April Armstrong
Casey Going
Dr Cate Howell
Julian Muldoon
Paul Jarvis

Step 2: Read educational material “Introduction to Medicare”

Introduction to the Medicare Benefits Schedule 1975-2020 – 45 years on

Medicare Australia commenced in 1975 under the Labor Whitlam government. Prior to the introduction of this health insurance program over one million (17% of the population) low income earning Australians were unable to afford health insurance and were at risk of significant medical bills much like we see in the United States system we see today. Two Health Economist Richard Scotton and John Deeble co-authored a series of studies regarding the financing, delivery and distribution of health services in Australia. Deeble went on to be known as “the father of Medicare” and was a key player in the establishment of both Medibank and the future Medicare model. In truth the model was almost stumbled upon as Debble and Scotton were completing their PhD.

December 1972 saw the swearing in of Prime Minister Whitlam who had won the election with a minority government on the promises of change. There were five key aspects of his election campaign withdrawing from Vietnam, reducing the voting age to 18 years of age, providing free education and the introduction of a health system that provided equality of health services.

The new health insurance scheme known as Medibank had taken many years for the bill to pass due to the opposition under Malcom Fraser rejecting the proposed 1.3% levy to fund the scheme. The scheme on its implementation was fully government funded. Honourable Bill Hayden’s Second Reading Speech of the Health Insurance Bill 1973, on 29 November 1973, the purpose of Medibank was to provide the ‘most equitable and efficient means of providing health insurance coverage for all Australians’

The new scheme was vigorously objected to by the Australian Medical Association, the General Practitioners Society and the private health funds, in fears of a socialist reform. Many Doctors were concerned that the introduction would result in significant reductions in income. Under Medibank patients would receive free hospital services, including inpatient, emergency and outpatient services and a refund for doctors’ fees with a maximum gap of $5, in the same way that private health insurance had operated.

Malcom Fraser was elected into power in 1975 and shortly after declared significant changes to the insurance scheme, but by 1976 Medibank Mark II was announced and a 2.5% levy on taxes (exempted for those who held private health insurance) was introduced and the funding of public hospitals was changed to cap federal funding. In 1981 further changes were announced to free hospital care and bulk- billing with eligibility only for pensioners, health care card holders, sickness benefit recipients and those significantly financially disadvantages. A 32 per cent income tax rebate was introduced for those who took out private health insurance in hopes to increase numbers and reduce the financial burden of the government scheme. The Australia Medical Association was closely involved in the proposed changes during this period and there was fierce opposition to many of the proposed changes that would result in Australians first Doctors Strike in NSW. The General Practitioners Society (founded 1968) and the Royal Australian College of Surgeons played important roles with the AMA in the protection of private rights to practice through the changes that were implemented from inception to current day services. ​

Medicare Australia ​
The Hawke government proposed changes to the Medibank mark II system, to be renamed Medicare. This came into operation in 1 February 1984. Funding of Medicare was via a 1% levy on all taxpayers with an exemption for low-income earners. It has little opposition from voters with the preceding years being in turmoil due to the constant changes imposed under the Fraser government. The AMA and other medical organisations still had much ground to cover and ongoing concern regarding the risk of doctors over servicing patients. Despite the ten years and three governments Medicare was much of what was intended in its original form and is essentially the model as we see it today. The sweeping changes that occurred in the years to come would be regarding the services covered rather than the structural changes of the past.

1996 Chronic Disease Management
The Enhanced Primary Care Package was introduced in 1999 which was to provide funding for GPs to be involved with multidisciplinary case conferencing and care planning for people with chronic disease and complex needs. Health Assessments were introduced at this time with the over 55 indigenous heath assessment and the over 75 years older persons health assessment. Home medication reviews commenced in 2001 and the MBS safety net for concession card holders in 2003. By 2003 significant changes were about to begin and this is where the complexity of the Medicare system truly began. ‘A Fairer Medicare’ was proposed but met with significant opposition and it was not until 2005 that many of their proposed changes were implemented. ​​

Bulk-Billing – Inception until today
Bulk-billing low income earners was to provide health services to those who needed it without financial disadvantage. In the early 1990s there was a progressive increase in bulk-billing services. There was a sudden turn with bulk- billing rates dropping as its highest, almost 80% in 1997, to 65% by 2003. The Australia Medical Association blamed the increasing costs of running a practice and the schedule fee not keeping pace with the consumer price index. General Practitioners were moving towards an out of pocket costs in order to maintain practice viability. The AMA believed that an increase in the schedule fee would increase bulk-billing rates and reduce the cost- shifting to state services and public hospitals that had been impacted by the continual decline in bulk- billing services. The government’s belief was somewhat different blaming the workforce maldistribution for decreasing rates. The changing requirements for GP training, VR and Non-VR registration and the newly imposed ten-year moratorium were also seen as contributing factors.

In January 2005 General Practice Rebates were increased to 100% of the schedule fee. This took a level B consultation from to   

There was a massive, maldistribution of medical practitioners, with most opting for city living and practice. The rural areas and low socio- economic suburbs where medical workforce shortage was at its worse had the lowest bulk-billing rates of around 50%. This was proving to be an ongoing issue and the two tiered health system continued to challenge policy makers. By May 2005 an additional bulkbilling incentive fee of $7.50 was offered to practitioners who bulk-billed in rural areas. Later in the same year the $7.50 incentive was extended to districts of workforce shortage.

As of September 2015 bulk- billing rates were around 77.4% but GP services the rate was around 84.0% and specialists around 30.0%.

On January 1 2020 bulk-billing incentives will be removed for areas that no longer fall within the distributions of workforce shortages. Again, workforce shortage is an issue, with GP training positions been unfilled for the second consecutive years after on oversupply of applicants for the past ten years. Visa restrictions and immigration changes have resulted in International Medical Graduates being given strict time restraints to complete training, some of who which will fail and step away from general practice. Maldistribution remains an ongoing problem and concessions for Doctors recruited under the six year return to service program reduces their time to 50% of the agreed contracts.

New Medicare items and programs 2004 to 2019 – Evolution of the MBS

The Strengthening Medicare package of 2004 included the bulk- billing incentive payments, the introduction of allied health services for patients with chronic disease management. Aged care was on the agenda with the health assessment for aged care facilities (CMA) and residential medication review. Aboriginal patients 15- 55 years were provided with a new health assessment MBS item number. 

In 2005 (as mentioned above) GP services changed from 85% of the schedule fee to 100%. After hours services were addressed with the introduction of non-urgent item numbers (5000 series) and an increase in fees for the current after-hours item numbers. The change of the chronic disease management resulted in the item number 721- 731, as they stand in 2020. Pain speciality medicine became a recognised speciality with additional item numbers.

Mental health was entered on the agenda in 2006 and the provisions of mental health care plans and consultations for general practitioners and a range of services for treatment of mental health disorders via other health professionals. Health Assessments were extended to patients aged 45- 49 years at risk of chronic disease, Refugees and Aboriginal children. Easy-claim was introduced during this year providing practices with a streamlined process that provided faster delivery of Medicare funds to the practices and practitioners with less administrative paperwork. Incentives for converting to easy-claim were provided to practices. 

Chronic disease management further extended to include allied health item numbers for patients with Type 2 diabetes in 2007 and an additional health assessment was added for the Intellectual Disability Health Check. Dental services commenced at this time for patients with chronic and complex conditions (ceased 30 November 2012)

2008 saw an array of changes in the after-hours item numbers and health assessments. Two additional health assessments – Health Kids check (ceased in 2015) and the Type 2 Diabetes risk health assessment. Autism was addressed with the Helping Children with Autism initiative and Aboriginal health with the introduction of allied health item number for patients with GP management plans utilising Aboriginal health workers and practice nurses. These visits were increased from 5-10 in 2009.

Mental health training for general practitioners with new item numbers commenced in 2010 and health assessments were streamlined into time based assessments and the 715 aboriginal health assessment item number (as we use them today). Nurse practitioners and Eligible Midwives were recognised under the MBS in November 2010 providing them with rebates for services, referrals and diagnostic services. Acupuncture item numbers and public health physician item numbers were added in 2010.

The Better Start for Children with Disability initiative of 2011 was an extensive array of item numbers for General Practitioners, consultants Physicians, psychologists, occupational therapists, speech therapists, audiologists, orthoptists, optometrist and physiotherapist. The Helping Children with Autism program had extensive amendments to allied health item numbers. In July 2011 the introduction of telehealth services for eligible patients in regional areas and aged care services. Item numbers were established for General practitioners who participated in the patient- specialist video consultation. Funding to assist with establishing telehealth services was offered to clinics as a once off payment.

In January 2014 benefits were commenced to provide access for basic dental services to children aged 2-17.   

In 2015 MBS review taskforce was created to identify the changing needs of patients, the obsolete services and item numbers, and changing technology and evidence based medicine that required the MBS to be updated. Between 2015 and 2020 over seventy committees and 700 contributors have provided advice to the Taskforce on how to improve Medicare. With nearly 6000 MBS item numbers in current use ongoing review of item numbers and constant changes prove challenging for medical practitioners to remain up to date with MBS requirements.

2015-2019 saw between six and nine updates of the MBS per calendar year resulting in 36 updates of the MBS during this period. What had essentially been a twice-yearly update in May and September a constant array of item number and explanatory note changes resulted in a lack of understanding with the increasing complexities of the MBS.

2019 saw the introduction of the controversial Heart Health Check and changes to Aged Care consultations with the introduction of a flag fall at each facility attendance. The introduction of item numbers for eating disorders in November 2019 rounded of the year with the unfreezing of the MBS rebates in July resulting in a small increase in rebates.

Medicare and COVID-19 – 2020-2022

March 2020 proved that the Department of Health could respond in a timely fashion to the health needs of the community with the introduction of telephone and video consultations for General Practitioners, Specialists and Allied Health. Initially there was a requirement to bulk bill these services which was controversial and subsequently reversed (Except for COVID vaccine item numbers) for non – GP specialists and then specialists. The monthly changing criteria for MBS item numbers, multitudes of new items.

In December 2020 an introduction of mental health item numbers for residential aged care facilities (RACF) provided access of up to twenty individual psychological services. This was in recognition of the impact of COVID on RACF as well as the gap within the MBS that previously had not provided for mental health care plans or mental health services. In addition, an extension of MBS item numbers for multidisciplinary care plans and Health assessments for Aboriginal and Torres strait Islanders in RACFs aligned services with those available in the general community.

In July 2021 many of the telephone consultation item numbers were removed and a reduction in telephone consults for general practice with only two item numbers being available. Smoking cessation counselling item numbers were introduced and were exempted from the established clinical relationship rulings. These item numbers were introduced to align with the TGAs decision to include e-cigarettes containing nicotine to a S4 prescription medication. Twenty-four MBS item numbers for blood borne viruses, sexual and reproductive health were also introduced. An extension of availability of MBS item numbers for mental health plans, consults and non-directive pregnancy counselling allowed GPs to continue to offer both telephone and video consultations for these patients.

January 2022 saw the introduction of increased bulk-billing incentive rebates for regional and remote areas, resulting in a two-tiered structure with higher rebates for remoteness. These new incentives posed multitudes of problems with software not able to automate the coupling of bulk-billing incentives to eligible patients.

To reduce the reliance of telephone consultations the Department of Health introduced the 30/20 rule from July 1, 2022. This refers only to telephone consultations and results in practitioners being referred to the PSR should they bill more than thirty telephone consults on any twenty days in a 12-month period.

In summary

Medicare has seen an evolutionary transformation and the increasing complexity and changing item numbers from 2004 until 2022 has led many practitioners to be perplexed about how they can time manage their professional development with the rapidly changing medical services in conjunction with legislative and billing practices. The fear of being audited increases as unintendedly incorrect billed item numbers occur on a daily basis. Understanding the fundamentals of the MBS, the categories and the explanatory notes is the foundations of continual learning which will assist practitioners in maintaining their compliance with the ever increasing difficulty of the health economics and policy changes.


National Health plan August 2019
National Health plan August 2019 ​

MBS taskforce  

Medicare Australia annual report 2009-2010

Telehealth: Specialist video consultations under Medicare

History of key MBS primary care initiatives 1999-2013

Australian primary care policy in 2004: two tiers or one for Medicare?

100% rebate information

Mental health and Medicare ​ say/10957812

Eating disorder

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