Healthcare billing
Understanding how healthcare billing works is essential to managing your healthcare costs. From Medicare rebates to private health insurance coverage, out-of-pocket expenses, and safety nets, we’ll ensure you’re informed and empowered when it comes to your healthcare expenses.
Quick navigate on this page:
Public health services funding
Medicare:
Medicare is a government insurance scheme that helps Australians pay for healthcare, funded through:
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Medicare Levy: Most taxpayers contribute 2% of their taxable income to fund Medicare.
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Government Contributions: Additional funding comes from the Australian government’s general revenue.
Medicare covers:
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Free treatment in public hospitals as a public patient.
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Subsidised GP consultations, allied health and specialist visits, and diagnostic services (e.g., blood tests, imaging).
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Certain treatments and procedures listed on the Medicare Benefits Schedule (MBS).
What is bulk billing?
’Bulk billing’ refers to a system where healthcare providers may opt to bill Medicare directly for services provided to you. If you are ‘bulk billed’ by your provider then you do not have pay any out-of-pocket costs. Bulk billing is a way to make care more accessible and affordable.
Safety Nets:
The Medicare Safety Net helps reduce out-of-pocket expenses for high medical costs within a calendar year. Medicare Safety Nets have thresholds. When you spend certain amounts in gap and out of pocket costs, you’ll reach the thresholds. Once you’ve reached the thresholds, you’ll start getting higher Medicare benefits. This means you’ll get more money back for certain Medicare services. You can find out more about Medicare Safety Nets through Services Australia.
Additional Support Programs:
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State and territory governments may offer additional subsidies for healthcare services or medications.
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Programs like the National Disability Insurance Scheme (NDIS) and Veterans’ Affairs offer tailored healthcare and medication funding for eligible groups.
Private health services funding
Private health insurance in Australia is optional and complements the public healthcare system (Medicare) by providing additional coverage for services that Medicare does not fully fund or cover. Key benefits include access to private hospitals, the freedom to choose your doctor, and shorter waiting times for elective surgeries.
Types of cover:
Private health insurance in Australia offers three types of coverage:
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Hospital Cover which covers private hospital stays, including accommodation, theatre fees, and inpatient services like surgery, diagnostic tests, and specialist fees. Medicare and insurance jointly cover up to the MBS fee, but out-of-pocket costs may apply for fees above this.
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Extras Cover for non-hospital services like dental, optical, physiotherapy, chiropractic care, and more. Benefits are subject to annual limits and may involve gap payments if the provider charges above the rebate.
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Ambulance Cover for emergency ambulance transport (not included in Medicare) and is often included or offered separately.
Private healthcare is funded by:
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Insurance premiums contributions are paid by individuals or families to private health insurers.
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Government rebates, surcharges, and penalties which shape consumer premium contributions and encourage participation in private health insurance:
- Private Health Insurance Rebate: a government rebate reduces premiums based on income and age, making coverage more affordable.
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Lifetime Health Cover (LHC): a loading penalty applies to premiums for individuals over 31 who delay purchasing hospital cover.
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Medicare Levy Surcharge (MLS): high-income earners without private hospital cover pay an additional tax, encouraging uptake of private insurance.
Gap cover schemes:
Gap cover schemes allow health insurers to provide benefits for their members to cover some or all of the gap.
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There is no requirement for any doctor to participate in
an insurer’s gap cover scheme. -
Ask your health insurer and your doctor’s office about your gap cover benefits before you are treated.
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Doctors are required to advise you if there is an amount left for you to pay before you are treated, wherever practicable.
What doesn't it cover?
Health insurers do not pay any benefits for out-patient
(out-of-hospital) medical services. These services can include visiting your doctor or specialist in their rooms, or having radiology or pathology tests.
Medication funding
Pharmaceutical Benefits Scheme (PBS):
The PBS subsidises the cost of prescription medications, ensuring Australians can access affordable medicines.
How It Works:
The government negotiates prices with pharmaceutical companies. Patients pay a co-payment, with the government covering the remaining cost. In 2024, the co-payment is capped at $30 per prescription for general patients and $7.30 for concession cardholders.
Eligibility:
All Medicare-eligible residents. Certain medications require specific criteria or prior approval.
Safety Net:
Once patients or families reach a PBS Safety Net threshold in a calendar year, their medication costs are further reduced or waived for the rest of the year.
Private Health Insurance:
Some private insurance policies cover medications not listed on the PBS or additional co-payments.
Out-of-Pocket Payments:
For medications not listed on the PBS, patients must pay the full cost unless covered by private insurance or other programs.
How are healthcare fees set?
In Australia, healthcare providers have the autonomy to set their own fees for services, as there is no regulation governing the amounts they charge.
Subsidies and reimbursements
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Fee subsidies like Medicare are set by the government and paid directly from the government to the healthcare provider on behalf of you the patient.
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Fee contributions from your private health insurance are set by your private health insurer but are regulated by the Australian Government through the Private Health Insurance Act 2007.
What is an out-of-pocket expense?
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These clinical service costs are the difference between what the healthcare provider charges and what is covered by Medicare, private health insurance and/or other reimbursement programs like the National Disability Support Scheme (NDIS). This also can be called an ‘out-of-pocket’, ‘patient payment’, ‘patient contribution’, or a ‘gap payment’. These fees are set by healthcare providers for services.
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At times, additional non-clinical service fees like administration fees may also be set by the healthcare provider.
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Some health service providers are moving to bundled payments for clinical services and products (like medications) under a single one-time fee or ongoing subscription fee. This service model is not eligible for medicare rebates.
Free private clinic appointments
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At times healthcare providers may elect to offer you free follow-up or initial consultations at their discretion.
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Clinics that offer ongoing free or very low fee medical consultations may derive revenue from other sources, including the products prescribed to you.
Consenting to fees
You are entitled to request an estimate of fees before receiving a service or agreeing to a proposed treatment. Healthcare providers should, wherever feasible, discuss their charges with you in advance, and this information is ideally provided in writing.
However, in certain situations, such as emergency admissions, it may not be possible for your doctor to obtain your informed financial consent (IFC) beforehand. In such cases, details regarding costs should be communicated to you or someone acting on your behalf as soon as reasonably possible.
Reporting incorrect billing
If you think a healthcare provider has claimed a Medicare, health insurance or Pharmaceutical benefit incorrectly, including claiming for a service which was not provided, or not meeting the requirements for claiming, these concerns can be reported.
You can report to the Department of Health and Aged Care's tip-off line suspected fraud or billing errors by doctors, pharmacists, dentists and allied health professionals, pharmacies, medical practices, hospitals and administrative staff which relate to:
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Medicare benefits via the Medicare Benefits Schedule (MBS)
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Pharmaceutical benefits via the Pharmaceutical Benefits Scheme (PBS)
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Child Dental Benefits Schedule (CDBS) payments
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payments for through incentive programs including the Practice Incentive Program (PIP) and Workforce Incentive Program (WIP)
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COVID-19 vaccination issues related to the charging of out of pocket costs, or the billing of additional Medicare items in general practice
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charging for COVID-19 vaccinations by general practices.
If you suspect there is an issue with claims made to your private health insurer – report this to your own health insurance fund for investigation.
Reviewing bills
By carefully reviewing your healthcare bill and understanding its structure, you can avoid overpaying and make informed decisions about your healthcare expenses.
What fees might I be charged?
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Consultation fees (initial or follow-up) which may or may not be partially or full covered by medicare, health insurance or another reimbursement program.
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Diagnostic tests which may or may not be partially or full covered by medicare, health insurance or another reimbursement program.
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In-clinic procedures which may or may not be partially or full covered by medicare, health insurance or another reimbursement program.
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If your treatment requires surgery, the specialist may charge a pre-surgical planning or management fee. These fees are often not fully covered by Medicare or private health insurance unless part of an inpatient hospital stay.
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Specialists performing minor procedures in their private rooms may charge a fee for the procedure itself and any equipment or materials used.
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If a specialist performs surgery or procedures in a private hospital, their surgical fee will apply and you may also be billed for:
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Anaesthetist fees.
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Assistant surgeon fees.
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Hospital theatre fees (usually covered by private insurance if inpatient).
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Some healthcare providers charge additional fees (which are typically not covered by Medicare or private insurance) for administrative services, such as:
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Preparing medical reports or letters.
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Processing insurance forms.
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Providing copies of medical records.
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Non-attendance and cancellation fees.
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Booking fees.
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How to review costs
Ask for a breakdown of fees, including any gap payments, itemised by the services provided (e.g., consultation, diagnostic tests, procedures) and the date and time of each service. You can look for:
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The portion of the service cost covered by Medicare, shown as the rebate amount. This should include item numbers (codes) corresponding to the Medicare Benefits Schedule (MBS). You can use your Medicare online account to check your Medicare Claims History Statement and make sure you’re getting the correct Medicare benefits for the services provided to you.
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The amount contributed by your insurer for eligible services, such as inpatient procedures or hospital-related costs. You can call your insurer to support you in reviewing your bill.
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The portion of the bill you are required to pay out of pocket. Common reasons for gap payments include:
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Specialist fees above the MBS rate.
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Services not covered by Medicare or insurance.
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Non-Medicare-listed services (e.g., cosmetic procedures).
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