In Australia the Medicare Benefits Schedule (MBS) lists the medical services which are subsidised by the Government.
There are no requirements for doctors to charge the rates stated in the MBS so commonly a doctor may charge above the MBS. Your health provider will pay the MBS and the cost above this is an out of pocket expense. This difference is what is called a ‘Gap’.
Health funds commonly have arrangements with hospitals to fully or partially cover costs related to hospital accommodation. The importance of going to a hospital which has such an agreement with your private health provider can save you significant amounts of money. If your fund has an arrangement with a hospital you will still have to pay an excesses or co-payments if this is part of your policy.
Again your health fund may have an arrangement with certain doctors so that they may cover all or some of the doctors’ fees for your hospital treatment. Choosing a doctor who does not have such an agreement will again cause your significant out of pocket expenses.
How to avoid the gap
There are usually three options a doctor has and it is important to ask them if they participate in your insurers Medical Gap cover scheme.
- No Gap-If a doctor opts into this choice they are agreeing to charge a certain amount for their services and you will not need to pay for any out of pocket expenses.
- Known Gap-This is a set amount above the MBS that you will be billed for and must be giving in writing prior to any procedure (known as Informed Financial Consent).
- Does not participate-you will incur all out of pocket expenses for any costs charged over the MBS fee.
Private health insurance and no gap cover
The Federal Government rebate on private health insurance has given funds an incentive to provide no gap or known gap products. This is usually incorporated into hospital cover.
Be sure of what you need to pay
Because doctors are free to charge what they like and they have no obligation to participate in health fund gaps schemes it is important to understand what costs you will have to pay.
Before you go to hospital make sure you contact your private health fund and doctor to determine any out of pocket expenses you may need to pay.
When gaining a referral from your GP to a specialist ask them to refer you to one which offers no gap or a known gap. Most health funds have a search option on their websites which allow you to find a doctor who participates in their Medical Gap Scheme.
Some health funds also have arrangements with diagnostic services (such pathology) and other health care groups.
Make sure when you are choosing a private health fund that you look at what their Medical Gap Scheme entails.