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What is the Medical Gap Scheme?
There are some things you can’t put a price on, and good health is one of them. Like an extra layer of protection, gap cover helps to minimise or eliminate the out-of-pocket costs associated with specialist private hospital medical treatment. This may be part of your health insurance policy (depending on the funds agreements), adding even more value to your cover.
As a private health insurance fund member, you may think this doesn’t concern you. Your private health insurance allows you to access the comfort of private hospitals and have your pick of the best medical professionals. But this guaranteed access can sometimes incur unavoidable doctor and surgeon fees – costs known as the gap – that aren’t covered by your private health insurance.
There are two types of gap cover, hospital and medical, and we’ll focus on the latter.
The gap explained
A gap is the difference between what Medicare and your private health fund will pay towards your treatment (the MBS fee), and what your specialist doctors or hospital charges. The patient sometimes needs to pay the difference, known as the gap.
Ways to avoid paying the medical gap
If you have private health cover, contact your health fund for a list of healthcare professionals with gap cover arrangements. If you’re treated by anyone on the list and they agree to participate, there’ll either be low or no medical gap cost involved.
The gap shouldn’t be confused with excess (the amount you contribute upfront, as part of your medical cover) or co-payments (the fees that you pay if you’re admitted into a private room in a public or private hospital). Depending on your policy, these payments may also be required.
There are three ways you may be eligible for access to gap cover doctors participating in the Medical Gap cover scheme.
1. No gap means no extra fees for you
Your health insurance provider sets a maximum limit for how much they’ll pay over the Medicare Benefits Schedule (MBS) fee. The MBS is the list of suggested fees set by the government for standard Medicare-covered consultations, treatments and general services. If your doctor charges above the MBS, but under or up to your insurer’s ‘no gap’ threshold, you’ll be covered with no extra fees to pay.
2. Known gap cover means capped extra fees for you
If your doctor participates in a ‘known gap’ scheme, you’ll have known out of pocket expenses for each procedure that he or she performs. Prior to the procedure, make sure the doctor gives you an “informed financial consent”, which lists all costs so you’re aware of exact out of pockets.
Not all health funds offer a known gap option in their scheme. With that in mind, it pays to review a provider’s policy carefully before committing.
3. No gap cover means you’ll incur all out-of-pocket expenses
If you visit a doctor that doesn’t participate in any level of gap cover, you’ll need to pay the total costs that are charged over the MBS standard fee.
For example, after many years working outdoors and many seasons of football, James has been booked in for knee replacement surgery. Medicare covers part of his fee and so does his private health insurance Hospital policy (PHI).
James’ chosen surgeon charges more than the standard MBS cost, there’s an outstanding medical gap. This means that James has to pay the out of pocket expenses which covers the gap between what Medicare covers, and what the surgeon charges.
Why does the medical gap exist?
The Medicare Benefits Schedule (MBS) is sent to members of the Australian Medical Association, and describes different procedures a doctor can perform, and suggests fees Medicare believes practitioners should invoice. Since there’s no rule that says doctors should charge what Medicare thinks is fair, some choose to charge more. This is the medical gap.
Let’s look at the figures. Medicare pays 75% of the MBS fee for treatment of private patients in hospital. Your private health insurer pays the remaining 25%. When a specialist considers Medicare’s schedule fee, they take into account their costs and the circumstances of each particular case and patient to determine a price.
Speak to your doctor before treatment
Ask your doctor about their fees before you’re treated, and they’ll happily break down the costs – including how much is covered by Medicare and insurance. Legally, they have to reveal these costs to you.
It’s a good idea to ask if other doctors or specialists will be involved, and if and how they’ll be billing you for their service.
You can find a list of no gap doctors at privatehealth.gov.au
To discuss your gap cover options with our friendly iSelect team, call us on 13 19 20.
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