What is a Medical Gap?

A Medical Gap is the difference between what your doctor charges to treat you as a private patient, the amount Medicare gives you for the service your doctor provided and the amount your health insurer contributes. It applies to private patients in a public or private hospital.

How a Medical Gap works

If Medicare covers your service but your doctor charges above the Medicare Benefit Schedule (MBS) fee, and your health insurer doesn’t cover this cost, you may have to pay the extra amount. This extra amount is called the ‘Medical Gap’.

If you decide to be treated as a private patient, the doctors and other healthcare providers are entitled to charge you a fee for their services.

These fees are your medical fees. They are different from other fees you are charged for your stay as a private patient in a hospital, including theatre, accommodation and meals.

When you are admitted to hospital as a private patient, Medicare pays 75% of the MBS fee for each MBS item.

Your health insurer pays the remaining 25% as long as your Hospital Cover includes that treatment and may pay an additional amount if there is an agreement with the doctor (and the doctor is honouring that agreement).

Nevertheless, doctors and other healthcare providers are allowed to charge more than the MBS fee. This means there is no cap on the amount they can charge you.

If your doctor charges above the MBS fee, and your health insurer isn’t covering it, you may have to pay the Medical Gap.

Health insurers often have agreements with medical providers to charge the insurer a fee higher than the MBS if the patient has no out-of-pocket expense (no Gap) or a defined out-of-pocket expense (known Gap). However even when there is an agreement, the medical provider may still charge a higher rate at their discretion, resulting in significant out-of-pocket expenses.

Always check with your doctor before treatment what their fees are – this is known as Informed Financial Consent. Check with your insurer what medical provider they have agreements with. You may be able to get out-of-pocket expenses with an alternative medical provider. However this may not be possible in emergency situations.

Also check with your health insurer how much it pays for the particular treatment you are receiving. Otherwise, you will pay significant out-of-pocket costs.

Example of a Medical Gap