Prescribed List reforms overshadowed by delays, errors and growing inefficiency

The release of the interim evaluation report of the Prescribed List (PL) reforms has revealed both unexpected delays in application pathways for medical technologies and troubling errors still plaguing the PL. Despite the government’s focus on cost savings, the reforms appear to be causing more confusion and inefficiency than anticipated.

From July 2022 to June 2024, benefit reductions through the PL reforms are projected to have saved between $282 million and $291 million. These savings reflect lower insurance pay-outs for medical devices used in private hospitals.

The gap between PL benefits and public hospital prices has narrowed. The median gap for all items dropped from $24 to $12 following benefit reductions in 2022 and 2023. For items where a gap still exists – about half of all PL items – the median gap has fallen from $177 to $61.

The Department of Health has introduced revised assessment pathways, aligning them with Health Technology Assessment (HTA). A new tiered system allows for more targeted assessments, but it’s quickly becoming clear that the process is more time-consuming and resource-draining than originally projected.

The Department’s compliance strategy is still in its infancy, with significant work left to be done before it becomes operational. Despite claims that issues will be assessed on a case-by-case basis, many stakeholders assert that outstanding errors in the PL, which have been flagged for months, remain unaddressed. To achieve best-practice assurance and compliance, stakeholders warn, the Department will need to commit more resources – something that is clearly lacking.

An attempt to secure an alternative funding arrangement for general use items (GUIs) also fell apart. After extended lobbying from the Medical Technology Association of Australia (MTAA) and the Australian Private Hospitals Association (APHA), the government decided to retain them on the PL citing unresolved implementation challenges and the financial pressures on private hospitals.

According to the report, the decision to defer benefit reductions of Cardiac Implantable Electronic Devices (CIEDs) by one year is projected to result in an estimated $94 million in forgone savings over the five-year period from July 2022 to June 2027.

Looking ahead, the PL reforms are expected to generate between $1.04 billion and $1.17 billion in savings over the five-year period from July 2022 to June 2027. This includes the final round of benefit reductions for Part A of the PL and additional cuts for CIEDs. While these reductions are achieving their goal of lowering benefit levels, many in the medtech sector believe the savings are coming at too high a cost.

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