Informed financial consent

Going to hospital can be a stressful and confusing time and it’s vital that you find out if you’ll have to pay any out of pocket expenses beforehand. Knowing the exact amount that your treatment will cost is informed financial consent, and you’ll need to liaise with your doctor, your private health insurer and your hospital to work out your total expenses.

What does informed financial consent mean?

Informed financial consent refers to knowing how much your private medical bills will cost before you go in for treatment. Depending on your circumstances, some of the treatment costs might be covered by Medicare or your private health insurer, but anything left over will need to be covered out of your own pocket – this is known as a gap payment.

It’s important to ask your doctor, your health fund and your hospital about how much you will have to pay for treatment before you go under the knife. Doctors and hospitals must inform you of the total cost of treatment, preferably in writing, before you are admitted to hospital or receive treatment. This allows you to compare health services providers and possibly save money on out of pocket expenses.

Are you going to hospital as a private patient?

If you’re scheduled to receive treatment as a private patient, as well as any questions and concerns you will have about your health, you’ll also want to know how much the procedure will cost. The Medicare Benefits Schedule (MBS) lists a set fee for every medical service, and Medicare covers 75% of that fee when you receive hospital treatment as a private patient. If you have adequate private health cover in place, your private health fund will cover the remaining 25%.

However, extra costs may arise if the specialist treating you, or other doctors involved in your treatment and care, charge more than the MBS fee. If the doctor or specialist is happy to use your health fund’s ‘gap cover arrangements’, your private health insurance can cover more than 25% of the MBS fee.

But it’s entirely up to the doctor’s discretion as to whether they use an insurer’s gap cover arrangements. If they decide not to use those arrangements, you’ll need to cover the fee gap out of your own pocket.

That’s why it’s important for you to get the full information on the cost of a procedure from your treating doctor, your health fund and your private hospital before you receive any treatment.

Questions to ask your doctor, fund and hospital

The Australian Government provides a handy checklist of questions you can ask to find out about any out of pocket expenses associated with your treatment.

Questions for your treating doctor or specialist:

• How much is your fee for the treatment I will receive?
• Will you agree to participate in my health fund’s Gap Scheme?
• Will my private health insurance cover all of your fee or will I have to pay the gap?
• How much will that gap be?
• What happens if I can’t afford this amount?
• What other doctors and specialists will be involved in my treatment?
• How can I get in touch with them to find out about their fees?
• Will I receive a surgically implanted device or prosthesis? Will this be covered by my health insurance or will I have to pay the gap?
• What is the MBS item number for this procedure?

Questions for your private health fund:

• Does my health insurance policy provide cover for this procedure?
• Do you have a contract with the hospital where I want to have the procedure performed?
• Does my doctor participate in your Gap Scheme?
• Do I need to pay an excess or co-payment when I’m admitted to hospital?
• If so, how much?
• Are all treatment expenses covered by my policy, or will I have to pay extra for hospital accommodation, doctors’ fees and other costs?

Questions for your hospital:

• Does this hospital have an agreement with my private health insurer?
• Is there a gap I will have to pay for hospital accommodation costs?
• Are there any other expenses I will have to cover during my stay in hospital?

How much of the doctor's bill will Medicare cover?

As mentioned above, the Medicare Benefits Schedule (MBS) is produced by the Australian Government and lists a fee for every medical service. When you receive treatment as a private patient in a public or private hospital:

• Medicare will refund 75% of the MBS fee for services and procedures you receive from the treating doctor.
• Some or all of the remaining 25% can then be covered by private health insurance.

However, doctors and specialists have no obligation to charge you the MBS fee, so their fees may end up being more than the amount listed in the MBS. It’s also worth pointing out that when you are being treated in hospital there may be several specialists involved in your care, including a surgeon, an anaesthetist and a pathologist. With this in mind, there can be quite a large gap between the total fee charged for your procedure and the 75% MBS fee coverage provided by Medicare.

How do gaps work?

The gap refers to the difference between the total cost of medical or hospital expenses and the amount of that which is covered by Medicare and your private health insurance.

There are two types of gaps: hospital gaps and medical gaps.

• The medical gap arises when you receive in-hospital treatment as a private patient. While Medicare covers 75% of the MBS fee for your procedure and your health fund will cover the remaining 25% (if you have adequate cover in place), sometimes doctors charge more than the MBS fee. As a result, you may have to pay the extra amount – the gap.
• All private health funds in Australia offer some type of gap cover scheme to help provide cover when the fee charged by your doctor is more than the fee listed in the MBS. However, cover is only provided if the fund has an agreement with the doctor or if the doctor is happy to participate in the fund’s "gap cover scheme". Whether or not they decide to participate is entirely up to the doctor.
• The hospital gap refers to situations where your health fund does not offer sufficient cover for private patient hospital accommodation costs and you need to cover some of those out of your own pocket. While health funds have arrangements in place with many hospitals to provide full or partial cover for accommodation costs, if you receive treatment at a hospital that does not have an agreement with your health fund, you may incur sizable out of pocket expenses.

How can I avoid additional medical costs?

• Talk to your doctor. Talk to your doctor or specialist to find out how much they charge for a procedure. Ask what the MBS item number is for the procedure and determine how their fee compares to the one listed in the schedule. If they charge more than the MBS fee, check to see whether they are willing to participate in your health fund’s gap cover scheme.
• Talk to your health fund. Your health fund can give you a list of doctors that participate in its gap cover scheme, as well as a list of the hospitals around Australia with which it has agreements. Using doctors and hospitals approved by your fund can save you a substantial amount of money.
• Talk to the hospital. Before deciding on the hospital where you will receive treatment, work out whether you will have to cover any out of pocket accommodation expenses.
• Get help. If you’re sick or injured, gathering the information you need to make an informed decision regarding medical costs can be difficult. Ask a friend or loved one to help you find out the details you need.
• Written estimate. If possible, get a written estimate of all costs you will have to pay before committing to a procedure.
• Bill details. Finally, work out how your doctor will bill you and how long you will have to pay any additional costs not covered by Medicare or your health fund.

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

The Private Health Insurance Ombudsman recommends taking the following steps if you receive a bill from your doctor that is much higher than anticipated:

• Make sure you didn’t agree to the charges before receiving treatment. You may have already been told about them and either failed to comprehend what they meant or simply didn’t question them.
• Contact your doctor. Get in touch with your doctor to discuss the charges and why they ended up being more than you expected.

• If you still think the bill is unfair, the Ombudsman advises paying part of the bill (for example, the MBS fee or the amount you were expecting to pay). When you make the payment, provide a letter explaining the amount you are paying, the amount you initially expected to pay for the procedure and why you expected that amount, and asking if the doctor can make a case explaining the unexpected high cost of the procedure. You can also suggest any further payments you may be willing to make and request a written response to your letter.
• If you can’t come to an agreement with your doctor, you can contact the health complaints agency in your state or territory. If the matter involves private health insurance, the Private Health Insurance Ombudsman may also be able to offer assistance.

Informed financial consent allows you to make the right decision about the medical care and treatment you receive. Make sure you ask all the right questions and find out exactly how much your treatment will cost before you go under the knife.