How to avoid health care out-of-pocket costs


Tips on how to get cheaper health care and negotiating with your surgeon.

Mind the gap


  • Where you live may affect how much you're out-of-pocket for doctor and medical services
  • Specialists are more likely to charge on top of what Medicare covers than GPs and other medical services
  • There are ways to minimise your out-of-pocket healthcare costs

Australians in high socioeconomic areas are more likely to be out-of-pocket than others after visiting their GP or getting a blood test, according to a new report by the Australian Institute for Health and Welfare.

And specialists hit you hardest with out-of-pocket costs compared to other medical services you might access outside of hospital.

So how much extra do we pay for medical services outside of hospital? 

The report found that Australians were out of pocket by $3 billion in 2016–2017 for doctors' visits, blood tests and other services provided outside hospitals that are covered by Medicare. In other words, doctors and medical service providers charged $3 billion above what Medicare agrees to cover for those services. 

But not all of us are out of pocket – this sum was borne by half the people who used the services, while half were bulk-billed.

How can you avoid being out of pocket for health care?

Outside of hospital

Having private health insurance doesn't help when you visit a GP or specialist outside of a hospital, as their fees can't be claimed through private health cover.

Finding a doctor that charges the same as, or close to, the Medicare Benefits Schedule (MBS) fee is your best bet to reduce the expense to you.

  • Medicare will pay 100% of the Medicare Benefits Schedule (MBS) fee if you visit a GP and 85% of the MBS fee if you visit a specialist. See Medicare 101.
  • If your doctor bills Medicare directly (bulk billing), you won't have to pay anything. 

When it comes to visiting a specialist, it pays to shop around – and even be prepared to travel. The Australian Institute for Health and Welfare report says:

  • seven in ten patients visiting a specialist paid extra, with a median cost of $64 per service
  • there are large variations of costs between patients living in different geographical and socioeconomic areas 
  • patients living in a higher socioeconomic area in one of the major cities faced the highest charges. 

The report can even tell you which suburbs and towns in Australia have the highest, and lowest, out of pocket costs – so you can travel if you think it's worth it.

At the hospital

If you need to visit hospital and you have private health insurance, your fund will offer some protection from out-of-pocket costs in a private hospital. But some health funds are much better at protecting you from extra charges than others. Use the CHOICE health insurance finder tool to compare health insurance and see how we rate the fund for its gap cover.

And if you do need to have surgery, whether you go public or private, it is possible to find out how much extra you'll have to pay on top of your Medicare (and health insurance benefit), and use that information to negotiate with your doctor or shop around to get a better deal for surgery. See our handy guide below.

How to save on surgeons' fees

You may be more than a little surprised to learn that using your private health insurance can expose you to thousands of dollars of out-of-pocket costs, while public patients enjoy the same treatments for free.

  • Ask if there are likely to be any out-of-pocket costs with the surgeon they refer you to.
  • Ask the GP to suggest a number of specialists so you can call and check costs yourself.
  • Get the names of specialists who work in both the public and private system.
  • Ask for the approximate waiting times in your local public hospitals. Remember, just because you have private health insurance doesn't mean you can't be treated as a public patient to save yourself money.
  • Ask if your policy covers the treatment you require and if you've served any waiting times. Tip: health funds may use different definitions for the same treatment than your specialist – especially in terms of what's minor surgery that's normally included in most policies, or major surgery which may be excluded if you haven't got top cover. Ask your GP or specialist for the Medicare item number and quote it to the health fund to be sure.
  • Ask if you have to pay an excess or co-payment.
  • Get a list of surgeons they have an agreement with.
  • Get a list of hospitals in your area they have an agreement with.

Not sure how private health insurance gap schemes work? Read gap cover explained.

  • Ask your friends and family if they can recommend a surgeon.
  • Armed with a list of names, make some calls. Be insistent and ask for a ballpark figure if the receptionist can't give you exact out-of-pocket costs for the surgery. Also check on the out-of-pocket costs for the consultation and any tests or other procedures likely to be done in the surgeon's rooms.
  • One option might be to travel for treatment if you live in a geographical area with high costs, such as an inner capital city or remote area.
  • Talk about costs early on and explain to the surgeon if the costs aren't affordable for you.
  • If your specialist says they're unable to charge you under your health fund's gap scheme, ask if they would accept another health fund's gap scheme.
  • If you transfer from one health fund to another, for example, you leave BUPA after the recent changes to their policies, they can't apply waiting periods for differences between medical gap schemes. But be careful to choose a policy that has the same cover level (for example, not one with a higher or lower excess) and covers the treatment you're scheduled for. Also, make sure the new fund has an agreement with the hospital your specialist uses. The CHOICE health insurance finder will help you find the best funds and policies for you. Our score includes a rating on the fund's gap performance.
  • Ask for the fees of any other doctors involved, such as an assistant surgeon or anaesthetist. If the specialist doesn't know, ask for the doctors' contact details and call them to find out.
  • Ask for a quote in writing.

How to negotiate with your surgeon

Your surgeon can decide on a patient-to-patient basis if they charge you under your health fund's gap agreement.

According to an AMA survey of their members, the vast majority of doctors take their patient's financial situation into account when setting their fee.

This could mean that with the same doctor for the same procedure:

  • pensioners and students are fully covered by the health fund.
  • full-time workers and self-funded retirees face out-of-pocket costs.
  • someone who is assertive and tells the doctor about their financial situation gets charged less than someone who stays silent.

But if you're sick, you may be in no mood to bargain, especially with a surgeon who may soon hold your life in their hands.

"Certainly an assertive consumer should not shy away from negotiating a fee with the surgeon and asking about no-gap arrangements. The reality is that many people don't feel confident and in any event may often be experiencing anxiety because of their condition and the looming operation," explains Leanne Wells, CEO of the Consumers' Health Forum.

This reflected the experience of one CHOICE member, who told us: "I was in great pain and not in a position to seek other opinions or quibble over costs."

But another member had a more positive experience: "The receptionist raised the matter [of costs], and I was pleased to know upfront."

Talk to the receptionist

The Private Health Insurance Ombudsman Michael Manthorpe suggests it might be better to talk to the surgeon's admin staff about costs rather than the surgeon. "The administrative staff at GP and specialist offices are accustomed to discussing fees and waiting times with patients," he says.

The best surgeon can also be the cheapest

Of course, you'd want the best surgeon, not just the cheapest, and the good news is they could be one and the same: "There's no evidence that links higher fees or lower fees to the quality or outcome of the service required by the patient," says Dr John Batten, president and chair of council and executive at the Royal Australasian College of Surgeons.

What about the anaesthetist?

Anaesthetist costs are in addition to surgeons' fees. Read How much will my anaesthesia cost? to understand anaesthesia bills and gap fees.

Find a health fund with better gap cover. The CHOICE health insurance comparison will help you find the best policy for your needs, and our score even includes a rating on the fund's gap performance.


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