Private insurers being brought to account
The AMA’s activities over several years to shed light on the egregious behaviour of certain private health insurers is now bearing fruit.
The Australian Competition and Consumer Commission (ACCC), the Commonwealth Ombudsman and the Federal Government are now taking action to curb unacceptable practices and shift the focus onto consumer needs, informed by AMA advice and submissions.
As part of its work in this area, the AMA recently made a submission to the Government’s review of private health insurance policy. Our submission called for the Government to abolish ‘junk’ policies; prevent insurers from arbitrarily introducing exclusions in policies and benefit payment schedules without prior advice; and prohibit insurers from encouraging consumers to purchase a product, or downgrade their cover to a level that is inappropriate to their health care needs.
In addition, the AMA’s inaugural AMA Private Health Insurance Report Card issued in February this year sent a clear message that consumers could not take at face value information provided by their health insurer. We warned consumers to avoid ‘junk policies’ – those that provide cover only for treatment in public hospitals – and to ensure they clearly understood the level of benefits paid by their insurer and likely out-of-pocket costs.
In response, the Government has now announced that it will eliminate junk policies as a part of its program of private health insurance reforms.
The Government also intends to create a three-tiered system of policies that will allow consumers to more easily choose a product that is right for them. It will mandate minimum levels of cover for policies, and develop standardised terminology for medical procedures.
These proposals will require detailed consideration to ensure an appropriate balance between private and public health care is maintained. This work will keep the Medical Practice Committee busy this year.
The Government has also responded to our complaints that the operations of third party comparator sites for private health insurance are not transparent; ‘comparisons of best value’ exclude some policies and commissions are kept secret. The Government will require third party comparator sites to publish commissions they receive, similar to the requirements for other financial services.
The Commonwealth Ombudsman is also investigating those insurers who are insisting on seeking ‘pre-approvals’ for plastic and reconstructive procedures. Many of our surgeon members have been affected by this practice in which insurers require private hospitals to get surgeons to fill in and ‘certify’ a form providing clinical details of the procedure and the reasons why it is necessary.
While insurers continue to claim that this process is not compulsory and does not constitute a ‘preapproval’, we understand that patients, hospitals and medical practitioners are being told that if forms are not submitted, benefits will not be paid.
In direct response to AMA concerns, the Department of Health wrote to all insurers in 2015 reminding them that, under law, they must pay benefits for a hospital treatment when an insured member undergoes a procedure for which a Medicare benefit is payable, and which is covered by their health insurance product.
Clearly this advice has been ignored, but the Ombudsman’s investigation will hopefully put a stop to this practice.
Finally, the ACCC is taking legal action against Medibank Private for allegedly misleading consumers – specifically, failing to give notice to members on its decision to limit benefits paid for in-hospital pathology and radiology services.
As mentioned earlier, we raised the issue of arbitrary changes to policies and benefits in our submission to the Government’s private health insurance review last year, but we also brought this to the attention of the ACCC in our 2016 submission concerning insurer activities designed to erode the value of private health insurance cover and maximise insurer profits.
Commenting on its legal action, the ACCC said: “Consumers are entitled to expect that they will be informed in advance of important changes to their private health insurance cover, as these changes can have significant financial consequences”.
The AMA wholeheartedly agrees.