Medicare Billing in Public Hospitals

Information for practitioners billing Medicare for patients in public hospitals.

Page last updated: 31 August 2020


    Difference between Public and Private Hospitals

    Public hospitals, in Australia, are those that are government-funded through both Commonwealth and State or Territory payments. This funding is underpinned by the National Health Reform Agreement (NHRA).

    When a person is admitted to a public hospital, they are treated as a public patient, that is, unless the person elects to be treated as a private patient. Patient election is based on informed financial consent. Patients can elect to be a public patient in a public hospital or a private patient in a public hospital.

    A public patient in a public hospital should be provided treatment, throughout the hospital episode, free of charge, providing the patient has a current Medicare card and the treatment is deemed clinically necessary.

    If a patient is treated as a public patient this means that no claims should be made against the Medicare Benefits Schedule, regardless of whether that service is bulk billed or not (a bulk billed service is, by definition, not a public service).

    Importantly, all associated care for public patients is the responsibility of the hospital, including all pathology and diagnostic tests.

    Practitioners should not refer public patients for private MBS services – this includes tests conducted prior to admission and generally also includes follow-up appointments related to the episode of care.

    Patient election status and practitioner billing options

    Private Patient | Public Hospital

    • Can choose to be treated, after providing informed financial consent, as a private patient in a public hospital
    • Patient entitled to MBS rebates for attendances
    • Practitioners with a right to private practice must ensure arrangements do not involve the practitioner and/or hospital being paid twice for a service

    Private Patient | Private Hospital

    • Commonly funded through a mix of private health insurance and MBS arrangements
    • It is unlikely that there will be a situation where MBS claiming also involves a public hospital payment or arrangement for a private patient in a private hospital, noting that practitioners in private hospitals can see public patients (see below)

     Public Patient | Private Hospital

    • Private hospitals can contract out to provide services to public patients
    • Record keeping for these patients should be carefully managed
    • Ensure patient’s election status is clearly tracked, including if the patient elects to change status
    • Ensure MBS claims are not made for services funded as public services

    Commonwealth Health Insurance Act 1973

    Eligibility for Medicare is governed by the Health Insurance Act 1973 (known as the HIA hereon in). Section 19(2) of the HIA states that unless the Minister otherwise directs, a Medicare benefit is not payable in respect of a professional service that has been rendered by, or on behalf of, or under an arrangement with a) the Commonwealth; b) a State; c) a local governing body; or d) an authority established by a law of the Commonwealth, a law of a state or a law of an internal Territory.

    This means, unless the Minister provides an exemption, it is a contravention of the HIA to claim a Medicare benefit for a professional service where the same professional service is already paid for through another mechanism or arrangement with the Australian Government or a State or Territory Government.

    The National Health Reform Agreement

    The National Health Reform Agreement (or NHRA), specifically, clause G17 provides that services provided to public patients should not generate charges against the commonwealth MBS.

    Additionally, for a professional service rendered to a patient in a public hospital to be eligible to claim Medicare benefits, the following criteria must be met:

    • The patient has elected, in writing, to be treated as a private patient
    • The patient is eligible for a Medicare benefit
    • Referrals are valid for Medicare and NHRA purposes
    • The MBS item number is billed correctly and only for the service(s) rendered by the individual provider
    • The provider who is rendering the services must not be a paid employee of the public hospital at the same time of the service
    • The provider must have rights through a hospital agreement to treat patients under private practice and can only bill Medicare if the patient has elected to be a private patient under admission
    • The patient has been referred to a named specialist (if relevant) who is exercising their rights of private practice and the patient has chosen to be treated as a private patient

    Patient Election

    Under the NHRA, all eligible patients who are admitted to a public hospital have the right to be treated as a public patient for the entire hospital episode, unless they elect, in writing through informed financial consent, to be treated as a private patient.

    If, during a hospital admission, a patient elects to become a private patient, a discharge and new admission will need to occur.

    Once the new private patient admission commences, all services provided to that patient from point of re-admission during their hospital episode will be claimable under Medicare.

    Any services that have been rendered to the patient prior to the private patient admission will not be eligible for Medicare payments.

    Provider Responsibility and Medicare Compliance

    Medicare Compliance

    The Department of Health has a strong program that PROTECTS Australia’s health payments system through the prevention, identification and treatment of incorrect claiming, inappropriate practice and fraud by health care providers and suppliers.

    Department of Health | Medicare Compliance – Provider Benefits Integrity Division

    The compliance program has been structured to ensure that activities are:

    • Targeted to the identified provider behaviour, recognising the vast majority of health providers and practice staff do the right thing
    • Informed by understanding provider behaviour, through the use of data analytics and established feedback mechanisms
    • Responsive as a result of analysing, interpreting, and understanding changing trends in provider behaviour to allow compliance treatments to be proactive

    This model strengthens our compliance response by allowing the Department to:

    • Support providers by delivering education and advice to help them remain in cooperative compliance
    • Focus compliance efforts on the type of non-compliance identified and taking different actions to address incorrect or inappropriate claiming, inappropriate practice or fraud

    Provider Responsibility

    Under Medicare, each billing practitioner must ensure they have fulfilled the service requirements as specified in the item descriptor have been met and that the services provided are eligible for Medicare benefits to be paid.

    It is at the provider’s own risk to allow hospital administrators or any other party to claim Medicare benefits utilising their provider number as there may be potential for incorrect claiming to occur.

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    Key messages

    • 1. Patients can receive private services in a public hospital

      It is entirely appropriate for patients to receive private (MBS and/or private health insurance-rebated) services in a public hospital where the hospital arrangements support this type of service. This helps to ensure the sustainability of the health system.
    • 2. Patients should be given the choice to receive public or private services

      Patients should be given the choice on whether they receive public or private services as part of informed financial consent. Patients should not receive preferential treatment – such as earlier access to the same health practitioner in the same hospital – based on this choice.
    • 3. Health practitioners should actively manage referrals, requests and claiming arrangements to ensure services are not paid for twice through public hospital and MBS funding.

      The variety and complexity of working arrangements in a public hospital can lead to inadvertent inappropriate claiming.

      Health practitioners should actively manage referrals, requests and claiming arrangements to ensure services are not paid for twice through public hospital and MBS funding.

      Health practitioners should consider:
      • The public or private election status of a patient – it is particularly important that this is established where referred or requested services, imaging or testing is provided
      • Whether the practitioner has rights to private practice, or is receiving payment for the service from the public hospital
      • Whether the service could be part of pre-care (e.g. tests prior to admission) or aftercare (follow-up) relating to a public episode that should be funded as a public service

    Further information

    Further information can be found on:

    Case Studies for billing Medicare in public a public hospital

    Case Study 1

    Ms A is admitted as a private patient at her public hospital with a fractured forearm and is treated by Dr B, an orthopaedic surgeon.

    While in hospital Ms A has an asthma attack and Dr B refers her to Dr C, a respiratory physician. Dr C’s registrar, who is employed and paid a salary by the hospital, reviews Ms A and arranges for appropriate treatment of her asthma. Doctor C does not physically attend the patient for review or treatment.

    Dr C then bills MBS item 110 for a consultation because Ms A is a private patient and was seen by his registrar, who is a trainee physician accredited by the Royal Australian College of Physicians.

    Is this appropriate?

    No.

    Registrars are not considered specialists for the purposes of claiming Medicare benefits.

    A registrar cannot provide a referred initial attendance for a patient.

    If the registrar provides an initial attendance on behalf of the physician, neither the registrar nor the physician can bill for this service.

    In addition, MBS attendance items are personal attendance items and services such as referred consultation services will attract Medicare benefits only if the consultant physician who bills for the service is the person who actually personally performed the service.   

    If the service is performed by another doctor employed by the hospital, which in this case is the registrar, Medicare should not be billed for this service

    In circumstances like this, the payment by the hospital of a practitioner salary, as well as the payment of a Medicare rebate for the same service creates what is termed a duplicate payment, which is not permitted under the National Health Reform Agreement and the Health Insurance Act 1973.

    Key Points

    • 1. Registrars are not considered specialists for the purposes of claiming Medicare benefits
    • 2. A registrar cannot provide a referred initial attendance for a patient
    • 3. If the service is performed by another doctor employed by the hospital, which in this case is the registrar, Medicare should not be billed for this service

    Case Study 2

    Ms A visits Dr B, a dermatologist, at her private practice rooms. Dr B has admitting rights to the local public hospital and so arranges for Ms B to be admitted for her condition.

    Ms A elects to be admitted as a private patient and be seen by Dr B privately. Dr B routinely sees patients privately at this public hospital, pays a sessional fee to the hospital for use of the facilities and required services, and otherwise retains the full fee as income.

    The next day Dr B sees Ms A on the ward and arranges for further investigations. Dr B records her clinical findings and treatment plan in Ms A’s clinical notes.

    Dr B bills MBS item 104 for the initial consultation provided at her private practice rooms and then bills MBS item 105 for the subsequent consultation provided in the hospital.

    Is this appropriate?

    Yes.

    Ms A is an admitted private patient and Dr B personally performed both the initial consultation and the subsequent consultation.

    The different locations for these services is irrelevant for Medicare purposes.

    Dr B has maintained adequate and contemporaneous clinical notes of the services provided to Ms A. The services were paid for by a single funding source (Medicare).

    It should be noted, however, that different contractual or payment arrangements could lead to the service infringing the legislation, for example if those contractual arrangements explicitly require the provider to bill Medicare for services provided on hospital premises and/or result in payments for the service being received from both the public hospital (or administrator) and Medicare.

    Practitioners should consider seeking their own legal advice on any risks associated with particular arrangements when providing private services in a public hospital.

    Key Points

    • 1. The different locations for these services is irrelevant for Medicare purposes
    • 2. Different contractual or payment arrangements could lead to the service infringing the legislation

    Case Study 3

    Mr A is suffering from cellulitis and is an admitted private patient at his local public hospital where he has stayed for four days.

    Dr B the consultant physician performed an initial consultation in the medical ward on day one, with junior medical staff, employed by the hospital, reviewing and attending to Mr A during his stay on days two and three.

    Dr B attended, reviewed and discharged the patient sending him home on day four.

    Mr A receives a hospital bill for MBS item 110 (initial attendance) and three charges for MBS item 116 (subsequent attendance).

    Mr A is unsure about the bill because he only saw Dr B on two occasions – on the day he was admitted and on the day he was discharged.

    Mr A contacts Dr B’s office to question the account. The practice manager tells him, that as an admitted private patient he must be charged for each day that he was in hospital.

    Mr A is still unsure and contacts the department to see if the billing is correct.

    Is this appropriate?

    No.

    Referred consultation services will attract Medicare benefits only if the consultant physician or specialist who bills for the service is the person who actually renders the service.

    It is not appropriate to bill Medicare daily simply because the patient remains admitted on that day.

    As Dr B personally rendered the patient’s initial consultation on the day of admission to hospital, he is entitled to bill item 110 to Medicare for this service.

    Similarly, as Dr B personally rendered the service on the day of discharge from hospital, he can bill item 116 to Medicare.

    On days two and three the patient was reviewed only by the hospital’s junior medical staff.

    Dr B cannot bill Medicare for services he did not personally render.

    In addition, Medicare cannot be billed for services provided in a public hospital by doctors in receipt of a public salary at the time the services occurred, as is the case with the junior medical staff in this case.

    Key Points

    • 1. Referred consultation services will attract Medicare benefits only if the consultant physician or specialist who bills for the service is the person who actually renders the service

    Case Study 4

    Ms A takes her son to a public hospital emergency department because he has just swallowed a button battery.

    The child is admitted and undergoes an endoscopic removal of the button battery performed by gastroenterologist, Dr B.

    The child is observed overnight and discharged the next day.

    The next month when Ms A checks her  myGov  account for medical services provided to her son, she is surprised to find that her son received a bulk billed consultation from Dr B.

    She is concerned because her son was admitted as a public hospital patient. Even though they have private health insurance, as it was only a short stay, Ms A signed the hospital administration form to say that her son was to be admitted as a public patient.

    Ms A contacts the department to make a complaint.

    Is this appropriate?

    No.

    Medicare benefits are not payable for services provided to a public patient in a public hospital.

    Clause G18 of the National Health Reform Agreement stipulates:

    An eligible patient presenting at a public hospital emergency department will be treated as a public patient, before any clinical decision to admit. On admission, the patient will be given the choice to elect to be a public or private patient in accordance with the National Standards for Public Hospital Admitted Patient Election processes (unless a third party has entered into an arrangement with the hospital or the State to pay for such services). If it is clinically appropriate, the hospital may provide information about alternative service providers, but must provide free treatment if the patient chooses to be treated at the hospital as a public patient. However:

    • a. A choice to receive services from an alternative service provider will not be made until the patient or legal guardian is fully informed of the consequences of that choice; and
    • b. Hospital employees will not direct patients or their legal guardians towards a particular choice.”

    Eligible patients have the right to elect to be admitted as a public patient regardless of their private health insurance status.

    A public hospital must not assume that a patient who has private insurance will automatically elect to be admitted as a private patient.

    A patient election form must be made in writing on the basis of informed financial consent.

    Key Points

    • 1. Medicare benefits are not payable for services provided to a public patient in a public hospital
    • 2. A public hospital must not assume that a patient who has private insurance will automatically elect to be admitted as a private patient

    Case Study 5

    Mr A presents to a public hospital emergency department with a suspected fracture.

    The emergency physician requests an X-ray and an INR (a test to see how thin the blood is), from contracted private diagnostic imaging and pathology services, as Mr A is on warfarin.

    Following confirmation of the fracture Mr A signed an election form to be treated as a private patient and is admitted as a private patient at the public hospital with a fractured forearm and is treated by Dr B, an orthopaedic surgeon.

    The contracted private diagnostic imaging and pathology services billed Medicare for the requests from the emergency department

    Is this appropriate?

    No.

    Clause G20 of the National Health Reform Agreement stipulates: Where a patient chooses to be treated as a public patient, components of the public hospital service (such as pathology and diagnostic imaging) will be regarded as a part of the patient’s treatment and will be provided free of charge.

    Medicare benefits are not payable for services provided to a patient in a public hospital emergency department.

    Diagnostic imaging and pathology service providers should check the patient’s status before billing Medicare – this is generally done via a request form.

    The companies concerned should have billed the hospital for the services.

    As Mr A had signed an election form, on the basis of informed financial consent, to be treated as a private patient once a fracture was confirmed by X-ray, all future clinically relevant MBS services could be billed to Medicare.

    It is noted that sometimes request forms do not indicate whether a patient is public or private. In these circumstances, it remains the responsibility of the biller to ensure the patient is eligible for a Medicare-billed service, including through contacting the requesting physician.

    Key Points

    • 1. Medicare benefits are not payable for services provided to a patient in a public hospital emergency department
    • 2. Diagnostic imaging and pathology services providers should check the patient’s status before billing Medicare

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    Case Study 6

    Ms A was admitted as a public patient at her local public hospital with an umbilical hernia and is treated by Dr B, a general surgeon.

    While in hospital Ms A has an asthma attack and Dr B refers her to Dr C, a respiratory physician, after obtaining informed financial consent and agreement to refer for a private service.

    Dr C reviews Ms A and arranges for appropriate management for the asthma attack. Dr C bills MBS item 110 for a consultation as he was exercising his right to private practice as a staff specialist.

    On the advice of the respiratory physician the patient is referred to a respiratory nurse practitioner, who is employed by the public hospital, to receive advice on proper use of inhalers.

    The respiratory nurse practitioner sees the patient, advises the patient on proper use of inhalers and breathing techniques and bills item 82210.

    Is this appropriate?

    In general, under the National Health Reform Agreement, there are requirements that referral pathways must not be controlled so as to deny access for patients to free public hospital services. 

    This means that practitioners cannot privately refer public patients from a public hospital to an outpatient clinic or to other providers to receive services as a private patient.

    However, it would be appropriate, where the patient’s agreement to be treated as a private patient and their informed financial consent has been obtained, for a patient to be referred for a private service.

    It is not appropriate for a publicly employed nurse practitioner to bill Medicare for services provided to admitted public patients.

    This applies to all allied health providers employed by the public hospital. Nurse practitioners in private practice are entitled to bill Medicare.

    Key Points

    • 1. It is not appropriate for a publicly employed nurse practitioner to bill Medicare for services provided to admitted public patients. This applies to all allied health providers employed by the public hospital
    • 2. Referral pathways must not be controlled so as to deny access for patients to free public hospital services

    Case Study 7

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    Case Study 8

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