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Managed care? We just want to look after members, cry insurers

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Private health insurers are intensifying their push for a bigger role in the provision of care as preparations for the Medibank Private sell-off advance.

While the major funds are quick to disavow any suggestion of move toward US-style managed care, the industry’s peak body, Private Healthcare Australia, has demanded that insurers be freed from current restrictions on their involvement in the provision of primary care, including visits to GPs, pathology tests and diagnostic imaging.

Chief Executive Michael Armitage told The Australian Financial Review said the ban on private funds covering procedures provided for by Medicare was nonsensical.

“Not only is it nuts from the financial side of things, it’s nuts from the patient’s perspective,” Mr Armitage told the AFR. “Because if there are ways in which GPs can be paid to do more preventive care to keep people out of hospital and hence the GPs be the integral part of the health equation, everyone in Australia would think that’s a good thing.”

His comments underline warnings made by AMA President Associate Professor Brian Owler earlier this year that the industry was intent on introducing managed care, where health funds – not doctors – would determine what treatment patients received.

“Despite the protests of innocence, I fear a concerted effort on behalf of private health insurers to undermine and control the medical profession,” the AMA President told the National Press Club earlier this year. ““The stage is being set for a US-style managed care system in both the primary care and hospital settings, [and] I am concerned that the Government is also looking towards such a system.”

A/Professor Owler’s warnings have come as major health funds Medibank Private and Bupa have made increasing forays into the provision of health care.

Medibank, which is in the throes of being sold-off by the Federal Government, is already involved in a controversial trial in Queensland where it covers the ‘administrative costs’ of general practices in return for a guarantee that its members are given an appointment within 24 hours and do not face gap fees.

Through its Medibank Health Solutions arms, the insurer has also secured a $1.3 billion contract to provide on-base health services for Australian Defence Force personnel. Under the arrangement, it has sought to prescribe to which specialists patients can be referred.

And last week Medibank managing director George Savvides told the AFR the insurer was planning to drive a harder bargain with private hospitals: “We only want to contract with the best providers who have the lowest infection rate, the lowest revision rate, the best scores around customer care”.

Bupa is making a foray into the direct provision of primary care, opening a series of 12 branded GP clinics beginning this month.

The insurer insists the operation will be kept separate from its insurance activities, and that the clinics will treat Bupa members and non-policyholders alike.

But Bupa Health Services managing director Hisham El-Ansary admitted to the AFR that the insurance arm could become more involved in the clinic operation in future.

The Government itself has sent out mixed messages on the issue.

In a major speech earlier this year, Health Minister Peter Dutton spoke encouragingly of that fact that health insurers were “looking at innovative options in the area of primary health care”.

But his office has denied any plans to overhaul laws to end the ban on private cover for Medicare-provided services.

And private funds themselves claim they have no interest in intervening in the doctor-patient relationship, and that their sole motivation is to improve the long-term health of policyholders in order to reduce expenses for both themselves and the health system.

All this activity is occurring against the backdrop of the looming public float, with estimates it could raise around $4 billion.

Medibank Private policyholders, called members by the insurer, have until tomorrow to pre-register interest in receiving the float prospectus.

But, in a controversial decision, the Government has ruled that Medibank members will not be given preferential access to shares when the sell-off goes ahead in December.

 The AMA has warned the privatisation could lead to higher premiums, but Finance Minister Mathias Cormann insists competition and Government regulations will ensure any increases are limited.

“The truth is that Medibank Private operates as a commercial business in a competitive market now. It will do so in the future,” Senator Cormann told the ABC. “Its capacity to increase premiums will continue to be tempered by competitive forces in the market place, and of course by regulatory arrangements.”

The Minister claimed the funds of policyholders will be much safer once the fund is privatised because governments will not be able to raid its capital reserves as has happened in the past.

Adrian Rollins