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Is there value in the Relative Value Study? Caution before Australian Medicare reform

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In April 2015, the federal Minister for Health, Sussan Ley, announced several initiatives to improve the operation of Medicare. One of these is the formation of a Medicare Benefits Schedule (MBS) Review Taskforce, to align MBS services with “contemporary best clinical practice”.1 The taskforce was allocated $34 million in the 2015 federal Budget, and has been described as the “most comprehensive review of the MBS ever taken”.2

In light of this review (and ongoing federal government determination for health care savings), it is timely to consider the lessons from the failure of the last major collaboration between government and the medical profession to restructure health system funding. The Relative Value Study (RVS) was a 7-year collaboration between the Australian Medical Association (AMA) and the federal health departments in the 1990s. The RVS was a review of the services and fees of the existing MBS, in order to address perceived unfairness. The RVS cost the taxpayer over $7.8 million but was never implemented.

Funding of the Medicare Benefits Schedule

When the Medical (now Medicare) Benefits Schedule was introduced in July 1970, medical fees were set according to an indicative list of AMA-approved “most common fees” charged. Technological advances subsequently reduced time to perform many procedures, but the calculation…