Bulk billing incentive cuts ‘co-payment by stealth’

15 Dec 2015

The Federal Government’s plan to rip more than $1.2 billion out of the health budget by slashing bulk billing incentives for pathology and diagnostic imaging services and cutting funding for health workforce programs has been condemned by AMA President Professor Brian Owler as “yet another co-payment by stealth”.

Professor Owler said the unexpected measures, detailed in the Mid-Year Economic and Fiscal Outlook released by the Government on 15 December, would push more health costs onto patients and hit the poorest and sickest the hardest.

Treasurer Scott Morrison has detailed plans to save $650 million by axing bulk billing incentives for pathology services and paring back bulk billing incentives for diagnostic imaging, including reducing the bulk billing incentive for MRIs from 15 to 10 per cent. The changes are due to come into effect from 1 July next year.

Health Minister Sussan Ley sought to justify the cuts by claiming bulk billing rates for pathology services had increased by just 1 per cent since the incentive payments were introduced by the Labor Government in 2009-10, at a cost of $500 million since then.

The Health Minister said bulk billing for pathology and diagnostic imaging services was increasing no faster than the natural rate of growth, proving that the incentives were ineffective.

The Government has argued that the competitive nature of the industry will mean that providers will absorb the loss of the incentive rather than passing it on to their patients.

But Professor Owler said this was an ill-informed view, and that inevitably pathology and diagnostic imaging services would have to charge patients, raising the risk that many will forego tests critical to the early detection and management of health conditions.

The AMA President said the Medicare rebate for pathology services had not been indexed for 17 years, and it was "completely ridicluous" for the Government to expect it could rip almost $300 million out of the industry and not have a flow-on effect on patients.

"Without that money being supplied to those providers, of course they're going to have to charge the patients, and so you're going to see more patients with more out-of-pocket expenditure," he said on ABC's RN Drive program. "And that is the plan of this Government - to pass more expense on to the pockets of the patients, and that is going to affect the sick and the most vulnerable in our community."

“Cutting Medicare patient rebates for important pathology and imaging services is another example of putting the Budget bottom line ahead of good health policy,” he said. “These measures are simply resurrecting a part of the Government’s original ill-fated co-payment proposal from the 2014 Budget. It is yet another co-payment by stealth.”

In addition to axing and downgrading bulk billing for pathology and diagnostic imaging services, the Government expects a further $595 million will be saved by “streamlining” health workforce funding, including dumping several programs including the Clinical Training Fund (which was originally intended to fund up to 12,000 clinical training places across a range of disciplines), the Rural Health Continuing Education Program, the Aged Care Education and Training Initiative and the Aged Care Vocational Education and Training professional development program.

The Federal Government is also tapping the aged care sector for significant savings. It plans to cut more than $480 million by improving the compliance of aged care providers and making revisions to the Aged Care Funding Instrument Complex Health Care Domain.

The Government also expects to realise $146 million in savings from improving the efficiency of health programs, and plans to extract $78 million from the Independent Hospital Pricing Authority and $104 million from the National Health Performance Authority.

A further $31 million will be withdrawn from public hospital funding over the next four years.

Professor Owler said the health sector needed more detail and explanation from the Government regarding the MYEFO cuts.

“All up, MYEFO has delivered another significant hit to the health budget with services and programs cut, and more costs being shifted on to patients,” he said.

The health savings have been announced as part of measures to help improve the Budget, which has been rocked by a plunge in revenues caused by soft economic activity and falling commodity prices.

Since May, the Budget deficit has swelled by more than $2 billion to $37.4 billion, and is expected to be $26 billion bigger than anticipated over the next four years. Mr Morrison has targeted social services and health to deliver the bulk of spending cuts needed to put the Budget on the path to a surplus, which has been pushed back to 2020-21.

But the tenuous nature of this goal has been underlined by the fact that the Government is relying on savings measures that have little prospect of being implemented to help achieve the surplus.

In particular, proposed changes to the Medicare Safety Net worth $267 million were withdrawn by Ms Ley earlier this month after failing to garner sufficient support in the Senate, but still included in the Budget.

While the Government targeted health for major cuts, it did announce some initiatives welcomed by the AMA, including $131 million to expand the Rural Health Multidisciplinary Training Program and establish grants for private healthcare providers to support undergraduate medical places, and a further $93.8 million to develop an integrated prevocational medical training pathway in rural and regional areas – a measure the AMA has long been advocating for.

The Government has also introduced new MBS items for sexual health and addiction medicine services.

Adrian Rollins