Poor Medicare indexation saves federal government billions

The AMA has analysed the indexation of the most commonly used Medicare item in general practice, the Level B consultation item, in a report launched this week. 

The AMA report Why Medicare indexation matters was launched this week and included AMA analysis of the level B consultation item (the item used for consultations lasting less than 20 minutes).

It found inadequate indexation of the Level B consultation item has saved the government around $8.6 billion over the lifetime of the item, that is since 1993.

From July this year, Medicare items were indexed by just 1.6 per cent despite practice costs like wages, rent and utilities climbing at a much higher rate.  

The report illustrated how inadequate indexation has put all medical practices under pressure, especially general practices where many patients may be bulk billed.

The AMA’s Plan to Modernise Medicare campaign calls on the government to implement a revised indexation tool to ensure rebates better reflect the rising costs of providing high-quality medical care and running a medical practice.

The AMA estimates that improved indexation across the whole MBS could cost the government $4.98 billion over four years — just over half of what has been stripped from one MBS item.