To measure the impact of capping Medicare Safety Net benefits on provider fees and out-of-pocket costs
The Medicare Safety Net was introduced in 2004 to provide additional financial assistance to households who incurred high out of pocket costs through their Medicare related service use. Our 2009 Review of the Safety Net showed that despite its small overall expenditure in relation to the overall Medicare program, the Safety Net represents a fundamental change in Australia’s public insurance arrangements. The Review found strong evidence that provider charges increased significantly due to the Safety Net, particularly amongst obstetricians and providers of assisted reproductive services.
Following our 2009 review of the Medicare Safety Net, the Australian Government reformed the program by placing caps on the amount of Medicare Safety Net benefits payable for a small number of Medicare items. Our 2011 Review of Safety Net Caps examined the impact of the policy change on provider fees, OOP costs and service utilisation. We found evidence to suggest that there have been some falls in provider fees in 2010, and these are most evident amongst capped items. However, the decline in Medicare benefits has been greater which has meant that OOP costs have increased for most capped services. The 2011 review showed that there are numerous opportunities for providers to shift billing practices in order to avoid caps, thereby creating incentives that may not be aligned with providing the most efficient care. The 2011 Review was tabled in both Houses of Parliament and is available here.
Department of Health and Ageing
1. Macquarie University