Specialist referral rules haven’t changed much since the 70s, but Australia’s health needs sure have

You have a chronic health condition and visit your specialist for an annual check-up, but the referral’s expired. You’re told to get a new referral from the GP to claim the Medicare rebate. You take the next afternoon off to see your GP, who gives you another 12 month referral and tells you they can’t backdate it. You’re out of pocket for the specialist fee and gap payment for your GP consultation. You’ll have to do it all again next year.

Common issues like this are highlighted in a new report on the specialist referral system out today by the Deeble Institute for Health Policy Research, the research arm of the Australian Healthcare and Hospitals Association.

The report, which we co-authored, finds shortcomings in a broken referral system, plagued by poor data collection and wasted dollars.

Fixing these issues requires a better understanding of patients’ long-term needs and the health and economic consequences of the medical referral system.

Chronic illness is more common now

The rules about specialist referrals were developed in the 70s, when acute illness was more common.

Now more people each year are being diagnosed with a chronic illness, needing long-term specialist management.

They will often need multiple referrals, depending on how many specialists they see and when these referrals expire. This can be a frustrating financial and logistical burden and can even cause some patients to delay treatment.

Referrals can be too short

Different types of health-care workers can refer you to specialists or consultant physicians. The duration of the referral ultimately depends on who issues it.

GPs commonly limit their referrals to fixed terms, even though indefinite referrals are possible. Specialists can only issue referrals to other specialists for three months, and this rule poses serious challenges for many vulnerable people.

One example, taken from a review of Medicare in 2016, is of cancer patients receiving different types of therapy, where the radiation oncology treatment lasts longer than three months. When the referral expires, the patient needs to obtain a new one to continue treatment.

Issues the review identified about the three month rule included difficulties providers had in interpreting the rules, leading to improper Medicare billing practices. This echoes previous concerns.

Read more: Explainer: what is Medicare and how does it work?

Why are referrals stuck in the 70s?

Regardless of the burden on patients, health-care workers and Medicare, both sides of government have shown little interest in changing the referral rules.

This is largely because of the general principles that sit behind them. These include the need to keep people away from expensive specialist care and the importance of GPs as gatekeepers of the health system.

So, the purpose of a referral is to provide access to Medicare subsidies for specialist care. But the purpose of a referral expiring is actually to reconnect you with your GP, who then issues a new referral if you are receiving ongoing specialist care.

The referral system offers important economic benefits. But the burden of referral expiration and the limited referral pathways available for patients needs attention. Revising how referrals operate and improving the system of communication between care teams can overcome many associated challenges.

Read more: Specialists are free to set their fees, but there are ways to ensure patients don't get ripped off

The referral system doesn’t always give good value

We’re seeing a trend toward what’s called value-based care. This is the idea GPs and specialists should deliver effective and efficient patient care, taking into account the limited resources available.

But the current referral system can discourage this.

Read more: 7 lessons for Australia's health system from the coronavirus upheaval

A recent example of the misuse of referrals is with Victoria’s Call-to-Test program for COVID-19. This is designed to provide about 200 vulnerable Melburnians access to nurse-led in-home COVID-19 testing each day.

People need a GP referral, unlike most government-run COVID-19 clinics around Australia. Victoria’s health department says a referral is needed so test results can be incorporated into treatment plans.

But referrals, as a vehicle, don’t achieve this. Referrals relate to Medicare billing and they are not designed to facilitate GP follow-up care.

We estimate GP consultations to obtain the Call-to-Test referrals are likely to cost Medicare anywhere from A$10,300 a day (if GPs claim for a shorter consultation along with a bulk billing incentive) up to a $17,560 a day (if GPs claim for a longer consultation). This would be on top of the cost of any follow-up services after the test results are known, which is where the money is better spent.

If not now, when?

Rather than waiting until the next scheduled review of the referral rules in 2028, we can do better, sooner. There is strong consumer and clinician support for a more efficient referral system.

Key legislative changes we’d like to see include expanding referral pathways and giving specialists the flexibility to extend referrals when needed, rather than letting them expire.

Consumer awareness of their referral rights is also needed. So too is compulsory and ongoing training for Medicare Benefit Schedule providers, administrators and Medicare staff who advise practitioners of the rules.

Supporting all of this, we need an independent inquiry and further research to ensure evidence-informed policies guide high-value, cost-effective care within the referral system.