💲 GP Billings

010 Home

When contracting with a surgery, an important factor to consider is the billings, i.e what is the billing policy of the surgery.

There is more to it than just Bulk Billing vs Private or mixed billing.

Whether you are an independent contractor (IC) or an employee, services are rendered under your name and Provider Number (PN). Therefore, payments for the services are made to the individual Dr. This applies to Medicare and DVA payments (which are administered by Medicare).

When applying for a PN for a practice, the practice will usually put their own bank account details to be associated with the PN, thus ensuring that all billings under that PN are sent to the practice account and not to the IC’s.

This in itself is not a problem, but as an IC you should be aware that it is you who is assigning this right to the practice. The practice can’t take it or force you to do this. That it is taken for granted is a bit of a surprise. To me at least!

If you are signing up with an accredited practice, there will also be Incentive payments. Medicare requires a separate form with bank details for these payments. This is also available via PRODA. Once again, it is up to the IC to assign someone else’s bank account details for these payments.

As with any financial dealings, due diligence must be done before assigning your rights to a 3rd party. Do you know, for example how many people’s signatures are required before a withdrawal can be made from the account you are nominating your payments be made into?

Is there a clause guaranteeing your money should the account be hacked or if an employee commits fraud and decamps with the money?

Income

Your income will obviously depend on the billings and your percentage management fee.

But, what exactly is your income?

In short, everything you bill is your income. This is typically from Medicare/DVA, SIP payments, Work cover and any private fees.

As far as the ATO or your indemnity provider are concerned, this is the figure you will quote as your income.

The service fee is a business expense, i.e a tax deductible expense.

This service fee attracts a GST of 10%. You will claim this back each quarter in your BAS.

So, if you bill $20000/fortnight and you pay 35% in management fee, you will receive $12300 in your bank account.

The service fee will be $7000 and $700 will be the GST amount you will claim back in your BAS.

As pointed out above, your income is $20,000. Not $12,300 and not $13,000.

If you have assigned the practice’s bank account for your PN, typically you get paid fortnightly and the payments will be based on the formula shown above.

You will receive payments from the surgery for services where payments are received, not where they are billed.

Let me explain. Say you see a patient on day 12 of your fortnightly billing cycle. The patient is a DVA card holder. DVA payments typically take 2-3 days to come through. Therefore, the payment for that service, though rendered in the billing cycle, will not be paid out to you in that cycle.

In other words, the surgery will pay you only once it has received payment, not when a payment is promised. So, in your contract, there should be a clause about bad debt, outstanding payments from Workcover etc.

In my experience, such clauses are conspicuous by their absence. I have myself come unstuck at a surgery where I had several thousand dollars outstanding in Workcover payments. The surgery had 1 staff member who dealt with insurance companies and when she was off, no one chased these payments.

Contracts drafted by surgeries, rarely if ever contain clauses to safeguard the IC. The ICs for the most part are naive and clueless. Everybody wants to save money by not running contracts past a lawyer. Unlike the UK there is no BMA model contract.

So, the onus really is on the individual before they sign a contract. Over just a few years, this is worth a few million dollars. The casual, almost blasé approach we have towards this aspect of our working lives is shocking.

The second, less common scenario is where all payments are made to the IC and in to their personal bank account. Then the surgery issues an invoice for the service fee at the end of the billing cycle.

Using figures from above, the whole $20,000 is received by the IC. The IC then pays $7700 to the surgery and claims $700 in BAS. The net result is the same, but obviously the IC’s cash flow is better in this scenario and I suspect the Banks will look favourably at the higher regular payments being made in to the account as well.

I hope this helps you to look at contracts with more understanding and promotes an environment where people are signing contracts that they explicitly understand.

Till next time…

Recent Posts