Prior agreement required to charge more than Medicare fee

If a practitioner intends to charge above the Medicare scheduled fee, the patient must be informed before treatment proceeds. Where no fee is agreed and the patient is not aware of any potential gap payment, a court will imply the Medicare scheduled fee as the reasonable fee payable. The practitioner would not be entitled to be paid any more than the scheduled fee, regardless of whether the fee quoted was considered excessive or not. 

Mr S was a private patient scheduled for surgery. The surgeon, Mr W, arranged for Dr E to provide anaesthetic services. Mr W did not discuss the anaesthetic fees for Dr E with the patient before the surgery.  Mr S and Dr E had a pre-operative consultation, where clinical matters were discussed but there was no discussion about fees. The court therefore found that no financial terms were agreed.

Following the surgery, Mr S received an anaesthetic account that exceeded the Medicare scheduled fee. Although the fee charged was lower than the AMA recommended fee, it was above the Medicare scheduled fee. As a result, Mr S’s private health insurance did not cover the full amount and he was left with a personal gap payment.

Mr S disputed the additional amount. The anaesthetic services group Dr E belonged to, brought a claim to recover the outstanding balance.

Implied contract and billing

The court found that a contract for anaesthetic services had been formed, but that no price had been expressly discussed or agreed. In those circumstances, the court indicated that there was no agreed fee and the law had to imply a reasonable fee into the contract.

It determined that the Medicare scheduled fee was the reasonable implied fee.

The court found that there had to be a discussion with the patient beforehand if a practitioner wanted to charge anything more than the Medicare scheduled fee, even if it was common practice for anaesthetists to charge above that amount.

In this case, there was no discussion of fees and no evidence that Mr S understood he would be required to pay a gap. The anaesthetist was therefore not entitled to recover the additional amount.

The claim for the additional fee above the Medicare scheduled fee was dismissed. As the scheduled fee had already been paid, the anaesthetist could not recover any further payment.  

Doctors are entitled to set their own fees. However, if those fees exceed the Medicare scheduled fee and result in a gap payment, the patient must be clearly informed before treatment. Providing written confirmation of out-of-pocket costs in advance of the procedure can help avoid later disputes.

Financial arrangements should not be assumed or left unaddressed. If another practitioner, such as a surgeon, is dealing directly with the patient, ensure that their processes include information about other specialist fees or how the patient can obtain that information.

It is important to document agreements about fees, to preserve the trust in the therapeutic relationship and reduce the risk of misunderstanding or disputes.

Avant factsheet - Informed Financial Consent