Home' Policy Magazine : Policy Vol 32 - No 4 Contents 61
POLICY • Vol. 32 No. 4 • Summer 2016--2017
DR MARK J. WALLAND VERSUS JEREMY SAMMUT
inception of Medicare, not been indexed to keep
pace with the consumer price index (CPI).3
It therefore publishes its own schedule of fees
re ecting CPI indexation over time. Gadiel labels
the AMA fee list 'in ated' but ultimately does
not contest the facts underpinning it. Whilst all
medical practice costs including wages have risen
substantially over more than 30 years, rebates have
not (even excluding the recent rebate freeze).
A genuine free market in surgical fees perhaps
exists only in cosmetic surgery. Fees for an operation
performed for medical reasons are often modi ed
by the various pricing recommendations made
by Medicare and private health insurers, which
condition the expectations of doctor and patient
alike. Doctors are nevertheless under no obligation
to adhere to insurers' fees, and it is worth noting
that most insurers' fees not only fall short of the
CPI-adjusted AMA fee schedule, but also that
many doctors already charge signi cantly less than
the AMA fee.
What about gap payments?
Given ever-increasing insurance premiums, however,
patients perceive private health cover as de cient:
they do not understand why they sometimes face
signi cant medical costs after surgery that their
policy won't meet.
Private insurance is most de cient when doctors
decline to charge the insurer's fee in a 'no gap' plan,
or if doctors' gap amounts exceed the insurer's gap
threshold (by even a dollar) in some 'known gap'
plans. Insurers will then often refuse to pay even to
the level of their own rebates, and will only reimburse
patients up to the level of the MBS schedule fee.
In this way insurers---with governmental
connivance---seek to coerce doctors into limiting
gap fees. ey trade on doctors' altruism, knowing
that it is patients who will su er the extra nancial
burden whilst insurers pocket the rebate that would
otherwise be paid in excess of the MBS schedule fee.
Insurers thus hardly 'lack power to bargain with
doctors', as Gadiel claims, nor are they 'e ectively
doing the doctors' bidding with their gap cover
arrangements'.4 Insurers clearly stand to bene t,
and can sometimes be reluctant to reveal to patients
by how much their cover falls short of a surgeon's
fee in gap cover plans.
Can doctors' fees be fixed?
Medicine has traditionally 'paid well' in keeping
with other vocations that attract similarly capable
and academically high-achieving individuals.
Adequate compensation for the decade or more
of study and nancial sacri ce that is an inevitable
preparation for a medical career seems justi able.
Yet even an explanation of medical fees---let alone
any defence---sounds self-serving in the face of
vulnerable patients apparently being overcharged.5
Gadiel expresses distaste that doctors 'set fees
that suit themselves'.6 Yet a private medical practice
is a small business, which involves all the usual costs
including rent, wages and equipment leases as well
as continuing professional development, indemnity
insurance and membership of professional
organisations and credentialing bodies. Medical
practices are also subject to more stringent ethical,
regulatory and advertising restrictions than other
businesses. Whilst innovation and technology can
increase e ciency and throughput of cases, these
are seldom cost-free, and such equipment may be a
further practice overhead.
Abolishing the MBS and AMA schedules as
reference points might result in fees that are more
free- oating and thus more 'market-based'. It is
assumed that this will drive fees down. e desire
to retain bene t payments for patients, however,
means that the rebate amount will constitute a new
reference point for doctors and insurers, simply one
25% less (for surgery), so that the 'market price' will
again not be truly free- oating. If medicine were
a true marketplace, Medicare would stand aside
and doctors and patients (with or without insurers)
would come to their own arrangements.
Doctors are 'rational market players'. If medicine
is to function more like a market, one cannot expect
doctors to respond in less market-based ways. ey
will likely try to maintain their income status quo,
whatever their altruism. If fees are driven down,
then one must expect a compensatory change in
If medicine were a true marketplace,
Medicare would stand aside and doctors
and patients (with or without insurers)
would come to their own arrangements.
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