Pathology gap fees

Consumers can face large gap payments for pathology, but a public provider may be able to provide a gap-free alternative.
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01 .Mind the gap

Pathology gap fees

Since the decrease in Medicare rebates for pathology in the 2009 Federal Budget, there has been a push from private pathology providers to increase the number of people paying an out-of-pocket gap payment.

When your GP requests pathology (for example, a blood test or skin biopsy) for you, this is done through the GP clinic, a “shop-front” collection centre or, if you live in the country, most likely a hospital outpatients department. It’s largely paid for by the federal government through Medicare, which has a “scheduled fee”.

Medicare rebates 85% of this scheduled fee; if your provider accepts this rebate as full payment, they can bulk bill Medicare direct, at no cost to you. If the provider wants more than the rebate, you will receive an account and have an out-of-pocket “gap” to pay. Alternatively, where there’s no Medicare rebate you will be required to pay in full (some public providers do some non-rebatable tests at no charge to the patient).

How big is the gap?

Private providers base their charges on the Australian Medical Association’s (AMA) suggested fees, which on average are almost double the Medicare scheduled fee. Because many people have several pathology tests at once, resulting in a large total gap payment, most private providers do have a cap.

When out-of-pocket gap payments reach $1126 (or $563 for people with a concession card or who come under Family Tax Benefit A), the Medicare Safety Net applies and 80% of gap payments are covered.

Gap-free is all down to your GP

Gap-free pathology is available to everyone in some form.

  • When your GP chooses a public (state government) provider, the service is bulk billed to Medicare – but this option is limited and, therefore, impractical in some areas.
  • When your GP refers you to a private provider, gap-free bulk billing can be requested on the form if you’re a pensioner, Gold Card Veteran or Health Care card holder, nursing home resident or in difficult financial circumstances.

If your GP forgets to do this, private providers usually bulk bill concession card holders anyway. Some GPs request bulk billing for all their patients, and private pathology companies are philosophical about this, especially if the GP bulk bills as well.

How to be bulk billed

Ask your GP to use the bulk-bill option with the pathology provider they use. If your GP won’t do this, ask whether you can use the public provider. You’ll need to attend the public provider’s collection centre if they don’t offer a courier service to the surgery, which may be difficult in some areas.

CHOICE suggests taking the private pathology form from your GP (you can also use this at the public provider), contacting the provider directly to find out the total gap payment – especially if you’re having multiple tests – and making a decision based on the travelling involved to both public and private collection clinics. Be aware, however, that your GP can overrule your decision.


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02.How the proposed legislation affects you

  • If taking your referral to a different provider than the one your GP suggests, you should get phone approval from your GP.
  • Legislation has been proposed to formalise full consumer choice of a provider, with this made clear on referral forms.
  • Public and private providers have told CHOICE about problems that can occur with patient choice. Your GP may want a specific provider with expertise in checking a skin tissue sample for cancer, or may want just one provider testing blood for tumour markers so they know for certain that any changes are not being caused by different machines or testing protocols.

The reality? GPs almost never discuss with you the choice of provider, the costs involved and/or your ability to pay. A compromise is consumer choice, but with the option to lock in a provider on specific clinical grounds.

Private providers

They claim to be operating in a challenging commercial environment, must compete with the bulk-billing public sector and bulk bill about 90% of services. While staff and technology costs are rising, Medicare pathology rebates have been static for many years, and are only paid on the three most expensive item numbers on a request form (this is called “coning”); the others must be done at no charge when bulk billed.

In last year’s Federal Budget, the specimen collection fee that the government pays for licensed collection centres was reduced from $14.80 to $5.10. The federal government cited automation efficiencies and operating profit margins of 18.5% to justify Medicare rebate reductions.

Service refusal can happen

Be aware that your GP can overrule your choice of provider.

An employee of the public provider, Western Pathology Cluster in rural NSW, told CHOICE they had received private referral forms where the GP refused permission for the pathology to proceed, insisting instead on a particular private provider being used. This was not for good clinical reasons, but purely because of a pre-existing relationship between the GP and the private provider. It meant the consumer had to pay more for pathology because their GP overruled their choice.

03.State-by-state pathology snapshots

Northern Territory

All providers in the NT bulk bill. Darwin-based public provider, Northern Territory Government Pathology Service, runs a small number of regional labs providing equity of access to medical services in situations where private providers would not make a profit. Profits from private referrals help fund the retention of experienced staff and pathologist training.

Tasmania - comparing the gapTasmania

Pathology is very much private sector-based in Tassie, with public-provided services currently limited to public hospital clinics. However, the public provider, Centrepath, is set to open three collection centres in Hobart over the next two years. Any profit from increased private referral work can be retained by the government pathology service for service improvement.

ACT - comparing the gapACT

The ACT is well served by a large network of public and private collection centres. The public provider, ACT Pathology, relies on both the money and work volume it gets from private referrals to support the comprehensive service it provides.

WA - comparing the gapWestern Australia

There is a large network of public and private providers in WA. Public provider, PathWest, has about 100 collection centres and 24 labs that serve all significant population centres. PathWest uses the Medicare income from GP referrals to reduce the amount of taxpayer funding for pathology services.

QLD - comparing the gapQueensland

The public provider, Pathology Queensland, has 33 labs and many hospital and health centre collection points, but only four shop-front collection centres – one in each of Townsville and Toowoomba, and two in metropolitan Brisbane. Private providers are also widely represented throughout Queensland in hospitals, medical centres and shop fronts.

SA - comparing the gapSouth Australia

The Institute of Medical and Veterinary Science (IMVS), part of SA Pathology, is the public provider in SA, with many shop-front collection centres. SA is also well served by an extensive private network, with many shop fronts and private medical centre collection points.

NSW - comparing the gapNew South Wales

Public pathology in NSW is regionally based and each service is independent. Access to the bulk-billing public provider is often good in the country but poor in greater Sydney (given traffic congestion) where public services are often provided through hospitals. There are some places where service is better, such as in the north of Sydney, where Pathology North has six metropolitan and 12 country community collection centres.

Victoria - comparing the gapVictoria

Victoria is largely a private pathology state. Several public providers exist in greater Melbourne, based in major public hospitals, with limited collection centres, often in a hospital. They will do GP- and specialist-referred pathology, but convenience may be an issue. St Vincent’s is the exception, with 32 collection centres. Most regional centres rely on private pathology, with smaller rural hospitals contracting out pathology to private providers.

Professor Ruth Salom is executive director of SA Pathology, a government-owned enterprise that provides pathology services to all South Australian public hospitals and to the public through “IMVS”-branded outlets. Income is derived from Medicare in the form of the bulk bill rebate for community pathology, and the public hospitals also pay SA Pathology for work at the Medicare rebate rate.

SA Pathology receives no money from state general revenue for provision of pathology services. The company is expected to provide high-quality 24-hour service to hospitals and doctors across the whole state, maintain a full complement of trained staff and provide a surplus to fund medical research within SA Pathology at the Centre of Cancer Biology. Direct funding of research amounts to about $9 million from a turnover of about $250 million. This model for a public enterprise is not without risk, given the significant reliance on private work. SA Pathology does about 40% of all private pathology in SA.

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