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Minimising Surgical Costs

Surgery Fees

From commencement of surgical practice in Hobart in 2005 Dr Mackie has continued to provide elective and trauma surgical services as a "No Gap Provider".

This means that all operations performed in a private hospital are invoiced directly to private insurance providers, without an out of pocket cost for Dr. Mackie's surgical fee (provided the level of private health insurance includes cover for specified conditions).

Dr. Mackie does not charge any form of surgical booking fee.

There may be out of pocket costs for surgery due to billings from:

  • Anaesthetic services, although Dr. Mackie primarily works with anaesthetists with similar billing practises.
  • Medical specialists,
  • Radiology or pathology services, but almost all inpatient services do not have out of pocket costs.
  • Hire of crutches or aids,
  • Pharmacy costs,
  • Hospital excess (as per level of insurance and insurance provider).  

Patients who book in for elective surgery are provided with telephone contact details of these service providers so that they may enquire as to any out of pocket costs.

Patients treated within the private hospital sector who do not have private health insurance will be required to pay the Australian Medical Association recommended fees and can obtain a partial Medicare rebate with the supplied receipt.  Preoperative quotes can be prepared, with hospital associated costs and anaesthetic costs also detailed.

Dr Mackie will invoice directly to the Motor Accident Insurance Board or Workcover for any accepted claims (claim number must be provided).

What Has Happened to Medical Fees?

Since 2012 successive Federal Governments have frozen the Medicare rebates for consultations with medical and surgical specialists.  The government-recommended fee structure for surgical procedures has risen by significantly less than the Consumer Price Index over a much longer period of time.

Medicare's co-contribution to the cost of surgical procedures requires that surgeons nominate a specific item number for a performed procedure.  This item number must come from a government list generated many years ago (and only occasionally reviewed).  The Federal Government suggests a nominal fee for each surgical item number, which is also used by private health insurers to nominate their own fee structure.  All private health insurers in Australia acknowledge the widening discrepancy between government recommended fees and a correct CPI-adjusted fee structure.  Insurers therefore do make a higher payment than the government recommended fee to surgeons who agree to the insurer’s fee levels.  An agreement to use the insurer’s fee level is not a binding contract, but allows surgeons to forward invoices directly to the private health insurer for payment.  This effectively removes the responsibility of privately insured patients having to deal with out-of-pocket costs to the clinician / surgeon.  Surgeons who wish to invoice more than the private health insurer’s recommended fee must charge an out of pocket “gap” fee directly to the patient.

 The Australian Medical Association (an advocacy body representing the majority of doctors in Australia) also publishes recommended fees based around the surgical item numbers.  The AMA regularly provides updated information outlining the growing discrepancies between government-indexed fees and the costs of running a modern medical practice (accounting for infrastructure costs, staffing costs, insurance costs etc.).  The AMA list of recommended fees is generally around 50% greater than those of most of the private health insurers.

A minimal rise in government-recommended fee structures over a prolonged period of time has resulted in an effective reduction in surgical income for surgical specialists.  Some specialists have responded by charging significant “gaps” for any surgical procedures.  These gaps may represent a surgeon’s expectation of what should be a more reasonable fee for their service.  A small number of surgeons have begun charging exorbitant “gaps” and claiming that patient demand for their service has driven this action.  These gaps range from less than $100 to in-excess of $20,000 per operation!

Dr. Mackie acknowledges the significant financial effects on his own income of the failure of governments to adequately index the fee structure with practice costs.  He maintains however a desire to support many of his patients for whom private health insurance premiums represent a significant financial burden.  He has elected to remain a no-gap biller for patients with private health insurance cover suitable to their planned operation.

One day it may have to change…