A federal-state tug-of-war over bulk billing is unlikely to leave any patients better off. 

A conflict between federal intentions and state actions has raised questions about the future of bulk billing .

According to reports, the federal government's $3.5 billion initiative to bolster bulk billing is under threat from state governments' revised interpretations of payroll taxes, potentially eroding the benefits of the policy.

Bulk billing allows general practitioners (GPs) to accept the Medicare benefit as full payment, ensuring no out-of-pocket costs for patients. While extremely beneficial to patients, there has been a decline in bulk billing rates over the years. 

In response, the federal government, in November, dramatically increased payments to GPs who bulk bill patients, aiming to reverse this downward trend.

However, this federal push faces complications from state-level tax policy changes. 

States have redefined payroll tax laws, categorising GPs as employees rather than contractors. This change subjects medical practices to higher taxes, thereby absorbing funds meant to decrease patient fees. 

“The money that is being put into general practice is going to be taken out by the states through the application of payroll tax on Medicare,” says Dr Nicole Higgins, President of the Royal Australian College of General Practitioners (RACGP).

The tax redefinition has led to substantial financial burdens on medical practices. 

A clinic in Victoria, for example, was hit with an $800,000 tax bill, retroactive over several years. 

In Canberra, some clinics have already begun raising their fees in response, directly attributing these increases to the new tax obligations.

The states maintain that including GPs for payroll tax purposes is fair, arguing against special exemptions as they would undermine the tax system. 

However, this stance has invited criticism and concern at both the federal and practitioner levels. 

Health Minister Mark Butler has voiced his apprehension about the situation, noting the risk of losing the $3.5 billion investment to state coffers rather than seeing it improve patient affordability.

While early data post-policy implementation showed a slight increase in bulk billing rates by 2.1 per cent, subsequent figures indicate no significant improvement in the proportion of GP fees covered by Medicare, suggesting that the increased costs imposed by payroll taxes may be nullifying the benefits of the federal funding.

As consultations between states and GPs continue, with some changes set to take effect in July, the federal government, doctors, and advocates remain hopeful for resolutions that truly benefit patients without financial penalties to practices.