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UTSpeaks: Holes in the netDr Kees van Gool - 1 February 2012

Holes in the net: Is Medicare still meant for all of us,

or only a privileged few?

UTSPEAKS

1 February 2012

Kees van Gool

Based on joint work with Elizabeth Savage, Rosalie Viney Meliyanni Johar, Stephanie Knox, Glenn Jones and Marion Haas

Outline• Part 1: The Extended Medicare Safety Net

(EMSN) – a background

• Part 2: The impact of the EMSN on fees and out-of-pocket costs

• Part 3: The impact of 2010 EMSN reforms

• Discussion – some observations about Medicare

PART 1: BACKGROUND TO MEDICARE SAFETY NET (EMSN)

4

5

Average fees, benefits and out-of-pocket (OOP) costs per consultation

Source: DOHA 2011; Constant 2010 dollars

020

40

60

80

100

Const

ant dolla

rs

1985 1990 1995 2000 2005 2010

Year

General Practice

020

40

60

80

100

Const

ant dolla

rs1985 1990 1995 2000 2005 2010

YearDoctor's fee

Medicare benefit

Patient OOP cost

Specialist Attendances

Strengthening Medicare -2004/05

• Three main reforms:1. An incentive for GPs to bulk-bill children and

concession cardholders (+ regional)

2. Increase Medicare benefit for GP services

3. Medicare Safety Net

6

7

Medicare Safety Net – March 2004• Applies to all Medicare funded out-of-hospital services• Covers 80% of OOP costs above a threshold.• As of January 2012 the thresholds were:

– $598.80 for low/middle income families– $1198.00 for all other families

• If registered, the family’s OOP costs count towards the same threshold.

• Threshold changes:– Indexed to CPI at the start of every year– One off change in January 2006

• Works on a calendar year basis– Threshold count starts afresh on 1 January

• An example…

8

Safety Net example for the Smith family*

* The Smith family are registered and eligible for the lower threshold of $599

Date Service Doctor Medicare Safety OOP Cumulativecharge rebate Net benefit cost OOP cost

1-Feb GP visit 55 34 - 21 218-Feb Spec -

obst 243 69 - 174 195

2-Mar Ultrasound 180 60 - 120 3152-Mar GP visit 55 34 - 21 3362-Mar X-ray 150 56 - 94 4308-Mar Spec 150 69 - 81 5113-Apr Antenatal

attendance 78 34 - 44 555

4-May Antenatal attendance

78 34 - 44 599

9-Jun Pregnancy planning

2000 104 1517 379 978

6-Jul Antenatal attendance

78 34 35 9 987

2-Sep GP visit 55 34 17 4 9915-Jan GP visit 55 34  - 21 21

Total Medicare and Safety Net expenditure (constant 2010 dollars)

9

Year Medicare rebate

(a)

Safety Net(b)

Medicare benefit

(= a + b + OSN)

  $ millio

n

%change

$ millio

n

% chang

e

$ millio

n

%change

2004 9,144 231 9,386

200510,27

012 322 39 10,60

113

200610,50

82 275 -14 10,79

42

200711,29

47 358 30 11,66

48

200811,95

16 436 22 12,40

06

200912,83

67 539 23 13,38

88

10

Individuals with out-of-pocket costs > $2000

2000 2001 2002 2003 2004 2005 2006 20070

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

>$2000 >$3000 >$4000 >$5000 >$6000 >$7000

Nu

mb

er

of

ind

ivid

ua

ls

11

0.2

.4.6

.81

Cu

mul

ativ

e p

rop

ortio

n o

f in

divi

dua

ls

0 1 2 3 4 5SEIFA Category

equality line 2001 OOP

2003 OOP 2005 OOP2007 OOP 2005 EMSN2007 EMSN

Safety Net expenditure, 2007 ($ millions)

12

GP; 26.2

Specialist; 51.3

Obstetrics; 99.7

Operations & anaesthetics;

20.5

Diagnostic imag-ing; 25.7

Radiation on-cology & nu-

clear medicine; 12.0

Assisted repro-ductive services;

71.7

Other; 16.5

13

Service description (Medicare item)

Mean safety net benefit

$

Number of services

In-hospital Out-of-hospital

Total

Hair transplant (45560) 3,288 12 192 204

Lipectomy (30174) 2,741 386 12 398

Rhinoplasty (45638) 1,657 2,149 20 2,169

Chronic/complex dental care (10977)

1,611 0 61 61

Reduction mammaplasty (45522)

1,534 229 86 315

Brachytherapy planning (15539)

1,516 427 206 633

Liposuction (45585) 1,400 123 84 207

Rhinoplasty (45641) 1,373 1,873 29 1,902

Vulvoplasty (35533) 1,241 1,036 99 1,135

Assisted reproductive services (13200)

1,193 18 30,578 30,596

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PART 2: THE IMPACT OF THE EMSN

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Data and methods

• Quarterly data on doctor fees, Medicare rebate, EMSN benefits, OOP costs and services, by professional groups and in hospital and out-of-hospital

• Estimate pre and post policy trend in:– Doctor fees, out-of-pocket costs and services

used– Compare against trends in

• Medicare rebate• In hospital

17

Trend in average fees, benefits and OOP costs, all professional groups (excludes GP and pathology)

2040

6080

100

120

$

2000q3 2002q3 2004q3 2006q3 2008q3

18

050

100

150

200

$

2000q3 2002q3 2004q3 2006q3 2008q3

Obstetrics

200

400

600

800

1000

1200

$

2000q3 2002q3 2004q3 2006q3 2008q3

Assisted reproductive services

Note: scale $0 to $1200Note: scale $0 to $200

19

Average fee by setting Total fees by setting ($ million)

Obstetrics:

in and out-of-hospital fees

020

040

060

080

010

00$

2000q3 2002q3 2004q3 2006q3 2008q310

2030

4050

60$

2000q3 2002q3 2004q3 2006q3 2008q3

Out of hospital In hospital

20

Average fee by setting Total fees by setting ($ million)

Assisted reproductive services: in and out-of-hospital fees

400

600

800

1000

1200

$

2000q3 2002q3 2004q3 2006q3 2008q3

Out of hospital In hospital

020

4060

$

2000q3 2002q3 2004q3 2006q3 2008q3

Conclusion from our 2009 Review

• Change to Medicare arrangements• Expenditure is small but with high growth• Fewer people with very high OOP costs - but rising.• It is a regressive policy – favours the wealthy• Change in incentives for in and out-of hospital billing• Significant rises in provider fees has led to ‘leakage’:

– For every $1 spend on the Safety Net• 43¢ towards increased provider fees• 57¢ towards reducing patients’ OOP costs.

– Inflationary effect could make things worse for those who do not qualify for Safety Net benefits

• May reinforce the mal-distribution of specialists– Enable wealthy to afford more specialists care

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Government response: Safety Net Caps• 2009-10 Budget Measure

– Review cited as support for the measures• Caps apply to Safety Net Benefits payable per service for selected

MBS items from Jan 1 2010– ART Services (11 items)– Obstetrics (57 items)– One type of cataract surgery– Hair transplantation for alopecia– One type of varicose vein removal– Nov 2010 new items for midwifery services

• For capped items, there is a maximum Safety Net benefit that can be claimed

• Example.....

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Safety Net cap example

Doctor fee Medicare rebate

Safety Net benefit

Out-of-pocket cost

2003 150.00 38.00 - 112.00

2009 150.00 38.00 89.60 22.40

2010 150.00 38.00 30.00 82.00

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• Item capped in 2010• Cap is $30.00 (maximum Safety Net benefit)• Assume that the patient has reached the Safety Net threshold.

• After caps were introduced, in this example the patient pays 100% of any doctor fee above $75.50

PART 3:THE IMPACT OF CAPPING

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Data and method

– Aggregate monthly data on fees, benefits (rebate and EMSN), OOP costs

– Observation period: Jan 2000 to Dec 2010– Interested in what happened after:

• EMSN introduced– Jan 2004• Caps introduced– Jan 2010

– Contrast changes over time between• In and out-of-hospital services• Medicare items that complement or substitute for capped

items• Doctors that charge high fees and low fees

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Limitations

• One year observation period after caps implemented• Medicare data retrieved March 2011• Medicare benefits schedule revision:

– Assisted reproductive technology (ART) services (new items, change in the definition of items, change in Medicare rebate

– Obstetrics (new item, change in Medicare rebate)

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Average Medicare and EMSN benefit per service27

  2009 2010  Medicare

rebateEMSN benefit

MedicareMedicare rebate

EMSN benefit

Medicare

ART services* 475 656 1131 686 361 1047

General practice 41 0 41 41 0 41

Obstetric ultrasound* 67 11 78 68 4 72

Obstetrics* 42 106 148 55 13 68

Ophthalmology* 234 37 271 231 34 265

Plastic & recon surg* 263 53 317 263 49 312

Psychology 93 4 97 93 4 97

Radiation oncology 143 14 157 145 15 160

Specialist attendances 51 3 54 50 3 54

Vascular procedures* 121 152 273 123 66 189

* Service group with at least one capped item

Trend in average fees, benefits and OOP costs, all professional groups (excludes GP and pathology)

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20

40

60

80

100

120

$

Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10

Average fee Predicted average fee

Average rebate Predicted average rebate

Average rebate+EMSN Predicted average rebate+EMSN

Average OOP Predicted average OOP

Vascular procedures

• Capped item 32500, in 2010:– Injection of sclerosant into varicose veins– 55,000 OOH services (↓9% from 2009)– 206 IH services (↑ 71% from 2009)– MBS rebate for OOH = $89.85– EMSN cap = $111.65

• Uncapped item 32504 in 2010– Multiple excision of varicose veins– 2754 OOH services (↑ 91% from 2009)– MBS rebate for OOH = $218.90

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Fees for capped varicose veins item in and out hospital30

0

250

500

750

1,000

79.25

0

250

500

750

1,000

89.85

Jan 00Jan 00 Jan 04Jan 00 Jan 04 Jan 10 Jan 00Jan 00 Jan 04Jan 00 Jan 04 Jan 10

In hospital Out of hospital

25th percentile 50th percentile 75th percentile 90th percentile

Pro

vid

er fe

e $

Fees for capped and uncapped varicose veins items31

0

250

500

750

1,000

89.85

0

1,000

2,000

3,000

4,000

218.90

Jan 00Jan 00 Jan 04Jan 00 Jan 04 Jan 10 Jan 00Jan 00 Jan 04Jan 00 Jan 04 Jan 10

Item 32500 (Capped) Item 32504 (Uncapped)

25th percentile 50th percentile 75th percentile 90th percentile

Pro

vid

er fe

e $

Cataract surgery

• Capped item 42702, in 2010:– Lens extraction and insertion of artificial lens– 4,708 OOH services (↓23% from 2009)– 125,708 IH services (↓ 7% from 2009)– MBS rebate for OOH = $660.60– EMSN cap = $101.50– Cuts to MBS rebate ($102.90)

• Uncapped item 20142 in 2010– Initiation of management for anaesthetic for lens surgery– MBS rebate for OOH = $97.20

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Fees for capped cataract surgery in and out hospital33

0

1,000

2,000

3,000

4,000

548.85

0

1,000

2,000

3,000

4,000

660.60

Jan 00Jan 00 Jan 04Jan 00 Jan 04 Jan 10 Jan 00Jan 00 Jan 04Jan 00 Jan 04 Jan 10

In hospital Out of hospital

25th percentile 50th percentile 75th percentile 90th percentile

Pro

vid

er

fee $

Fees for uncapped item 20142 -anaesthetic for lens surgery - in and out hospital

34

0

500

1,000

1,500

2,000

85.75

0

500

1,000

1,500

2,000

97.20

Jan 00Jan 00 Jan 04Jan 00 Jan 04 Jan 10 Jan 00Jan 00 Jan 04Jan 00 Jan 04 Jan 10

In hospital Out of hospital

25th percentile 50th percentile 75th percentile 90th percentile

Pro

vid

er

fee $

Hair transplant

• Capped item 45560, in 2010:– Treatment of alopecia– 100 OOH services (↓50% from 2009)– 14 IH services (steady)– MBS rebate for OOH = $387.35– EMSN cap = $152.25

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Fees for capped hair transplant in and out hospital36

0

3,000

6,000

9,000

12,000

341.800

3,000

6,000

9,000

12,000

387.35

Jan 00Jan 00 Jan 04Jan 00 Jan 04 Jan 10 Jan 00Jan 00 Jan 04Jan 00 Jan 04 Jan 10

In hospital Out of hospital

25th percentile 50th percentile 75th percentile

Pro

vid

er fe

e $

Data and methods for the capped groups: ART and obstetrics

• Changes to MBS in ART and obstetrics• Unit of analysis:

• Services• Episodes of care

• Definition of an episodes of care:• Obstetrics: Confinement item – 10 months of obstetric

items• ART: planning item + 30 days of ART items• Observation period: June and October 2003 to 2010

• Provider fees, benefits, OOP costs and services used over time

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ASSISTED REPRODUCTIVE TECHNOLOGIES (ART) GROUP

38

39

0

100

200

300

0

500

1000

1500

Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10

Obstetrics

Assisted reproductive technology services

Average fee Predicted average fee

Average rebate Predicted average rebate

Average rebate+EMSN Predicted average rebate+EMSN

Average OOP Predicted average OOP

$

ART cycles (June and October) by SEIFA

40

Year

SEIFA Q1 (Least

advantaged)

SEIFA Q2 SEIFA Q3

SEIFA Q4

SEIFA Q5 (Most

advantaged)

2003 438 563 967 1,900 2,7002004 468 648 1,166 2,223 3,4092005 449 679 1,279 2,494 3,7592006 475 703 1,340 2,530 4,0522007 575 786 1,562 2,819 4,5442008 543 824 1,513 3,053 4,8332009 666 912 1,775 3,487 5,2442010 593 818 1,639 2,936 4,668

41 Year Average P25 P50 P75 Average P25 P50 P75

  Fees per cycle ($) Medicare benefit per cycle ($)

2003 2,057 759 1,418 3,498 1,231 541 858 2,022

2005 2,739 1,036 1,991 4,358 2,295 812 1,955 3,777

2007 3,382 1,369 2,409 5,688 2,783 903 2,032 4,702

2009 4,414 1,859 4,388 7,083 3,645 1,527 3,419 5,897

2010 4,306 1,982 2,923 7,198 2,921 1,254 1,572 4,979

  EMSN benefit per cycle ($) OOP cost per cycle ($)

2003        827 82 390 1,504

2005 1,019 45 688 1,761 444 114 333 633

2007 1,407 213 900 2,544 599 194 465 916

2009 2,168 660 1,787 3,728 769 282 846 1,073

2010 1,051 131 667 1,668 1,385 671 1,180 2,136

Number of ART cycles (June and October)

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Year Stimulated A

Stimulated B

Non-Stimulated

Artificial insemination

Frozen/donated embryo

TOTAL

2003 2,927 0 57 1,896 1,641 6,628

2004 3,740 0 44 2,053 1,989 7,966

2005 4,194 0 59 2,107 2,245 8,745

2006 4,422 0 47 2,218 2,369 9,150

2007 2,407 2,746 28 2,257 2,833 10,369

2008 2,420 3,298 28 2,263 2,744 10,878

2009 2,857 4,030 37 2,216 2,910 12,189

2010 2,224 3,423 13 1,641 3,407 10,802

Cumulative distribution of provider fees43

0

0.25

0.50

0.75

0.901

0

0.25

0.50

0.75

0.901

0 2,500 5,000 7,50010,000 0 2,500 5,000 7,50010,000 0 2,500 5,000 7,50010,000

0 2,500 5,000 7,50010,000 0 2,500 5,000 7,50010,000

Stimulated A Stimulated B Non-stimulated

Artificial insemination Frozen/donated embryo

2004 2009 2010

Provider fee $

OBSTETRICS

44

45

0

100

200

300

0

500

1000

1500

Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10

Obstetrics

Assisted reproductive technology services

Average fee Predicted average fee

Average rebate Predicted average rebate

Average rebate+EMSN Predicted average rebate+EMSN

Average OOP Predicted average OOP

$

46

0

200

400

600

800

1000

1200

1400

1600

1800

2000

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10

Private confinement (MBS item 16519)

Private confinement (MBS item 16522)

Average fee Predicted average fee

Average rebate Predicted average rebate

$

Number of private confinements by SEIFA

47

Year

SEIFA Q1

(Least advantag

ed)

SEIFA Q2

SEIFA Q3

SEIFA Q4

SEIFA Q5 (Most advantag

ed)

2007 643 1,075 2,225 4,074 6,563

2008 640 1,137 2,247 4,147 6,553

2009 634 1,214 2,360 4,292 6,660

2010 546 1,010 2,178 3,947 6,156

Number of private confinements

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June births October births

Year Normal Complex TOTALNorma

lCompl

exTOTAL

2007

4,179 2,177 6,356 4,628 2,268 6,896

2008

4,119 2,110 6,229 4,782 2,408 7,190

2009

4,194 2,438 6,632 4,620 2,589 7,209

2010

4,023 2,517 6,540 3,870 2,295 6,165

Cumulative distribution of provider fees49

0

0.25

0.50

0.750.90

1

0

0.25

0.50

0.750.90

1

0 2,000 4,000 6,000 8,000 0 2,000 4,000 6,000 8,000

0 2,000 4,000 6,000 8,000 0 2,000 4,000 6,000 8,000

June, Normal June, Complex

October, Normal October, Complex

2007 2008 2009 2010

Total provider fees $

Conclusions EMSN Caps• Government EMSN spending down

– 29% on 2008– 42% on 2009

• Caps give Government a policy lever to reduce their exposure to provider fees.

• But– Remains exposed to demand side risk– Thresholds indexed by CPI– Caps require parliamentary approval

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Conclusions EMSN Caps• Following introduction of caps, fees have fallen

for some items/services.• But OOP costs have increased and service use

fallen.• Unintended consequences:

– Shifts care setting/billing– Substitute billing to non-capped items – Complementary services fee changes

• Results are preliminary – Early days - one year follow-up only– Other changes to MBS.

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Discussion• Out-of-pocket costs seen as price signals to improve efficiency, but is

a very blunt policy tool• Leads inequity and worse health outcomes• Lack of clarity about doctor fees and Medicare benefits

• High OOP costs for specialist type services, not GPs.– Have we got this the wrong way around? – Specialist services are referred services (GP’s recommendation – what is

the role of price signals?)• High OOP costs for specialist services are an artifact of Medicare

rebate not keeping pace with doctor fees.– Concern of government expenditure– Doctor control over fees– Subsidising the wealthy - Safety Net amplifies this

• Government’s Safety Net dilemma when setting MBS rebates

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Discussion• What do we want from Medicare? • Scotton and Deeble wrote in 1968:

• Health care should be available without regard to income, age, length or type of illness, and that the cost of providing this care should be equitably distributed.

• That the system should promote the most efficient use of resources in the health care industry.

• Greater transparency in doctor fees, setting Medicare rebate and caps.• Patients need to know what their OOP costs will be.• Government needs to think beyond its own budget line.

• Rethink on how we pay doctors:• Potential use of financial incentives to encourage lower doctor

fees for target groups.• Research agenda on provider and patient behaviour in response to

incentives

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Acknowledgements: Australian Government Department of Health and

Ageing Medicare Benefits Branch and the Medicare Financing and Analysis Branch

If you haven’t registered your family for the Medicare Safety Net but would like to:

www.medicareaustralia.gov.au/public/services/msn/register.jsp

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