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HomemistoryThe Great Medicare Debate

The Great Medicare Debate

Most of you would agree that the revenue collected from bulk billing goes no way towards covering the cost of delivering quality eye health consultations – let alone providing the capital required to invest in state-of-the-art diagnostic equipment that patients expect. So, why do the majority of optometrists insist on bulk billing patients when they could charge the scheduled fee plus 15 per cent? And why do they put up with the paper chasing that bulk billing inevitably generates?

It could be argued that the same applies to eye health services. If optometrists don’t receive a fair and reasonable fee for service – one that covers their costs and some, they are forced to look for other ways to survive.

In an ideal world, optometrists would bulk bill patients and the Medicare rebate coming back from the government would reflect a fair fee for service. It would be increased annually in line with inflation and perhaps, even allow for investment in increasingly expensive equipment.

However, in reality, the government is stretched every which way financially and always keen to minimise costs wherever possible. As a result, the annual Medicare schedule of fees is not increased in line with inflation – it’s usually about 50 per cent of that. Last year the official inflation rate was three per cent and on 1 November 2012, the schedule fee was increased by 1.9 per cent.

…optometrists are the only health professional who have the fees for their services determined by the Government

Subsidising Costs

In order to run a profitable optical business an owner needs to subsidise the cost of running a practice by selling frames. Yet wouldn’t we all – practitioners and patients alike – be better off practising under a totally transparent fee-for-service system? It stands to reason that optometrists should feel adequately remunerated for the professional skills and services they deliver.

It also stands to reason that customers buying frames shouldn’t have to subsidise the cost of other customers’ consults. In the long term, optoms who cover their costs in this way run the risk of practice failure. After all, customers are increasingly buying frames online or taking up the corporates’ two for one deals.

Yet according to Andrew McKinnon, CEO of the Optometrists Association of New South Wales, bulk billing is here to stay.

“Various people have advised optometrists not to bulk bill for the past 10 years, yet when you look at the figures, the amount of bulk billing that goes on is as it was 10 years ago,” he said. They’re not only bulk-billing basic eye examinations. According to figures from the Department of Health and Ageing, in 2011–2012, optometrists who participate in the Medicare Rebateable Schedule (MBS) bulk billed 96.9 per cent of their services.

A Fact of History

Mr. McKinnon believes one reason for continued bulk billing is recent history. “No optometrist under the age of 50 has operated in a climate without bulk billing – so it’s become a system that we’re used to and one that we can’t easily see our way around.”

However, he warns, if Medicare schedule fees aren’t at least increased, the profession will start to hit a point of resistance. “I don’t know when it’s going to occur but optometrists can’t keep investing in the latest equipment if they can’t charge the appropriate fee.”

We asked the office of the Minister for Health and Ageing, the Hon. Tanya Plibersek, whether there was any chance that the schedule fees would be increased or billing caps on optometry services removed. The response was perfunctory and less than satisfactory: “The schedule of optometric items available under the MBS was designed with the aim of providing adequate eye care benefits to the community within a sustainable budget… The Australian Government applies an annual fee increase to most Medicare items on 1 November each year. On 1 November 2012 an annual fee increase of 1.9 per cent was applied.”

Genevieve Quilty, CEO of the OAA said the Association, along with others such as the Australian Medical Association, believes the indexation of MBS has been inadequate for some time.

“We have consistently put this argument to Government. According to our assessment, if the CPI health index had been applied,our rebate for 10900 ought to be AUD$90.94. That’s almost AUD$20 more than the rebate, which as at 1 November 2012, is AUD$71.00,” said Ms. Quilty.

“Efforts to apply another more appropriate index have consistently been resisted by successive governments as it would cost a large amount of money if applied across the whole MBS schedule.

“For optometrists, the impact of poor indexation is more greatly felt because there is a cap on the fees that can be charged under Medicare. No other health professionals work under this constraint; optometrists are the only health professional who have the fees for their services determined by the Government.

“We are currently talking to government to seek to remove the fee cap and bring optometry in line with other health professionals under Medicare,” said
Ms. Quilty.

OAA’s Victorian CEO, Terri Smith says the ability to charge an appropriate fee would provide optometrists with the operating capital they need to differentiate their services.

“If independents want to survive and flourish, differentiating themselves on the delivery of primary eye care is a great way to do it – but that’s only achievable by charging a realistic fee for service,” said Ms. Smith.

Never Look Back

Those who have made the switch from bulk to private billing say they’d never look back. Not only are they charging most customers the full Medicare schedule fee (the government bulk billing fee plus 15 per cent), but also most are charging for additional services – such as OCT and retinal photography.

Without the need to deal with government red tape, they have less paperwork to manage and they feel they’re respected and rewarded for their professional expertise. As a result of all of this, they say they have more time to spend with each patient on eye health examinations, discussion, advice and education.

Clare Madigan runs Eyes on Rathdowne in Melbourne. Her practice, which she’s run for 15 years, sits on a small shopping strip just north of the CBD and her clientele is predominantly professional people and their families.

A sole practitioner, she sees around five patients in any one day and says moving away from bulk billing was one of the best business decisions she’s ever made.

“I moved away from bulk billing in November 2009 for a few reasons. One reason was all the problems I
was experiencing with bulk billing.”

Ms. Madigan, who was managing her Medicare claims manually, said people would often hand over an expired or cancelled Medicare card and because of the bulk billing system, she wouldn’t know that the payment bounced until up to a month after the consultation. “By that time, it was often difficult to chase people up for payment – especially if there weren’t regular customers.”

Additionally, Ms. Madigan said, she would often receive a reduced Medicare schedule fee because the patient had had their eyes tested within the required two-year period. “Sometimes clients couldn’t remember when they last had their eyes tested – or they did remember but didn’t say anything because they’d decided to get a second opinion. It wasn’t until a month down the track, when the Medicare billing report came in, that I’d realise the fee had been reduced,” she said.

She estimated that Medicare issues like these alone were costing her AUD$100 per week. That may not sound too much but over a year it’s more than AUD$5,000. It quickly adds up – and if you’re operating a bigger practice, those numbers escalate.

Ms. Madigan said another important reason for eliminating bulk billing was self-esteem. “Bulk billing tends to attract some people who think the service on offer has no value – and consequently, they’ll go anywhere to have their eyes tested. I have 30 years of experience in the profession and I felt that dealing with people with that attitude was demoralising,” she said.

Lang Lang

But according to optometrist Kaye McCraw, feeling valued is all a state of mind. “By bulk billing I don’t undervalue the service I provide to the community – on the contrary, I am confident the community values my contribution,” she said.

Ms. McCraw’s practice is located in the rural Victorian township of Lang Lang, and the majority of her patients are “low income earners”. While she completely agrees with the concept of lifting the cap on services, she says that at this point she has no intention of stopping the practice of bulk billing.

“Lang Lang is in the top 10 per cent of Victoria’s most disadvantaged areas and I believe that without bulk billing, many people here would miss out on eye care for fear of what they’d have to pay.

“The fact that Medicare rebates fees for medical services within 24 hours, often doesn’t help – because they just don’t have the money in their bank account to pay the consult fee in the first place.

“I believe a lot of people in business and government are losing touch with the real economic hardship some people face. Australia’s medical system is becoming increasingly complex, with improved technologies and treatments and costs – and it is increasing difficult for people living on government benefits or pensions, and low incomes, many of whom are seeing a variety of health care providers,
to access affordable healthcare.”

“So my decision to bulk bill is all about making eye care accessible. That’s not to say that we never charge. If I can’t provide a particular service, like digital photography or an OCT without charging, I will pass on the costs. But I always explain to my patients why I’m charging, and they accept my explanation.

While Ms. McCraw acknowledges she could assess individual patients on their ability to pay and then charge accordingly, she believes it’s more equitable to have one system that applies to every person.

“In Lang Lang there are some who can afford to pay for eye examinations, but why should they be penalised for that – especially as they are often the ones who put a lot back into the community.

‘For as long as I can afford to do so, I will continue to bulk bill, the majority of my patient services.”

Ms. McCraw believes that her practice remains busy, despite many areas of retail noticing a reduction in trade, because in tough times, people travel further to seek out optometrists that still bulk bill.

Encouragingly, her practice has had the best two months ever. But her’s is a story that highlights a grim reality – billing private fees as opposed to bulk billing, just isn’t realistic in some regions of Australia.

Making the Decision

Aside from your own personal philosophy on public vs. private health systems, demographics must therefore be a key factor in any decision to move away from bulk billing… because, as Optometrist Jim Papas who owns and operates the eyeclarity retail stores says it’s all a numbers game. If practices remain on bulk billing, and the exam fees remain capped, then optometry as a primary eye care service is not sustainable in the long term. The question remains: if optometrists wish to be in primary eye care, how and when will you move to private billing?”

Steps to Take

Before making the leap and charging patients the full schedule fee, there are some important considerations that need to be made.

The first is to decide on the best way to introduce the new fee system.

“Some optometrists I’ve talked to have set a date from which they’ll charge new patients, but they plan to continue to bulk bill existing customers,” said Ms. Smith.

“Others decide on whether to bulk bill or charge a patient on a case by case basis. This can be difficult – particularly for front desk staff, who then have to consult the practice owner before charging any patient – it can really disempower – and confuse – them.

“I think most of us would agree that health cardholders should be bulk billed,” she added.

A slow, planned and smooth transition is recommended by Jim Papas.

“Unless you’ve got the patient demographic that will accept a sudden change to your fee structure, I’d always advise making the transition slowly. Start by charging new patients for their full eye examination and by charging existing patients the full fee for a second full eye examination if the 10900 has already been claimed. Additionally, it’s important to charge for contact lens examinations – in fact anything contact lens related should be charged the appropriate Medicare item number plus a contact lens fee,” he said.

Mr. Papas said easing in the change would also help your practice staff cope with the change. “You need to have the systems in place and you need to ensure your staff understand the new fee structure and feel confident about explaining it to customers,” he said.

At Eyes on Rathdowne in Melbourne, Ms. Madigan decided her patients would understand the need to privately bill and so she decided to introduce the change overnight. It worked – she hasn’t bulk billed a single customer since November 2009.

“Prior to then, I’d been bulk billing with Medicare slips. I was considering making the change but I still had a huge pile of slips to work through. I kept looking at that pile, watching it go down. And I decided, once it had completely run out, I wouldn’t re-order – that would be it. It’s a bit like deciding to stop eating rubbish food – if there are no more potato chips in the cupboard, you just can’t eat them.”

Ms. Madigan even refuses to bulk bill pensioners, health cardholders, students or children.

“I didn’t want to treat different people differently, and I didn’t want to do any more bulk billing at all. So I changed the system for all of my patients – even my parents had to pay.

“If money’s an issue – if I believe the client will find the extra AUD$10 fee a bit tough – or the client is a student, a child, or a health card holder – I’ll charge the bulk bill rate – but they must pay after the consultation and then get the money back from Medicare.

“My clients have been very understanding. As professionals, they understand the concept of fee for service… and when I told them I was no longer bulk billing, some of them said they didn’t understand why I ever bulk billed in the first place.”

She said whenever possible she will process the patient’s claim electronically on their behalf using the Mediclaims system, or, if necessary, help them to make the claim manually.

“Any practice contemplating private billing needs to do this – so they need to put ‘Mediclaims’ or a similar system in place. Professional people don’t mind a 10 dollar gap, but they hate doing the homework to get the schedule fee back,” she said.

Technology Essential

Ms. Smith agrees that having the technology in place is crucial so that each patient’s Medicare claim can be processed at the time of the consultation. “I remember the days of having to queue at Medicare to get money back on doctor’s visits – there’s no way that we want to take our patients back to that system,” she said.

However, the government might appreciate a return to this approach. According to reports, in days gone by when it was necessary to line-up at Medicare, many rebates were left unclaimed – particularly among higher socio-economic groups.

Communicating the Change

Clear and positive communication is always key to maintaining patient loyalty – especially in the face of a change that will result in higher patient costs.

One way to affect this is to ensure you take the time out to educate and train your staff on the new system well before it is implemented.

“The thing is, staff need to be convinced of the need to charge a fee for service – and they need to be able to explain this to customers. When GPs stopped bulk billing, they found that if their staff weren’t wedded to the idea 110 per cent, the fee for service concept just didn’t fly,” said Andrew McKinnon.

Ms. Smith agrees. “Most patients will understand why you’re introducing a fee once you’ve briefly explained the costs of a consult and the fact that by charging appropriately you can offer them more time in the consult room. However, often it’s the staff that feel awkward about addressing these issues with the patient. So you need to ensure they are aware of the costs of business and have the communication skills to manage patients in a positive way.”

Genevieve Quilty, CEO of the OAA, says this is something the Association can help optometrists with.

“OAA has recently provided all members with access to a range of member only resources to support those wishing to introduce full-fee and private billing in their practice, including advice on optimal electronic claiming options for patients.”

Additionally, Ms. Quilty said the Association recommends optometrists monitor the impact of changes in billing practice on practice income and patient access overtime. “This will provide an informed understanding of the impact of the change and supports a strategic approach to planning any further change,” she said.

It’s a big jump to make but, as we start a new year of competition, with no sign or greater financial support from the government, perhaps today is the day to make your practice’s very first step towards a more financially sustainable future.