Suite 11, 5 Frederick Street Launceston, Tasmania 7250 PH: (03) 6331 5299

Frequently asked questions

 

It sounds like if you charged the no-gap rate all the time, you’d still make a decent income. Why don’t you just do that?

 

My surgeon didn’t charge me a gap. Why did you still charge a gap?

 

My private health insurance fund has a no-gap policy, and I have had top cover with them for 20 years. I thought that meant I would not get any gaps, so how is it that I still got charged a gap?

 

I am a pensioner.  Why do you still charge me a gap?  Everyone else seems to reduce rates for pensioners.

 

If I wanted to change the private health insurance company that I am insured with, how can I do this?

 

It sounds like if you charged the no-gap rate all the time, you’d still make a decent income.  Why don’t you just do that?

This is a very good question and one that I considered in depth before deciding how to structure my fees.  

Indeed, some anaesthetists that I have worked with on the mainland do only charge the no-gap rate, and they have good reasons for doing this.  On the balance of advantages and disadvantages, and of overall fairness to my patients, myself, my employees and my medical colleagues, I have decided against “no-gapping” everybody.

Some reasons why somebody might “no-gap” everybody are:

  • It simplifies their business structure in the following ways:
    • They can work as an anaesthetist without secretaries or consulting rooms, reducing the significant costs and time that it takes to manage employees.  If they need to see a patient in consulting rooms, they may hire a room from a surgical colleague while the surgeon is not consulting, and they can outsource their billing to an interstate billing agency.
    • They are not morally or legally obliged to organize for upcoming patients to be contacted prior to surgery and informed of their fee structure and expected out-of-pocket expenses (ie, their expected gap).   This saves time and paperwork.
    • Patients who feel as though they are not paying for a service may have lower expectations of it, and so may be less likely to complain about it is they are not completely satisfied.
    • Cash-flow is often more immediate.
  • They can dedicate more time to anaesthetising more patients or to doing things outside of work, as they don’t have to spend as much time running their business.  (For example, this website is taking me tens of hours to put together.)
  • They are at less risk of getting into trouble with some aspect of running their business, such as not complying with Fair Work Australia or privacy rules.
  • When they do consult with their patient, the issue of money is not a distraction.
  • They do not subject their patients to further financial burden to what their hospital admission will already be to them.

 

However, apart from the obvious fact that one would earn less money, there are other disadvantages to “no-gapping” everybody.  Some of these disadvantages are:

  • Assuming that one streamlined their business to not have rooms or secretaries, then there may be less access to consulting rooms.  When there is a patient that the anaesthetist would like to see preoperatively even though it is not absolutely necessary, the decreased access to consulting rooms may tip the balance in favour of not seeing them preoperatively.
  • Also assuming that I chose not to have rooms or secretaries, there would be one less job in Launceston (as we employ about one full-time equivalent per anaesthetist), hence one more family who either has to make do on one less income or needs to move away for work.
  • The Australian Medical Association, Workcover, and the Motor Accident Insurance Board agree that the AMA schedule is a fair and reasonable fee for our services.  Although I don’t routinely charge this amount to patients who are incurring out-of-pocket expenses, I think that discounting my fees by around 59% from the AMA schedule to meet the various “no-gap” schedules is severely “under-selling” the value of my services and is not reasonable.
  • Over time the various “no-gap” rates have not kept pace with inflation, and there is nothing substantial to indicate that this will change.  If one only charged the “no-gap” rate, then each year their income would go down in “real” terms for the same work that they perform.  Indeed, when the private health insurers were first allowed to reimburse above the Medicare schedule (ie, when “no-gap” was introduced), many anaesthetists thought that it was great because they could charge a little bit less than the AMA schedule but their patients would not get a “gap” from them.  Over time though, as the “no-gap” schedules have fallen further behind inflation, a lot of these anaesthetists have gone back to charging what they think is a reasonable fee, and their patients are again incurring “gaps”.
    No-gap vs CPI
  •  Some insurance companies have a “no-gap” policy but not a “known-gap” policy.  If you incur a “gap”, it will be much larger if you are insured with a company without a “known-gap” policy.  For more explanation about the difference between “no-gap” and “known-gap” policies, click here.
  • If I “no-gapped” everybody, then I believe this would be unfair to the insurance companies with “known-gap” policies who actually protect their members from large “gaps” better than the “no-gap only” insurers do.  In time, these insurance companies might drop their “known-gap” policies if they are not being used very often.  If this happened, then it would be a disservice to the patients of other anaesthetists in Australia who do charge above the “no-gap” schedules, as their “gaps” would then be significantly larger.  It is unfortunate that people often only understand the shortcomings of their insurance company’s “no-gap” policy after incurring a larger than expected “gap”.
  • If a patient is paying out of pocket for a medical service, then the doctor may feel more accountable for the quality and professionalism of the service. Even though ethically and legally this should not make a difference, knowing that one’s patients are paying out of pocket does give extra incentive to make sure one’s standards are always at the highest level.  “Charge what you are worth, but make sure you are worth what you charge”. 

 

My surgeon didn’t charge me a gap.  Why did you still charge a gap?

I don’t know how often this scenario comes up, as I don’t know how the surgeons that I work with construct their fees.  However, I assume that it might happen from time to time, and I can understand that it might be quite puzzling to our patient when this does occur.

The basic principle is that your surgeon will work out what they should be charging for their service, and whether or not this is the same as the “no-gap” schedule of your insurer or whether it is higher therefore including a “gap” for his/her services.  Independently, I work out what I should be charging for my anaesthetic service, and as I have explained here this will usually be greater than the “no-gap” schedule of the insurers and so will include some out-of-pocket expense (a “gap”).

Indeed, if your surgeon and myself discussed who we were going to “no-gap” and who we were going to “gap”, then the ACCC may well view this as “collusion” or “price-fixing”, and it may be illegal for us to have these discussions.

One reason that your surgeon may not charge above the “no-gap” rate whereas your anaesthetist might, is because the “no-gap” schedule of the private health insurance companies is often closer to the Australian Medical Association (AMA) schedule for surgical services than it is for anaesthetic services.

I am not suggesting that anaesthetists should charge the same fee as surgeons do.  Although anaesthetists and surgeons have qualifications that are of an approximately equal level, there are good reasons that surgeons should usually be paid more than anaesthetists for the same operation.  Firstly, surgeons usually have higher overhead costs than anaesthetists, in particular the cost of running their rooms, the cost of liabilities insurance, and in some cases the cost of equipment.  Secondly, a busy anaesthetist can spend 30-50% more time in the operating theatre than an equally busy surgeon can.  (As evidence of this, there are more surgeons than anaesthetists here in Launceston, and you generally need one of each for each operation).

However, the AMA schedule takes all of this into account.  The AMA schedule is a list of suggested fees for each medical service, that is the closest that can be worked out as to what is a fair and reasonable fee to charge.  (In Tasmania, Workcover and Motor Accident Insurance Board agree with this schedule and pay doctors rates equal to the AMA schedule when their services are required.)

Despite the AMA’s recommendation that a fair and reasonable fee for an anaesthetic service for a particular operation is usually lower than a fair and reasonable fee for the surgeon for the same operation, the private health insurer’s “no-gap” schedules still reimburse anaesthetists a lower proportion of the AMA schedule than they reimburse surgeons.

Some examples are below:

4 year old, nasendoscopy, tonsillectomy, and adenoidectomy, 1 hour 

Example 1: Nasopharyngoscopy, tonsillectomy

38 year old, laparoscopic cholecystectomy, 1 hour 45 minutes 

Example 2: Laparoscopic cholecystectomy

65 year old, total knee replacement, 2 hours 30 minutes 

Example 3: Total knee replacement

 

My private health insurance fund has a no-gap policy, and I have had top cover with them for 20 years.  I thought this meant I would not get any gaps, so how is it that I still got charged a gap?

This is a good question, and one that is often not well understood until you actually need to have surgery.

This is how the “no-gap” policies work:

The private health insurance company creates a schedule, placing a value upon each medical service that the doctors provide.  If the doctors agree to charge exactly the same fee for their service as the amount listed in the private health insurer’s schedule, then the insurer (in combination with Medicare) will reimburse the whole amount and there will not be a “gap”. 

The values listed in the insurer’s “no-gap” schedule for anaesthetic services are usually less than half of the values of the same services on the Workcover schedule, the Motor Accidents Insurance Board schedule, or the AMA schedule.  If the doctor does not accept the value of the service listed on the insurer’s schedule as a fair value for their service, and does not discount their fee down to the amount stipulated by the private health insurer to comply with their “no-gap” policy, then the patient will incur out-of-pocket expenses for the service (ie, will incur a “gap”).

Regarding the second part of the question, loyalty is generally not rewarded by the private health companies by reimbursing you more for the doctors fees.  Also, having top cover may entitle you to things such as reduced excess for an admission; staying in a single room; and covering more potential reasons for a hospital admission, but with limited exceptions top cover does not mean that the private health insurer reimburses you any more for the doctors services.

In general, I do not accept most of the private health insurer’s schedules as reasonable, and so in general my fees will include a “gap”.

Now it becomes complicated, as the “gap” will be significantly different depending on who you are insured with, and sometimes which policy you have with your insurer.

Most private health insurers have a “known-gap” policy as well as a “no-gap” policy.  If your insurer has a “known-gap” policy, and their “no-gap” schedule values one “anaesthesia basic unit” at $33.55, and if I charge $34.55 per “unit”, then you will have a “gap” of $1 per “unit”.

Insurers that have a “known-gap” policy (excluding insurers with a known-gap policy of $24 per “unit” or less) include:

  • Medibank Private
  • AHM
  • St Luke’s Health
  • BUPA (including MBF, Mutual Community, and HBA)
  • ACA Health Benefits Fund (some policies)
  • Australian Unity Health Limited (some policies)
  • CHBS Health Fund Limited
  • CUA Health Limited
  • Defence Health
  • Doctor’s Health Fund
  • Emergency Services Health
  • GMHBA
  • GU Health (Grand United)
  • HBF
  • HCF
  • Health Care Insurance Limited (HCI)
  • health.com.au
  • Health Partners
  • Health Insurance Fund of Australia Limited
  • Navy Health
  • Nurses and 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 

However, check with your insurer, as each insurer has several different levels of cover, and it may be that not all levels of cover have a “known-gap policy”.

Some private health insurers have a “no-gap” policy but do not have a “known-gap” policy.  If your insurer is one of these, and their “no-gap” schedule values one “anaesthesia basic unit” at $34.10, and if I charge $35.10 per “unit”, then you will have a “gap” of $15.30 per unit (compared with a “gap” of $1 per “unit” if they did have a “known-gap” policy) .  This is because these particular insurers will only reimburse more than the value listed in the MBS schedule (currently $19.80 per unit) if the doctor charges exactly the same as in the insurer’s “no-gap” schedule.

Some insurers have a “known-gap” policy that only reimburses a little bit above the MBS (less than $24 per unit, whereas the “average” “known-gap” or “no-gap” policy reimburses $34.10 per “unit”).  If you are insured with one of these insurers, then your “gap” will be similar to if your insurer did not have a “known-gap” policy.

Put simply, if you are insured with one of the insurers listed below, then your “gap” will be significantly larger than if you are insured with an insurer listed above.

Insurers that have a “no-gap” policy but not a “known-gap” policy, or a “known-gap” policy which reimburses much less than average include:


  • Budget Direct Heath Insurance (brought to you by GMHBA)
  • CDH Benefits Fund (I think – difficult to tell from their website)
  • Frank Health Insurance (brought to you by GMHBA)
  • Latrobe Health Services
  • Mildura District Hospital Fund
  • NIB Health Funds


 

I am a pensioner.  Why do you still charge me a gap?  Everyone else manages to reduce rates for pensioners.

 I do not like charging pensioners (or indeed anybody) fees that leave them with out-of-pocket expenses.  There was a time when the government and private health insurers subsidized people’s medical expenses more adequately (more closely to the Australian Medical Association’s recommended schedule of fees) than they do now.  If this was still the case, then my patients would not incur out-of-pocket expenses from me.

Unfortunately this is no longer the case, so although I discount my fees by 45% for pensioners compared with 33% for non-pensioners, I am not willing to discount my fees by 57% or greater to meet the various “no-gap” schedules of the insurers.

Council rates, electricity bills, motor vehicle registrations, pharmaceuticals, and some doctors’ visits (such as some GP consultations) are often cheaper for pensioners.  All of these companies and services have been provided some sort of federal government incentive to reduce their rates for pensioners.  For example – pharmaceuticals on the PBS cost pensioners less than non-pensioners, but the drug company that makes the drug still gets the same amount of money for the sale.  The federal government just chooses to pay a greater proportion of the cost of the drug.

There are no government incentives for anaesthetists to reduce their fees to pensioners.  Despite this I do reduce my fees further for pensioners – all this means for me is that I earn less money.  I do not however reduce my fees by enough to meet the the various insurers’ “no-gap” schedules.

I know that there will be exceptions and in individual circumstances out-of-pocket expenses may inflict a greater financial burden on pensioners than usual.  Although I would prefer not to charge “gaps”, I have tried to create a fee structure which is as fair to everybody as possible.

 

If I wanted to change the private health insurance company that I am insured with, how can I do this?

 I am not an expert on the private health insurance industry, and everybody’s individual circumstances are different.

In general, it is fairly easy to change private health insurer if that is what you want to do (I have done so twice myself in the last 10 years).  Your old insurer will send you a “certificate of continuation”, which means that most waiting periods that you have already served with your old insurer will not need to be served again with your new insurer.  If the level of coverage is different with your new insurer, then waiting periods may have to be served for these new things that you are now covered for that you weren’t covered for in your old policy.

The new insurer will want your business, so they are usually pretty good at guiding you through the steps that you need to go through to change to them.

Different insurance companies’ policies; levels of coverage; and prices can be viewed and compared on a government website www.privatehealth.gov.au (not to be confused with the commercial website “www.privatehealth.com.au”).  This website is pretty good but it does not tell you absolutely everything, and some insurer’s own websites appear to be more of an advertisement than a source easily obtainable information to help you make an informed decision.

One strategy that might be useful is to talk to your current insurer and ask “I’m thinking of leaving you and joining this other insurer.  Can you tell me why I should stay with you rather than changing to them?”  Your current insurer would usually want to keep your business, so it would be in their best interest to give you any reasons to stay with them that you may not have discovered or considered.  On the flip side though, if your current insurer judges that you may be somebody who will cost them more in medical costs than they stand to receive from you in future premiums, then they might not be motivated to explain the good reasons that you should stay with them.

Private health insurers usually offer hospital cover and extras cover.  I do not hold extras cover myself and I am not reimbursed through the extras cover of my patients, so I know very little about extras cover and the difference between different policies and insurers.

Hospital cover is what covers the bulk of your hospital admission.  The only (unqualified) advice that I would offer when choosing a hospital cover policy is to consider choosing a level of cover that has minimal exclusions (“www.privatehealth.gov.au” classifies these policies as “top” cover).  Many cheaper policies with “basic” or “medium” cover exclude admissions for joint replacements, cataract surgery, obstetrics and childbirth, cardiac-related surgery, psychiatric admissions, or dialysis for renal failure.  Although if one is young and well they would hope that they do not need any of these services for several decades, it is not rare for me to be involved with people in their 30s suddenly and unexpectedly requiring one of these treatments. 

Independent advice would be highly recommended, but it can sometimes be difficult to find independent advice, as many advisers in this field receive commissions from some insurance companies if they sign up new members for them.

In summary, changing insurers can be done fairly easily.  It might be a good decision and it might be a bad decision.  I cannot give you advice about whether you should change or not, and I’m afraid I do not know of anybody that I can direct you to who is able to give you the advice that you need to make this decision.