ACCC Puts Private Health Insurance Under Microscope

The Australian Competition and Consumer Commission (ACCC) has released its 2012 annual report detailing the anti-competitive practices of health funds in relation to private health insurance. Surprise, surprise: the allied healthcare providers recognised by insurers aren't always based solely on clinical assessments.

Health Care picture from Shutterstock

Each year, the ACCC produces a report for the Australian Senate on the anti-competitive practices by health insurers or providers which put consumers needlessly out-of-pocket or reduce the extent of their health cover.

For its latest report, the ACCC focused on the way health insurers recognise certain types of allied healthcare provider over others; a decision that can affect the employment prospects and income of said providers.

The report found that insurers often fail to recognise certain types of allied healthcare provider, despite offering the same or similar services as the companies it did recognise. The "application of commercial judgement" also factored into insurers' recognition decisions in addition to clinical assessments. The ACCC argues that this puts providers at a competitive disadvantage and negatively impacts consumers.

"Insurers’ recognition practices can impact consumers who choose to obtain services from a non-recognised provider and potentially incur higher costs as compared to using a recognised provider and receiving a rebate on their medical expenses," the ACCC argues.

Some of the findings of the report include:

  • Private health insurers will recognise at least one category of provider for each service covered by their PHI products. However, some members experience difficulty accessing the services of providers that are recognised by their insurer and may need to call on the services of an unrecognised provider. This is more common in rural and remote areas where the number of recognised providers is not always sufficient to meet consumer demand.
  • All allied healthcare providers identified in submissions as not recognised had some of their services recognised by some insurers, though not always on the same terms. For example, the ACCC found that there are some insurers that recognise dieticians but not nutritionists and others that recognised nutritionists but not dieticians, and still others that recognise both dieticians and nutritionists.
  • There are no regulatory impediments preventing insurers from recognising any category of allied healthcare provider identified in submissions as not recognised. Whether they choose to do so is a commercial decision for the insurer.
  • Insurers appear to take into account a number of factors when deciding whether recognition of a new category of allied healthcare provider is commercially viable and in their members’ interests. While there is some variation in assessment frameworks across insurers, most claim to give primacy to the clinical efficacy of the service and any clinical risks. Most also have regard to member demand for services, the impact of recognition on administration and total claim costs (and hence insurance premiums), and whether recognition enhances the ability of the insurer to attract new members.
  • Insurers’ assessments of clinical efficacy and risk are often fully or partly contracted out to an agency with specialist knowledge in this field and can be a costly process.
  • When an insurer decides to recognise a particular type of allied healthcare provider they generally recognise that provider across their product range and make all members eligible for a rebate on the cost of their services (where that services is covered under their PHI product), irrespective of where they live in Australia.
  • Allied healthcare providers did not appear to be aware of the factors employed by insurers in deciding whether to recognise healthcare providers.

The ACCC report concludes that more transparency is needed around the ways insurers decide which healthcare providers to recognise. As always, our advice is to do plenty of research and comprehensive comparisons before signing on with a particular health fund.


Comments

    Health insurance is a rort anyway, as a very basic example, I saw a story recently (ABC I think) where a lady who had paid health insurance for decades ended up in a public ward and still paid a considerable amount of the cost as well. People are paying a thousand dollars and more per year for health insurance/care and most very seldom actually use it over the years. Then when they need it they get shafted. We use the public system, my wife recently had a Hysterectomy, she waited no more than two months for the operation and we paid nothing! Someone explain how these insurance/health schemes are even legal?

    Last edited 22/03/13 12:25 pm

      On top of that, paying for medicare through taxes is LITERALLY a non-profit insurance scheme. Paid for indexed on income.

      The reason for private healthcare is that rich people don't like things indexed by income because it makes them pay more, so they try to shaft poor people and get rid of the public option. Keep in mind that the political class are in the 1%.

      Timmahh im sorry but that is a very poor example of "elective surgery" in todays society.

      Where i live, people who NEED, (you will be shocked how many things are "elective" despite their actual immediate need) elective surgery are forced to wait months even up to a years.

      I have a family friend who needed a knee replacement (mid 50's), she could no longer work due to the severity (she was a nurse). IT took them so long she need both knees done, because it would have literally taken years to be seen publicly, she had to take out private insurance, wait 1 year then get it done privately. All because it would have taken twice as long to get done in the public system.

      Yet somehow this important 100% NEEDED surgery was classified as "Elective", where as your example really was 100% elective this is not and these are the kinds of things that take years to get done with the public system.

      While Private health insurance is very shady its only because our current health system is failing so miserably that people are forced into it.
      So while i understand your point your are mis informed, in todays day and age if you dont have the proper (your old lady example obviously didn't have the right cover) insurance you will get screwed by our health system unless you are basically about to die from whatever is wrong with you.

        In my wife's case, she had other mitigating circumstances that were in toto deemed important IE non elective. I see your point though and I think the patients location also needs to be taken into account and we are lucky in that respect too I guess. However having seen a fair bit of anecdotal information, I still believe that a lot of people are paying way too much for no real good reason. Rich people need to actually pay more and poor people should be charged less or go onto the Gov health scheme and prioritised on a case by case basis.

        Last edited 22/03/13 2:01 pm

          "...Rich people need to actually pay more..."

          Genius - let's just take more money from these 'rich people' everyone hates so much; they're a bottomless pit of cash from which society can draw from as necessary.

          This ignores the facts that the medicare levy is a direct percentage of income and therefore higher income = higher contribution (irrespective of usage) and surcharge thresholds mean that higher income also means less rebate on premiums.
          Effectively, a worker on an income not so greatly higher than his colleague can easily pay double the total outlay for the same notional 'service'.

          Questions also occur to me regarding why health insurance is so different to all others.
          Where's the actuarial tables, the risk factors and the realistic premiums?
          One policy holder (A) pays $x/yr - cost per insured/yr = $x.
          Couple pay $2x - cost per insured/yr = $x.
          Family with 3 children pay $2x - - cost per insured/yr = $0.4x.
          Family with 8 children (B) pay $2x - - cost per insured/yr = $0.1x.

          Now imagine that A rarely consumes resources (goes to the doctor's maybe once a year, looks after himself and such) - with the premium and mediacare levy, that annual vist could easily cost $2000.

          FamilyB have a private table at the local doctor's surgery because they're in there every other day with ear infections and asthma attacks because mom and pop chain-smoke.

          With rebates, support payments and bulk-billing, each visit costs the Bs essentially nothing.

          What other form of insurance would tolerate this level of disparity?
          Imagine if your hoon neighbour could insure his fleet of V8 drag cars for the same premium as the single Getz you drive carefully to the train station every day, and nothing he does every impacts his premiums?

    I know that the health industry is in shambles at the moment, but we are still better off than the Americans. I agree though that private health insurance is a bit of a joke. Mum needed back surgery . if she had waited to go through public (that kind of surgery was considered non-emergency) system, it would have taken a year or so. She was in intense pain and was unable to function in any meaningful way. So had to go through private health, now unfortunately private health only covers a set amount. Which is generally a very small component of the actual surgery. So because all of the staff (i.e. surgeon, anesthesiologist etc) can choose to charge whatever they want, we were out of pocket upwards of 20'000 dollars.

    Your point about the USA health system is spot on. Their system is a complete and utter shambles. It is totally dominated by the insurers and you are flat out getting them to pay up on essential medical services even when you have to top level of cover.
    A contact I have there now directs some of his family's health care claims to his insurer via a lawyer. Reckons its the only way to get the reimbursement you are entitled to.

    I fear the Australian system is heading in the same direction.

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