Current Context

A substantial component of the Commonwealth’s expenditure on obstetric services is funded through the MBS. Between 2003–04 and 2007–08, the amount of MBS funding for obstetric services increased from $77 million to $211 million.112 Of the $134 million increase in funding over the four years, $109 million was due to MBS item 16590, for the ‘Planning and Management of Pregnancy’, and of this 97 percent was claimed for services provided by obstetricians. The proportion of total Medicare funding of these services increased over the four years from 0.9 per cent to 1.6 per cent.

Existing MBS items for obstetric services are medically focused and are primarily concerned with the provision of antenatal care and labour/delivery services. Items focus almost exclusively on services provided by obstetricians, GP obstetricians and GPs, with provision for the involvement of others, such as anaesthetists and paediatricians, as the clinical need arises. Since November 2006, midwives’ services have been covered by Medicare, but only in certain prescribed circumstances, including that the service is provided on behalf of, and under the supervision of, a medical practitioner in a regional or remote area. This item also funds such care when it is provided by suitably qualified nurses or Aboriginal Health Workers. 113 In 2007–08, 22,825 of these services were supported at a cost to Medicare of $457,540. Midwives currently have limited scope to prescribe under State and Territory legislation and no capacity to prescribe medicines supplied through the PBS.

While there is a suite of MBS items that covers post-partum pregnancy elements, these items also have a medical focus and cater predominantly for immediate after-birth care and/or postnatal interventions that address medically related complications. While the medical side of pregnancy should not be downplayed, there is potentially scope for additional Medicare service options that address the therapy needs of women, particularly during the immediate postnatal phase of a pregnancy. To the extent that this type of postnatal service is funded under Medicare, it is largely performed by GPs under generic standard and long consultation items.114

Figures 11 and 12 show obstetric services and benefits provided through the MBS in 2007–08.

Figure 11 shows that 85 per cent of obstetric services are for antenatal attendances, of which 70 per cent is provided by obstetricians. Eight per cent of obstetric services are for the planning and management of pregnancy, 6 per cent are for labour and delivery, and less than 1 per cent is for post-partum care.

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Figure 11: Obstetric services under Medicare, 2007–08

Figure 11: Obstetric services under Medicare, 2007–08
Source: Commonwealth of Australia, unpublished Medicare statistics.
Figure 12 shows the benefits paid under the MBS for obstetric services. In contrast with what is shown in Figure 11, 52 per cent of benefits are paid for the planning and management of pregnancy, of which 97 per cent is for services provided by obstetricians; 25 per cent of benefits are paid for antenatal attendances; 23 per cent for labour and delivery; and less than 1 per cent is for post-partum care.

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Figure 12: Obstetric benefits under Medicare, 2007–08

Figure 12: Obstetric benefits under Medicare, 2007–08
Source: Commonwealth of Australia, unpublished Medicare statistics.
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Medicare Safety Net

A significant proportion of total MBS funding for obstetrics services is through the Extended Medicare Safety Net (EMSN), introduced in 2004.115

Prior to the introduction of the EMSN, many patients seeing a private obstetrician were charged a ‘booking fee’. This covered such things as the doctor committing to attend the birth and arranging for the patient to be booked into hospital as well as other out-of-hospital costs that were not covered by existing MBS items. The ‘booking fee’ was not claimable from the MBS or PHI.

In September 2004, a new MBS item (16590) was introduced for the ‘Planning and Management of Pregnancy’. It provided MBS funding for the costs of the long-term management of a pregnancy that are not limited to the individual patient visits, or by the delivery itself, such as being on call. This item was to cover the activity previously provided by the ‘booking fee’. The item could be charged for a patient beyond 20 weeks of pregnancy, and claimed once for each pregnancy.

After the introduction of the EMSN, there was a significant increase in the fees charged for specialist consultations and antenatal attendances by some obstetricians and gynaecologists, as many specialists sought to offset the booking fee for patients against item 16590.

The fee charged for item 16590 has increased steadily and significantly. Currently, around 30 per cent of all expenditure through the EMSN is for the ‘Obstetrics’ Broad Type of Service Group. In addition, there is significant expenditure through the EMSN on other pregnancy-related services such as pregnancy ultrasounds and ART.

It is difficult to assess whether or not the introduction of the EMSN has reduced out-of-pocket costs for women having private obstetrics services as data is not available on how much doctors were charging for the ‘booking fee’ prior to the introduction of the EMSN.

Once a person has qualified for the safety net, it covers 80% of any increase in the fee charged by doctors. Many women who choose to see a private obstetrician qualify to receive safety net benefits. If their obstetrician increases their fees by $100, the patient only pays an additional $20. This enables obstetricians to increase their fees and their income significantly. Anecdotally, there is evidence that these arrangements have resulted in some obstetricians charging patients excessive fees to take advantage of Commonwealth funding support through the safety net.

Under the current structure of funding, there is the potential for a wide disparity between out-of-pocket expenses for patients, and in the incomes earned by doctors working in the private sector in metropolitan areas compared with those of doctors working in rural areas or in the public sector.

Under legislation, a review of the EMSN is currently being conducted and will be finished in 2009.

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What the Review Team Heard

  • Current financial constraints on private service delivery by midwives were identified as a barrier to increasing the range of models of maternity care available in Australia, with consequential limitations on women’s choice.
  • These constraints include the lack of availability of government funding (such as MBS and PBS), lack of access to professional indemnity insurance, and lack of hospital admitting rights.
  • The predominance of the provision of obstetric services by specialist obstetricians for women who elected to deliver privately was highlighted to the Review, alongside the higher intervention rates associated with this care.
  • A number of submissions highlighted the current level of funding on the EMSN and questioned whether it was well targeted and provided possible options for change.
  • In relation to possible funding models to support an expanded midwifery role, issues raised included the importance of maintaining quality and safety, supporting continuity of care, ensuring effective collaboration between members of the maternity team, providing no disincentive (financial or otherwise) to appropriate and timely referral, and ensuring government resources were targeted at areas of greatest need.
  • The existing Medicare item 16400, which allows antenatal care to be delivered for and on behalf of a GP or obstetrician in rural areas, also attracted comment.
  • Also raised was the desirability of allowing obstetricians as well as GPs to refer patients to services covered by the Pregnancy Counselling items that allow access to psychology services provided by (item 4001), psychologists (81000), social workers (81005) and mental health nurses (81010). In 2007–08, 4,656 of these services were provided (98.5 per cent of them by GPs) at a cost to the Australian Government of $313,000.
  • The limited information available about the costing of maternity services, including in the public sector, was a point raised, as were the consequent constraints to examining models of care from a costing perspective.

Recent Related Initiatives

The implementation of a new National Healthcare Agreement (on 1 July 2009) will have the potential to help increase the range of maternity health care models available to Australian women. The new Agreement extends beyond hospital care to encompass a wide range of outcomes over the broader health system, including the primary and community health sector (in which maternity health services can also be delivered). For instance, the new Agreement sets the outcome that ‘children are born and remain healthy’ and includes the policy direction to ‘encourage public and private investment in initiatives that support children getting a good start in life.’ The new Agreement also sets a policy direction to ‘better connect hospitals, primary and community care to meet patient needs.’ 116

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One of the drivers for maternity reform in Australia is the desirability of women having a greater range of maternity care options available to them and be supported in their choice of practitioner and their preference for continuity of care. As discussed earlier in the Report, it is clear that greater choice for women could be provided in part by a greater recognition of the role that midwives can play in collaborative models of maternity care. Within the public sector, to varying degrees, states and territories are expanding their maternity services to support a wider range of care.

Supporting giving midwives a greater role as part of the maternity care team has the potential to improve service delivery by making better use of the existing workforce, creating opportunities that increase participation rates among midwives and assisting in retaining those currently practising. This in turn would increase access and choice for women, particularly in rural and remote communities where maternity services are limited. It could reduce the pressure on rural GPs providing maternity services and enable the development of new, more innovative models of care that meet local needs.

A number of issues would bear on any decisions to extend Commonwealth funding support for more extensive roles for appropriately skilled and qualified midwives.

  • Women can currently access midwives’ services but, outside of the public sector, this is often at their own expense. Improving access to midwife care must necessarily involve relieving women of at least a part of this private cost. It is almost certain that any program of support for midwives’ services would involve a net increase in the range of services supported (postnatal care through midwives, for example) and, with it, an increase in government spending.
  • Arrangements that would allow midwives to undertake an expanded role including prescribing appropriate pharmaceuticals in their own right would need to be resolved having regard to issues of safety and quality of care as well as financial cost to the PBS. The states and territories have the responsibility of regulating the prescribing of prescription medicines. To date, there are only limited prescribing rights for midwives in some states and territories and no prescribing rights in others. The issuing of consistent prescribing rights in jurisdictions would be a prerequisite for midwives having authority to prescribe certain medicines subsidised under the PBS. PBS access would require amendments to the National Health Act 1953.
  • Similarly, arrangements that would allow midwives to undertake an expanded role including making referrals and ordering appropriate tests would need to be resolved having regard to issues of safety and quality of care as well as financial cost to the MBS. Feedback through the consultations supported the view that, if midwives were to undertake an expanded role as part of broader collaborative teams, then, to be fully effective for some aspects of care, they would need to be able to refer patients to other providers, including medical specialists, and to request certain imaging and pathology tests. Under current legislation there is only very limited authority under Medicare (the Health Insurance Act 1973) for some allied health providers to refer (e.g. optometrists to ophthalmologists) and to request tests (e.g. physiotherapists, chiropractors and osteopaths for certain relevant diagnostic radiology).
  • Almost half of Australia’s registered private health insurers (PHI) currently provide benefits for midwife services, including antenatal care, hospital/birthing centre delivery, except where a medical practitioner is involved, homebirth and/or postnatal care. Under the provisions of the Health Insurance Act 1973, if MBS items were introduced for out-of-hospital antenatal and postnatal care by midwives this would prevent insurers from continuing to provide benefits for these services. Depending on the schedule fee, some privately insured women might receive lower benefits under the MBS than they currently receive from their insurer. Potentially, funding through the MBS for these services could also lead to a small reduction in costs under general treatment policies to insurers, with a corresponding positive impact on premiums.
  • If MBS items were introduced for midwife services provided in hospital, then under the provisions of the Health Insurance Act 1973, an insurer would be required to pay at least 25 per cent of the MBS fee for services provided by a midwife (whether or not its policies currently cover midwife benefits) for women insured under hospital treatment policies that cover pregnancy and birth services. Insurers may respond to the introduction of MBS items for in-hospital services provided by midwives in several ways, depending upon a range of factors, including the anticipated costs associated with models of care which involved midwives in the delivery.
  • As mentioned previously, the MBS funds a range of maternity services including antenatal care, planning and management, labour and delivery, and postpartum surgical services (such as repair of the cervix). A number of submissions highlighted the perceived fragmentation of postnatal care for women and their families post-discharge, and the need to address this, particularly given the prevalence of early discharge policies. As postnatal care provided under the Medicare arrangements is claimed under existing consultation items, gaps in such services are not easily identified. However, there is considerable support for coordinated care being provided to women and their families in the first six weeks by a known carer, to assist with such things as early parenting, breastfeeding and detection of postnatal depression. A number of submissions recognised that midwives could have a significant role in this area.
  • The consultations and submissions revealed strong and uniform support for collaborative models of care, as distinct from models that privilege the role of one professional group over another. Extending Commonwealth funding to midwives as primary maternity care providers was thought to be one mechanism for enhancing collaborative care, by providing support for and recognition of the role and skills of midwives as members of the team. The development of innovative incentives for collaborative private sector care, through mechanisms such as regulation, accreditation and models of funding, would also need to be considered.
  • The public health sector is a major provider of obstetric care including services provided by midwives. Any additional support for care involving midwives through the private sector should consider how such private services would mesh with existing public sector provision, including any effects on the available workforce. It would be vital that any changes introduced would complement and enhance and not compete with services funded and delivered by state and territory governments.
  • A further consideration would be the effect of any new method of funding on midwives who are already employed in obstetricians’ rooms, and on the interaction with the existing antenatal MBS item 16400 (the ‘for and on behalf of’ item relating to midwives, nurses and registered Aboriginal Health Workers, described above).

While most submissions suggested that any expanded funding for midwives should be through the MBS, this view was not universal. In general terms, the three main financing choices available are fee-for-service (such as through Medicare), salary, and capitation-based funding.

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Fee-for-service models have the advantage that there is a well-established and efficient infrastructure in place (through Medicare Australia) to generate reimbursement for patients. Patients continue to be primarily responsible for paying the provider unless the provider chooses to direct bill the insurer, with a discount on the schedule fee. However, there are other considerations to be kept in mind.

  • Costs to the patient may continue to be a barrier. Under Medicare, this could be alleviated through an arrangement similar to that which applies to optometric services, whereby providers enter into an undertaking to charge no more than the schedule fee as a condition of participation in insurance arrangements.
  • Under current Medicare safety net arrangements, the funder may bear a significant proportion of any risk of increased total fees for maternity services.
  • Fee-for-service based–reimbursement may not be the most effective means of encouraging collaborative care.

Salary-based funding arrangements may suit some midwives who value continuity and predictability of employment, but these may not be a preferred option for midwives seeking to operate as private providers in their own right. While this approach could provide some certainty of cost to funders and patients, other issues include how funding would be distributed, on what basis, and to whom.

Other forms of financing—linked to an enrolled patient population, for instance—could be considered. As well, some submissions have advocated block payments for individual components of maternity care (antenatal, labour, delivery and postnatal care) or a single maternity payment for the total episode of care. While this may provide some certainty of cost to governments and—depending on the conditions—to patients, again, how funding would be distributed would need to be carefully considered, particularly where multiple practitioners are involved in the woman’s care, to ensure that opportunities for collaboration are not undermined.

On balance, the Review Team believe a fee-for-service model is considered the most appropriate mechanism to extend funding to incorporate an expanded scope for midwifery care.

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The Review Team concluded that:

  • Changes to Commonwealth funding arrangements could support the expansion of collaborative models of care, with an expanded role for midwives. Any new Commonwealth funding arrangements would need to be carefully considered to ensure an expanded role of midwives occurred within collaborative, multidisciplinary maternity care models and maintained appropriate quality and safety.
  • Importantly, changes to Commonwealth funding arrangements need to occur in a manner that complements the services provided by state and territory governments.


  1. That, noting the potential issues to be resolved including the potential interaction with Private Health Insurance arrangements, the Australian Government gives consideration to arrangements, including MBS and PBS access, that could support an expanded role for appropriately qualified and skilled midwives, within collaborative team-based models.