex and wide-ranging issues and stakeholder sensitivities identified in the Philip Review, and the need for structural solutions to address vulnerabilities in the system.

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