The Red Tape Burden of the Proposed Medical Services Co-payment

The AMA has released an independent report that shows the Government’s proposed co-payments for general practice, pathology, and diagnostic imaging would be a costly red tape nightmare for medical practices. 
The report – The Red Tape Burden of the Proposed Medical Services Co-payment – details the results of modelling of the red tape (additional administrative) costs of the proposed medical services co-payment, with a particular focus on the costs that will be encountered by General Practices.
AMA President, A/Prof Brian Owler, said that the additional measure of cutting the Medicare patient rebate by $5 would dramatically cut funding for medical practices, and the cumulative effect could make some practices unviable.
The report shows that red tape and potential bad debts could totally erode the $2 of the co-payment the Government planned to pass on to GPs.
The report’s analysis takes account of the tender time, the verification time, the documentation time, the back office time, financial institution fees, and cash handling costs that practices will face under the Government's flawed model
Depending on the level of computerisation of practices, the estimate of the additional red tape burden is between $1.41 per service and $1.61 per service.
Assuming similar unit costs in Pathology and Diagnostic Imaging, the aggregate dead-weight cost on the economy of the Government's model is between $274 million and $313 million in the first year (2015-16), rising to between $289 million and $331 million by 2017-18.
The cost to practices rises even further when bad debts are taken into account. For example there is a cost of $0.35 per service for a bad debt rate of 5 per cent or $2.80 for a bad debt rate of 40 per cent.
A bad debt rate of 8.5 per cent is the break-even point. For anything above 8.5 per cent, the combined costs of administration and bad debts will exceed the extra $2 per service that the Government says will be retained by practices.
“The Government has committed to an agenda of deregulation and red tape reduction, but its Medicare co-payment proposal achieves the opposite,” A/Prof Owler said. “The Government's model is unfair on disadvantaged patients and unfair on practices.
“The Government needs to abandon its model and work with the profession to support high quality and affordable general practice, pathology, and diagnostic imaging services, especially for the sickest and the poorest in the community,” A/Prof Owler said.
The report is available at https://ama.com.au/ama-report-red-tape-burden-governments-medicare-copayment