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How Does Medicare Bulk Billing Work?

As a practice owner in Australia, one of the first decisions you’ll make when you set up is whether to offer bulk billing, private billing, or a mix of the two. As there are a number of factors to consider, it’s important to have a good understanding of how Medicare bulk billing works so that you can make the best decision for your practice.

While the medical system in Australia may look complicated at first glance, it delivers above-average health outcomes, ranks well for healthy life expectancy, and healthcare spending is similar to that of other developed countries.

So, how does Medicare bulk billing fit into this?

An Introduction to Medicare in Australia

To get a full understanding of bulk billing in Australia, we have to first take a step back and look at the bigger picture. The healthcare system is made up of a mix of healthcare services that may be privately or government-funded.

Medicare was introduced in 1984 as the government’s universal health insurance scheme which provides Australian residents with free hospital treatment, as well as free or subsidised treatment by many healthcare practices including doctors, psychologists, physiotherapists, dietitians, dentists and many more.

Medicare is funded by Australian taxpayers. It’s set at 1.5% of their taxable income (if they earn over a certain amount), and at 2.5% for high-income earners who choose not to have private health insurance. Medicare pays a benefit to those with a valid Medicare card for costs including:

  • Consultation fees;
  • Tests and examinations;
  • Surgical procedures;
  • Chronic conditions.

For patients with chronic conditions, Medicare offers rebates for visits to allied health professionals (such as physiotherapists, psychologists, and dietitians), but there are strict criteria for this.

  1. The client can only claim a certain number of visits per year;
  2. You (as the healthcare professional) must be registered with Medicare;
  3. Your client must be referred to you by a GP;
  4. Your GP must draw up a care plan for the client stating that they have a chronic condition and they need the health services that your practice offers.

Medicare Schedule Fees

‘Schedule fees’ are the standard fees that Medicare benefits are based on. Practice owners can set their own fees for the services they offer (covered by the Trade Practices Act). Most doctors, for example, choose to follow the suggested fees set by the Australian Medical Association, which keeps up with costs and recommends higher fees than the scheduled Medicare fees.

For many practices, bulk billing has become less attractive as there is an ongoing Medicare freeze, so the amount that can be bulk billed per client has stayed the same, while the costs of running a practice continue to increase year on year. Research is showing that this freeze has led to many practices introducing private billing, as evidenced by a survey by RACGP of over 500 healthcare professionals, 29% of whom were changing from bulk billing to private billing because it is more productive. There has been a phased lifting of the freeze in recent times for GPs, which may explain why bulk billing among GPs is still at around 86%, while non-hospital specialists are down at around 41%.

A full historical view of Medicare bulk billing rates is updated and published by the Australian Department of Health every year.

Reconciling Bulk Billing with Medicare Schedule Fees

Bulk billing is where you as the health professional accept the Medicare Benefits (either 85% or 100% of the schedule fee) as full payment for your services and the client is not required to pay a gap fee.

In these situations, you will swipe your client’s Medicare card and give them a form to sign. They will not pay for the appointment and you will recover your payment directly from Medicare.

While bulk-billing rates have been declining in recent years, Medicare does not make provision if you bulk bill health care card holders, pensioners, and children under the age of 16. Unfortunately though, the gap between what Medicare covers and the cost of running a practice means that it is often financially impossible to offer bulk billing to all clients. This has led to some practices offering bulk billing during certain times of the day, offering it only to some clients (such as concession card holders), and why some private practice owners choose not to offer bulk billing at all.

Also keep in mind that in order for the client to qualify for the rebate, there is a specific list of services you can offer. Each service has an item number that needs to be matched to the Medicare Schedule fee list, but not all services have item numbers. Regardless of whether the service is an effective treatment or not, if there is no item number, Medicare will not pay for the treatment, so you will need to make the client aware that they are responsible for the full cost before beginning.

Bulk billing, Telehealth and COVID-19

COVID-19 has put a financial strain on independently owned clinics in Australia, particularly GPs. The Australian government’s telehealth bulk billing policy requires all general practices to bulk bill for clients who are vulnerable to COVID-19, according to the Medicare Benefits Schedule. The requirements set out by the policy are far-reaching, so as many as 50% of consultations are now being bulk-billed in practices that usually bill privately or charge a gap fee.

This has led to a considerable loss in revenue as many GP practices only operate on a 2 – 3% margin, but are now forced to comply with billing restrictions. This has also had a knock-on effect for the standard of care that a doctor can offer as they now need to see between 8 and 10 clients an hour to make up for the loss in revenue. And it may lead to clients choosing telehealth over in-person visits because they are charged more for face-to-face consultations (which do not fall under the telehealth policy).

Common questions that practice owners ask about Medicare bulk billing in Australia

There is a lot of debate about the merits of bulk billing versus private billing, so here are answers to some of the most common questions:

Should you choose bulk billing or private billing?

This is a decision that each practice needs to make based on their clients and the type of work that they want to focus on. Bulk billing makes it easier to attract new clients, and you’re likely to see a wider range of ailments and conditions, but you might also find that you work harder, providing a higher number of consultations daily.

Private billing gives you more control over your practice as you are likely to have more repeat clients with whom you can build a relationship over time. You will also see fewer clients, making your schedule less rushed, so you can spend more time with each client.
The billing model that you choose isn’t the most important factor for private practice, but it is important to consider the pros and cons of each as it will have an impact on the culture and style of your practice.

Does offering Medicare bulk billing deter affluent clients?

No. If your practice has a strong reputation and excellent quality of care you will attract clients from across a broad socio-economic spectrum. Offering bulk billing might even work to your advantage as the convenience of a ‘no appointments’ system means that clients can come in when it suits them.

Do you earn more in private practice?

Definitely not. For one, offering bulk billing means that you will continue to attract new clients and retain current clients if you offer a good standard of care. This offers the potential for time and cost savings as you will not have to market your practice to the same extent as if you were in private practice.

Is it possible to offer bulk billing and private billing?

Yes, many practices choose to offer a combination of both (often called a mixed billing practice). This means you can offer high-quality care to the people who need it, even if they can’t afford to pay private rates. But for people who are able to pay for your services, you can charge them the private rate.

This might mean that you offer bulk billing to certain groups of people such as Health Care card holders, pension card holders, DVA card holders, children under 16 years, students under 25 years with a student card, refugees or NDIS clients (as long as the client has a valid Medicare card).

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With different factors to consider, such as a packed schedule, and lower reimbursement rates, it’s no surprise that private practices are divided in their opinions about whether to offer bulk billing. While it remains a popular option for general practitioners, many allied health professionals are choosing to offer bulk billing to certain clients and charging gap payments in order to remain profitable.
But the fact remains that in order to make an informed decision about Medicare bulk billing for your practice, you need to understand how it works and the criteria that need to be met in order to be reimbursed. If you know a private practitioner who is considering switching or needs to make a decision for their practice, please share this article with them! It might save them a lot of time and hassle going forward.


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