A report has found Medicare is not keeping pace with the rising cost of medical practice and Australia’s health will suffer.
Australians are paying more to see specialists than they were eight years ago, but the Medicare rebates haven’t kept up with the price rises.
Healthcare directory Cleanbill has compared billing data from 165 dermatology clinics in 2017 and compared it to the same clinics in 2025.
They found that the initial consultation for a dermatology appointment has risen $61.45 to $210.18, a 41% rise. Despite this, Medicare rebates have risen only $11.40 to $84.15.
For follow-up appointments, they found consultations have increased an average of 55%, ranging from $107 in 2017 to $166 in 2025. However, the rebate has risen from $36.55 in 2017 to $42.30 in 2025.
When they surveyed their entire database of dermatologists, they found the average cost of an initial consultation is $296.71, over 3.5 times the Medicare rebate.
According to a spokesperson from the Australasian College of Dermatologists (ACD), the government’s indexation of Medicare rebates hasn’t kept pace with the rising costs of medical practice.
“Dermatology is a combined medical and surgical procedural specialty and practice costs are high,” they said.
“As well as the demands of clinically diagnosing and managing increasingly complex disease, costs include, but are not limited to, equipment such phototherapy units; nursing and practice staff; insurances; and other business costs.
“Medicare has failed to keep pace with these rising costs. The gap between the cost of maintaining a dermatology practice and Medicare indexation continues to widen. The stark gap between Medicare indexation and CPI is well documented.
“This, combined with the demands of diagnosing and managing increasingly complex disease, is driving up out-of-pocket costs,” they told Dermatology Republic.
Rising out-of-pocket costs impacting patient care
It’s not just dermatology that has seen specialist prices rise.
Insurance fund peak body Private Healthcare Australia analysed data from Zable, a healthcare platform that creates clearer pathways to care. They found some psychiatrists charging $950 for a first appointment, obstetricians up to $650, and cardiologists up to $600.
Medicare covers about a third of these fees.
AMA president, Dr Danielle McMullen said when looking at out-of-pocket costs, all factors need to be examined.
“Medicare rebates have fallen well behind inflation for years and, for those services in a private hospital, the fees paid by insurers are not keeping up with practice costs.
“Despite this, doctors are doing their best to minimise out-of-pocket costs for patients with 97.2 per cent of services for privately insured patients delivered under known or no gap arrangements. Until the 2023 budget, we had seen a decade of no or minimal MBS indexation with insurer rebates largely matching this trend,” she said.
The ACD say part of the reason for rising dermatological consultancy fees is that they’re experiencing a workforce shortage. They have just over 660 dermatologist Fellows and 130 trainees in Australia.
“This shortage is due to insufficient public investment in dermatology services and in the registrar and consultant supervisor positions needed to grow the workforce. This lack of investment negatively impacts dermatology service provision, leading to long wait times and access barriers for Australians with skin condition,” the college spokesperson told DR.
Regardless of the cause, rising costs are impacting the number of Australians seeking specialists and getting the care they need.
PHA examined Medicare data that showed the number of Australians seeing medical specialists in the community has fallen 10% in the past five years.
There were 5,640,731 initial specialist doctor consultations billed through Medicare in 2019. In 2024, this had dropped to 5,092,786, 10% fewer. In this period, the population grew by over 7%.
Data from ABS and Patients Australia suggested 10 to 20% of Australians referred to a specialist doctor don’t attend because of cost or uncertainty of cost.
According to PHA CEO Dr Rachel David, this is extremely worrying.
“If you don’t see a specialist doctor when you need to, it puts you at risk of worsening health and crises that result in emergency department visits and more expensive care in the hospital system further down the track,” she said.
Fifty-five percent of Australians have private health insurance, however private health insurance doesn’t cover these consultations. The entire out-of-pocket cost is paid by the patient.
“We have record high health insurance membership in Australia and an ageing population with more chronic disease, so we should be seeing demand for private hospitals rise faster than it is. The barrier is clear: People can’t afford to see private medical specialists in the community,” Dr David said.
What would make a difference?
Federal health minister Mark Butler was asked about a rebate rise to address out-of-pocket fees for specialist appointments last month.
“That’s not on the table right now,” he replied.
“The first thing that we want to do is provide patients with better information,” he continued.
His priority is to expand the data on the Medical Costs Finder website to make fees more transparent for consumers. It was launched by the Coalition in 2022, but three years later, only a few dozen specialists have voluntarily uploaded their fees.
The government has promised a $7 million investment to improve the website. They will analyse annual Medicare, hospital and insurer data for every common medical service and display the average fee that each doctor charged, alongside the national average for that service.
Dr David said this is a great start.
“We need this to happen as soon as possible. In Australia, doctors can set their own fees. Research shows they charge based on competition in their area and the wealth of people living around them, so people living in areas with fewer doctors tend to face higher fees,” she said.
The AMA believes nothing can change until the entire sector is reformed.
“The AMA has called for a Private Health System Authority that can bring the industry together to discuss reforms that support a more sustainable private health system, one in which patient choice and clinical autonomy is protected,” Dr McMullin concluded.
