Rural clinics $900K short as Medicare funds just 25% of team care

For health system leaders, the binding constraint on remote primary care is not clinical capability but payment architecture. Evidence to a Senate inquiry shows Medicare's fee-for-service incentives — keyed to GP consultation time rather than patient need — cover only about 25% of the cost of Aboriginal Community Controlled Health Organisations' multidisciplinary model, leaving each clinic about $900,000 short versus a comparable GP practice. As value-based and team-based care gains traction, this is a live case study in how legacy payment design can systematically underfund the exact model that complex, high-need populations require.

A Senate inquiry into access to Medicare in rural and remote Australia has heard that Aboriginal Community Controlled Health Organisations (ACCHOs) — which deliver roughly three million episodes of care each year through a community-controlled, multidisciplinary model — are being systematically underfunded by a fee-for-service system that rewards GP consultation time rather than patient need. Giving evidence at Parliament House in Canberra on 14 August 2026, Dr Jason Agostino, senior medical advisor at the National Aboriginal Community Controlled Health Organisation (NACCHO), said Medicare covers only about a quarter of the cost of the team-based work those clinics perform. The result is that clinics staffed by doctors, allied health workers, nurses and midwives receive around $900,000 less in Medicare and workforce incentives than a similar-sized standard GP clinic.

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The result is that clinics staffed by doctors, allied health workers, nurses and midwives receive around $900,000 less in Medicare and workforce incentives than a similar-sized standard GP clinic.

The testimony sits against a stark clinical backdrop. Remote Australia contains teenagers with type two diabetes, young patients on kidney dialysis and people dying of heart disease before middle age. Despite the Aboriginal and Torres Strait Islander population being the youngest in the country, its burden of disease is more than double the national average. Remote healthcare teams have built what Agostino described as a leading model of care for that urgent need — but the funding system does not recognise it.

The mismatch is structural rather than clinical. Medicare incentives in Australia remain largely keyed to time spent with a GP, which systematically undervalues the allied health, nursing, midwifery and care-coordination functions that remote, high-need populations depend on. Agostino's core demand to the inquiry was blunt: "Fund the whole team, not just the doctor, and write the rules with us with a clear line of sight to closing the gap." NACCHO and its member organisations are calling for needs-based block funding to replace fee-for-service, arguing that predictable, flexible funding would let community-controlled clinics deploy the right workforce mix for local needs.

The fragility of current funding compounds the problem. Many clinics operate on short-term grants, and Agostino said one remote service survives by cobbling together 100 separate grants — an administrative load that diverts resources from care delivery. This precarity sits alongside the structural penalty embedded in Medicare's incentive design.

The evidence also captured the wider rural picture. Margaret Deerain, policy advisor at the National Rural Health Alliance, told the inquiry that some farming communities rely on fundraising to keep their medical clinic running or pay for it through council rates. The NSW Mudgee region has run a successful campaign to attract GPs using incentives funded by mining companies, and a clinic in Western Australia's wheatbelt is cited as another example. The inquiry is examining how patients outside the cities are "inadvertently penalised for where they live."