How do health funds work for anaesthetists?

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Health funds will be a significant source of income for private anaesthetists. Hence why it’s a good idea to understand how they work. 

How do health funds work?

Members of health funds are entitled to rebates for anaesthetic fees where they are covered for the surgical procedure under their policy. The rebate must be, as a minimum, the fee set under the Medicare Benefits Schedule (MBS). Since Medicare already pays 75% of the benefit, the minimum cost to the actual health fund is only 25% of the MBS fee. So, let’s say the current MBS RVG unit fee is set at $20. Medicare pays $15 for each unit and the health fund just $5. 

That said, all health funds offer to pay more than the minimum MBS fee. The catch is that you have to agree and abide by certain terms and conditions under their “schemes”. These are usually not too onerous and you can “opt out” on a patient-by-patient basis. Many health funds give them fancy names to make them sound special. For example, Medibank Private calls their GapCover and NIB has two different schemes called Medigap and Gapsure. 

Most health funds simply require you to provide written Informed Financial Consent (IFC) and ensure that the patients out of pocket expense or “gap” is less than $500 per “episode of care”. This is essentially referring to the the entire hospital admission. They also forbid you from charging any fees that are not MBS-rebatable, such as admission or booking fees. If you charge a gap of more than $500, then the rebate drops back to the minimum MBS fee and the patient’s gap is dramatically increased. Funds with significantly different rules to this include:

No-gap patients

If you are happy to accept the health funds rebate as payment in full for your services, that is, you “no-gap” the patient, then the health fund will directly pay you both the health fund and Medicare components of your fee in one hit, and the patient does not have to pay you anything. The health fund then is reimbursed by Medicare. 

Gapping the patient

If you gap the patient, but abide by the health fund’s scheme rules, then the health fund will still pay you directly and the patient only needs to pay you the gap. 

If you gap the patient and your fee falls outside of the scheme rules, then the patient must pay you the full fee. This includes any Medicare and health fund rebates. They then take their receipt to Medicare and their insurer to make claims for reimbursement. Alternatively, the patient can take the invoice to Medicare and their insurer, who will give them cheques for their rebate made out in your name – a massive pain! 

All billing agents submit claims electronically through a system called Eclipse – hence every billing agent spruiks their use of technology! Once submitted, your cash will hit your bank account between within 14 days after claim submission. If the claim is accepted, of course. There’s plenty of reasons why claims get rejected. This is why Solo Practice Management does validity checks on all patients’ policies before they hit the anaesthetic bay. This is part of the reason our bad debt rate is so incredibly low. 

Our expertise can help you maximise your income and minimise your administrative stress. If you’re not already using Solo Practice Management, why not give us a call to see how we can help you improve your cash flow and work-life balance.