Why am I charged a pregnancy care management fee?
The Medicare management fee item number was introduced by the Federal Government when the Government realised many obstetricians did not make enough income from antenatal visits and delivery to cover the high overheads of running an obstetric medical practice. As well as all the usual costs associated with running a small business, there are large extra costs such medical indemnity insurance.
As well, the management fee facilitates personalised pregnancy care. Personalised pregnancy care includes consideration of a patient’s personal delivery preferences and also prompt quality management of any complications of pregnancy that occur. Such complications can have considerable impact on the wellbeing of a patient and her baby.
The management fee also allows us to run our practice efficiently with minimal patient waiting time and inconvenience, and with the opportunity to see a patient whenever there is a problem between scheduled visits (such as if bleeding occurs).
What is the history of the pregnancy management fee?
In April 2002 there were spiralling obstetric practice costs especially due to medical indemnity insurance premiums.
In April 2002, on a panel discussion on the 7.30 report on the ABC about obstetric practice costs, Dr Michael Kaye, an obstetrician in Sydney, commented: “In 1982 when Medicare came in, I had to deliver one baby to pay for my insurance. I now have to deliver 100 babies to pay for my insurance”. Also on the panel was John Howard, the Prime Minister at the time, Simon Crean, Opposition Leader at the time, and Dr Kerryn Phelps, the President of the AMA at the time.
Fees charged to patients were increasing as a consequence and so private obstetrics was becoming very expensive for pregnant women. A number of obstetricians had to cease working as the overheads in running an obstetrics practice were greater than their income. Most private obstetrics in country areas ceased. In April 2002, Australia’s biggest medical indemnity insurer, United Medical Protection (UMP), announced it was becoming non-viable and appointed a provisional liquidator. That meant most doctors were exposed and were not protected personally from what could be massive payouts (in obstetrics it could be millions of dollars) if sued. I remember those times well and personally know of obstetrician colleagues who ceased practice. That meant that unless there was a solution urgently found, most private obstetricians would have to cease practice as the potential risks if sued was too great.
There were multiple reasons for the spiralling insurance costs including a largely unregulated legal system that resulted in an increasing incidence of litigation and huge payouts. As well, there were other factors such as in September 2001 the demise of HIH Insurance, which was Australia’s second largest insurance company and was the re-insurer for UMP.
The Howard Federal Government addressed this huge crisis a number of ways:
- The Federal Government gave United a $35 million lifeline to prop up UMP.
- John Howard made a pledge that the Government would not allow doctors to be unprotected.
- The legal system was overhauled in relation to medical litigation.
- The Medicare Safety Net was introduced in March 2004.
- The Medicare Management Fee item number was introduced.
It is my understanding the Government introduced the Medicare Safety Net and management fee to protect patients from the huge out-of-pocket costs of private obstetrics, to make private obstetrics affordable and to make being an obstetrician a viable career.
The Federal Government introduced the ‘Planning and Management of a Pregnancy’ item (16590). This pregnancy management fee is a fee that is to be charged only once during the pregnancy and only when the pregnancy has reached 20-weeks gestation.
Combined with the Medicare Safety Net higher rebate it meant that 80% of gap (out-of-pocket) payments in that calendar year above the Medicare rebate would paid by Medicare once the Medicare Safety Net threshold had been reached. That meant the patient only paid 20% of the management fee gap and only 20% of the gap for subsequent antenatal visits that calendar year. This combined with the ‘no gap’ for delivery concept meant that private obstetrics was in a much better place and was very affordable for the public.
In January 2010, the Rudd Federal Government determined there would no longer be an unlimited 80% gap payment in obstetric care. The Medicare pregnancy care item numbers payment was capped, including for the management fee and antenatal visits. To get this extra capped Medicare payment, the Medicare Safety Net threshold still had to be reached. The capped payout for the management fee continues to be in force today.
The Rudd Federal Government changes have meant that private pregnancy care has become much more expensive than was the case. When this happened, I recall I reduced my fees considerably to try to absorb the extra patient cost, but even so patients were out of pocket far more than had been the case.
While the crisis that resulted in the introduction of the management fee has passed, the management fee remains an essential fee to maintain the viability of a private obstetric practice and so to provide quality obstetric care.
When do I need to pay the management fee?
The management fee is payable at 20 weeks pregnancy. You are expected to pay it in full at your first visit after 19 weeks. You can make instalment payments before 20 weeks. Please check with my staff for details.
It you have not paid the full amount at your first visit after 20 weeks, then I will not be able to continue your pregnancy care until full payment is made.
What is the relationship between the management fee and my delivery fee?
NONE. The management fee is independent of your delivery fee.
The management fee (Medicare item 16590) is independent of the delivery fee (Medicare item 16519 or 16522).
The Government expects the management fee to be paid once in a pregnancy. The management fee amount is the same irrespective of the type delivery, the number of week gestation you are when you deliver, whether or not I am personally available to deliver your baby.
What happens if you are not able to deliver my baby?
I personally deliver the babies of well over 90% my patients with ongoing pregnancies. While I am usually available 24 hours a day, seven days a week to attend to you in labour and to deliver your baby, there are there are scenarios when this does not happen.
As your management fee is independent of your delivery fee, you are not entitled to a refund (in full or in part) of your management fee if I am not available to personally deliver your baby.
The most common scenarios when I don’t deliver your baby include…
- Early preterm delivery. Less than 3% of patients will deliver before 34 weeks pregnancy. If it is likely you will delivery before 34 weeks I will arrange for you to be transferred to a teaching hospital where you will be under the care of another obstetrician See Q&A topic What if my baby delivers prematurely? The obstetrician at the other hospital who takes over your care will not charge you a management fee, but will charge you for pregnancy care after you are transferred and for delivery.
- Your labour and delivery progress is too quick for me to attend.
- I am not available as am on holidays, have a family commitment, am at a conference, etc.
- I am operating or delivering at another hospital.