If you receive doctors' services in hospital as a private patient, Medicare will usually cover 75% of the Medicare Benefit Schedule fee for doctors' charges and your health insurance will usually cover the remaining 25% of that schedule fee. In effect, you will usually be covered for 100% of the Medicare Benefit Schedule fee.

The Medicare Benefit Schedule fee (MBS fee) is determined by the Government and is the basis on which Medicare and health funds calculate your benefits. Many argue that this schedule has been inadequately indexed and now fails to accommodate increases in medical service providers expenses, in particular Medical Indemnity Insurance's. As a result, your doctor or specialist may charge more than the Scheduled fee.

'Medical gap' is the expression commonly given to the scenario where doctors charge in excess of the MBS fee. A patient may experience 'out of pocket expenses' when the fees charged by doctors for medical services in hospital exceed the combined Medicare and health insurance benefit.

What is the Medical Gap Scheme?

Medical Gap Scheme is designed to assist you financially when you need private treatment, adding further value to your medical insurance.

The Medical Gap occurs when a doctor charges a fee higher than the Medicare Benefit Schedule (MBS) - the MBS is a listing (or schedule) of the Medicare services subsidized by the Australian Government.

How to avoid paying the Medical Gap

If you require a medical procedure, speak with your doctor prior to treatment and ask if they participate in your funds Medical Gap cover scheme. The doctor has 3 options:

  1. Participate in 'No Gap' cover - no extra out-of-pocket expenses for you

    If your doctor agrees to participate in a ‘No Gap’ scheme. You will have no gap (out of pocket) payment to make to the doctor. This is because the doctor has accepted the terms of the ‘No Gap’ scheme offered by your health fund.

  2. Participate in Known Gap cover - capped out-of-pocket expenses for you

    If your doctor agrees to participate in a ‘Known Gap’ scheme, you will be charged a known gap for each procedure that the doctor performs.

    The doctor must provide you with details of the out-of-pocket expense in writing prior to the procedure, this is referred to as “informed financial consent”

  3. Not participate in Gap cover — you will incur all out-of-pocket expenses

    If your doctor chooses not to participate in any form of Gap cover, you will incur all costs that are charged over the MBS scheduled fee.

All health funds now offer gap cover

On the introduction of legislation for the Federal Government Rebate on private health insurance, great incentive was given to funds to introduce no gap or known gap products.

The amended legislation allowed health funds to offer their members the rebate in the form of a reduced premium on the condition that the fund offered at least one no or known gap health insurance product.

As a result, all funds now offer some form of gap cover. Gap cover is usually incorporated into a funds hospital cover. However it may not be available on every hospital cover provided by a health fund.

The Government does not set doctors' fees, they are free to charge whatever they feel is appropriate.

It is also up to the doctor on a case-by-case basis whether they choose to participate with your health fund's gap cover arrangement. They can decide to opt-in or opt-out with participation of a health funds gap cover scheme at any time.

You should also ask your Doctor about any other Doctors who are involved on your care (for example assistant surgeons, anaesthetists) and what their charges will be.

It is important to contact your health fund and doctor before admission to hospital to determine if you may be required to pay any out-of-pocket expenses. You may wish to ask your GP to refer you to a specialist who offers no gap, or a known gap, for the medical services he/she provides in hospital. If you are dissatisfied with the indicative costs you may incur, consider asking your GP to refer you to an alternative specialist.