The budget has extended by two years to 2020 an indexation freeze on the Medicare rebate it pays for services like GP visits, saving almost $1 billion.
But GPs have long argued the pause is a GP co-payment "by stealth", insisting doctors are already being forced to pass costs on to patients to meet the funding shortfall.
Health Minister Sussan Ley on Tuesday said the extension was in recognition of the fiscal environment and the new Healthier Medicare trial, which includes new payment models for GPs treating chronically-ill patients.
She insisted the government remained committed to a possible review of the pause as further improvements and inefficiencies are identified.
The powerful doctors' lobby, the Australian Medical Association, which launched a fierce campaign against the federal government's GP co-payment until it was declared "dead, buried and cremated" last year, has already vowed to make the existing freeze an election issue.
Ms Ley previously has refused to rule out the possibility of costs being passed on to patients, insisting her department's modelling shows changes will be minimal.
Tuesday's budget will also anger health groups with another $182 million to be removed from 16 flexible funds that provide financing for programs, interest groups and not-for-profit organisations, such as he Butterfly Foundation.
The government already cut $197m from flexible funds in 2014/15, and another $600m in 2015/16.
"All existing contracts will be honoured and future spending will be prioritised towards frontline services," Ms Ley said.
The government has also announced savings of $1.2 billion through changes to the way it funds aged care.
It will save another $744m by continuing the pause of indexation of income thresholds for the Medicare Levy surcharge and private health insurance rebate.
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