As part of a plan to ease pressure on the public health system by reducing the number of avoidable hospital admissions, performance bonuses of up to $10,800 will be paid for general practices to keep diabetics out of hospital.

Diabetics will be offered with an option of signing up with a GP practice with Kevin Rudd's $436 million plan.

To cover the costs of day-to-day care and additional services GPs could be paid $1200 a year for every enrolled patient.

The Prime Minister said, “This means a single practice will be responsible for ensuring that voluntarily enrolled patients are able to access services from a wide range of health professionals.”

Rudd’s announcement attracted immediate flak from the Australian Medical Association, with president Andrew Pesce describing it as ‘policy on the run’.

Dr Pesce said, “By removing fee for service, the government is removing patient choice about their primary care and eroding the individual doctor-patient relationship.”

Every year GP will be eligible for payments of about $10,800.

Rudd stated that several Australians living with diabetes were treated in hospitals.