Cost of day surgery in a private hospital

The cost of day surgery in private hospitals can differ widely, as it depends on the type of hospital treatment, where you’re being treated and who’s treating you. While you might receive the same quality of care, hospital costs can vary significantly across Australia.

Even if you have a private health insurance policy, you may have some out-of-pocket costs for your hospital admission in a private day hospital.

When you’re admitted to hospital, all procedures carry a government-assigned Medicare item number. Each item number has a cost under the Medicare Benefits Schedule (MBS) that the government deems reasonable. However, your surgeons and anaesthetists can charge more than the MBS if they choose. As such, you may need to pay what is known as the ‘gap’ to cover these fees.

When you claim on your hospital policy, Medicare covers 75% of the MBS fee, while your private health insurance will cover the remaining 25%.

Example: The MBS fee for a grommet myringotomy (a surgery where a small cut is made in the eardrum to relieve pressure or to insert grommets) is $272.05.² Medicare will pay 75% of the total ($204.05), meaning your insurance will cover the remaining 25% of the MBS fee ($68).

Furthermore, your private health insurance policy may also cover all or some of the other costs of your hospital admission, such as theatre fees, medication, dressings and additional testing. For example, the average hospital fees for a grommet myringotomy are $1,300;³ your hospital insurance will pay most or all these fees provided you hold an appropriate level of cover and are admitted as an inpatient. You may also need to pay an excess on admission.

Remember, you should always ask for an informed financial consent form before treatment so you’re aware of all costs and whether you can claim on your insurance for your day surgery.

Health funds have agreements on costs with different hospitals, healthcare facilities and doctors, known as a gap cover agreement. If your treating doctors have this agreement with your health fund and choose to use it for your admission, they’ll only charge up to an agreed amount or won’t charge you more than your policy will pay, eliminating or reducing your out-of-pocket costs.

Before you’re admitted to hospital, check if your health fund has an agreement with each health professional involved in your day surgery, such as your surgeons and anaesthetist. If there’s no agreement, you may need to pay each health professional’s individual costs above the MBS amount for their service – this is the ‘gap’.

The excess is a set amount you agree to pay when you’re admitted to hospital and make a claim on your hospital cover. When you take out your policy, you can typically choose your excess amount, but remember that the lower your excess, the higher your premiums are likely to be.

Whether you need to pay an excess for your private hospital day surgery depends on your fund and the terms of your chosen policy. In some cases, the excess may be halved or waived for day surgeries, but these waivers vary between insurance policies and funds.

A co-payment is slightly different from an excess in that you agree to pay a set amount for each day you’re admitted as a private patient at a private or public hospital, usually capped at a yearly limit.

To be covered for day surgeries, you’ll need to be formally admitted to the hospital or facility for a treatment covered by your hospital insurance policy. You may still be required to pay additional costs like an excess, co-payment or fee gap when you’re admitted.

Based on your health fund, chosen policy and gap cover agreement, you may be covered for:

• Pathology and radiology tests (e.g. x-rays)
• Dressings used in surgery
• Operating theatre fees
• Meals
• Medications costing more than the approved value of the Pharmaceutical Benefits Scheme (PBS)
• Allied health services, such as physiotherapy, hydrotherapy and occupational therapy.

There are four tiers of hospital insurance in Australia, and each has minimum requirements for cover. The difference between a Basic (lowest tier), Bronze, Silver and Gold (highest) hospital policy is the medical services they are required to include, so it’s important to know your level of cover.

According to the Commonwealth Ombudsman, Australia’s most commonly excluded or restricted services* are: ⁴

• Cardiac related services
• Eye lens procedures (e.g. cataracts surgery)
• Pregnancy, assisted reproductive services and other birth-related services
• Reconstructive or plastic surgery including skin grafts for burns, skin flap repair and breast reconstruction after a mastectomy
• Joint replacements (including hip and knee replacements)
• Rehabilitation and psychiatric care.

There are also surgeries that Medicare and health insurance don’t cover at all, such as cosmetic surgery that’s not medically necessary.

What’s more, your policy may have other exclusions and restrictions on what you can claim. As such, do your research, check your policy documents and talk to your health fund so you’re aware of what’s covered before undergoing surgery.

*Restricted services are services your insurer covers only if you’re a private patient in a public hospital. If you seek treatment as a private patient in a private hospital for a restricted service, your health fund won’t cover your theatre fees – though they may pay a small amount towards your accommodation fee. This means you could face considerable out-of-pocket costs.

If you haven’t already signed up for a policy or are planning to upgrade to a higher level of cover, you’ll need to wait a certain amount of time before you can claim on your hospital policy. These amounts of time are referred to as waiting periods. Thankfully, you won’t ever need to wait longer than a year before you can claim on your hospital inclusions.

The government has set the following guidelines that health insurers must follow:⁵

While both inpatient and outpatient procedures can be performed on the same day, they are treated differently when it comes to private health insurance. These procedures may also incur different private hospital day surgery fees.

Outpatient surgery doesn’t require a formal admission into hospital and is therefore not usually covered by your health fund except in special circumstances. For example, treatments like a GP removing an infected toenail, meeting a specialist or blood tests without being admitted as a patient aren’t covered by your policy.

Outpatient treatment can include treatment in an emergency room, specialist doctor consultations before treatment (such as a doctor examining a skin cancer) and most assisted reproductive services or treatments.

Inpatient treatment means you’ve been admitted to hospital by a health professional and undergone a procedure. Depending on the procedure and your private health cover, you could be covered by your policy up to the MBS limit.

When you’re admitted to a day hospital as an inpatient, you may have to undergo a pre-admission assessment to evaluate any risk factors that could affect your eligibility to be treated and go home on the same day.

As always, you should read your policy documents carefully for information specific to your health fund and the individual policy.

On top of providing cover for day surgery, a health insurance policy can also help you avoid public waiting lists, recover from treatment in a private room (if available), choose your own available doctor and much more.

Our health insurance comparison tool is an easy way to compare policies and the features they offer. In addition to the day surgery procedures that may be covered, you’ll also be able to assess their exclusions, benefits, extras and more.

The best part is it takes just minutes to use our service and it’s completely free to use.