Recently, ABC news online reported that based on advice provided to the Greens from the Parliamentary Library, the Government could bypass the Senate to introduce elements of its GP co-payment proposal. The news story goes on to suggest that the Government could use its regulatory powers to implement at least one element of the proposal—a $5 reduction in the Medicare rebate paid to doctors—without the need for legislation. This Flagpost explains how this might occur.
The Medicare rebate is calculated as a proportion of the Medicare Schedule Fee, which is listed in the Medicare Benefits Schedule. For most out of hospital services, the rebate is calculated at 85% of the Schedule Fee, but for GPs it is calculated at 100% of the Schedule Fee. The requirement to calculate the rebate in this manner is enshrined in the Health Insurance Act 1973.
So how could the Government reduce the rebate without changing the Act?
The fees for medical services are described in the General Medical Services Table (GMST) in the Medicare Benefits Schedule, which also details the types of medical services for which a rebate is payable. The amount of the Schedule Fee for each medical service is specified in the GMST—literally thousands of services with their fees are listed. Because services may need to be added, amended or deleted to reflect current medical practice, the GMST needs to be in a form which can be updated easily. The GMST must also allow for regular indexation of fees due cost increases. Hence, the Act specifies that the Minister can make regulations to alter the services and benefits listed in the GMST without needing to amend the principal Act.
Amendments to the GMST are made frequently. When the GMST needs to be updated this is done by an amendment to the GMST regulation, which is then registered on the Federal Register of Legislative Instruments and tabled in Parliament. The GMST regulation is also a disallowable legislative instrument, meaning that either Parliamentary chamber can vote to disallow (but not amend) the regulation. A motion to disallow a legislative instrument must be made within 15 sitting days of the legislative instrument being tabled.
Most recently, the GMST regulation was amended to increase GP fees by two per cent (indexation of other services will be paused for two years, under a budget savings measure). The increase in GP fees was done in part to provide some compensation to GPs for the effect of the proposed reduced rebate. It should be noted that GPs are free to charge patients a fee higher than the Schedule Fee—but the effect of specifying a Schedule Fee is widely regarded as having a moderating effect on doctors’ fees.
If the Government wishes to reduce the level of rebate paid to GPs it could simply issue a new regulation specifying a reduced Schedule Fee for these services. Because the GP rebate is set at 100 per cent of the Schedule Fee, a reduction in the Schedule Fee would have the effect of reducing the rebate due to the doctor (if they bulk bill) or the patient (if they don’t) by the same amount. Being a legislative instrument, the regulation would also be subject to Parliamentary disallowance.
On the other hand, trying to reduce the rebate paid to doctors without reducing the Schedule Fee would not be possible without changes to the Act. This is because section 10AA of the Act specifies that the rebate (or benefit) must be calculated as a direct proportion of the Schedule Fee. Amending the Act to remove this requirement would require successful passage through the Senate, where a majority of Senators have previously indicated opposition to the GP co-payment proposal.
The other component of the budget measure is a $7 co-payment to be imposed by doctors on patients who are bulk billed. The government intends that the doctor would keep the $7, presumably to partially offset the $5 reduction in their rebate. Currently, the Act prohibits any additional charge on a patient who is bulk billed. To permit bulk billed patients to be charged a co-payment would require an amendment to section 20A of the Act.
Regardless of whether the Government chooses to pursue a regulatory or legislative approach to try to meet its objective of reducing the rebate paid to GPs and impose a patient co-payment, Parliamentary approval will be needed.