The out-of-hospital gap: why a GP visit and a specialist bill can still cost you

The most common surprise in visitor health cover is not the emergency. It is the appointment that happened three months earlier, got referred onwards, and turned out to be a fee nobody had quoted you.

This is the out-of-hospital gap, and it has three separate causes. Fixing one does not fix the others.

Cause one: the policy does not include out-of-hospital cover at all

This is the large one, and it is a product choice rather than a pricing artefact.

Home Affairs defines out-of-hospital medical services as those provided by a medical professional such as a physician at a clinic and general practice, and which do not involve hospital admission. Out-of-hospital treatment is described as the most effective way to treat many conditions, and cover for it is recommended for all visitors.

But the same page states that, subject to some conditions, an Australian registered private health insurer can determine whether it provides cover for out-of-hospital treatments and that consumers may choose to purchase additional cover to meet their individual health care needs.

On a hospital-only product, that GP consultation is entirely self-funded. PrivateHealth.gov.au describes the three product types plainly: hospital policies cover you when you go to hospital; general treatment policies cover ancillary treatment; ambulance policies cover ambulance transport. “Hospital and medical” is a hospital policy with the out-of-hospital medical layer added.

Cause two: the benefit is a percentage of the MBS, not the fee

This is the subtler one, and it catches people who have already bought out-of-hospital cover.

Home Affairs requires that for out-of-hospital services which have an MBS item number and for which a benefit is payable, cover should include benefits up to the benefit listed in the MBS.

Up to the MBS benefit. Not up to what the provider charges.

Australian doctors set their own fees. A provider may charge above the MBS benefit for the same item, and that difference is the gap. The consumer guidance states plainly that depending on your level of cover, you may not be fully covered against all costs associated with your treatment and will have to pay some out-of-pocket expenses.

The distinction matters commercially. A product paying 100% of the MBS benefit leaves you exposed only where the provider charges above the MBS. A product paying 85% of the MBS benefit leaves you exposed on every single out-of-hospital service, whether or not the provider charges above the MBS.

Cause three: waiting periods on the service you actually needed

A compliant policy can be payable and still pay nothing, because the clock has not run.

The caps Home Affairs recommends not exceeding, measured from the policy start date, are: 12 months for pre-existing conditions, 2 months for psychiatric, rehabilitation or palliative care, and 2 months for all other treatments. Waiting periods are the reason a first specialist appointment in your second month can be entirely self-paid.

The setting trap: hospital building, no admission

This one is worth a separate section because it reliably confuses visitors.

Medical services can be undertaken in a hospital environment by a treating physician, such as in an outpatient department. Home Affairs is explicit: providing that the patient is not admitted to hospital, the services performed are still considered to be out-of-hospital medical services.

So a specialist consultation, a day-procedure review, or diagnostic work carried out inside a hospital you have not been admitted to, is out-of-hospital. Being inside a hospital building does not make it an admission, and it does not make it covered by hospital cover.

Why the Department tells you to check before you go

Home Affairs recommends that before receiving any health care in Australia you get an estimate of what the costs are, what your private health insurance covers, and any out-of-pocket costs (gap fees) you must pay. It calls this informed financial consent, and notes your insurer will allow hospitals to check your cover so you know your out-of-pocket costs before you are admitted.

The consumer guidance repeats the point from the member’s side: if you are anticipating treatment, contact your insurer and find out whether you will be covered and how much you will need to pay yourself; and if you need treatment which is not covered, ask the service provider to find out how much you will need to pay out of your own pocket, and if possible ask for a written quote.

A written quote before the service is the entire defence. There is no equivalent after.

Reciprocal countries: a narrower version of the same problem

If you are from one of the countries with a reciprocal health care agreement — the United Kingdom, Sweden, Belgium, Finland, Italy, Malta, the Netherlands, Slovenia, the Republic of Ireland, Norway or New Zealand — you generally have access to Medicare for immediate necessary treatment in the public system.

Two limits. Reciprocal benefits do not cover treatment as a private patient in hospital, and depending on your country other limits apply, for example that benefits expire after you have been in Australia for a certain period. Public emergency care is free of charge; everything else is not. Our guide to reciprocal Medicare and the gaps it leaves covers this in full.

What to check on any quote, in this order

1. Is out-of-hospital medical cover included at all, and is it stated as included rather than “available as an add-on”?
2. What percentage of the MBS benefit is payable for out-of-hospital services with an MBS item number?
3. Is the MBS benefit capped annually, and how much of that cap have you used?
4. What is the waiting period for the treatment you might need in the first three months — see our waiting periods guide for the caps.
5. Is there an excess or co-payment, and does Home Affairs’ recommendation of a product with no excess apply to this one?

Then compare

Put the answers side by side across providers — the third line is the one that separates apparently similar policies. Compare current OVHC quotes in one view, and read the out-of-hospital section of the PDS before you decide on price. Benefit percentages and limits change; check the current Product Disclosure Statement. General information only; not financial, medical or migration advice.