Medicare safety net has ‘traps’ for chronic disease patients

Financial

By Geir O'Rourke

18 Jun 2024

Which month a patient is diagnosed with a chronic condition can have a real impact on their out-of-pocket costs, with those who start treatment later in the year potentially up to $2,000 worse off than patients commencing in January, researchers say.

It’s prompting calls to redesign the Extended Medicare Safety Net, which provides higher MBS rebates to patients once their out-of-pocket medical costs meet an annual threshold; currently $2544, or $811 for concessional patients.

Under the scheme, patients remain eligible for the subsidy – which covers up to 80% of the gap between a provider fee and MBS rebate for out-of-hospital care – for the rest of the year.

However, there have long been concerns about potential equality issues, because eligibility resets every calendar year, meaning patients receiving expensive treatments later in the year may not benefit.

“Due to the design of the EMSN, this could imply that those patients who are diagnosed earlier in the calendar year benefit for a longer period of time than those who are diagnosed later in the year,” wrote Professor Kees van Gool and colleagues in a recent paper for Health Policy (link here).

“This is particularly true for episodes of care, like cancer care, that extend over longer periods of time and where the fees charged are distributed over the entire period.”

To examine the extent of the problem, the team used data from the Sax Institute’s 45 and Up Study, which included 14,253 cancer patients among its broader cohort of 267,357 individuals aged 45 years and older.

Results showed that, among non-concessional patients, patients diagnosed in the final quarter of a calendar year had out-of-pocket costs that were $103 higher on average compared to those diagnosed in the first quarter, after controlling for patient characteristics, cancer type and stage, and calendar year.

This was more than tripled in patients who needed radiation oncology, for whom the ‘fourth quarter effect’ was $334, the researchers said.

But importantly, there was no similar effect among concession card holders (i.e. those eligible for the lower EMSN threshold), who comprised about 70% of the sample.

“This result is likely to be driven by two factors,” the authors wrote.

“First, concession card holders face a lower EMSN threshold to qualify and therefore even those patients who have to qualify twice over two calendar years will face lower OOP costs than general patients.”

“Second, providers are more likely to charge concession card holders lower fees and therefore they face fewer OOP costs. This implies that the effect of the EMSN may not come in play because many concession card holders never reach the threshold.”

They argued their findings had important implications for the design of the safety net, as well as similar insurance products where patients received higher benefits once that had incurred a high deductible.

The additional costs may also have impacts on the way patients interact with the health system, with some potentially deterred from seeking the care they needed because of large deductibles, the authors said.

They added: “Whilst previous research has highlighted broader issues on the unintended consequences of the EMSN, the results highlighted in this paper could be rectified by changing its design.”

“Namely, instead of working on a calendar year basis, qualification for the EMSN could function on a rolling year aggregate. Then, regardless of when in the calendar year a patient qualifies, the patient would be eligible to receive EMSN benefits for the following twelve months.”

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