[Guides](/guides) In-hospital billing: the 75% benefit, the 25% fund benefit, and no-gap and known-gap schemes ============================================================================================ Updated 28 October 2026 For a privately admitted patient, Medicare pays **75% of the MBS schedule fee** for each medical service. If the patient’s hospital cover includes the service, their health fund must pay **at least the remaining 25%**. Anything you charge above the schedule fee is the patient’s gap, unless you bill under the fund’s **no-gap** or **known-gap** arrangement, where the fund pays more. Who pays what ------------- Your feeMedicareHealth fundPatientAt or below the schedule fee75% of the schedule fee, but no more than your feeThe rest of your feeNothingAbove the schedule fee, not using a gap scheme75% of the schedule fee25% of the schedule feeYour fee − the schedule feeWithin the fund’s no-gap rate75% of the schedule feeThe rest of your feeNothingWithin the fund’s known-gap limit75% of the schedule feeUp to the fund’s scheme rateThe known gap, up to a limit the fund sets > [Item 51904](/items/51904) has a schedule fee of $544.40. If you charge $854.65 outside any gap scheme, Medicare pays $408.30, the fund pays $136.10, and the patient pays **$310.25**. If that $854.65 is within a fund’s no-gap rate, the fund pays $446.35 and the patient pays nothing. MBS Search shows each fund’s published scheme rate on an item’s page. Click **Use** next to a rate to see the split at that fee. No-gap and known-gap schemes ---------------------------- - **No gap:** the fund pays more than 25% of the MBS fee. If you charge up to the fund’s no-gap rate, the patient has no out-of-pocket cost. - **Known gap:** if you charge above the no-gap rate but within an extra limit set by the fund, the fund still pays its scheme benefit and the patient pays a known, capped gap. Each fund sets its own limit. For example, HCF caps its known gap at $500. - **Above the known-gap limit:** the fund pays only 25% of the MBS fee and the patient pays the rest. Each fund sets its own participation terms and rates, which vary by state. Check the fund’s current scheme rules before billing. Informed financial consent -------------------------- Patients have a right to an estimate of their costs before they agree to treatment. This is called informed financial consent. A written estimate that lists your fee, the expected Medicare and fund benefits and the expected gap lets the patient compare options and avoids surprises. Where you can, mention other doctors involved, such as the assistant and anaesthetist, who bill separately. Check whether the fund’s gap scheme has its own requirements. Safety nets don’t apply in hospital ----------------------------------- Gaps for in-hospital services don’t count towards the Medicare safety nets, and safety-net benefits aren’t paid for them. See [Medicare safety nets explained](/guides/medicare-safety-nets). Frequently asked questions -------------------------- ### How much does Medicare pay for in-hospital services? 75% of the MBS schedule fee for professional services provided to a privately admitted patient. The patient’s health fund must pay at least the remaining 25% if their hospital cover includes the service. ### What is the difference between no gap and known gap? Under no gap, if you charge up to the fund’s rate, the patient pays nothing. Under known gap, you charge above the no-gap rate but within a further limit set by the fund, and the patient pays a known, capped amount. ### Is the known gap always capped at $500? No. Each fund sets its own known-gap limit. Some use $500, but check the fund’s current scheme rules. ### What happens if I charge more than the known-gap limit? The fund pays only the minimum 25% of the MBS fee, so the patient pays everything above the 75% Medicare benefit plus the fund’s 25%. ### Do public patients get an MBS benefit? No. Public patients in a public hospital are treated free under the hospital agreement, so no MBS benefit is paid for their medical services. Sources ------- - [Department of Health: out-of-pocket costs for private health insurance](https://www.health.gov.au/topics/private-health-insurance/what-private-health-insurance-covers/out-of-pocket-costs) - [privatehealth.gov.au: out-of-pocket costs](https://www.privatehealth.gov.au/health_insurance/howitworks/out_of_pocket.htm) - [Commonwealth Ombudsman: informed financial consent](https://www.ombudsman.gov.au/publications-and-news-pages/publication-pages/brochures-and-factsheets/factsheets/private-health-insurance/informed-financial-consent) - [HCF: charges and the gap](https://www.hcf.com.au/insurance/health/understanding-the-costs/charges-and-the-gap) More guides ----------- - [How Medicare benefits work: schedule fees, 75%, 85% and 100%](/guides/how-medicare-benefits-work) - [Medicare safety nets explained: original and extended (EMSN) thresholds for 2026](/guides/medicare-safety-nets) - [Bulk billing incentives and BBPIP explained: 2026 amounts by MM area](/guides/bulk-billing-incentives) - [The MBS multiple operation rule and surgical assistant fees](/guides/multiple-operation-rule) - [Assignment of benefit for bulk billing: the changes from 1 July 2026](/guides/assignment-of-benefit-2026) - [MBS telehealth rules: the eligible telehealth practitioner and phone items](/guides/mbs-telehealth-rules) - [GP chronic condition management plans: items 965 and 967 explained](/guides/chronic-condition-management-plans) - [Medicare billing compliance: claim time limits, records and the 80/20 rule](/guides/medicare-billing-compliance) General information for health professionals, not legal or financial advice. Check MBS Online and Services Australia for the rules that apply to your circumstances.