Medicare is to undergo a major shake up, with the Federal Government announcing every subsidised test, treatment and procedure will be investigated to make sure it is effective and value for money.

Minister for Health Sussan Ley announced the wide-ranging review, saying Medicare needed to be revamped.

“It has come back to me through every single consultation with doctors that the Medicare system is sluggish, bloated and at high risk of long-term chronic problems,” Ms Ley said.

“Patching it up with band-aids is not a solution.”

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Among the measures, the Government will:

• review all Medicare-funded procedures, tests and treatments
• examine new ways to pay GPs providing care for patients with chronic conditions and mental health problems
• develop new rules to crackdown on Medicare cheats

In making the announcement, the Government explicitly said there will be no GP co-payment or any plans to introduce one.

Over 350 million Medicare services worth about $20 billion were paid out by the Government last year.

Ms Ley said many Medicare items were no longer used or used inappropriately.

Research from leading academics, including Associate Professor Adam Elshaug from Sydney University, has shown there are at least 150 ineffective, expensive or outdated Medicare-funded items.

“Reducing inappropriate tests and procedures is actually delivering better healthcare for patients, ensuring safer and better health outcomes but it’s also ensuring we save those dollars and those dollars can be allocated elsewhere in the healthcare budget,” Associate Professor Elshaug said.

During the review, the pause on indexation of GP and specialist Medicare rebates will remain in place. But it may not be permanent.

“I am open to a future review of the current indexation pause as work progresses to identify waste and inefficiencies in the system,” Ms Ley said.

The review of Medicare items will be led by Professor Bruce Robinson, Dean of the University of Sydney.

Former Australian Medical Association (AMA) president Dr Steve Hambleton will head the review into GP funding.

“We will look at how do we set up the health system to best deal with patients living with chronic conditions,” he said.

It will examine whether GPs should be paid each time a patient comes to see them or whether they should be paid a lump sum, known as block funding, for patients with chronic conditions such as diabetes.

AMA warns against continued freeze on rebates

The AMA welcomed the Government’s review, but said in a statement the Government’s focus on budget savings was “frustrating”.

The AMA said the ongoing freeze of Medicare rebates threatened to undermine the good intentions of the reviews.

“At a time when the Government should be increasing its investment in general practice, the rebate freeze will eat away at the viability of individual practices,” AMA president Associate Professor Brian Owler said.

Associate Professor Owler said that the reviews should not be driven by a push to find immediate savings.

“Putting budget savings ahead of good health policy will make it harder for doctors to provide efficient and affordable health services. The reviews must not be about cutting vital services to patients.”

Patient groups welcome Medicare revamp

Leading patient group Consumers Health Forum said the review was a long overdue opportunity to modernise Medicare.

“We welcome the opportunity to join clinical leaders to co-design Medicare for the 21st century and better funding arrangements in this era of growing chronic illness,” chief executive officer Leanne Wells said.

She said a redesigned Medicare system would provide more patient-centred care.

The taskforces would be expected to report back with key priority areas for action later this year.