Your explanation sounds spot on to me. this is from the medicare website:



What is the Medicare Safety Net?
The Medicare Safety Net provides families and individuals with financial assistance for high out-of-pocket costs for out-of-hospital Medicare Benefits Schedule (MBS) services. Once you meet a Medicare Safety Net threshold, you may be eligible for additional Medicare benefits for out-of-hospital MBS services for the rest of the calendar year. Also available is the PBS Safety Net if you and your family need a lot of medicines in any year.

Medicare Safety Net thresholds as at 1 January 2010
Threshold amount Who it is for How it is calculated What the benefit is
Original $388.80† All Medicare cardholders Based on gap amount 100% of schedule fee for out-of-hospital services
Extended concession and FTB(A) $562.90† Concession cardholders and families eligible for FTB(A) Out-of-pocket costs 80% of out-of-pocket costs or the EMSN benefit cap for out-of-hospital services
Extended general $1126.00† All Medicare cardholders Out-of-pocket costs 80% of out-of-pocket costs or the EMSN benefit cap for out-of-hospital services

Out-of-pocket costs—the difference between the Medicare benefit and what your doctor charges you.

Schedule fee—a fee for service set by the Australian Government.

Gap amount—the difference between the Medicare benefit and the schedule fee.

What is an Extended Medicare Safety Net (EMSN) benefit cap?
An EMSN benefit cap is an upper limit on the amount of Medicare Safety Net benefit payable for an out-of-hospital MBS service. Not all Medicare items have an EMSN cap.

For more information about the EMSN benefit cap go to the Extended Medicare Safety Net fact sheet on the Department of Health and Ageing's MBS Online website.

What are the benefits for me?
Once you reach a Medicare Safety Net threshold visiting a doctor or having tests may cost you less.

For example: if you reach a threshold and then visit your doctor who charges you $65.00 for a standard consultation, you will receive your Medicare benefit of $34.30. You will also receive 80 per cent of your out-of-pocket costs (($65.00 - $34.30) x 80 per cent), giving you an extra $24.60. So in this example it will only cost you $6.10 to visit your doctor. An out-of-pocket cost is the difference between the Medicare benefit and what your doctor charges you.