Articles and Case Studies

Private Patient Arrangements in the Public Health System

11 Sep 2013

There are a number of different private patient arrangements in place throughout the public health system in Australia. Under some arrangements, medical practitioners are said to be providing services to private patients pursuant to a right of private practice.

Common features of these arrangements include:

  • the medical practitioner is employed or appointed at a public hospital and is remunerated by the state/territory for treating public patients in the public hospital
  • patients attending public hospitals have a right to elect to be treated as a private patient
  • the public hospital may grant practitioners a right to admit and treat private patients in the public hospital
  • private patients will be referred to the medical practitioner concerned
  • the medical practitioner (in most cases) will not be remunerated by the public hospital for treating private patients admitted under their care, but will bill the patient privately. Those patients may, generally speaking, claim under Medicare and/or their private health insurance for the services provided.

Medical practitioners entering into these arrangements should give consideration to the following:

Compliance with the requirements of the Health Insurance Act 1973

  • Should Medicare audit or investigate the medical practitioner, it will be the practitioner and not the public hospital that will be called to account for any irregularities or inappropriate billing. If there are any doubts about a particular arrangement and whether it infringes the provisions of the Health Insurance Act 1973, the practitioner should seek advice.
  • If a medical practitioner is providing services in a public hospital and billing those patients under Medicare, it is the medical practitioner whose Medicare Provider Number is used for billing who is responsible for ensuring that patients are appropriately billed. If billing is undertaken by the public hospital on the medical practitioner’s behalf, the practitioner should call for statements and review the billings under his or her Provider Number on a regular basis.
  • The practitioner should also ensure the requirements of the Medicare Item Number are met. More often than not, the service will have to either be provided by the medical practitioner him or herself, or at the very least, involve the medical practitioner to some extent.
  • If a service is provided by a medical practitioner who does not have his or her own Medicare Provider Number, e.g. a junior medical officer, then in most cases, Medicare should not be billed for that service.
  • Ordinarily, public hospitals will not indemnify a practitioner for Medicare audits and investigations or hearings. While the MDA National Professional Indemnity Insurance Policy may cover the legal costs associated with these processes, the policy will not cover any amounts which may have to be repaid as a consequence of an audit, investigation or hearing.

How will the practitioner be remunerated for providing services under these arrangements?

  • Medical practitioners might be entitled to keep all or some of the billings generated by the provision of services to private patients. Under other arrangements, the practitioner might be required to assign their billings to the public hospital.
  • Practitioners should seek accounting advice to ensure they are appropriately recording all income derived when submitting their income tax returns, and claiming for any permitted deductions.

Does the medical practitioner have appropriate professional indemnity insurance?

  • If state or territory indemnity arrangements are in place for the treatment of public patients, medical practitioners should determine whether this will extend to the treatment of private patients, and if so, whether there are any conditions that may apply.
  • Contact MDA National Insurance to ensure there are no gaps in medical indemnity cover arrangements, particularly if there is any concern about the extent of the indemnity offered by the state or territory.

By Dominique Egan, Partner, TressCox Lawyers.

Anaesthesia, Dermatology, Emergency Medicine, General Practice, Intensive Care Medicine, Obstetrics and Gynaecology, Ophthalmology, Pathology, Practice Manager Or Owner, Psychiatry, Radiology, Sports Medicine, Surgery


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