Lab Copay on the Table, But for Now, It’s Australia

Pending legislation would require copayment for GP, medical lab tests, and diagnostic imaging

CEO SUMMARY: Patient copayment is the idea that always appeals to government health officials who want to control healthcare costs. In Australia, Parliament has yet to vote on a bill that would, starting in July 2015, institute a patient copayment of $7.00 Australian for general practice visits, medical laboratory tests, and diagnostic imaging services. Reaction to this proposed new law was immediate and some GP clinics have already seen a significant decline in patient visits in reaction to the news.

SOME IDEAS NEVER DIE and that’s certainly the case for the lab test copay. In the United States, Congress regularly considers reinstituting the clinical laboratory copay as a way to find money it can spend elsewhere.

In Australia, the federal government has announced its intention to institute copayments beginning in July 2015. Pending legislation proposes that patients will be required to make a copayment for general practice office visits, medical laboratory testing, and diagnostic imaging services.

Attempt to Control Costs

The initiative is part of a federal government strategy to control the year-to-year increase in healthcare costs in that country. The announcement of this change triggered a vocal and emotional debate in the Australian media.

The Australian Broadcasting Company (ABC) reported that the Department of Human Services Medicare office was playing a recorded message to callers about this copay—despite the fact that the law has yet to be passed.

ABC reported that callers to that government office heard a message that said: “From the first of July 2015 the Medicare benefit will be reduced by $5 for all patients for non-referred general practitioner consultations, out-of-hospital pathology episodes [and] out-of-hospital diagnostic imaging services.”

ABC noted that “The recording also suggests the controversial $7 GP co-payment has also already been approved.” That would be the equivalent of US$6.57.

The copay requirements are part of the proposed 2014-2015 budget that includes other changes designed to save money. In Australia, healthcare costs are currently 4.1% of GDP and projected to reach 7% if no changes are implemented.

Should this legislation pass and the proposed copays take effect for GP visits, clinical lab tests, and imaging studies, Australia will become a case study for the positive and negative consequences of implementing a patient copay requirement.

That experience might help inform the debate in the United States about the reimposition of a 20% patient co-pay for Part B Clinical Laboratory Tests. This is a concept that resurfaces regularly when Congress looks for sources of Medicare cost savings that it can use to fund other needs.

Change in Patient Behavior

One element in the Australian experience that may be of interest to policymakers here in the United States is the fact that patients are already responding as if the copay had been implemented. Last month, the Sydney Morning Herald reported that general practice physicians in poorer areas had already seen a decline in patient visits.

“The Australian Medical Association has confirmed anecdotal reports that some clinics have reported a sharp fall in visits,” noted the Herald. “A doctor in the Blacktown-Mount Druitt area said he was already considering cutting back on one of his two trainee placements due to a 10% fall in patient visits since last week’s budget announcement… Another doctor in the area estimated the downturn [in patient visits] at closer to 30%.”

Medical laboratory professionals in Australia pointed out the obvious fact that pathology labs [the Australian term for medical labs] don’t see the patient and this increases the difficulty of collecting the copayment. “The copayment can’t be collected in the 40% of patients having tests who are never seen by the pathology practice,” stated Dr. Bev Rowbotham, Associate Professor of Pathology at the University of Queensland. “Who will collect a copayment on our behalf when they [the GPs] are already struggling to collect their own copayment for the service they have just performed?”

For healthcare advocates who are concerned about restricting access to care, the Australian experience may be highly instructive, assuming that the Australian government does implement the copay requirements in 2015. It will be one more real-world demonstration that copayments come with at least as many disadvantages as benefits.

Cost to Implement Copay Is a Factor in Australia

OPPOSITION AND CRITICISM of the proposed copayment requirements for Australian patients was immediate. On June 24, The Australian newspaper wrote an opinion piece, stating:

The government has proposed that people pay $7 each time they visit a GP, get an X-ray or a blood test from July next year. A patient who visits a doctor and needs a pathology test and an X- ray will be slugged with $21 in upfront fees.

The $7 fee is applicable to everyone except concession card holders and children under 16 who will pay for the first 10 services combined.

The controversial plan has drawn the ire of consumers and many in the healthcare fraternity who say it marks the demise of universal access to healthcare in Australia.

One of the biggest challenges with the proposal is there is no way to determine—in real time—the number of times a patient has made a copayment.

The federal Department of Human Services, which runs Medicare, declined to say how long it would take to develop special software or a portal to provide the real-time information and how much it would cost.

The Australian raised the legitimate issue of the cost, time, and challenges faced by officials at the federal health program to create an information system that would allow physicians and other providers to accurately track how many copayments had been made by patients.

Physicians are against the copayment proposal. As noted in The Australian, “The Australian Medical Association is one of the loudest critics of the controversial proposal which it says will disadvantage Australia’s poorest and most vulnerable.”

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