Public System
- Medicare funds services listed on the Medicare Benefits Schedule (MBS)
- Public hospitals are funded jointly by Commonwealth and state governments
- Activity based funding pays hospitals by activity, priced by IHACPA
- Public patients receive treatment free of charge, with elective surgery prioritised by urgency category
- National Elective Surgery Urgency Categories set target times of 30, 90 and 365 days
- Private patients can elect to use their insurance in public hospitals
Private System
- Private health insurance covers hospital costs and part of medical fees
- Implants are funded through the Prescribed List, formerly the Prostheses List
- Informed financial consent before surgery, including out of pocket costs
- Gap cover schemes limit out of pocket costs when the surgeon charges at or below the insurer schedule
- Medicare pays 75% of the MBS fee for private inpatients
- Day surgery and rehabilitation are funded through hospital contracts
Other Payers
- Department of Veterans’ Affairs
- Workers compensation schemes
- Transport accident and compulsory third party insurers
- These schemes often require prior approval and reports
Ethical Billing
- Claim only MBS items that match the service performed
- Professional Services Review investigates inappropriate practice
- Avoid low value care, for example knee arthroscopy for degenerative disease
- Co-claiming of related items must follow MBS rules
- Provide written estimates of fees and of other providers involved
- Keep records that support the items claimed
Reviewed by Professor Phong Tran, Head of Orthopaedic Surgery, Western Health. Last updated 10 October 2026.