Medicare rebates 'should be recouped from specialists who charge high fees'

The Grattan Institute has suggested a number of measures to bring specialists fees down, which it says have grown three times the rate of inflation since 2023.

In a new policy document the think tank said even if the government implemented a range of other recommended measures to improve access and affordability, regulation of fees would still be necessary.

Out of control: How to rein in runaway specialist fees is a follow up to its 2025 report Special treatment: Improving Australians’ access to specialist care.

It found in the past year, the average specialist fee had risen by 4% on top of inflation. Its 2025 report had found a 73% increase in the cost of seeing specialists in Australia since 2010.

The new report reiterated the need to modernise public clinics, invest in those where the greatest need was, train specialists in areas Australia needs them, and reduce unnecessary referrals.

It has also suggested making specialists who charge extreme fees return Medicare funding.

The institute has proposed targeting specialists who charge on average more than three times the Schedule Fee across a year.

“They would have to repay the government the value of the Medicare rebates for their services that year. Patients would keep their rebates,” according to the policy brief.

The Institute says this would achieve strong protection from extreme fees, protect access to care and be fair to both patients and specialists.

The Institute said under its proposal consequences would fall on the provider, not the patient.

“Patients would claim their Medicare rebate as usual. Only later, once a specialist’s annual charging pattern was calculated, would the specialist be required to repay the government.”

It anticipates this would make it harder for the financial consequence to be passed directly on to an individual patient.

It acknowledged there were legitimate reasons that fees for an individual service could vary, adding that is why the average of a full year of billing would be a useful measurement.

The document said limiting the policy to what were clearly extreme fees reduces the risk of large numbers of specialists giving up on Medicare funding and charging patients more, or shifting their work to different settings.

Transition period

The Grattan Institute also acknowledged there was a need for the transition to regulation to be managed carefully, noting that for some specialities the government should consider phasing in the policy with a temporary, higher threshold where Schedule Fees may need reviewing.

“Although the rule captures only a small share of specialists overall, in some specialties the share is much higher," the policy brief stated.

“More than 60% of dermatologists would be classified as extreme-fee chargers, and more than a quarter of obstetricians and gynaecologists."

Applying the full penalty to such a large share of a specialty could create a greater risk of Medicare exit, abrupt patient fee increases, or disruption to access.

“It may also indicate that Schedule Fees for some of the specialty’s main services are too low."

The AMA has argued against using Medicare rebates as a benchmark for specialist fees, pointing to a failure from the government to keep rebates inline with Consumer Price Index.

However, Grattan argues slow indexation could not fully explain fast-rising fees.

"While rebates have fallen in real terms, that explains only a fraction of the fee increases Australians have faced," according to the policy brief.

It points out that in the past three years rebates rose by 8.7%, and inflation rose by 10.2%, resulting in a real fall of 1.3%. In the same period, fees rose by 30.6% "dwarfing the lost revenue".

"The level of government funding isn’t the main reason for rising fees, and increasing it isn’t the best solution either."

It also argued there was no guarantee that higher rebates would be passed on through lower fees.

"The impact of restoring lost indexation would be even lower for extreme fees. Those fees are so high that restored indexation would only put a small dent in them, even if it were fully passed on to patients."

AMA National President Dr Michael Bonning said while the association was willing to work with the government on solutions, the answer to an affordability crisis did not lie in regulating doctors against inadequate Medicare rebates.

“The fact that patients are paying more to access specialist care, and in some cases can’t access care, concerns doctors more than anyone.,” he said.

“But a patient’s out-of-pocket cost is not the same thing as a doctor’s fee. The gap patients pay is what is left after Medicare makes its contribution and a patchwork of private health insurers make their differing contributions, and that contribution has failed to keep pace with the real cost of providing care.”

Dr Bonning said the AMA was ready to work with the government on genuine outlier fees, better informed financial consent and greater transparency for patients.

Earlier this year Health Minister Mark Butler admitted specialist fees had got "out of control" and had ordered the Department of Health, Disability and Ageing's Specialist Affordability Working Group to advise the government on practical reforms to improve access to affordable specialist health care services in Australia.

As part of that process public hearings into the Parliamentary inquiry into access and affordability of medical specialists in Australia are set to begin later this month.