Shadow Minister for Health flags ‘real concerns’ on private health insurance-Prostheses List bills

The Coalition and the Australian Greens have voiced their support for the three bills* that relate to the Prostheses List and private health insurance, despite pointing to a lack of transparency and detail on several important items.

The Prostheses List reforms are a result of more than four years of collaboration by key stakeholders such as MTAA, Australian Medical Association, Australian Private Hospitals Association, Catholic Health Australia and the Consumer Health Forum with the former government to ensure that the reforms protect patient access and doctor choice while helping private health insurers remain sustainable.

According to the ACCC report 2020-21, an average gap expense for hospital treatment increased by 9.5% on the previous year and 23% over the last five years, while private health insurance management costs have increased by 8% or about $200 million. At the same time, the number of exclusionary policies grew by 150,000 policies or around 4.6%. This is part of a long-term trend which has seen the number of policies with exclusions grow from 28.7% in 2012 to 61.3% today – likely a function of people cancelling top cover and opting for low-cost, basic policies to avoid the added tax expenses.

Anne Ruston, Shadow Minister for Health and Aged Care, said “The Coalition are absolutely happy to support the process and the progression of these bills. In saying that, whilst the importance of this legislation cannot be overstated, there are some real concerns about the fact that so much of the information that is needed to underpin the moving forward of this particular initiative is completely absent and nobody has any line of sight whatsoever. This sector has no line of sight, this Senate has no line of sight, certainly the opposition has no line of sight.”

One area of concern is that despite the fact that the cost recovery framework regulations and rules have not been out for consultation yet, the mechanism for cost recovery is being put in place with this legislation.

Another area of concern is in relation to the ~500 general use and consumable items that have been removed from the Prostheses List. Mark Butler MP, Minister for Health and Aged Care, made a statement in mid-December 2022 that he is going to mandate the requirement for these items to continue to be funded by private health insurers for the next two years. Yet, there are no details on what that is going to look like.

The Independent Health and Aged Care Pricing Authority (IHACPA), is running the consultation on the bundling of benefits for general use items with the purpose of providing options for the new transitional arrangement planned for the two years commencing 1 July 2023.

IHACPA does not have to report on the consultation until after the passing of the legislation meaning it cannot be scrutinised. The Department of Health and IHACPA have a preferred model for bundling by facility type, but the sector prefers a procedure bundling exercise instead of facility type as it is a more targeted way to ensure the correct funding and cost mechanisms.

“The question then is: what happens after two years? Is the expectation that we’re just going to set everybody against each other while they go and fight it out as to who is going to pay for these particular items that have been removed from the Prostheses List by this particular legislative framework?” Senator Ruston queried.

Of even greater concern is the timelines of the requirement for this bundling to come into effect. Industry have been categoric in saying they do not believe they will be in a position to implement these changes on 1 July 2023, which is the intention of the government.

Senator Ruston added “Once again, we have seen the rushing of a piece of legislation…with no regard to the implications of those time frames on the people required to implement them. Most particularly, I don’t think there has been any regard taken for the implications on patients, and the outcomes for patients and our overall health system, of the intention to push forward with this on 1 July.

“Will we just see many of the procedures that are currently being undertaken in public hospitals and private hospitals shoved into the public system because private hospitals will no longer be able to afford to provide these procedures? We should have had these questions answered before we were asked to come in here and vote on this particular bill.”

Independent Senator for the ACT, David Pocock, called for an amendment to allow the ACCC to report on the savings delivered by the medtech sector to ensure they are delivered to the consumers by the private health insurers.

He said “These savings that have been committed to – around $900 million, over the next four years from the medical technology industry – should be delivered to consumers…When these sorts of savings are put on the table for consumers, we can put processes in place that actually check on them and make sure that they are flowing. We can’t have a system where large deals are agreed to by government and then have no scrutiny.”

The Coalition proposed a delay of further debate on these bills until May or June, when the consultation process has finished and the details around the subordinate legislation has been confirmed.

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*Private Health Insurance Legislation Amendment (Medical Device and Human Tissue Product List and Cost Recovery) Bill 2022, the Private Health Insurance (Prostheses Application and Listing Fees) Amendment (Cost Recovery) Bill 2022 and the Private Health Insurance (National Joint Replacement Register Levy) Amendment (Consequential Amendments) Bill 2022