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News & Trends - MedTech & Diagnostics

Urgent reforms needed to protect Australia’s healthcare system, says Private Healthcare Australia

Health Industry Hub | February 5, 2021 |

MedTech News: Private Healthcare Australia is calling for urgent reforms to protect timely access to healthcare and the well-being of Australia’s population.

In its 2021-22 Budget Submission, PHA says the future of Australia’s mixed public/private health system relies on maintaining the balance between Medicare and a strong private health sector.

PHA Chief Executive Dr Rachel David said “The current environment required bold policy commitments to address both the existing or long run need for reform, and the immediate or short term consequences of the COVID-19 pandemic.

“The importance of our mixed private and public health system was clearly demonstrated during the COVID-19 pandemic. It showed our capability to provide extra surge capacity while maintaining high quality and delivering a critical safety net for Australian governments as they navigated the response.”

Health funds delivered the lowest premium increase in two decades. The average premium increase of 2.74% will come into effect on 1 April 2021. However, the latest ACCC annual report into the private health insurance industry found that insurers paid out $500 million less in hospital and extras benefits in 2019-20 compared to the previous year.

The PHA submission outlines four key areas where savings of over $1billion can be made:

  • Reforming prostheses funding (up to $500m pa)
  • Reforming second tier default benefits (up to $200m pa)
  • Removing unwarranted and outdated regulation (up to $445m), and
  • Increasing the Medicare Levy Surcharge ($164m).

The PHA says that the greatest savings providing no patient disadvantage come from reforming funding for medical devices. The current Prostheses List (PL) provides set prices for more than 11,000 items, with prices set by reference to other items on the list with no market mechanisms. Private health funds are required to pay for items on the Prostheses List regardless of quality, efficacy, efficiency or safety.

According to Medical Technology Association of Australia (MTAA) CEO Ian Burgess “Private health insurers are advocating for a complete undoing of the PL, removing patient access and surgeon choice and replacing the PL with what, in effect, would be a managed care system that would be disastrous for patients, our health system and the Australian MedTech industry.”

Liz Carnabuci, Vice President of Medtronic Australia and New Zealand, recently said “The Diagnosis Related Groups (DRGs) system (as a PL reform option) will erode what we have all been working towards in terms of value – access to innovation and novel technology and clinical choice of medical devices – that the current PL accommodates. The reduced value of medical technology may potentially lead to less innovative technologies being launched in Australia which impacts not only the MedTech sector but also patients, hospitals and the healthcare system.”

PHA has developed a blueprint for reforming prostheses funding in Australia. PHA says that these reform measures, combined with the gradual restoration of the private health insurance rebate to 30% for those on low incomes will take immediate pressure off family budgets and ensure that the average premium increase over the next five years would be about one per cent per annum.

Mr Burgess noted “As we move forward, we need to ensure that all stakeholders work together to ensure that Australians retain the right to choose what medical device is implanted in their bodies, ensure that Australians continue to have the access to those life-saving and life changing medical devices, clinicians are not forced to recommend medical devices that do not meet their patients’ needs and that hospitals do not take on the private health insurers’ risk.”


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