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1.91% or 2.5%: what is a reasonable increase to make to your 2022 fees?

The AMA have published their annual Medical Fees Index

The AMA Medical Fees Index (MFI) is a weighted average of the cost and wage indices impacting the cost of practice for Australian doctors. It takes into consideration:

  1. Salaries and wages of staff employed – based on the ABS Wage Price Index
  2. Other practice costs (including medical defence premium costs) – based on ABS Consumer Price Index (CPI)
  3. Motor vehicle costs – based on Private Motoring Component of CPI

Your fees need to increase in line with inflation

We recommend that medical practices routinely increase their fees on the same date every year. This ensures that patients and staff can plan for and expect regular small increases to keep pace with inflation. It makes sense to have these increases scheduled for the start of the calendar year (1st January) or the start of the financial year (1st July). Notification of this should be included in your financial consent forms for patients.

How much should you increase your fees by?

The AMA Medical Fees Index has been reporting since 1973 and recommended price increases have fluctuated over that time. The low inflation environment of the past seven years has seen increases of less than 3%.

For 2022 Fees, the AMA recommends an increase of 1.91%.

We consider 1.91% the lower limit of what is reasonable, as higher inflationary pressure is expected to impact medical practices in the coming year due to:

  1. A very tight market for medical practice administration staff (increasing wage costs);
  2. The increased workload required with managing telehealth (increasing per session staff costs); and
  3. The scheduled 0.5% increase in the superannuation guarantee on July 1st 2022.

If these factors will impact your practice in the coming twelve months you may reasonably increase your service fees by 2% to 2.5%.

You next step is to get out the calculator to determine the increased price for every medical fee on your list, effective on January 1st.

In order to double-check a fee schedule, all doctors should satisfy themselves as to fair and reasonable fee structures, considering their own costs and the particular circumstances of individual cases and patients.  

Hoxton clients have their Practice Management Advisory Service to assist with developing Billing Strategies and performing fee reviews and updates. Get in touch with us today to find out how we can support your practice.

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Hoxton MPM
Suite 2.02,
116-118 Thames Street
Box Hill VIC 3128
Phone: 03 8060 4277

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