One of the major deterrents to dropping out of the Medical Rural Bonded Scholarship program was being barred from billing Medicare for six years. This is now set to change.
Doctors who took part in the Medical Rural Bonded Scholarship Scheme who have not yet completed their return of service obligation will no longer face Medicare disqualification if they choose to withdraw, provided a new amendment passes.
The amendment also includes provisions to extend the grace period for students currently on a bonded scheme to withdraw from medicine without consequence and for the responsible minister to make changes to the program.
The bonded medical scheme has existed in various different forms since 2001; the Medical Rural Bonded Scholarship Scheme was the very first iteration and was active until 2015.
The constant across all iterations of the scheme is that a prospective medical student is offered a Commonwealth supported place at a medical school in an Australian university on the condition that they work in a regional, rural or remote location for a set period after gaining fellowship.
For doctors on the Medical Rural Bonded Scholarship scheme, the return of service terms were decided when they signed onto the program. This cohort also received a scholarship.
In general, students had to agree to working 20 hours per week in an eligible non-metro area for at least nine months of the year over about five years.
Half could be completed before fellowship, but not during intern year.
Failure to complete the return of service obligation within 18 years from graduating medical school or withdrawing from the program resulted in being liable to pay back 100% of the scholarship amount plus interest and a ban on billing Medicare for up to six years.
While the financial penalty for these legacy program doctors will remain in place, the Medicare ban will be lifted.
Overall, the program has been so unsuccessful that, as of June 2025, fewer than one in six bonded medical scheme participants had completed their return of service obligation.
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Around 6% of participants have withdrawn from the scheme, leaving about 81% of the 17,000 total participants in the wind.
One of the major criticisms of the program has been that participants are as young as 17 when accepting a bonded place.
“Lots of students participating in the [bonded medical program] agree to the scheme when they’re 18, and some younger, long before they’re able to predict their future circumstances,” Australian Medical Students Association president Melody Ahfock told The Medical Republic.
“We also commend the extension of the grace period for students who withdraw from medicine, recognising that lots of students who leave medicine don’t do this for trivial reasons.”
Ultimately, she said, the changes are unlikely to have a big positive or negative impact on rural communities.
“We are still calling for an independent review of the bonded medical program to determine its efficacy, as well as looking at investment in schemes that we do know work,” Ms Ahfock said.
“Things like providing financial support to rural students who study medicine, … an expansion of rural clinical schools and training hubs to facilitate positive placement experiences for students, as well as looking pre-vocationally and vocationally at training opportunities in rural areas with specialty colleges.
“These changes are good for students and doctors, but when we really look at the goal of the program there’s still a lot left to be done.”
The changes to the bonded medical program and the Medical Rural Bonded Scholarship Scheme are part of the Health Legislation Amendment (Miscellaneous Measures No. 1) Bill 2025, which was introduced to the lower house on Thursday.
The Bill also includes an amendment that will automate prescriber numbers.
