FEDERAL Health Minister Greg Hunt has ordered the Private Health Insurance Ombudsman to investigate health fund Bupa for its decision to overhaul its medical gap scheme, which doctors have blasted as "one big leap towards US-style managed care".
Bupa, one of Australia's biggest health insurers, told doctors that insured patients will only be eligible for gap cover if they are treated at a Bupa-contracted hospital or day-stay facility. It will come into effect in August.
Bupa said this only affected doctors in public hospitals and four per cent of beds in the private system, but the Australian Medical Association (AMA) has warned the change was a harbinger of US-style managed care.
AMA president Michael Gannon urged Mr Hunt to seek advice from the Department of Health and the Ombudsman about the legality of Bupa's actions, and even look at potential competition and consumer law implications.
A spokesman for Minister Hunt told Fairfax Media: “The Minister has written to the Private Health Insurance Ombudsman and asked him to review and investigate this action.”
Bupa's announcement about the Medical Gap Scheme came soon after news that it would remove restricted cover for pregnancy, hip and knee replacements and other procedures from basic to standard hospital policies from July.
It said it made the changes in a bid to lower premium increases and keep the overall cost of health care down.
HBF, the dominant fund in Western Australia that is planning to merge with HCF, has also announced it will remove services such as weight-loss surgery, cochlear implants and dialysis from entry and mid-range hospital policies from July, also citing the need to limit future premium increases.
“One option is to increase the price of the products – which would impact every member who has this type of product,” HBF chief executive John Van Der Wielen said.
“We believe it’s fairer to ask those members who need to claim for certain services to move to a level of cover that reflects the cost of the claims they make.”
It appears health funds are taking significant steps to simplify their products ahead of the government’s introduction of gold, silver, bronze and basic categorisation of policies in April 2019.
Bupa’s decision to stop paying benefits for services such as hip and knee replacements, cataract and eye lens procedures and IVF services and make them exclusions on some policies will affect about one-third of its customers.
Many Bupa members have threatened to ditch their cover.
It said psychiatric, rehabilitation and palliative care services won’t be affected, but it’s understood these were never under threat because funds are required by law to provide some cover for these services.
Bupa rejected suggestions that changes to the Medical Gap Scheme was a sign it was moving towards a US-style managed care system, saying doctors will continue to decide what treatment is required and where it will be provided.
"Doctors, never health insurers, will always determine patients’ treatment and care options as they do today; nothing has changed. The doctor’s right to do so is protected by legislation," a Bupa spokesman said.
"However, customers have been asking for greater clarity on costs especially at locations where mixed arrangements were in place, and this change to the medical gap scheme is designed to support this."
Under the Medical Gap Scheme changes, doctors at hospitals (including public hospitals) and day-stay facilities that don’t have an agreement with Bupa will only be paid at the minimum rate the insurers are required to pay - 25 per cent of the MBS - meaning they will have to bill patients the rest.
Dr Gannon warned that patients will have to do more homework to make sure they’re not hit with large out-of-pocket costs and may not be able to access their doctor of choice because of inadequate coverage.
He said there were “a number of implications” for medical professionals. Non-contracted hospitals, which includes most if not all public hospitals, will no longer be able to attract Bupa patients and their treating doctors.
“The changes proposed by the largest PHI in Australia, a massive multinational company headquartered in Britain, to no and known-gap arrangements are one big leap towards managed care,” he said.
“The fact that the change has occurred straight after a premium increase, straight after agreement was made to retain second tier rates for non-contracted facilities, and straight after an announcement by Government to work collaboratively with the sector on the issue of out of pocket costs is unconscionable.”