Federal Treasurer Wayne Swan has confirmed plans to introduce reform to the Medicare system in Tuesday's budget.

The reform to the Medicare will encourage GP clinics to employ nurses.Each GP will be eligible for $25,000, worth up to $75,000 a year to a three-doctor practice, enough to hire a full-time nurse to write prescriptions, make home visits and teach patients to manage their illnesses.

The care they provide is expected to come at no cost to the patients and it will free up GPs to carry out the more complex medical care.

Currently, government incentives for employing nurses are capped at $40 000 per practice and only apply in places with a workforce shortage or rural areas.