To understand 'The Gap', you need to understand the Medicare Benefits Schedule, the Medicare Schedule Fee, the Medicare Benefit or Rebate, and the fee charged by your doctor.

The Medicare Benefit Schedule is a list of procedures compiled and updated by the Commonwealth Government. Each operation is allocated an Item Number and Fee - The Medicare Schedule fee. The Medicare Schedule Fee "represents the amount the government, having regard to budgetary and economic considerations is willing to pay" (Auditor General Report No 32 1990-91) – it is NOT a recommended Doctor's fee but only what the Government is willing to pay. The Item Number on the account from the doctor will match a particular Medicare Schedule Fee. The Medicare Benefit (or rebate) is the amount Medicare refunds for the procedure. It is 75% of the Medicare Schedule Fee for hospital services (e.g. operations) and 85% of the Medicare Schedule Fee for out of hospital services (e.g. consultations). The fee charged by BrizBrain & Spine is above the Medicare Benefit. It is based on recommendations made by the AMA (Australian Medical Association). The reasons for this are explained here.

Gaps have become a problem as the Medicare rebate is not keeping pace with inflation. The Federal Government has failed to adequately increase the Medicare Rebate. The Medicare Schedule was established in 1985 but has not increased in line with inflation. The costs of running a quality medical practice have expanded phenomenally with computer software, hardware, information technology, insurance, staffing and Medical Indemnity.

This graph shows the real reason for 'The Gap'.

Parameters shown from 1985.
AWE - Average Weekly Earnings
AMA - Australian Medical Association Fee (fee AMA considers appropriate for a medical service)
CPI - Consumer Price Index (the measure of inflation)
MBS - Medicare Benefits Schedule (the level of the Government rebate)

The graph below shows the change in general price levels compared to the Medicare rebate since 1985. As you can see from the graph, Medicare has not even come close to keeping up with inflation. If we continued to charge the schedule fee we would eventually be unable to practice as we would not be able to meet the business expenses. The rise in some of these expenses far exceeds the inflation rate e.g. Medical Indemnity Insurance.

If the government does not increase the schedule fees 'The Gap' will continue to rise. The AMA has issued its own Schedule of Fees based on inflation rates and we use these fees as a guideline for billing.

But I have Private Insurance!!

Yes, although most policies cover the myriad of expenses charged by the actual hospital including theatre and equipment, theatre nurses, a room/bed, medications and most prosthetics, these costs are quite considerable. Hospital Cover does not include Doctor Cover and as such, this is why there is a gap for fees charged by our practice. Please refer to your Private Insurance Policy for further information.

What about 'No Gap' or 'Known Gap' Insurance

In August 2000, the Federal Government passed legislation making it compulsory for health funds to develop no-gap or known-gap private health insurance policies in order to qualify to offer their patients a 30% rebate on health insurance premiums. Every health fund had to offer the rebate to remain competitive. However, the funding offered by the health funds is still inadequate and these offers raise the spectrum of 'managed care'.

Managed care relates to the intervention of a third party (e.g. Health Fund) in the Doctor–patient relationship, or interfering with clinical decisions. This would mean a third party who is not medically trained, making medical decisions based on cost rather than on 'best medical practice'.

The concern about 'No-Gap' private health insurance products are that they:

• Have the potential to interfere with a Doctor's responsibility to recommend – in a patient's interest – the best possible Doctor, hospital and clinically appropriate treatment
• Have the potential to introduce dollar-driven third party intervention into the Doctor-patient relationship
• Have the potential to severely restrict a patient's future health care choices
• Have the potential to take away a patient's right to full freedom of choice of Doctor, hospital and treatment