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News & Trends - MedTech & Diagnostics

‘Deadline for 1 July cannot be met without massive disruption to private hospitals’, says CEO of APHA

Health Industry Hub | April 19, 2023 |

MedTech & Diagnostics News: Michael Roff, CEO of Australian Private Hospitals Association (APHA), joined Health Industry Hub to discuss the Prostheses List (PL) reforms and the significant challenges facing the private hospital industry as the 1 July deadline draws closer. This date marks the removal of nearly 500 general use items from the current PL, alongside the commencement of the relevant Private Health Insurance Bill provisions.

The 2021–22 Budget provided $22 million over four years to reduce the cost of medical devices used in the private health sector and streamline access to new medical technologies to improve the affordability and value of private health insurance for Australians.

Whether the PL reforms widely meet its policy objectives and contribute to a future fit private healthcare system is yet to be determined. However, Mr Roff stated that in terms of pricing changes to deliver savings to health insurers, it is certainly meeting that objective.

“What we want to see is guaranteed access for consumers to not just current but also emerging and future technologies with no out-of-pocket cost to the consumer. Maintaining clinical independence is also critical. Different doctors treat different cohorts of patients and do different procedures. We don’t want a cookie cutter approach in the future,” Mr Roff said.

He pointed to the Ernst & Young report developed during the height of the COVID-19 pandemic as the basis for the changes to the general use items on the PL, noting that although it had the input of a clinical reference group, the consultation was not transparent and their Terms of Reference were limited.

“There are many specialties that access these general use items that have not been consulted. We’re getting feedback from specialists who work within our hospitals that they have no idea what is being planned, clearly reflecting the deficiency in the consultation process,” he said.

The APHA firmly believes that the deadline for 1 July cannot be met without massive financial disruption to the service mix in some private hospitals. The APHA has expressed concerns about the Department of Health’s lack of understanding into the complexity of changes impacting patients and certain procedures, including bariatric surgery, neurosurgery, cardiac surgery, and to some extent cancer surgery.

“One of the issues that we were raising way back into last year was that the the Department needed to consult with the software vendors who provide the billing and claiming software because they are a key part in this implementation. And they only just started meeting with them in the last couple of weeks.

“The Department has been told that once they get the final specifications of what the changes will be – and no decisions been made on that yet – then it would take the software vendors about twelve months to develop, build and test new software before it could be validly used in claiming. That’s a key part of the puzzle that just hasn’t been included. That’s one of the many reasons that this mooted change cannot go ahead on 1st July,” Mr Roff stated.

Notably, the Department of Health has come back to stakeholders with suggestions that portray a potential lack of understanding of what is involved – that perhaps some of these claims could just be manually processed or that hospitals could withhold the part of the claim relating to the general use items.

“We’re talking millions and millions of claims over that period. You can’t hold back on it. All of these proposals indicate they don’t understand the complexity of the systems that are involved,” Mr Roff added.

When considering the Ernst & Young report closely, it recommended that before any of the general use items could be removed from the PL, a viable alternative funding mechanism had to be identified, developed and tested.

“The Department barrelled ahead with the first part of the EY recommendation to remove these items and totally ignored the second part. Their view was that these will be subject to negotiation between hospitals and health insurers and they’ll be included in their contracts. There are a lot of hospitals, and particularly day surgeries, that don’t have contracts with health insurers so they would be left in the cold,” he said.

The Independent Health and Aged Care Pricing Authority (IHACPA) met with stakeholders recently regarding the bundling arrangements for the general use items. Stakeholders outlined issues with IHACPA’s bundling proposals including deficiencies in the data used, the inability of the options to account for variations in clinical practice and concerns that some hospitals would be seriously underfunded for the use of these general use items.

IHACPA has confirmed with Health Industry Hub that despite concerns from stakeholders on the unfeasibility of the current bunding options for the general use items “the Department has not asked IHACPA to provide additional advice on bundling options for the Prostheses List.”

“We recommend that the general use items are either not removed from the PL or they be hived out while the benefits still apply for the use of those items in the short term.

“If the HCP data would be expanded to have more detail about prostheses use for each procedure, then you could actually monitor the utilisation of individual items. Providing clinicians with data and information, particularly comparative data where concerns of overuse arise, is a better way to influence behaviour rather than some sort of artificial financial incentives or penalties that apply to the hospital rather than the clinician,” Mr Roff noted.

In considering a broader reform to private health insurance, Luke Toy General Manager of Advocacy at the Australian Medical Association (AMA) called for a Private Health Authority at the recent APHA congress “to remove the Department of Health of its conflicted role of regulator/policy maker and ensure a cohesive regulatory model that brings all health sector stakeholders together.”

While the government is looking at reforms to private health policy settings, it is keen not to act too quickly and consult widely regarding any changes.

Mr Roff said “Whether or not that process also includes consideration of a proposal like the AMA’s Private Health Authority is yet to be determined. What the AMA is proposing would be a fairly radical reorganisation and it’s not something that would happen quickly or without a lot of thought beforehand.

“We’re not ruling out AMA’s proposal, but the devil would be in the detail. There are a lot of bodies involved from the Health Department – Safety and Quality Commission, APRA, the Ombudsman, and that’s before you even get down into what’s happening on a state level. It would be quite a job to come up with something that satisfies everybody and addresses the challenge of determining what the objective of this Authority would be.”

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