The consultation paper for the excessive medical fees inquiry has finally landed, promising ‘consequences’ for specialist doctors who charge patients very high fees.
Caps on out-of-pocket fees for MBS services, bulk-billing incentives for non-GP specialists, and PSR-style peer assessment of fees are just three of the options on the table for reining in “excessive” medical fees, a new consultation paper reveals.
As foreshadowed by health minister Mark Butler multiple times over the last year, the Department of Health, Disability and Ageing presented a wide range of potential solutions for non-GP specialist fees for consideration.
The official public consultation paper, released this week, did not settle on a single definition of an excessive fee.
Instead, it concluded that an excessive fee could be identified by considering the “reasonableness” on a case-by-case basis, or by using the MBS fee, or the average out-of-pocket charged by other practitioners as a benchmark to measure it by.
In its own analysis, using the peer-comparison method, DoHDA estimated that about 1.1% of patients receiving an in-hospital service were charged a fee between three and five times the median total fee charged, and about 0.7% were charged a fee higher than five times the median.
For out-of-hospital specialist services, these figures were 0.7% and 0.1% respectively.
When using the MBS fee as a baseline, around 3.9% of in-hospital specialist services had a fee of between three and five times the schedule fee attached, and 1.8% had a fee five times higher or more.
For out-of-hospital specialist services, these figures were 1.8% and 0.2% respectively.
There were also different trends across specialists.
Within hospitals, anaesthetists, sports doctors, obstetricians and surgeons were the most likely to charge significantly higher than the MBS schedule fee, while endocrinologists, addiction specialists, infectious diseases specialists, and immunology and allergy specialists were the least likely.
In outpatient settings, the top billers (using MBS schedule fee as a baseline) were dermatologists, obstetricians, sports physicians, and surgeons.
The lowest were pathologists, haematologists, immunology and allergy specialists, and optometrists.
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While the absolute number of doctors charging an excessive fee may be low, DoHDA felt there was a case for intervention.
“The combined effect of limited transparency, the imbalance of power between the provider and patient, and excessive fees is compromising access and affordability of specialist services,” the consultation paper read.
“While high prices can be a natural outcome of any market with limited supply and high demand, there are significant ethical considerations which bear consideration in a market that is delivering an essential health good subsidised by government.
“Increasing financial barriers to access undermine the universal nature of the Australian health care system and contribute to imbalances between private and public systems.”
DoHDA came up with six reform options.
The first was to publish a single point at which fees were deemed “excessive”, identify the providers charging these fees, and strengthen informed financial consent.
Some reforms in this vein were already being progressed via the inquiry into informed financial consent.
While this option was one of the least punitive for providers – who would not necessarily face any consequences for excessive fees – it was worth noting that the inquiry into informed consent proposed expanding the role of regulators like the ACCC and PSR.
Option two, to improve provider education and awareness around billing behaviour using mechanisms like nudge letter campaigns, was also relatively low stakes.
Reform option three – peer assessments – was where things were likely to get more controversial.
“This approach relies on the judgement of a third party to determine when a fee that is charged is reasonable and fair (i.e. not excessive),” the consultation paper said.
“The advantage of peer assessments is that it may not require up front calculation of reasonable and excessive fees for each service.
“Instead, it is flexible, allowing consideration of individual circumstances that may explain variations in fees from the norm (for example, differences in technique or technology used in a procedure that is understood and supported by the patient).”
Option four was to introduce a fee cap on each MBS item, alongside penalties for charging high fees.
“Some potential methods for using statistics to determine an excessive fee for an individual MBS item … methods included providers charging multiples of the Schedule Fee, median fee, or charging fees in the top percentiles of an item’s fee distribution,” the paper read.
“There are a broad range of actions that could be considered where providers have charged above the caps, including warning letters, monetary fines, withholding Medicare benefits/considering excessive fees to be Medicare ineligible, recovering the MBS benefit from the provider, or removing future Medicare eligibility from the provider.”
Option five was to base fee capping on billing behaviour over a longer period of time.
“This approach would identify providers that routinely charge over an agreed fee cap for items, with the cap based on an agreed definition of excessive,” the paper said.
Remedial actions would, again, include warning letters, fines, or removal of Medicare eligibility.
The department acknowledged that this particular approach could create perverse incentives.
“Under an approach which considers average fees charged rather than each service, patients may continue to be exposed to high fees due to the opportunity for providers to engage in cross subsidisation of fee charging,” the paper read.
“A provider may continue to charge a subset of excessive fees but offset these with a sufficient volume of low-fee or bulk-billed services elsewhere in their practice to not exceed the fee cap on average.
“As a ratio across all billings is used to determine when a provider exceeds a cap, this handful of excessive fees may not be sufficient to trigger a provider for remedial action. To mitigate this risk when using aggregate or average billings, a lower cap may be required to generate a greater effect for more individual patients.
“This may, however, increase the risk of providers charging excessive fees completely outside of Medicare.”
The sixth and final reform option presented in the consultation paper was to incentivise lower out-of-pocket fees by introducing a bulk billing or “low billing” incentive payment.
While this method had worked to help lower GP out-of-pocket fees, DoHDA said, a non-GP specialist version would require “significantly more investment”.
Council of Presidents of Medical Colleges chair Associate Professor Kerin Fielding told The Medical Republic that extreme medical fees were a problem, but a “narrow” one.
“We completely agree with the transparency [reforms], and we completely agree with the work about egregious fees – but punitive measures have been shown across the world not to work well,” the Wagga Wagga-based orthopaedic surgeon said.
The medical care affordability problem, she said, was not just with some outlier specialists but with the whole system.
“Access and affordability is directly linked,” Professor Fielding said.
“If you have to go from Wagga to Nepean to get a pain clinic visit, the cost to the individual patient is enormous, right? And I have patients where that’s the only access they can get for a pain service.
“We [here at Wagga Wagga] are linked into the to the Nepean network. It’s incredibly difficult for a patient that’s in chronic pain to get to Nepean from Wagga. If you know your map, it’s a very long way.
“And then where do you stay if you’re a public patient? There’s no accommodation provided.”
Expenses like accommodation, time off work, childcare, and travel costs would all fall on a public patient, for instance, even if their care through the system was recorded as being at no out-of-pocket expense.
“There’s a huge economic effect to the community when you don’t have these services locally,” Professor Fielding said.
“We really want to help fix that problem, and I can tell you all the colleges have been working really hard together, sharing ideas and collaborating … to sort this problem out.”
