Australians claiming medical rebates will soon find themselves waiting in long queues at a privatised Medicare shopfront or even a post office, Labor claims.
But the federal government says it's looking for a private provider for IT services only, not shopfronts.
The opposition and the public sector union say thousands of jobs could be lost through a push towards privatising the delivery of Medicare and Pharmaceutical Benefits Scheme claims.
"(People) shouldn't have to stand in line at Australia Post, at some private company's shopfront or spend hours on hold to some international call centre just to lodge a claim or hand in a form," opposition health spokeswoman Catherine King said on Friday.
The government has called for expressions of interest from companies wanting to take over payment processing from the human services and veterans' affairs departments.
This would involve processing more than 630 million transactions a year valued about $32.5 billion.
"This is another part of the Abbott government's plan to murder Medicare," Community and Public Sector Union national secretary Nadine Flood said.
She feared 20,000 front-line workers could lose their jobs.
But Health Minister Peter Dutton said the tender did not include Medicare's face-to-face services.
The government is looking at whether there's private sector interest and capability to provide the health and veterans' affairs departments with IT services contracted to the Department of Human Services.
"The commercial sector may be able to provide a better service to Australians at a lower cost to the taxpayer," Dutton said.
"If so patients, doctors and the government will reap the benefits and savings."
The commission of audit recommended outsourcing Commonwealth payment systems, and the government allocated $500,000 in its budget to explore this suggestion.