Out of pocket costs

When being admitted to hospital as a private patient, you may have to contribute toward the cost of your treatment. In most cases, these out of pocket costs relate to medical fees charged by your treating doctors and health care providers. You may also incur out of pocket costs for hospital fees and prostheses.

Before you go to hospital, whenever practicable, you should ask the hospital, your doctors and your health insurer to find out exactly what is covered on your policy and what you will need to pay for yourself.

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When being admitted to hospital as a private patient, you may have to contribute toward the cost of your treatment. In most cases, these out of pocket costs relate to medical fees charged by your treating doctors and health care providers. You may also incur out of pocket costs for hospital fees and prostheses.

In Australia, doctors and health care providers decide how much to charge for their services. Before you receive your treatment you are entitled to ask your doctor or health care provider, your health insurer and your hospital about any costs you may have to pay out of your own pocket, commonly known as a ‘gap’ payment.

Medical gaps

If you decide to be treated as a private patient, in a public or private hospital, each of the doctors and  health care providers involved in your care may charge a fee. This can include medical specialists, surgeons, assistant surgeons, anaesthetists, physiotherapists, pathologists and radiologists. These fees are referred to as your medical fees, which are separate to the fees the hospital may charge for accommodation, time in theatre and other hospital services.

When you are admitted to hospital as a private patient, Medicare will pay 75 per cent of the Medicare Benefit Schedule (MBS) fee for each MBS item. Your health insurer will pay the additional 25 per cent (if you are eligible for benefits for those items under your health insurance policy). 

However, doctors and health care providers are free to charge more than the MBS fee and many do.  In Australia, doctors and health care providers take into account their particular costs in delivering services and may have differing views about what represents a reasonable return for their time and skill. This means that there is no cap on the amount a doctor or health care provider can charge for their services.

If your doctor charges above the MBS fee, you may have to pay the extra amount. This extra amount is sometimes known as a 'gap'. If you do not do check with your doctors and insurer what this amount is, you may be faced with significant out of pocket costs for your treatment.

Medical gaps

Kumar* was admitted to hospital as a private patient. His doctor charged $1,000 for their service.

The MBS fee for the service was $700, of which $525 (75 per cent of $700) was paid by Medicare. A further $175 (25 per cent of $700) was paid by Kumar’s private health insurer.

This left a $300 'gap' for Kumar to pay out of his own pocket to the doctor.

*identifying details have been changed for privacy reasons

Before you go to hospital, you should ask your doctor for the MBS item numbers for the services they will perform and an estimate of your out of pocket costs. You should also ask the doctor if there will be other doctors or health care providers involved in your care (for example, anaesthetist or an assistant surgeon) and how you can get an estimate of their fees. Estimates should preferably be provided in writing. For more information, see the Ombudsman's factsheet on Informed Financial Consent.

Once you have your MBS item numbers, you should then check with your health insurer to find out exactly how much is covered on your hospital policy for that procedure.

Out-of-pocket medical costs and Informed Financial Consent (IFC)

Rebecca* had a planned surgery to have her adenoids removed as a private patient. Prior to her admission, Rebecca’s treating doctor quoted a fee of $1,200.

Rebecca contacted her health insurer to confirm her hospital cover and the benefit amount she could claim towards the doctor’s fee. The health insurer advised the total benefit payable between Medicare and the insurer would be $500 towards the doctor’s fee - leaving out of pocket costs of $700.

Although Rebecca had an out of pocket expense she had to pay, Rebecca was able to make an informed decision about whether to go ahead with the surgery.

*identifying details have been changed for privacy reasons

Not all medical services are listed in the MBS. You should check with your doctor or health care provider and your insurer whether your medical treatment is listed in the MBS. If it is not listed your health insurer may not pay benefits and you may face significant out-of-pocket costs for your treatment.

If you do not have hospital cover for a particular condition or medical service, you cannot claim, from your health insurer, the fees associated with your hospital stay for that treatment.

If you are not an admitted hospital patient, then your fees may only be claimable with Medicare.

Medical gap cover schemes

Some health insurers have gap cover agreements made with particular doctors or health care providers. The agreement allows health insurers to provide benefits to cover some or all of the gap fees for your in-patient hospital treatment. If you receive treatment from a doctor or health care provider who charges above the MBS fee and who does not have a gap cover agreement with your health insurer, you may face significant out-of-pocket expenses for your treatment.

There is no requirement for any doctor to participate in an insurer’s gap cover agreement. Doctors and health care providers are free to decide on a case-by-case basis whether to use an insurer's gap cover arrangement. You should check with your doctor or health care provider and insurer whether you can be treated under this agreement. If you cannot be treated under a gap cover arrangement, you will have to contribute towards the medical fee out of your own pocket, for the amount that is billed over and above the MBS fee.

Medical costs finder

To help you find out more about the cost of specialist medical services, the Department of Health has introduced the Medical Costs Finder.

The Medical Costs Finder is an online tool that you can use to:
  • see how much people have paid out of pocket for a procedure
  • compare the costs estimated by your specialists and other health providers for a hospital procedure with the typical costs for the procedure in your area.
This helps you better understand what is typically paid and whether your likely out of pocket costs are high or low, compared with what others have paid for the treatment.

Hospital gaps

The benefits paid for hospital services such as accommodation, time in theatre and labour ward fees will depend on the type of cover you purchase and whether your insurer has an agreement in place with the hospital in which you are treated.

When there is an agreement between your insurer and your private hospital, you will have either no out-of-pocket expenses or you will be provided with details of your out-of-pocket expenses. Public hospitals don't have agreements with specific insurers but are generally treated as though they are agreement hospitals.

If you are treated in a hospital that does not have an agreement with your health insurer, you may face significant out of pocket costs for your treatment.

Find private hospitals that have an agreement with your insurer using the Agreement hospitals tool.

You are entitled to and should always ask your hospital or health insurer for an estimate in advance of the costs of your treatment, in both private and public hospitals. 

If your hospital policy has an excess or co-payment, you have to pay the agreed excess or co-payment amount for hospital treatment out of your own pocket, even if your hospital has an agreement with your insurer. 
  • An excess is the set amount that you are obliged to pay towards the cost of hospital treatment. You, and anyone else listed on your hospital policy, may be required to pay an excess every time you go to hospital, or less often, depending on your policy. 
  • A co-payment is the set amount you are obliged to pay for each day you are in hospital. For example, you, and anyone else listed on your hospital policy, may be required to pay the first $50 per day in hospital, depending on your policy.

Prostheses

A prosthesis is an artificial substitute or replacement for a body part attached or applied to the body to replace a missing part. Surgically implanted prostheses are sometimes required, such as a replacement cornea, a hip joint replacement device, a pacemaker, or a heart valve.

  • If you are having surgery to implant or apply a prosthesis, your private health insurer must pay a benefit if you have the correct hospital cover and the product is on the Prostheses List. If you are covered, your health insurer will pay at least the minimum benefit listed on the Protheses List.
  • If the minimum benefit does not cover the cost of the prosthesis, you might need to pay all or part of the gap to the hospital.
  • Before you have surgery, you should ask your health insurer if you are covered, how much your policy will pay for a particular prosthesis, and whether you will have any 'gap' to pay for the prosthesis.
  • Before you have surgery, you should also ask your doctor if the prosthesis is on the Prostheses List. If it is not on the list, you should ask your doctor if there is a prosthesis on the list that can be used instead. You should ask your doctor if you will have any 'gap' to pay for the prosthesis.
  • Before you have surgery, you should ask your hospital if you will have any 'gap' to pay for the prosthesis.

How can I avoid unexpected out of pocket costs?

We recommend that you ask about fees as soon as possible when consulting with a doctor or health care provider ahead of a hospital admission, or as soon as practicable if you need to be admitted to hospital urgently.

If your doctor arranges for your admission to a hospital or day surgery as a private patient, we recommend that you ask your doctor or your doctor’s office staff the following questions:

  • What are the MBS item numbers for the services the doctor is going to perform and what will be the charge for each of these services?
  • Does the doctor participate in my health insurer’s gap cover scheme and will the doctor treat me under this arrangement? 
  • Will I incur any personal out of pocket expenses and, if so, how much? (You should confirm this with your health insurer.)
  • Who are the other doctors treating me during the admission (e.g. anaesthetist, assistant surgeon) and how can I get an estimate of their fees?
  • Will the doctor provide me with a written estimate of any costs I’ll have to pay so I can consider this when agreeing to the treatment?
  • How will the doctor bill me?
  • Which hospital will be admitted to and does this hospital have an agreement with my insurer?
  • When will I have to pay?
If you can’t afford the treatment, discuss alternative treatment options with your specialist or GP. You may also consider shopping around to see what other specialists charge or consider being treated as a public patient at a public hospital.

You should contact your health insurer to ask about benefits for your hospitalisation and your medical bills.

Medicare can confirm the amount they will pay for the medical services provided if necessary. You can visit your local Medicare Office, contact them on 132 011 or online at Services Australia.

What can I do if my bill is much higher than expected?

In the first instance, we suggest you contact your doctor’s or health care provider’s office to check  whether you agreed to these charges before treatment, and discuss the reasons for the various charges.

If you still consider that the charge is unfair or significantly more than you were advised, we suggest that you pay at least part of the bill. For instance, pay the amount that you were expecting to pay or find out what the MBS fee is for the procedure(s) and pay that amount.

When you make that payment, provide a letter to your doctor or health care provider. This letter could include the following points:

  • State the amount you are paying and explain why you are paying that amount, for now.
  • Indicate what amount you were expecting to pay and why you expected to pay that amount. 
  • Ask if any procedures have been performed other that the ones you were expecting or if a case can be made for the unexpected charge.
  • Indicate any personal circumstances that affect your ability to pay the higher fee.
  • Suggest what further amount you would be prepared to pay (if any) and what payment arrangements you would like to make. 
  • Ask for a written response to your letter.

Where can I seek further assistance?

If you can’t resolve your issue directly with your doctor or health care provider, you can seek assistance from another organisation:
Type of issueWho to contact
A private health insurance-related matter, such as a dispute over the fee charged by a doctor or health care provider for in-patient treatment or a private patient hospital gap feePrivate Health Insurance Ombudsman
A competition or fair trade issue Australian Competition and Consumer Commission
A health practitioner standards complaintAustralian Health Practitioner Regulation Agency
A complaint about the provision of healthcare, in a public or private setting, including disputes about medical billsState and territory healthcare complaint bodies: 

ACT: Health Services Complaints Commissioner

NSW: Health Care Complaints Commission

NT: Health and Community Services Complaints Commissioner

QLD: Office of the Health Ombudsman

SA: Health and Community Services Complaints Commissioner

TAS: Health Care Complaints Commissioner

VIC: Health Complaints Commissioner

WA: Health and Disability Services Complaints Office