14 January 2016

Medicare cuts: Policy v Spin

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There's been a lot of talk about the recent cuts to Medicare payments for pathology services which were flagged in last December's Mid-Year Economic and Fiscal Outlook, particularly in relation to the possibility of increased costs to the consumer for services such as pap smears, MRI's, urine/blood tests, X-rays and ultrasounds."

The situation came to a head when popular website mamamia wrote a post outlining the increased costs of pap smears and the possible long-term ramifications of making preventative medical tests more user pay than they currently are.

In light of the article, Australian Federal Health Minister, The Hon. Sussan Ley MP was quick to label the claims misleading, with a spokesperson for the Minister stating:

"There are no changes proposed in MYEFO regarding the cost of either receiving or delivering a physical pap smear examination undertaken by your GP or specialist, nor their billing practices. Nor is there any reduction in the dollar-value of the Medicare rebate a patient receives to undertake associated pathology tests." 

While this is true, the cuts in question relate to an incentive payment paid directly to pathology corporations separate to the Medicare rebate. The payment, labelled inefficient in the MYEFO is valued at between $1.40 and $3.40. 

So where has the uproar come from? Is the Health Minister being honest with the people when she says this cost will not create a rise in patients out of pocket expenses, or are the pathology companies simply generating press coverage because they're going to be losing money.

The reality is that whether the Government labels the payment inefficient or not if the pathology companies and practitioners don't cover this loss themselves, it will be passed onto the patient. It's basic business. Will the business absorb the loss of revenue or will they increase their prices and pass the loss onto the consumer?

In a January 7 interview with ABC, Doctor Michael Harrison, President of the Royal College of Pathologists Australasia suggested the figure of "$1.40 - $3.40," put forward by the Government could snowball when it reaches the stage of patients being billed for pathology tests.

"When you have a pathology test we can't actually raise a bill until we've done the test.. If we don't bulk bill and send it straight to Medicare, we have to send an account to the patient." Dr Harrison said.

"This is the bit the Minister doesn't understand," he says. "Once you start sending accounts out - that's a very costly exercise. The Government is saying it's only cutting $3.20, but it costs $15 to $20 to send out an account. So the gap could be more than $30, it could be as high as $50 or $60."

The changes are scheduled to take effect from July 1 2016 but still need to pass the Senate. With Labor vowing to block the move in the Senate the Government could face a rocky path to trying to pass the changes. 

Independent Tasmanian Senator, Jacqui Lambie said in a media release on January 10 2016 that she would fight to stop the Turnbull Government from making any changes to Medicare:

"I will do whatever it takes in the Australian Senate - including voting against all Liberal/National Government Legislation - to stop Malcolm Turnbull and his incompetent Health Minister Sussan Ley from increasing the cost for Australia women to access vital Cancer health checks." said Senator Lambie. 

Opposition Health Spokesperson, Catherine King, said the cuts could have a devastating impact on women's health. In a statement she said pap smears had been a major part of preventing cervical cancer.

"Given the possible consequences of not having this test, this is a disastrous move for women's health that will be not only bad for patients, but a short-sighted measure that will cost the health system more in the longer term."

However, the Health Minister's spokesperson dispute this by saying:

"This payment was only introduced in 2009 at a cost of $500 million over five years - it is not a long-standing fundamental pillar of Medicare."

The reduction in the incentive payment is projected to save the Government $650 million over four years if it comes into effect from July 1 2016.



Mike Cullen has recently returned to Akolade after a period as the conference producer for one of Australia's leading economic think tanks. Mike began working in the conference industry in 2007 after looking for a career change from the high pressured world of inbound customer service. Mike has worked for some of the most well-known conference and media companies in the B2B space and in his spare time is working on his first novel in a planned Epic Fantasy trilogy.

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