News & Trends - Medical Technology

MTAA releases unparalleled data highlighting medtech industry’s collaboration in Prostheses List reforms

Health Industry Hub | November 17, 2021 |
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MedTech News: In an interview with Health Industry Hub, Ian Burgess, CEO of MTAA, reflected on the potential for the AMA summit to impact private healthcare reforms and the role of elevating the patient voice within the Prostheses List (PL) reforms process.

Importantly, he discussed the recent release of unprecedented medtech data to the Independent Hospital Pricing Authority (IHPA) in supporting the public private referencing model as a sustainable funding mechanism of medical devices and without the need to compromise patient access or clinical freedom.

Health Industry Hub: The Australian Medical Association (AMA) President, Dr Omar Khorshid, recently announced that he will be calling a national summit to push for the next stage of the private healthcare sector reform. Considering the mix of vested interests and the nature of private health insurance in Australia, is it likely that a summit of stakeholders will produce a long-term solution?

Ian Burgess: I’m cautiously optimistic that the AMA summit would produce tangible and positive outcomes. The majority of stakeholders have been keen to collaborate to formulate meaningful and sustainable reforms to private health. We would engage with the AMA summit proactively and in a positive manner to maximise its impact.

We’ve been working closely with the AMA, consumer groups and private hospitals to achieve Prostheses List reforms where there is consensus between those stakeholders to ensure it is successful and appropriately implemented to protect the current value of the PL in terms of continued patient access and surgeon choice of medical devices that are on the list.

Private health insurers need to come to the table and join the other stakeholders in collaborating in a meaningful manner.

Health Industry Hub: How do we elevate the patient voice to raise concerns from patients and patient organisations regarding the PL reforms and its implications for patients accessing innovative technology and potentially facing out-of-pocket costs?

Ian Burgess: The medtech industry is all about patients – saving lives, extending lives and providing better quality of life. All stakeholders must keep in mind the fundamental purpose of everything we’re doing is about patients.

The high out-of-pocket costs are a key driver of patients and customers questioning the value of private health insurance. The current value of the PL is that it generally provides guaranteed access, freedom of surgeon choice and no out-of-pocket costs for the patient. Reforms that are implemented have to retain that current PL value. Despite insurers’ claims, the PL expenditure on medical advices are not driving up insurance premiums. There have been reductions in PL benefits and substantial cost savings have been delivered by the medtech sector.

It’s critical that the current PL reforms are formulated and implemented in a way that out-of-pocket costs to patients don’t increase. To achieve this, the government needs to address each of the other policy levers to ensure a sustained framework. We require a fully considered policy reform process that reflects on each of the PL reform parameters, how they interact with each other and the impact on out-of-pocket costs. For example, the current discussions regarding the removal of items from the general miscellaneous list need to include a clinical review to ensure that those products are clinically appropriate to be removed. Additionally, there has to be a guaranteed alternative and sustained funding mechanism where insurers need to make a commitment and are held accountable in continuing to fund those medical devices through hospital-insurer negotiations on a long-term basis.

The patient voice is included in the stakeholder group that the Department of Health has setup as part of the PL reform process. It is essential that this voice be listened to. Our concern has been that too much weight has been placed on the views of private health insurers to the detriment of all other stakeholders, particularly patients. We need to make sure that the balance is right and that the patient voice has the appropriate opportunity but is also listened to during the entire PL reforms process through to the implementation stage.

Health Industry Hub: In our last interview you discussed the Benchmark Price for Prostheses Consultation and MTAA working with members, non-members and KPMG on the PL data collection to submit to IHPA. What is the progress and why is this important?

Ian Burgess: The fundamental process of the PL benefit review proposal we put forward is a public private referencing mechanism which was supported by all stakeholders except for private insurers who wanted to abolish the PL. It was also ultimately supported by the government in its earlier budget announcement.

MTAA endorses IHPA’s adoption of a weighted average price methodology to determine the public price point for medical devices on the PL. This methodology will refrain from referencing the lowest possible price in the public system as this will not reflect a true supply price point and would result in enormous reductions in the corresponding health benefits. Additionally, there is a private adjustment factor demonstrating the differences in pricing between the private and public sectors. The public system is a tender driven and procurement-based system with volume price trade-offs, whereas the private system is predicated on choice and patient access to medical technology and related technical services.

Our proposal would achieve ongoing reductions in PL benefits, which is the government’s objective, but importantly in a manner which is sustainable for the private health system and industry while maintaining patient access and doctor choice within an appropriate policy framework.

MTAA has just released industry data to IHPA, who has been tasked with quantifying the gap between PL benefits and public prices in providing recommendations to government. This is unprecedented and quite extraordinary in terms of the extent and detail of this confidential and commercially sensitive pricing data that the medtech industry is willingly providing to government through this process. This has been done prior to the methodology of the PL benefit review being finalised and prior to all the reform areas that are currently being progressed by the Department of Health.

The data set is comprehensive encompassing 85 – 90% of the value of the PL and includes contributions from member and non-member medical device companies. The ‘why’ comes down to the fact that this is the most comprehensive and accurate data set to use for that public private referencing model.

We’ve had appropriate assurances from government on the use of the data and that confidentiality will be maintained by IHPA and the government.

In the immediate term, MTAA will be engaging with government on the methodology of the public private referencing mechanism. We’re looking forward to engaging positively with the government around the final design of the methodology to ensure that it is appropriate, fit for purpose and achieves the government’s objectives in the best way.

Health Industry Hub: Despite differing policy agendas at play, all key stakeholders agree that the private sector has a fundamental place in Australian healthcare and the government is obliged to protect it. How do we ensure patients receive value from their expensive insurance premiums?

Ian Burgess: To achieve better value for consumers from their private health insurance, we need broader and deeper reforms than just the Prostheses List.

We need an appropriate and dedicated regulator of private health insurers. Currently, APRA and ACCC don’t provide the right regulatory framework and the required oversight of private health insurers. Concerningly, there are increasing management fees and expenses incurred by insurers which are greater than what they spend on the PL benefits. A review of these expenses and the insurance industry is critical particularly as the sector receives more than $6 billion taxpayer funded assistance.

Regarding the PL reforms, we have received assurances from the government regarding its objectives, including the sustainability of the medtech sector, and we are keen to ensure these assurances are met as we flesh out the details in the next couple of months.

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