Pricing of general practice in Australia: some recent proposals to reform Medicare

In the Australian Medicare system, general practitioners (GPs) are paid on a fee-for-service basis. A practitioner can choose to bill the government directly (termed bulk billing) and receive 85% of a regulated fee as full payment. Bulk billed consultations are free to the patient. However, GPs are free to charge above the regulated fee. The patient can then claim a rebate from the government but only the equivalent of 85% of the regulated Medicare fee. Such copayments for GP consultations cannot be covered by private health insurance. In the ten years following the introduction of Medicare in 1984, the bulk billing rate for GP consultations steadily increased to 84%. Since then the rate has fallen to below 68%. In April 2003 the Minister for Health announced a reform package under the title A Fairer Medicare which aimed, among other things, to increase the availability of bulk billing for some patients. A key feature of the proposal involved changes to the way that GPs are reimbursed. Following political opposition that would have prevented it passing both houses of the federal parliament, a revised version, MedicarePlus, was released in November 2003. This paper describes the factors influencing a GP's choice to bulk bill and examines the two proposals, in this context.