PL reforms deliver $1 billion in savings but patients are yet to see the benefit

The final evaluation of the Prescribed List (PL) reforms has delivered a mixed verdict on one of the private health sector’s most contentious cost-cutting exercises. The reforms generated hundreds of millions of dollars in savings, but there is little evidence consumers have seen those savings flow through to lower health insurance premiums.

Released by the Department of Health, the evaluation closes out a multi-year reform program that was designed to rein in the cost of medical devices and put downward pressure on private health insurance premiums.

On the headline measure, the reforms delivered. They generated $302 million in savings in their first two years and $540 million over three years, with total savings projected to reach $1.17 billion by June 2027. The median gap between targeted PL items and public benchmarks also fell sharply, from $177 to $35.

The evaluation found that the reforms put downward pressure on premiums, but could not establish that the savings were visibly returned to consumers. In an environment where private health insurance premiums have continued to rise, that finding leaves a sizeable gap between the government’s cost-cutting success story and the experience of policyholders in a cost of living crisis.

Perhaps the most striking conclusion in the evaluation was not a dollar figure at all, but its assessment of the relationships underpinning the reform process. The evaluation team highlighted the “extent of mistrust between the private sector parties involved in the PL reform process – insurers, private hospitals and the medtech companies”.

Ian Burgess, CEO of Medical Technology Association of Australia (MTAA) told Health Industry Hub, “A key theme throughout the report is that private health insurers find themselves at odds with every other stakeholder in the private health system. Patients, clinicians, hospitals and the MedTech industry are united in their focus on patient care and hospital sustainability. It’s time for insurers to stop attacking the sector and start doing their part.”

The potential for conflicts of interest was extremely high. The government adopted a consultative process, but consultation did little to prevent the reform process from descending into open acrimony between powerful commercial interests.

“The significant commercial interests involved meant that the reforms became highly contentious, with claims made by various stakeholders bordering on litigious. The interests of consumers were often lost in the process,” the report noted.

The evaluation also points to the limits imposed by the memorandum of understanding (MoU) between the Minister for Health and the MTAA.

The MOU was blamed for constraining the government’s flexibility to pursue some of the reform’s other objectives, particularly a planned project to restructure the PL and simplify its 13 groupings.

“The MOU’s ban on the achievement of further savings was a significant factor in the failure to achieve regrouping,” the report stated.

Yet the number of new items listed on the PL has fallen by 6.9% over the four years since the baseline. Between August 2024 and July 2025, the number of items across Parts A, C and D fell a further 1.3%.

Industry stakeholders have suggested that reduced benefits, combined with rising supply costs, are putting pressure on sponsors to maintain listings. Some device removals may also be linked to the introduction of the cost recovery levy, with clinician stakeholders reporting that sponsors may be rationalising less frequently used products, a trend they expect to continue.

Private hospitals voiced that reductions in benefits have prompted hospitals to reconsider device selection, particularly where supplier prices exceed PL benefits. In some cases, devices have reportedly been removed from preferred-use lists because of reimbursement concerns rather than clinical considerations.

Hospitals also reported difficulties sourcing more advanced medical technologies, including some cardiac implantable electronic devices (CIEDs) and spinal implants, which they attributed to pricing cuts created by PL benefit reductions. One hospital reported that clinicians are becoming increasingly cautious in their device selection because of uncertainty over insurer reimbursement, even for devices that remain listed on the PL. The concern is that a reform intended to control costs could, indirectly, begin to constrain clinical autonomy.

The evaluation also raises questions about the red tape surrounding the PL assessment process.

Feedback from the medtech industry suggested that the PL listing process imposes more stringent requirements around clinical effectiveness than comparable international markets. The report recommends that the Department of Health and the Therapeutic Goods Administration (TGA) jointly examine whether some PL assessments could leverage the TGA’s assessment of device safety and quality, as well as international assessments of clinical effectiveness, to eliminate unnecessary duplication and reduce timelines to access of novel meidcal technologies.

Dr Katharine Bassett, Director of Health Policy at Catholic Health Australia (CHA), said “Not all the reforms landed. There is unfinished business, including resolving how technical support services are funded and addressing payment delays and disputes between insurers and hospitals. Hopefully the next round of reform can learn from this one, and keep the patient at the centre of it.”

The projected $1 billion in savings may stand as a formidable policy achievement. But unless those gains are ultimately reflected in the cost and quality of cover for patients and policyholders, the reform’s most consequential promise remains unfulfilled.

In reimagining healthcare across the entire patient journey, Health Industry Hub^TM is the only one-stop-hub uniting the diversity of the Pharma, MedTech, Diagnostics & Biotech sectors to inspire meaningful change.

The Health Industry Hub^TM content is copyright protected. Access is available under individual user licenses. Please click here to subscribe and visit T&Cs here.