Thu Feb 19

How to make specialists’ fees fair? It’ll take more than a revamped website

Written by Yuting Zhang, Professor of Health Economics, The University of Melbourne

Consumers will soon have a clearer picture of how specialists’ fees compare if legislation ^[1] before parliament ^[2] is passed.

New legislation would allow the government to publish details on the revamped Medical Costs Finder ^[3] website about what individual specialists charge.

It’s a step forward for transparency, and will go part-way to relieving bill shock.

But our new research, which has been peer reviewed and accepted for publication in the Australian Economic Review, suggests how transparency alone won’t be enough to rein in specialists’ fees.

We also show how far specialists’ fees have risen since Medicare began.

What is the Medical Costs Finder website?

The Medical Costs Finder ^[4] website cost A$24 million to build. It relies on specialists voluntarily uploading their fees. But by the end of 2025, only about 88 individual doctors had done so.

If the bill ^[5] passes, new legislation would allow the government to upload billing data that’s routinely collected for Medicare claims. This would allow patients to compare out-of-pocket costs before they even book an appointment.

With more fee information, patients would have informed discussions with their GPs about where they are referred.

Few doctors have volunteered their fees. Dept Health, Disability and Ageing ^[6]

However, transparency may have unintended consequences.

Some doctors might charge more once they see their neighbours charging higher rates.

There is also the persistent perception that higher price equals better quality, which is often not true ^[7].

So the website also needs to report measures of quality health care, such as clinical outcomes and wait times for an appointment. Without this, transparency might inadvertently encourage some patients to choose more expensive doctors, wrongly assuming they will get better care.

Ideally, fees and waiting times should be provided at the doctor level, rather than at postcode level as it is currently done. That’s because fees can vary substantially within a postcode.

We need to make fees fairer

To truly fix the system, we also need to make Medicare Benefits Schedule ^[9] (MBS) fees fairer. These are fees the Australian government sets for providing certain services.

In 2014–2019 ^[10] the then government froze indexation of the MBS rebate for specialists. This proved a fundamental failure. It led to the schedule fee falling behind the cost of practice, providing a legitimate excuse for specialists to charge higher gaps to maintain (or increase) real incomes.

This set a precedent where fees for some specialities have run out of control, substantially higher than they would be if they had been properly indexed since Medicare started in 1984 ^[11].

For example, mean fees for an initial consultation with a specialist (Medicare code 104) are now 34% higher than inflation would predict. This is an average across all specialities billing 104 but the rise in some specialities is substantially higher. Psychiatrist fees (code 296) are 77% higher.

This chart outlines how much fees for initial consultations with various specialists have risen since 1984. It also shows how much MBS fees would have risen in line with the Consumer Price Index (CPI) or another measure, the Producer Price Index (PPI).

So to make Medicare fees sustainable, they should be calculated based on the real-world expenses of running a clinic, including rent, staff, advanced training, and the time a doctor provides.

To keep these payments fair over time, they should be updated every year to match inflation and the rising costs of medical technology.

What else could we do to make fees fairer?

We propose specialists be invited to participate in a “fair fees” scheme, agreeing to charge the MBS fee or a set percentage above it. Those who participate would display a sign of certification, and their patients would receive a Medicare rebate.

Those who choose not to participate would be required to advise patients upfront that no Medicare rebate will be available for their services. This uses the public subsidy as a powerful regulatory lever to protect patients from excessive charges.

The government can also encourage fair pricing by offering higher subsidies to doctors who work in regional areas where medical care is harder to find.

Other options include paying specialists a single fee for an entire treatment based on how well the patient recovers, rather than for every single test or appointment. This rewards specialists who provide high-quality care and successful results rather than those who simply process the highest number of patients. This ensures patients pay for a successful health outcome rather than being charged for every individual test or unnecessary follow-up appointment without knowing the full costs.

Even if the government does not currently have the budget to fully cover “fair” rebates, it could control specialists’ fees, as occurs in other countries ^[12].

In the past, Australian government policy has focused almost exclusively on setting rebates rather than regulating fees. This may have been because of perceived constitutional constraints ^[13]. But fees can be regulated in ways that would withstand legal challenges.

In a nutshell

The proposed legislation for greater transparency for specialists’ fees is a necessary start, but it is only the first chapter.

To ensure a health system that is truly fair, we must address the underlying economics of specialist pricing and ensure Medicare remains a guarantee of affordable care, not just a small discount on an ever-rising bill.