The normally unflappable federal health minister was seemingly caught out by questions about gap fees for out-of-hospital pathology tests during his Tasmanian trip. What is going on?
Out-of-hospital pathology testing is the most likely type of service to be bulk billed in Australia – the most recent Medicare dataset pegs the bulk billing rate at 99.7%. So, when health minister Mark Butler started fielding questions from journalists about gap fees for routine tests earlier this week, it was too significant to ignore.
But try as we might – and boy, did we try – The Medical Republic could not confirm what, exactly, happened here.
The story began on Tuesday, the first day of Mr Butler’s excursion to Tasmania.
His first major stop was in Launceston, where he announced a $1.75 million federal grant to build a memory support unit at Calvary Sandhill.
During the press conference, one journalist threw out a question on pathology centres charging for B12 and urine testing.
Mr Butler referred back to a 2025 decision by Medicare to introduce an 11-month frequency restriction on the quantification of B12 markers such as homocysteine or methylmalonic acid.
At the same time, a new exception item was introduced to enable more frequent testing for patients requiring subsequent testing following inconclusive initial vitamin B12 test results, or those with risk factors for abnormal vitamin B12 levels.
The reporter then followed up by asking if the patient was paying “because the Medicare rebate is insufficient and the provider has introduced a gap fee”.
“I’m not aware of gap fees being introduced for tests that are supported by Medicare,” Mr Butler said.
He went on to quote the sky-high bulk billing rate of out-of-hospital pathology testing.
“We’re determined to keep that bulk billing rate that high,” the health minister said.
“But obviously doctors and pathology companies, the big three pathology companies that effectively control the entire market in Australia, have had to update their understanding of this in line with the best clinical advice that we received some years ago.”
The “big three” in question were Sonic Healthcare, Healius, and Australian Clinical Labs.
But the journalist had more queries.
“Sonic are introducing fees for things like B6 testing as of 1 July, 2026,” the reporter said.
“They’re saying – the AMA is saying – that’s because of not enough … funding from the federal government in terms of bulk billing. What’s your reaction to that?”
Mr Butler reiterated that he was not apprised of the situation but that the 2025 budget had introduced indexation for pathology MBS items and he would “take a take a very, very dim view of [pathology companies] introducing any new gap fee arrangements”.
Related
While that particular exchange ended there, the subject came up the next day during an interview on ABC Northern Tasmania Breakfast.
Host Kim Napier said she had heard from listeners who said pathology tests “they used to have bulk billed are now attracting out-of-pocket fees”.
She then played an excerpt from an interview with immediate past AMA Tasmania president Dr Michael Lumsden-Steel, who said: “Now, the cost of providing that services have been going up by 5% to 7% per year, but there’s been no indexation to the numbers, and that’s why pathology providers are now having to index the fee.”
Ms Napier asked Mr Butler directly whether this was an intended consequence of Medicare changes or if something had gone wrong.
“Yes, something’s gone wrong,” he replied.
“I think first of all that doctor hasn’t kept up with what we’ve done. We indexed pathology rebates last year in last year’s budget for the first time in 25 years, and that was welcomed by the industry.”
He then appeared to clarify further.
“[Federal MP for Braddon] Anne Urquhart has told me about some stories in the northwest where it appears now after investigation that the doctors referring patients for a test had been including the wrong information or not enough information on the referral form for the pathology company to effectively apply the right rebate and bulk bill the person,” Mr Butler said.
“I think that’s been corrected.”
It is unclear as to whether this potential mix-up represents the entirety of the story.
If a problem does exist, it is unclear whether it is isolated to Tasmania.
TMRreached out to the AMA Tasmania, Mr Butler’s office, the peak body for pathology companies in Australia, the Royal College of Pathologists of Australasia, and several different contacts for Sonic Healthcare for this story.
TMR could find no announcement from any pathology company about gap fees being introduced because Medicare funding was too low.
Normally we wouldn’t move forward with information this scarce, but the stakes are high.
If, after building empires on bulk billed tests, pathology companies were indeed starting to charge gap fees, it would be a very loud canary in the Medicare coalmine.
If you know more, please contact Holly@medicalrepublic.com.au.
