Medicare cheque payments set to be phased out by 2028
20 Jan 2026
Under a proposal released last month by the Department of Health, Disability and Ageing (DoHDA), government-issued Medicare cheques would stop being valid from July 2028. The plan is currently open for public consultation.
The proposal also outlines changes to gap-only billing, which allows patients to pay only the difference between the Medicare rebate and the doctor’s full fee. Under the new rules, this billing option would only be available for Medicare items with fees above $697.
At present, doctors can offer gap-only billing for any service, but only by using Medicare rebate cheques through the Pay Doctor Via Claimant (PDVC) system.
Although use of PDVC has declined in recent years, DoHDA’s impact analysis shows it remains widely used. In the last financial year, around 39,000 providers billed 588,000 patients through the system, with 40% of those patients holding concession cards. In total, about 870,000 claims were processed this way.
Under PDVC, patients pay the gap upfront, then receive a cheque from Services Australia made out to the provider for the remaining amount. If the cheque is not passed on within 90 days, the payment is transferred electronically.
The DoHDA documents do not specify which services or practitioner groups use PDVC most frequently.
Medical groups have long criticised Medicare cheques, describing the system as outdated, administratively burdensome, and slow due to the 90-day payment delay. Similar plans to remove cheques were previously announced in the 2013–14 and 2021–22 Federal Budgets, but were never implemented.
RACGP President Dr Michael Wright welcomed the renewed proposal, saying it made sense to modernise Medicare and move away from cheque payments.
Under the proposed electronic payment model, gap-only billing would still exist, but the $697 threshold would effectively rule out its use for most GP services, as well as many allied health and pathology items.
DoHDA acknowledged this impact, stating that low-cost services would no longer be eligible for gap-only billing. The department said the change is intended to prevent fee inflation and help protect bulk-billing rates.
The $697 threshold reflects the point at which the gap between an MBS fee and the 85% Medicare benefit exceeds the current maximum allowable gap of $104.50. The threshold would be indexed over time.
Health officials noted that while removing gap-only billing altogether was considered, retaining a modernised version was assessed as delivering the greatest overall benefit, including savings of more than $11 million a year in regulatory costs linked to cheque management.
The proposal would retain the 90-day payment delay for gap-only billing, which officials say helps maintain the incentive for bulk billing, where payment is immediate.
The consultation period closes on 27 February, with the RACGP currently preparing a submission.
Source:
(DoHDA); RACGP; newsGP