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Patients left stranded by health cover gaps

Patients are being forced into last-minute cancellations of vital surgery to repair eyesight, fix dodgy knees and hips and reconstruct hands, faces and chests ravaged by cancer because of unexpected gaps in their private health cover.

The AMA has called for private health insurance policies that exclude basic and common procedures to be banned, after a survey of AMA members found insurance companies are increasingly marketing policies with exclusions and caveats that patients do not fully understand, and which are forcing them to forego common procedures like cataract surgery, hip and knee joint operations and reconstructive breast, face and hand surgery.

In a submission to the Australian Competition and Consumer Commission on the private health insurance industry, the AMA said health funds were engaging in sharp practices that left consumers confused and unaware of major gaps and shortfalls in their cover.

“There is a significant disconnect between most consumers’ understanding of the services and rebates they are entitled to under their private health insurance policy and the reality of what their product provides,” the submission said.

It complained that insurers presented their products in a poor and confusing manner, and often they were explained incorrectly by frontline staff.

“The combined effect means that consumers have limited ability to ‘shop around’ and compare products, and to fully understand the products they have purchased,” the AMA said. “It is usually only at the time when people need to have medical treatment in a hospital that they first comprehend that their insurance policy is deficient.”

The number of policies being sold with exclusions and minimum benefits has accelerated as premiums have increased. A decade ago, just a third of policies had restrictions, exclusions or higher excess, but they account for around a half of all policies held now.

The Australian cited Private Healthcare Australia figures showing more than 985,000 policies were downgraded between February 2012 and December 2014, and the number is expected to surge higher following the latest average 6.2 per cent premium increase that came into effect on 1 April.

In its submission, the AMA said many practitioners were concerned that insurers were deliberately allowing people to take out health policies unlikely to suit their health needs, such as selling cover that excludes psychiatric care to patients with a chronic psychiatric condition.

In addition, firms are marketing changes to policies without fully explaining the consequences for consumers.

One doctor surveyed by the AMA reported that, “I’ve had patients who were told their premiums would not rise this year, but did not understand this had only happened because they had been shifted to a policy with exclusions. The detail was in the fine print”.

Insurers faced particular condemnation for marketing ‘public hospital only’ policies, which the AMA said were of no value to consumers.

One doctor observed that, “consumers are being sold a non-existent service because they wait the same amount of time for admission as public patients, and they are usually unable to choose their doctor. In some states or regional areas it’s completely useless because surgeons just can’t offer that service”.

In its submission, the AMA called for such policies to be withdrawn from the market.

The AMA reserved special condemnation for the pre-approval processes used by private health funds to try to dodge their obligations.

Under the Private Health Insurance Act 2007, private funds are required to pay benefits for hospital treatment for which a Medicare rebate is payable.

But AMA reported that some insurers were adopting a virtually default position of refusing to pay a claim, forcing patients to complain and challenge the decision.

“The two largest private health insurers are circumventing their obligations under the PHI Act by rejecting the payment of private health insurance benefits prior to procedures being performed,” the submission said. “In a situation where the…insurer refuses to pay, it is only the patient who has standing to pursue payment…through the courts. The reality is that few patients will do so.”

The AMA has called for policies that exclude common procedures, or provide cover only for treatment in public hospitals, to be banned.