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Healthy Communities: Patients' out-of-pocket spending on Medicare services, 2016–17 - Technical Note - About the data sources

Healthy Communities: Patients' out-of-pocket spending on Medicare services, 2016–17

About the data sources

Medicare Benefits Schedule 2016–17

Data for the report were sourced from the Medicare Benefits Schedule (MBS) claims data, which are administered by the Australian Government Department of Health. The claims data are derived from administrative information on services that qualify for a Medicare benefit under the Health Insurance Act 1973 and for which a claim has been processed by the Department of Human Services. Data are reported for claims processed between 1 July 2016 and 30 June 2017.

Scope and coverage

Under MBS arrangements, Medicare claims can be made by persons who reside permanently in Australia. This includes New Zealand citizens and holders of permanent residence visas. Applicants for permanent residence may also be eligible depending on circumstances. In addition, persons from countries with which Australia has reciprocal health care agreements might also be entitled to benefits under MBS arrangements.

It is important to note that some Australian residents may obtain medical services through other arrangements. This includes services that were fully or partially subsidised by the Department of Veterans’ Affairs, compensation arrangements, or through other publicly funded programs including jurisdictional salaried GP services provided in remote outreach clinics. Some areas have a higher proportion of services that are not Medicare funded than other areas and this may affect comparability.

Out-of-pocket costs

The MBS lists fees for certain health services (the Schedule fee). If a health practitioner provides a service listed on the MBS, on a ‘fee-for-service’ basis to a Medicare eligible patient, the patient or practitioner can make a claim with Medicare. Medicare will then provide a rebate or benefit as a percentage of the Schedule fee as set out below:

  • 100% of the Schedule fee for non-referred attendances for non-admitted patients
  • 85% of the Schedule fee for all other services for non-admitted patients, other than as part of privately insured episodes of hospital substitute treatment
  • 75% of the Schedule fee for professional services as part of an episode of hospital treatment (other than public patients)
  • 75% of the Schedule fee for professional services rendered to a patient as part of a privately insured episode of hospital substitute treatment.

Health providers can choose how much they charge, so the fee charged may be higher than the Schedule fee. The gap between the fee charged by the provider and the benefit paid by Medicare is the ‘out-of-pocket’ cost incurred by the patient.

Out-of-pocket costs for services to private in-patients and for privately insured episodes of hospital substitute treatment are not included, since data on supplementary benefits paid by private health benefits organisations are not available through the Medicare claims system. The out-of-pocket costs associated with services included in this report cannot be further subsidised under other insurance schemes.

Statistics in this report do not include persons who did not claim on Medicare, either because they did not have Medicare eligible services, or because they did not claim for Medicare eligible services. The report does not include costs related to pharmaceuticals, either purchased privately or subsidised by the Pharmaceutical Benefits Scheme.

Where patients have claimed on Medicare before paying the treating practitioner and have not subsequently produced proof to Medicare of the fee paid, the amount is included in the ‘out-of-pocket’ costs.

The out-of-pocket costs for non-hospital Medicare services that any given patient pays in a calendar year are limited by the Original Medicare Safety Net (OMSN) and the Extended Medicare Safety Net (EMSN). These safety nets cover part of the costs after patients have spent a certain amount in a calendar year. The impact of the safety nets was accounted for when calculating both annual out-of-pocket cost per patient, and out-of-pocket cost per service.

For more detailed information on the MBS services and item types, see the Australian Government Department of Health MBS Online website: link, opens in a new window..

For more information about the OMSN and EMSN see: link, opens in a new window..