Eye surgeons are calling for patients to complain to their health insurance provider and the government over rising out of pocket expenses for medical treatments and procedures. Meanwhile, a leading consumer group says it’s medical professionals who are charging too much and funding should be reviewed to stem a culture focused on high fees coupled with high patient turnover.
The occurrence of out-of-pocket costs, or gaps, is a common cause of complaints and disputes between insurers and policyholders, and judging by the latest figures to be released, that’s not surprising. According to the Operations of Private Health Insurers Annual Report 2010–11, privately insured patients in Australia paid out-of-pocket costs totaling AUD$4,379 million in the financial year 2010–11. The total cost of these services was AUD$19,511 million; AUD$12,964 million was paid in benefits by private health insurance and AUD$2,257 million in benefits paid by Medicare.
The report also showed that benefits paid out to members increased by 7.6 per cent and that 45.3 per cent of people were covered by private hospital insurance at the end of the
last financial year.
According to the Operations of Private Health Insurers Annual Report, the industry increased its premium revenue by AUD$1.25 billion in the financial year 2010–11, or 8.8 per cent on the previous financial year, to a total of AUD$15.4 billion. Despite being in this strong financial position, members of the private health insurance industry have stated that the only way it can pay more in rebates is if members pay more in premiums.
we’ve currently got is a system that bankrolls health providers
Carol Bennett, Chief Executive Officer of the Consumers Health Forum of Australia, said the Australian consumers’ biggest criticism is that, “despite having paid private health insurance fees, patients feel when they go to make a claim they are faced with a huge out-of-pocket cost. Often people feel as though what they are getting in terms of value is not as high as it should be given the level of contributions they have made over a number of years.”
According to one report, some hospital patients are being left with medical bills of up to AUD$1,700 that are not covered by either Medicare or their private health fund. On average, a patient will pay an out-of-pocket gap of AUD$1,720 for plastic and reconstructive surgery, AUD$1,585 for orthopedic surgery and AUD$1,048 for ophthalmology services.
“This is a huge slug, especially for those with a range of chronic conditions, those who may not be working full-time and those with large families. It’s an amount of money that forces people to make a decision about what they can reasonably afford – whether to pay for a prescription or to put bread on the table – to see a specialist or pay the electricity bill,”
said Ms. Bennett.
According to the National Healthcare Agreement performance report, the proportion of people who delayed or did not see a specialist due to cost has increased in recent years. For example, in NSW the rate rose from 10.1 per cent in 2009 to 15.4 per cent in 2010–11. When people delay the medical treatment they need, they often end up in an acute care system where all the costs are covered publicly. For the government, that’s a false economy.
Ms. Bennett said the situation is fast reaching crisis point and warrants a review of current medical funding. “We need to think about how we can make this work for the future because the current model is not sustainable for government or for taxpayers – and it’s
not achieving the health outcome we want. Our medical system is becoming very inequitable, very rapidly.”
She said medical fees are too high and therefore consumers are paying too much in out of pocket costs. “Our out of pocket expenses are among the highest in the OECD countries, which is ridiculous when you consider how much we contribute through taxes, private health insurance, and co-payments etc.
“But the problem is not so much that the Government is not paying enough on Medicare rebates – they’re costed on an assessment of the value of the service provided. The problem is that every time the government tries to adjust the rebate, the service provider increases the co-payment too – so the consumer receives no benefit. Fees for ophthalmologists are very high in relation to the level of work involved – for instance, a cataract procedure is straightforward yet the charges are excessive and every time the government has tried to rein them in, there has been a backlash.
“I think we need a review of the way we fund medical treatments because what we’ve currently got is a system that bankrolls health providers by getting as many people through the door as possible – not one that looks at the health outcomes or the value for the consumer – if we were to do that (the latter), we’d get a very different result. Clearly you can deliver a more cost effective model – there may be different inputs but there will also be different outcomes,” she added.
However Kerry Gallagher, CEO of the Australian Society of Ophthalmologists, believes government rebates for ophthalmology services do not reflect rising capital and operating costs faced by the profession, which means these costs must be passed on to the patient.
“Ophthalmology is one of the highest cost medical specialties with little room for flexibility in cost adjustments. Specialist ophthalmologic equipment is very expensive and subject to constant update, and salaries for technical support staff and practice set-up costs are high to provide an appropriate and safe consultation/operating environment. While capital and operating costs continue to increase, government rebates do not keep up with or reflect those escalating costs.”
According to Mr. Gallagher, Annual Health Price Indices are invariably much higher than CPI increases. “Indeed there are increases in the 2009–10 Index in excess of 12 per cent. This contrasts starkly against Government increases to MBS Rebates to patients of just over two per cent,” he said.
He continued, “Medicare patient rebates are not calculated scientifically on the basis of actual costs, but are arbitrarily determined by Government and the department. They bear no relationship to actual costs.
“If ophthalmologists are to continue to provide world class safe eye services to all Australians then the fees they charge must reflect the true cost to them to deliver these services.”
Mr. Gallagher said patients are not alone in feeling the effects of increasing costs and charges. “Ophthalmologists like other medical specialists and indeed like everyone else, face increasing costs to fit out and maintain rooms and increasing wages for specialist staff.
“They must maintain a safe working environment for patients and staff under ever increasing stringent government regulations. They also face higher indemnity and general insurance costs each year.
“These conditions are not unique to ophthalmologists, but an additional cost borne by the specialty is that for specialised equipment to maintain professional standards of excellence.
“Like any service provider, ophthalmologists are forced to pass these costs on to their patients whose Medicare rebates do not keep up with service provision costs. The inevitability is patients are being forced to cover increasing gaps between actual costs of service and their Medicare rebate,” said Mr. Gallagher.
Susi Tegan, Chief Executive of the Royal Australia New Zealand College of Ophthalmologists (RANZCO) said health insurers need to do more. “Anyone who has invested in private health to ensure they are covered in the future should be able to access that insurance to adequately cover the services they need. To that end, health funds must work to determine how they can best meet the needs of those who have engaged them,” she said.
She added, “RANZCO is concerned with ensuring the highest levels of care, safety and guarantee of service for all patients and is currently working closely with the Department of Health and Ageing and others to ensure Australians continue to enjoy what is currently one of the most equitable, balanced and fair medical systems in the world.”
In 2010–11, 12 per cent of all medical services required an average gap payment of AUD$183.86 to be made by the patient. While ophthalmology services in hospital made up just a small percentage of total in hospital services, claims for general optical treatments rose by 13.9 percent year on year.
