7 steps to managing out-of-pocket medical expenses

Piggy bank check-up

No one likes out-of-pocket medical expenses – particularly when they’re unexpected. The good news is there are some simple steps you can take to manage and minimise these hip-pocket costs.

It’s important to plan for the costs associated with your medical procedure, so you can focus on your recovery and not be concerned about unexpected charges.

We recommend gathering information in advance of your procedure to understand what fees will be covered by your health fund and Medicare, and what costs you’ll have to cover yourself, known as “out-of-pocket” expenses.

This will enable you to make an informed decision about your choice of healthcare provider and hospital, and go into your procedure with peace-of-mind about the costs associated with your care.

The Federal Government released a report in November 2018 which reviewed out-of-pocket healthcare costs. One of our CUA Health Insurance member experts has reviewed these findings and provided her top tips on how to manage and minimise these expenses.

1. Ask about fees before your first doctor’s visit

Most of us squirm at the prospect of talking about money, especially to a healthcare provider. But it’s important to have a clear understanding of expected fees in advance of your procedure.

It also helps to have the conversation about your specialist’s fees before your first appointment. If left until afterwards, most people find it too late to canvass other options.

CUA Health’s regulatory manager, Mayo Ishigami, recommends calling your specialist’s rooms and asking about consultation fees before your first visit.

In Australia, the Government pays a set fee for consultations with specialists (either in or outside a hospital) through Medicare. However, some healthcare professionals charge more than what the government reimburses.

This is known as the “gap” – and it’s one of the biggest out-of-pocket expenses for individuals.

A 2019 survey of privately insured Australians who visited hospital in the past two years found that four out of 10 people had been charged a gap. The average gap was $1,000 and a third of these people hadn’t been informed of these charges in advance.

Mayo says specialists should give you a breakdown of the estimated costs before your procedure – this is known as informed financial consent.

She says the best time to find out about your specialists’ fees is before your first consultation – when you haven’t yet committed to seeing one particular doctor.

“We recommend telephoning the specialist’s rooms and asking for their fees ahead of your first appointment,” she says.

2. Get your procedure’s item number

All medical procedures, either in or out of hospital, have what’s known as a Medicare item number. When you ring your specialist’s rooms in advance of your first visit, make sure to ask them for your procedure’s item number. You’ll need this when you contact other providers to compare fees.

Item numbers are assigned to all services covered by Medicare on the Medical Benefits Schedule (MBS), including surgical and other therapeutic procedures performed by doctors, and tests and examinations like x-rays and blood tests. The full list can be found here.

Once you have the item number for your procedure (plus a list of anything else you’ll need, like x-rays or blood tests), you’ll be able to look up the Medicare rebate. You can then subtract the rebate figure from the specialist’s fee to work out the gap you’ll need to pay for their service.

If there’s anything in your specialist’s quote without a Medicare item number, this may be an extra cost – such as a booking or admin fee – that can’t be claimed from Medicare or your health fund. According to the out-of-pocket costs survey, about eight per cent of those surveyed had been charged a fee like this - so this is worth watching out for.

3. Compare costs with other providers

If your GP has referred you to one specialist, ask for the names of two other specialists so you can contact their rooms and compare fees.

It should only take a few minutes on the phone to confirm the cost of your forthcoming procedure with each provider, including any additional admin charges.

Compare their fees for an idea of any significant variations in out-of-pocket expenses before booking your first consultation with your specialist.

4. Call your health fund to check what will be covered under your policy

Before you consent to any medical procedure, it’s always a good idea to speak to your health fund first to understand what you’ll be covered for.

If you go to hospital as a public patient, your costs will be covered by Medicare.

But if you’re admitted to hospital as a private patient – which means more freedom to choose where you go and who you see, often with a reduced waiting time – then you’ll be responsible for any gap between what the doctor charges and what’s covered by Medicare. Your health fund may contribute towards this cost, depending on your level of cover. If you want to learn more about the difference between medical costs and hospital costs, then read our simple explainer.

You’ll also be responsible for your hospital costs as a private patient including accommodation, theatre fees, pathology and radiology, pharmaceuticals, and dressings and bandages. You may be reimbursed for some or all of these by your health fund, depending on your level of cover.

“We encourage members to call our customer service team before any procedure to ensure they’re clear on what they’ll be covered for and what expenses they’re likely to incur,” says Mayo.

CUA Health Insurance’s friendly consultants are available Mon – Fri: 8:00 am – 5:00pm (AEST) on 1300 499 260.

5. Contact Medicare to see what costs will be reimbursed

A proportion of your costs will also be covered by Medicare, irrespective if you are a public or private patient.

If you are a private patient, your expenses are likely to be reimbursed by both your health fund and Medicare.

You can check potential rebates directly with Medicare. This is easy if you have the MBS item number. You can contact Medicare by visiting a service centre.

6. Call the hospital to get an idea of additional or incidental costs

Incidental costs tend to slip the mind of many patients, but they can also add up over the course of a hospital stay.

It’s a good idea to phone the hospital before your admission to ask about any additional incidental costs not covered by your private health insurance – such as parking, meals and accommodation for your partner, room upgrades, WIFI and pay television .

7. Keep good records

Finally, keep track of your notes in a file or diary, because paperwork can accumulate when you’re going into hospital or having a medical procedure.

You’re likely to collect a raft of paperwork in the weeks before a hospital stay – so keep it organised. This should include the quotes, item numbers and details gathered during your research stage.

When you have well-organised records of all the cost and rebate figures about your procedure, you can simply focus on your recovery when you come home from hospital.

If you have any concerns or questions when you get home, don’t hesitate to contact your health fund for guidance and assistance. At CUA Health Insurance, we’re only too happy to help.

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