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Bulk-billing, no-gap, known-gap, and gaps

 

Gaps

Bulk billing

Known-Gap

No-Gap

 

Gaps

A “Gap” refers to out-of-pocket expenses for doctors services.

A patient will have a “gap” if the rebates from Medicare and from their private health insurance company do not cover the cost of the doctors’ fees.

“Gaps” are a relatively recent phenomenon, and they have become larger and more widespread as the Medicare rebate and the rebates from the private health insurance companies have failed to keep up with inflation.

 

Why do gaps exist despite health insurance? A comparison with car insurance.

Crashed Car

Imagine that you have comprehensive insurance for your car.  Now imagine that you had a car crash, and needed to get your car fixed.

You get some quotes, and you are surprised to learn that the quotes include estimates of what your out-of-pocket expenses may be (in addition to the excess you expected to pay) for the labour costs of the panel beater, the auto electrician, and the mechanic.

You read the fine print of your insurance policy, and learn that while your policy will cover all of the costs of the replacement parts, the policy stipulates the maximum hourly rates that they will to pay for the labour costs of fixing your car.  You have a fair idea about how much the these trades are worth, and realise that the hourly rates that the insurance company is willing to pay is only about half as much as these tradespeople usually charge.

As absurd as this sounds, this is a comparison to how health insurance policies reimburse you for your hospital and prosthesis costs (fully covered except for your excess) and the doctors’ fees (not fully covered – unless the doctors steeply discount their fees you will have a “gap”).

Now imagine that you then read further, and you are relieved to find that your car insurer has a “no-gap” policy.  When you read about this, you work out that all that this “no-gap” policy means is that if the auto-tradespeople charge any more than the insurance company is willing to pay for their services (which is about half their usual rate), then the insurance company will pay them even less – only about a quarter of their usual rate. 

As these tradespeople do not discount their hourly rate by half, then rather than protecting you from having a “gap”, this “no-gap” policy means that your “gap” for getting your car fixed will be even larger!

This is a comparison to the way that health insurance policies with a “no-gap” policy but without a “known-gap” policy reimburse you for your doctors’ fees, leaving you with a larger “gap”.

 

 

Bulk billing

“Bulk-billing” is when the fee that a doctor charges for an out-of-hospital service (such as a clinic appointment) is 85% of the value of the service in the Medical Benefits Schedule (MBS), or when the fee a doctor charges for an in-hospital service (such as an operation) is 75% of the value of the service in the MBS.

The fee will be equivalent to the amount that the government will rebate the patient for their medical service.

As long as the patient is eligible for “Medicare”, then the patient will not have a gap for that service, whether or not they have private health insurance.

Regarding anaesthetic services in hospital, it is unusual for anaesthetists to “bulk-bill”.  There are a few reasons for this:

1)  Most patients in a private hospital have private health insurance, or are otherwise covered by an insurer (eg, DVA, Workcover, or MAIB).  Private health insurers all reimburse the patient at least up to 100% of the MBS value (as long as the insurance policy covers you for what you are having done), and most private health insurers have at least a “no-gap” policy (explained in more detail below).  Therefore, if an anaesthetist wanted to ensure that their patient did not have any out-of-pocket expense for their services, and the patient was privately insured, then the anaesthetist would “no-gap” them rather than “bulk-bill” them.

If the patient does not have private health insurance, or their insurance company does not cover them for this particular admission, then this is a rare occasion that the anaesthetist may “bulk-bill” them.  The patient would still face large out-of-pocket expenses for the hospital fees, theatre fees, and equipment/ prosthesis fees that are not covered by Medicare and would otherwise be covered by the private health insurer.

2)  The value of anaesthetic services in the MBS has fallen a long way behind inflation and wages, to the point that at present the MBS value for anaesthetic services is less than 25% of what the Australian Medical Association has calculated should be a reasonable fee for anaesthetists to charge for our services.  (More information about the MBS is in this section.  More information about the AMA schedule in this section).  To bulk-bill would be to charge 75% of the value prescribed in the MBS, which would mean charging less than 20% of the AMA’s recommended fee.  Most anaesthetists are not willing to discount their fees by over 80%, and so “self-funded” private patients would usually have out-of-pocket expenses (a “gap”) from their anaesthetist.

 

The one time that I generally do “bulk-bill” is when I see patients in my clinic in the days or weeks before their operation.  Most private health insurance companies do not reimburse these consultations, although DVA, Workcover, and MAIB do.  I do this because my patients would usually incur a “gap” from me during their anaesthetic, and I try to limit my patients to one “gap” from myself for their hospital episode.

 

Known-Gap

Most insurers have a “No-gap” policy and a “Known-gap” policy, although a large minority of insurers only have a “No-Gap” policy without a “Known-gap” policy.

I will explain “Known-gap” policies first, as they are easier to understand.

Private health insurers are obliged to reimburse the patient up to the MBS rate for the doctors’ fees.  The current MBS rate is $19.80 per “anaesthesia basic unit”, of which Medicare rebates 75%, or $14.85.  The minimum obligation of the private health insurers is to reimburse the other 25%, or $4.95 per “unit”.  Remember though, that the the MBS value for anaesthetic services is less than one quarter of the Australian Medical Association’s recommended rate.

Since 2001, private health insurance companies have been allowed to pay the patient extra above the MBS value for their medical costs (before this they were not allowed to).  Most insurers chose to reimburse the patients extra above their minimum obligations to reduce the gaps that their members were increasingly paying in larger amounts.

Private health companies with a “Known-gap” policy reimburse the patient, on average, about 130% of what Medicare reimburses the patient, even though they are only obliged to reimburse the patient 33% of what Medicare reimburses.  This means that instead of being subsidised for their doctor’s fees by 100% of the MBS (or approx 25% of the AMA schedule), the patient is now subsidised by about 170% of the MBS (or approx. 40% of the AMA schedule). 

Certain conditions need to be complied with for these private health insurers to reimburse above the MBS.  These conditions are different for each different insurer, but a common theme is that the patient needs to be informed in writing before the operation of any out-of-pocket expenses that they should expect, hence the title “Known-gap”.

If my usual discounted fee is 2/3 (67%) of the AMA schedule, and my patient’s insurer has a “known-gap” policy, then my patient’s out-of-pocket expenses will be equivalent to 25% of the AMA schedule, compared with a “gap” equivalent to approx. 42% of the AMA schedule if their insurer did not have a “known-gap” policy, or a “gap” equivalent to approx. 48% of the AMA schedule if the patient was uninsured and received the Medicare rebate only.

Health insurers who have a known-gap policy include:

  • Medibank Private
  • AHM
  • St Luke’s Health
  • BUPA (including MBF, Mutual Community, and HBA)
  • ACA Health Benefits Fund (except “basic hospital”)
  • Australian Unity Health Limited (some policies only)
  • Budget Direct (brought to you by GMHBA), (although their known-gap policy reimburses a much lower amount)
  • CBHS Health Fund Limited
  • CUA Health Limited
  • Defence Health
  • Doctor’s Health Fund
  • Emergency Services Health
  • GMHBA
  • Frank (brought to you by GMHBA), (although their known-gap policy reimburses a much lower amount.)
  • GU Health (Grand United)
  • HBF
  • HCF
  • Health Care Insurance Limited (HCI)
  • Health.com.au

 

  • Health Partners
  • Health Insurance Fund of Australia Limited
  • Mildura District Hospital Fund (although their known-gap policy reimburses a much lower amount)
  • Navy Health
  • Nurses & Midwives Health
  • onemedifund (National Health Benefits Australia)
  • Peoplecare Health Insurance
  • Phoenix Health Fund
  • Police Health
  • Queensland Country Health Fund Limited
  • Reserve Bank Health Society Ltd
  • rt (Railway and Transport) Health Fund
  • Teachers Health Fund
  • Teachers Union Health (TUH)
  • Transport Health
  • Westfund

 

 

 

 

What is No-Gap?

Some health insurance companies have a “No-Gap” policy, but not a “Known-Gap” policy.

These insurers will reimburse more than their minimum obligation, but ONLY IF the anaesthetist charges EXACTLY what the insurer has stated will be their “no-gap” rate.  Otherwise they will only reimburse the minimum that they are obliged to.

For example, if the insurer’s stated no-gap rate is $34.10 per “unit”, and the anaesthetist charges $34.10 per “unit”, then Medicare will reimburse the patient $14.85 per “unit” and the insurer will reimburse the patient $19.25 per “unit”, meaning that the anaesthetist’s fee is completely covered between them.

However, if for example the anaesthetist charges $35 per “unit”, then the insurer will only reimburse the patient $4.95 per “unit” in addition to the $14.85 per “unit” reimbursed by Medicare, and the patient will have a “gap” of $15.20 per “unit”.

If this insurer did have a “Known-Gap” policy which scheduled the same “unit value” of $34.10, and the anaesthetist charged $35 per “unit” as in the above example, then the patient would only have a “gap” of 80 cents per “unit”.  Because these insurers do not have a “Known-Gap” policy, the gap to the patient (in the above example) is $14.30 per “unit” greater than it would be if they did have a “Known-Gap” policy.

Health insurers who do not have a “Known-Gap” policy include:

  • ACA (“basic hospital” policy)
  • Australian Unity Health Limited (some policies)
  • Budget direct (brought to you by GMHBA), (some policies)
  • CDH Benefits Fund (I think – difficult to tell from their website)
  • Latrobe Health Services
  • NIB Health Funds

 

 AMA vs Known Gap vs No Gap vs Uninsured

For some examples of anaesthetic fees and gaps for different operations and with different insurers, see the section “What will my gap be?