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Device reforms may be too late to prevent premium pain

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The Federal Government is coming under pressure to speed up its review of prosthetic prices if consumers are to avoid another painful hike in private health insurance premiums.

Health funds have warned that unless the cost of medical devices on the Prostheses List falls into line with the much lower prices paid by public hospital in the next few weeks, policyholders will continue to pay an extra $150 to $300 on their premiums.

The warning is the latest shot in a tussle underway between insurers, medical device manufacturers and private hospitals other over the cost of prostheses, as documented in a series of articles in The Australian newspaper.

The health funds, increasingly worried about the backlash from consumers over rapidly rising premiums and complex and confusing insurance products, have set their sights on prostheses prices as a key way to contain costs.

They claim that existing pricing arrangements are woefully out of date and force insurers to pay grossly inflated prices for medical devices compared with public hospitals. According to insurers, they are being charged up to $3450 for a coronary stent that costs $1200 in the public system, while a defibrillator costing them $52,000 costs a WA public hospital just $22,555.

Altogether, the funds estimate they could save $800 million by bringing public and private prostheses prices into line, savings they say would be passed on in cheaper premiums for consumers.

But the Medical Technology Association of Australia, which represents medical device manufacturers, has defended the sector against what it considers to be false and misleading claims.

MTAA co-lead Andrea Kunca said the industry rejected accusations of inflated pricing and fully supported the work of a Government working group brought together earlier this year to work through “meaningful solutions” for reform of the Prostheses List.

The Australian has published claims that the MTAA, in concert with private hospital operators, has so far been successful in frustrating attempts by Health Minster Sussan Ley to reform the Prostheses List, and any changes are unlikely to come in time to head off another sharp increase in the health fund premiums next year.

According to The Australian, fierce lobbying by well-connected outfit CapitalHill Advisory on behalf of the MTAA derailed an early attempt by Ms Ley to cut implant prices.

Influential Senator Nick Xenophon has announced he will push for a Senate inquiry into private health insurance and the pricing of medical devices on the Prostheses List, a move welcomed by the MTAA.

“There have been a number of misleading and false claims put in the public arena in regards to the medical device industry,” Ms Kunca said. “A Senate inquiry will allow these false claims to be answered once and for all. From the MTAA’s perspective we look forward to presenting the facts rather than anecdotal misinformation put forward by some.”

Premium crunch time

The health funds have to submit proposals for their 2017 premiums, which have to be approved by the Health Minister and are announced in April, by early November.

Doctors, insurers and the Government fret that another 6.5 per cent premium increase could accelerate the shift among policyholders toward cheaper policies with multiple exclusions and less coverage, or even convince many to ditch private health cover altogether – the insurance industry has cited research that at least 20 per cent of current members would find premiums unaffordable in the next six years.

Ms Ley recently overhauled the membership of the Prostheses Listing Advisory Committee, appointing University of New South Wales Professor of Medicine Terry Campbell as Chair. Professor Campbell’s appointment was a belated replacement of long-serving Chair Professor John Horvath, who left last December to become a strategic adviser at Ramsay Health Care.

The stoush comes against the backdrop of rising dissatisfaction among doctors and consumers with the quality and value for money of private health insurance.

The AMA has been a vocal critic of the proliferation of complex and confusing policies, many with multiple exclusions that leave unsuspecting patients with inadequate cover.

AMA President Dr Michael Gannon has declared the medical profession’s support for Government reforms to improve the value of private health insurance by banning junk public hospital-only policies, standardising terms, mandating minimum levels of cover and preserving community rating.

Dr Gannon said doctors were doing the right thing, with 86 per cent of privately insured medical services charged on a no gap basis, and a further 6.4 per cent involving a known gap.

“This means that less than 8 per cent of privately insured patients are charged fees that exceed that paid by their private health insurance,” the AMA President told the National Press Club in August. “Put simply, the majority of doctors and hospitals understand the impact of gaps on patients and are doing the right thing by them.”

He said that because of these, doctors were deeply unimpressed with the behaviour of some insurers, “particularly the biggest and most profitable ones”, in putting profits ahead of the interests of patients.

Dr Gannon said that if such actions, including aggressive negotiations with private hospitals and attacks on the professionalism of doctors, continued unchecked “we will inevitably see US-style managed care arrangements in place in Australia”.

Adrian Rollins