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Budget 2009: A sustainable Medicare safety net.

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Minister for Health and Ageing


12 May 2009

A Sustainable Medicare Safety Net

The Rudd Government will support the long term sustainability of the extended Medicare safety net (EMSN) by making sure public money is spent on reducing costs for patients, not on providing excessive windfalls for medical specialists.

This measure is an important part of the Rudd Government’s commitment to reform and modernise the health and hospital system and to ensure that Australians’ hard-earned tax dollars are used efficiently to provide better health outcomes.

The EMSN will continue for all Australians and for all services currently covered. The safety net thresholds have not been changed from $555.70 for Commonwealth concession cardholders and recipients and $1111.60 for all others and are indexed each year by the Consumer Price Index (CPI).

However, there is evidence that the EMSN has enabled some specialists to charge excessive fees - resulting in excessive windfalls being paid by taxpayers through Medicare.

The Government will take action to ensure EMSN funding is used to benefit patients and reduce their costs.

In this Budget, the Government will change the EMSN to provide a maximum safety net benefit, or ‘cap’, for a small number of MBS services where there is evidence that the EMSN is being used to excessively increase the income of specialists, rather than reduce costs for patients.

These changes will apply to obstetrics, assisted reproductive technology (ART), cataract operations, the injection of a therapeutic substance into an eye, hair transplants for alopecia, and varicose vein treatment. In all these areas, some specialists are charging excessive fees, however very little of the taxpayer funding of these procedures is helping patients.

For each item that is capped, the Government will only provide safety net benefits up to a maximum amount. Patients who are charged reasonable fees will continue to be supported by Medicare and the EMSN, but specialists will no longer be able to increase their fees excessively, assuming that taxpayers will pick up most of the cost.

This measure starts on 1 January 2010.

This initiative responds to an independent review of the EMSN which found:

• doctors have increased their fees as a direct result of the EMSN, resulting in increased costs for some services where families have not qualified for the EMSN; and • for every dollar spent on the EMSN in 2007, as much as 78 cents was spent on

meeting providers’ higher fees rather than reducing patients’ out-of-pocket costs.

These excessive fees have resulted in taxpayers funding million dollar incomes for some specialists:

• the top earning 10 per cent of obstetricians were each paid an average of $1.1 million a year per specialist through Medicare, including $612,000 through the EMSN; and • the top earning 10 per cent of ART specialists were each paid an average of

$4.5 million a year per specialist through Medicare, including $2.2 million through the EMSN.

For all inquiries please contact the Minister's office - 02 6277 7220