Ms Ley will on Wednesday use a speech in Sydney to announce an examination of each of the 5500 medical services funded under Medicare, a separate review of care and funding models, and a crackdown on abuse of Medicare by unscrupulous practitioners.

She has asked for advice on priority actions for each of the three areas by late this year. This means there will be no structural reform of Medicare in next month's budget, and raises the possibility that the Coalition could seek a mandate for any significant proposals at the election due in the second half of 2016.

Ms Ley said her decision had been informed by the many conversations she had had with doctors and patients in the weeks since becoming Health Minister in December.

"Basically, there's wide agreement the Medicare system in its current form is sluggish, bloated and at high risk of long-term chronic problems, and continuing to patch it up with Band-Aids won't fix it," she said.

"Doctors and patients alike have raised various issues from over-testing and outdated or unproven treatments to unnecessary referrals, duplication, inefficiencies and systematic waste."

Bruce Robinson, the Dean of Sydney Medical School at the University of Sydney, will lead the Medicare Benefits Schedule Review Taskforce, which will be charged with weeding out low-value, ineffective and overpriced procedures and tests.

Former Australian Medical Association president Steve Hambleton will lead the Primary Health Care Advisory Group, which will investigate options to improve GP care for people with complex and chronic illness and mental health conditions, and foster stronger connections between GP care and hospital care.

The group will also look at "innovative care and funding models," which could include doctors getting a payment for each patient enrolled with their practice, or being paid an annual fee to look after a patient, rather than being paid for each visit.

"I think that what we're doing now is not giving us the outcome that we need," Dr Hambleton said.

"I see my role as gathering all the information from all the people who are engaged in healthcare to try to get a solution that we can employ from now on."

Dr Hambleton applauded Ms Ley for ruling out a Medicare co-payment, adding that he agreed with his successor as AMA president, Brian Owler, that "discussions about that policy has derailed looking at all the other options".

Ms Ley has kept in place a freeze on the indexation of Medicare rebates, which is expected to produce savings of about $1.3 billion over four years.

"As an article of good faith, I am open to a future review of the current indexation pause as work progresses to identify waste and inefficiencies in the system," Ms Ley said.

Dr Hambleton predicted the freeze would motivate doctors to contribute to the review process.

"Frankly, what the government's saying is if we do nothing, there's no more dollars. So if we can actually show that we can get better use of the current investment in general practice, we can start to look at unwinding some of those things," he said.

Both taskforces would be asked to contribute to work by the health and human services departments to tackle dubious conduct by doctors.

Ms Ley said the core focus of the work was on "delivering better patient outcomes," and she had not set an overall target for savings, but with Medicare spending predicted to grow faster than any other element of government health spending in coming decades, "we need to make sure each dollar delivers the best health outcomes for patients possible".

Medicare paid out about $20 billion last year for more than 350 million Medicare services, an average of 15 services per person worth a total of $800 each.

Consumers Health Forum chief executive Leanne Wells welcomed the announcement, saying it  represented "a long overdue opportunity to modernise Medicare so it can provide truly patient-centred care and better funding arrangements in this era of growing chronic illness".

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