Medicare overhaul needed to fix ‘broken’ health funding, report urges

Medicare overhaul needed to fix ‘broken’ health funding, report urges

Primary health care in Australia is funded by a broken model which, a new report says, discourages general practices from providing the care people with chronic illness need to keep them out of hospital.

A report by the Grattan Institute, which has been presented to the federal government’s Medicare taskforce, calls for a wholesale overhaul of Medicare and shift away from its current, fee-for-service arrangements to a blended funding model. The proposed new model would enable GPs to lead multidisciplinary teams of clinicians and prioritise the most complex cases.

A report by the Grattan Institute recommends a blended funding model for Medicare.Credit:April Lombardo

The report challenges the view of the Australian Medical Association (AMA) and Royal Australian College of General Practitioners (RCGP) that there is a shortage of GPs, and says some work currently done by doctors could be safely carried out by other health professionals such as nurse practitioners, physiotherapists and pharmacists at a far lower cost.

It also calls for an additional 10,000 clinicians to be employed in general practice over the next four years to support the work of GPs.

The report’s lead author, health policy analyst Peter Breadon, said the plan would cost $491 million to implement. This is about half the money set aside by the Albanese government in this year’s budget to fix Medicare.

Breadon, the Grattan Institute’s program director for health and aged care and a former senior executive within the Victorian Department of Health, said greater ambition was needed to achieve long-term reform.

“The current model is broken, actively discouraging team care and rewarding speed, not need,” his report concludes. “Australia is one of the last wealthy countries to fund general practice this way.

“More of the same – more GPs, and more funding under the same model – will not be enough to relieve the pressure on general practices. It will not address the structural mismatch between Australia’s outdated primary care system and the care Australians need.”

A draft copy of the report was provided two weeks ago to the federal government’s Strengthening Medicare Taskforce, chaired by Health Minister Mark Butler. The taskforce was established to recommend changes to health funding to better meet the demands of an ageing and increasingly chronically ill population. It reports to the government on December 13.

The AMA and RACGP have also been briefed on the Grattan Institute’s findings. They support the move to a blended funding model and team-based primary health care, but responded cautiously to the report’s recommendations.

Under Medicare’s fee-for-service model, doctors are paid set fees to provide a 15-minute consultation with patients and other services listed on the Medicare Benefits Scheme (MBS). The Grattan report found that while this is a good way of funding episodic care, it is poorly suited to meet the complex demands of people who have one or several chronic conditions.

AMA vice-president Dr Danielle McMullen, a member of the government taskforce, said the association had publicly backed the need for primary care to be, where possible, delivered by multidisciplinary teams, and supported funding reforms to support this.

“Our view is fee-for-service isn’t broken, but it has been severely neglected,” McMullen said. “Fee-for-service is likely to remain the bedrock of our health care system, but it needs to be supplemented.

“There will be debate about where exactly you draw the line and how quickly. We need to strengthen the Medicare Benefits Schedule and we need to modernise Medicare so we have got improved access to our whole general practice team.”

AMA vice-president and Medicare taskforce member Danielle McMullen.

RACGP president Dr Nicole Higgins, a Mackay-based GP who also sits on the taskforce, said a recent report to the British House of Commons on the chronic shortage of GPs in Britain and the resultant crisis in primary health care showed the risk of shifting too far, too quickly, from the current funding model.

Britain and most of Europe has moved to blended funding for general practice. The Grattan report cites Britain as an example of what not to do, saying GPs need to be supported under the proposed new funding model, not replaced by other health professionals.

“We need to be mindful of the experiences of other health systems around the world,” Higgins said. “My concern is fragmenting the relationship with the GP. We need the support of a team-based model but not at the exclusion of that relationship.”

There is broad consensus among healthcare experts that Medicare, a scheme designed at a time when people mostly went to the doctor to treat injuries and infections, has not kept pace with changing demands in Australia, where two-thirds of the disease burden is now caused by chronic illness.

The report found that healthcare in Australia is plagued by what researchers call inverse case law: the services being in greatest supply in areas where they are least needed.

It notes the example of publicly funded mental health services, which are provided at twice the rate in wealthy areas despite people living in poorer areas being twice as likely to need them.

Under the Grattan Institute’s proposed blended funding scheme, GP practices would receive fees for some services at a reduced rate than they are currently paid.

They would in turn be given a flexible budget to contract the clinical staff they need to best meet their patients’ healthcare needs. The budget would be adjusted according to demographic, clinical and socio-economic factors.

Although this model currently operates in Australia in some rural and Indigenous communities, Breadon’s report said a national rollout would require both funding reforms and regulatory changes to make clear what allied health professionals can and can’t safely do.

There are 38,000 GPs in Australia, according to Department of Health and Aged Care figures.

The AMA last week warned that, on current rates of training, retiring and projected demand, Australia will have a shortfall of 10,600 GPs by 2031.

While the Grattan Institute report doesn’t dispute these figures, it notes that Australia has more GPs per population than the Organisation for Economic Co-operation and Development average and significantly more GPs in training than there was a decade ago.

Every GP costs, on average, about $308,000 per year in MBS fees, which is about double the cost of a nurse practitioner and triple the cost of a physiotherapist.

Under the current funding system, general practices lose money when a routine procedure is done by someone other than a doctor. The Grattan report describes this is a “profound barrier” to multidisciplinary care.

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