Complete guide to Australian hospital Medicare billing — MBS (Medicare Benefits Schedule) items, private health insurance claiming, Inpatient Fraction Component (IFC), Medicare claiming process, and hospital billing software.
Australian hospital billing involves MBS (Medicare) + private health insurance. Medicare pays 75% of MBS for inpatient medical services, health funds pay 25% + hospital costs. This guide covers Australian Medicare billing.
Australian Hospital Funding Sources
| Source | Covers | Patient Type |
|---|---|---|
| Medicare (MBS) | Medical services (doctor fees) | All patients |
| Private health insurance | Hospital costs (accommodation, theatre) | Private patients |
| State government | Public hospital funding | Public patients |
| Department of Veterans' Affairs (DVA) | Healthcare for veterans | Veterans |
| Compensation/CTP | Compensation cases | Compensation patients |
| Self-pay | Non-covered services | Self-paying patients |
Medicare Claiming Process
- Patient registration: Register patient with Medicare number and private health insurance details
- Service delivery: Provide medical service and document with MBS item number
- Claim submission: Submit Medicare claim electronically (via Practice Incentives Program or hospital system)
- Medicare payment: Medicare pays 75% of MBS fee for inpatient, 100% for outpatient
- Health fund claim: Submit claim to private health insurance for 25% (medical) + hospital costs
- Gap payment: If doctor charges above MBS, bill patient for gap (or Access Gap Cover)
- Reconciliation: Reconcile payments with claims
Private Patient Billing
| Component | Payer | Amount |
|---|---|---|
| Medical services (doctor fees) | Medicare (75%) + health fund (25%) | MBS fee |
| Hospital accommodation | Health fund | Per diem (varies by fund) |
| Theatre fees | Health fund | Per procedure (varies) |
| ICU/HDU | Health fund | Higher per diem |
| Prostheses | Health fund | Per prosthesis (PL list) |
| Allied health | Health fund / Medicare | Varies |
| Gap (if doctor charges above MBS) | Patient (or Access Gap Cover) | Difference |
Frequently Asked Questions
- What is MBS and how does it work for hospitals?
- MBS (Medicare Benefits Schedule) is the Australian government's list of medical services and their rebate amounts. For hospitals: 1) Inpatients — MBS pays for medical services (doctor fees), private health insurance pays for hospital costs (accommodation, theatre fees), 2. Outpatients — MBS pays for medical services. Doctors can charge above MBS (gap payment) or bulk-bill (no gap).
- What is IFC (Inpatient Fraction Component)?
- IFC (Inpatient Fraction Component) is the portion of MBS benefits paid for inpatient medical services. When a private patient is treated as an inpatient, Medicare pays 75% of the MBS fee and private health insurance pays 25% (for medical services). The hospital bills insurance for accommodation, theatre, and other hospital costs separately.
- How do Australian hospitals bill private patients?
- Australian hospitals bill private patients through: 1) Health fund billing — directly bill the patient's private health insurance for hospital costs, 2) Medical billing — doctors bill Medicare (75%) + health fund (25%) for medical services, 3. Gap payments — if doctor charges above MBS, patient pays the gap (or use Access Gap Cover), 4. Out-of-pocket — patient pays for non-covered items.