Budget 2014: the costs of GP co-pay

As doctors' groups ramp up criticism of the imposition of a GP co-pay in Tuesday's budget, the implications for general practices in implementing the new arrangements is coming to light.

It now seems clear that the government will face an uphill battle to have all aspects of its budget passed by the Senate, with Labor, the Greens and Clive Palmer all voicing opposition about the GP co-payment measures in particular.

Beyond the ideological basis for these objections, many practical concerns have been raised by GP representative groups in the wake of the release of the budget on Tuesday night.

The AMA said the government's move could leave doctors $13 out of pocket if they waive the charge for their patients. Doctors who decline to charge the co-payment would also be ineligible for the Low Gap Incentive created to encourage the imposition of the charge.

AMA president Steve Hambleton told ABC Radio there were also administrative factors that had not been take into account.

"Currently if GPs are bulk-billing, it's very simple; there's very little staff required, it's a simple signature on a piece of paper or it's a key transaction with a computer," Dr Hambleton said.

"If there's a mandatory payment for everyone, then there'll be a requirement for banking, for change, for a float in the morning, for probably a new staff member to basically do the banking and, if you add up, it’s probably one staff member for four GPs will probably cost about the same as the co-payment."

RACGP president Liz Marles said the government had ignored evidence presented by the general practice profession that Medicare billings have remained constant for the past 20 years, with growth in expenditure occurring within the hospital sector.

The RACGP is concerned the general practice co-payment will drive emergency department presentations to a level that is financially unsustainable for the government.

“This model will place undue pressure on the hospital system as patients who fail to seek care at a primary healthcare level experience more complex conditions,” Dr Marles said.

Rural Doctors Association of Australia (RDAA) vice president John Hall said the anticipated switching of where some patients present for healthcare will be particularly problematic in rural areas.

“In many cases, patients unable to afford a GP consult will seek treatment at their local hospital,” Dr Hall said. “Because many rural doctors work at both their local general practice and the local hospital, they will experience an increasing number of hospital call-outs, including after-hours call-outs.

“The real danger is that many of the poorest rural patients will choose not to see a doctor for preventative healthcare, and will then present in subsequent years with serious health issues that will cost the health system and hospitals significantly more to treat."

The RACGP has also cited a lack of clarity about the implementation of the collection of the co-payment.

“The administration of the co-payment is unclear, and likely to increase the red tape burden already being experienced in general practice,” Dr Marles said.

Some GPs, speaking on their own behalf, have been more staunch in their criticism.

Readers of Australian Doctor online have vented their anger, with fedUpRuralDoc advocating charging a gap for all patients to minimise the administrative burden on practices.

"Lets get this straight,” the doctor wrote. “The MBS rebate is for the patient, to recoup his/her expenses from seeing the doctor. If bulkbilled, this is merely a way of efficiently transferring that rebate from patient to doctor, withiut the tedious "pay doc now, get amedicare rebate later" malarky. So...this is a rebate cut for patients. I would advise doctors to maintain their private fees as is...not to engage with collecting a Govt co-payment (the costs of admin alone are going to negate the $7)...so basically just charge a gap for everyone now."

In response to the same article, Dr Horst Herb went further, pledging to cease practising as a GP should the co-payment come into effect.

"Bye bye, General Practice. I enjoyed you while it lasted. But I will not be part of an US styled 3rd rate expensive scheme that betrays patients, betrays doctors, and ultimately ruins a once great health system. I hereby pledge to leave General Practice the day these obscene changes take place. A curse on the responsibles. May they one day become aware of the harm they did to this country."

On Twitter, Dr Ewan McPhee (@Fly_texan) tweeted a photo of some rough workings about the lost income GPs would suffer, should the co-payment be introduced.

Despite a few glitches in Dr McPee’s ‘back of the envelope' workings, the number of times this single tweet has been retweeted has eclipsed 95 at the time of writing, with frenetic back and forth discussions continuing about the co-payment plans on the social media platform.

GP co-payment: by the numbers

So for general practice and patients, what tangible financial changes will the co-payment deliver?

Using the best information available at the time of writing, Pulse+IT has quantified the impact of the co-payment across a range of scenarios. Additional scenarios and more detailed analysis will be added to this article as further information comes to hand.

Bulk billed consultation without co-payment charged from July 2015
May 2014 July 2015
Patient pays $0 $0
Patient rebate N/A N/A
Net patient contribution $0 $0
Practice receives $36.30 $37.70 - $5= $32.70

Bulk billed consultation with co-payment charged from July 2015
May 2014 July 2015
Patient pays $0 $7
Patient rebate N/A N/A
Net patient contribution $0 $7
Practice receives $36.30 $37.70 - $5 + $7 = $39.70

Bulk billed consultation with MBS item 10990, co-payment charged from July 2015 with Low Gap Incentive of $6.20 applied
May 2014 July 2015
Patient pays $0 $7
Patient rebate N/A N/A
Net patient contribution $0 $7
Practice receives $36.30 + $6 = $42.30 $37.70 - $5 + $7 + $6.20 = $45.90

Bulk billed consultation with MBS item 10991, co-payment charged from July 2015 with Low Gap Incentive of $9.10 applied
May 2014 July 2015
Patient pays $0 $7
Patient rebate N/A N/A
Net patient contribution $0 $7
Practice receives $36.30 + $9.10 = $45.40 $37.70 - $5 + $7 + $9.10 = $48.80

Privately billed consultation, fees set at $60 in May 2014, rising with inflation to $62 in July 2015
May 2014 July 2015
Patient pays $60 $62
Patient rebate $36.30 $37.70 - $5 = $32.70
Net patient contribution $23.70 $29.30
Practice receives $60 $62

EFTPOS fees and charges

What impact will the introduction of a GP co-payment have on practice EFTPOS fees and charges?

Pulse+IT discussed this topic with a rural general practice that currently averages 2000 patient consultations per month. Around 90 per cent (1800) of these consultations are currently being bulk billed, with the remainder of the consultations resulting in a direct payment to the practice in cash or via EFTPOS.

For at least the last 12 months, the fixed monthly costs incurred by the general practice using a National Australia Bank EFTPOS terminal are detailed below.

Fixed monthly costs for a NAB EFTPOS terminal, data retrieved from April 2014, September 2013 and August 2013 statements
Item Fee
Terminal fee $29.50
Imprinter fee $1.10
Total fixed monthly cost $30.60

Of greater relevance to the introduction of a GP co-payment is an analysis of the EFTPOS fees that will increase as a result of a greater number of EFTPOS transactions being made.

The transaction costs incurred by the general practice when processing payments using their EFTPOS terminal across a range of months are detailed below.

Variable costs for a NAB EFTPOS terminal, data retrieved from an April 2014 statement
Item Number of transactions Rate Fee
EFTPOS transaction 125 $0.456 $57
Credit card - card issuer fees 73 1.23% of $9071 $111.99
Credit card - service fees 73 0.811% of $9071 $73.57
Total transactions 198 Total transaction costs $242.56

Variable costs for a NAB EFTPOS terminal, data retrieved from an September 2013 statement
Item Number of transactions Rate Fee
EFTPOS transaction 134 $0.456 $61.10
Credit card - card issuer fees 93 0.76% of $17,269.50 $130.92
Credit card - service fees 93 0.811% of $17,269.50 $140.06
Total transactions 227 Total transaction costs $332.08

Variable costs for a NAB EFTPOS terminal, data retrieved from an August 2013 statement
Item Number of transactions Rate Fee
EFTPOS transaction 209 $0.456 $95.30
Credit card - card issuer fees 109 0.55% of $7164.50 $39.65
Credit card - service fees 109 0.811% of $7164.50 $58.11
Total transactions 318 Total transaction costs $193.06

As can be seen in the figures, the cost to the practice for each EFTPOS transaction (i.e. a non-credit card transaction) is around $0.46, a figure that doesn't fluctuate with the size of the transaction. More significantly, the average cost of a credit card transaction (being the sum of the card issuer fee and the service fee) in each bill ranges from $0.90 (August 2013) to $2.91 (September 2013), with the April 2014 figure coming in at $2.54. This variation from month to month is due to such fees being calculated based on a percentage of the transaction amount, with the percentage rate itself varying based on the type of credit card used.

When collecting a co-payment or other small payments using an EFTPOS terminal, practices should be mindful of their EFTPOS provider's fee structure with a view to ensuring the modest $2 in additional revenue the practice will receive from the co-payment is not eroded significantly by fees and charges.

Based on the figures presented, it appears that debit card transactions will account for 23 per cent ($0.46) of this $2, with a credit card transaction for a $7 co-payment costing the practice a more modest $0.11 to $0.14.

According to the practice, under the proposed co-payment arrangements, the reception staff of the practice would need to collect cash or process an EFTPOS transaction for a large percentage of the 1800 consultations that are currently bulk billed per month. If for example just half of these consultations attract the co-payment when it is introduced, the number of cash or EFTPOS transactions the practice's reception staff will have to handle each month will increase by several multiples.

Posted in Australian eHealth

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