Health legislation amendment (gap cover schemes) Bill 2000
May 2000
© Parliament of the Commonwealth of Australia 2000
ISSN 1440-2572
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Membership
of the committee
Members
|
Senator Sue
Knowles, Chairman
|
LP, Western Australia
|
|
Senator Lyn
Allison, Deputy Chair
|
AD, Victoria
|
|
Senator Kay
Denman
|
ALP, Tasmania
|
|
Senator Chris
Evans
|
ALP, Western Australia
|
|
Senator Brett
Mason
|
LP, Queensland
|
|
Senator Tsebin
Tchen
|
LP, Victoria
|
Report - Health Legislation Amendment (Gap cover schemes) Bill 2000
1.
THE INQUIRY
1.1 The Health Legislation Amendment (Gap Cover Schemes)
Bill 2000 (the Bill) was introduced into the
House of Representatives on 17
February 2000 and into the Senate on 12 April 2000. On 6 April 2000, the Senate, on the recommendation of
the Selection of Bills Committee (Report No. 5 of 2000), referred the Bill
to the Committee for report by 9 May
2000.
1.2 The Committee considered the Bill at a public hearing on
8 May 2000. Details of the public hearing are referred to in Appendix 2. The
Committee received 15 submissions relating to the Bill and these are listed
at Appendix 1. Copies of submissions may be accessed through the Committee’s
web site at: www.aph.gov.au/senate_ca.
2.
THE BILL
2.1 The Bill amends the National
Health Act and the Health Insurance Act to provide for gap cover schemes to
enable registered health benefits organisations to provide no gap and/or known
gap private health insurance without the need for contracts.
2.2 The ‘gap’ is the difference, paid by the
health fund member, between fees charged by doctors for in-hospital medical
services and the combined health insurance benefit and Medicare benefit. Data
for 1997-98 shows that the cost of medical gaps for in-hospital medical
services provided to people with private health insurance was around $200
million. The average medical gap for an episode for a private patient in a
private hospital was $151 and for a private patient in public hospital was $69,
though for some procedures the gap payment can be much higher.[1]
2.3 Research has regularly shown that the gap
is a major contributor to consumer perception that private health insurance
does not offer value for money. It remains a major cause of consumer complaint
about private health insurance.[2]
2.4 Current legislation
allows the gap to be covered in circumstances where the service is rendered by,
or on behalf of, a medical practitioner:
-
with whom the registered health fund has a
medical purchaser-provider agreement (MPPA); or
-
who has a practitioner agreement (PA) that
applies to the professional service provided, with the hospital where treatment
occurred, and that hospital has a hospital purchaser-provider agreement (HPPA)
with the registered fund.
2.5 While many health insurance funds have
successfully negotiated HPPAs with hospitals, most medical practitioners have
been implacably opposed to the agreements as a means of limiting out-of-pocket
costs for health fund members. Their opposition is based on a perception that
the system would permit health insurance funds to interfere in the
doctor-patient relationship, thereby leading to ‘US-style managed care’. As a result,
very few MPPAs have been negotiated. The gap cover schemes proposed in the Bill
are entirely voluntary and provide an alternative mechanism through which the
medical gap may be covered by funds, without the need for formal contracts
between doctors and funds.
2.6 The Bill establishes the framework that
allows health insurance funds to develop gap cover schemes, subject to
ministerial approval and review, to provide no gap and/or known gap private
health insurance cover. The machinery provisions relating to gap cover schemes
such as the form and content of applications; the ministerial approval process,
including the criteria for approval; the ministerial power to impose and vary
conditions on the operation of the schemes; annual reports and periodic reviews;
and revocation and variation of schemes will be contained in regulations.
2.7 The criteria for
approval of schemes by the minister as specified in the draft regulations
(which will be the subject of further consultation with the industry) are:
-
the scheme must be a genuine scheme that would reduce or
eliminate gaps;
-
the scheme contains proposals under which patients are
offered informed financial consent, that is, a contributor to a fund is
informed of any amounts that they can reasonably be expected to pay in respect
of the professional service, including the amount of any Medicare benefit,
health insurance benefit and the amount (if any) that the contributor may be
liable to pay for the professional service;
-
where appropriate, the
scheme provides for simplified billing arrangements;
-
the fund must
demonstrate the scheme will not have an inflationary impact;
-
arrangements made by
the fund to ensure that contributors will not be disadvantaged by revocation of
the scheme;
-
the scheme requires
all parties to maintain the professional freedom of medical practitioners
involved in the scheme, within the scope of accepted clinical practice, to
identify appropriate treatments in the rendering of professional services to
which the scheme applies.[3]
3.
ISSUES
3.1 The Department has stated that this
legislation addresses the demands of consumers, the concerns of the medical
profession and the needs of the health funds. The views of all relevant
stakeholders were canvassed, with health funds and their representative bodies,
peak medical bodies and consumer groups all supporting the proposed model.[4] This broad level of support for, or
non-opposition to, the Bill was confirmed in submissions to the Committee.[5]
3.2 It is important to note that the
legislation provides a framework and is not intended to be prescriptive. The
intention is to provide flexibility for the various parties in reaching
agreement over schemes. However, there was discussion in a number of
submissions that some aspects were not clearly defined. Because the legislation
effectively relies on the goodwill of all parties in the formulation and
success of schemes, some groups suggested that the legislation should be
reviewed in a few years time to insure that it is meeting its stated
objectives.[6] The AHIA suggested that a
time limit be placed on the legislation’s operation in the form of a sunset
clause ‘to ensure that the market behaviour anticipated by its supporters does
not change in ways contrary to the interests of contributors’.[7]
3.3 While there was general agreement with
the intended scope of the Bill, the Committee was asked to examine a number of
specific issues. These are discussed below.
The practicality of the proposed 'gap cover schemes' and the likely acceptance
of these schemes by medical service providers
3.4 Indications to the Committee were that
there was broad, but not necessarily universal, acceptance of these schemes.
3.5 The AMA referred to a survey of its
members that found near unanimous support for gap insurance but overwhelming
opposition to products based on the agreements. The AMA concluded that the
proposed gap cover schemes were likely to be at least as practical and have far
greater acceptance by medical providers than the existing schemes based on
agreements. APHA believed that the proposed schemes are generally practical and
should be attractive to medical practitioners as they gave them a choice.[8]
3.6 The flexibility of the proposals was
emphasised by the Department, stating that ‘it is up to the funds and the
medical profession to develop schemes that meet the needs of consumers and the
expectations of practitioners’.[9]
Success seems probable with the Minister saying in the second reading speech
that this is the first time health funds and doctors have been able to agree on
strategies for dealing with gaps. These sentiments were shared in submissions
with the AHSA saying ‘health funds cannot provide true value for money without
the cooperation of the medical profession - the legislation...will promote this
cooperation to the benefit of all’ and the AMA saying ‘our talks have lead us
to believe the funds will now launch products under this legislation that, for
the first time, could be endorsed by the AMA’.[10]
The effectiveness of measures proposed to cover gaps without inflation of
health insurance premiums or total costs to patients
3.7 The Committee received differing views on
the issue of inflation. The ACA expressed concern that the absence of clear
contract between health funds and providers has a very real possibility of
leading to inflation on medical fees, though their concern was moderated by the
protective features in the Bill.[11] Dr
Woollard, however, argued that due to an exaggerated price signal, gap
insurance ‘is likely to have a deflationary effect on medical fees rather than
the much touted medical fee inflation’.[12]
3.8 The AMA argued that all existing gap
cover products based on agreements have the potential to be inflationary on
both medical fees and insurance premiums and that any solution to medical fee
inflation must be a market-based solution with the key being informed financial
consent.[13] The AHA commented that the
proposed schemes should bring market forces into play, stating that ‘finding
the pricing level for the no-gaps fees schedule which encourages a critical
mass of medical practitioners to use it, yet keeps the premium price down will
be the key to its uptake by medical practitioners, and ultimately the
attractiveness of the product to consumers’.[14]
3.9 The criteria for a scheme’s approval
requires health insurance funds to demonstrate that the operation of the scheme
will not have an inflationary impact. The Minister has acknowledged that this
is not an absolute standard. He has stated that:
In exercising powers of approval, I would ensure the gap cover
schemes would not have an inflationary impact over and above those associated
with gap product already developed under existing arrangements. But in doing
this, I am trying to send a clear message that we simply will not allow any
open-ended scheme and we will not allow a scheme that allows medical fee
inflation.[15]
3.10 In order to ensure the schemes do not
produce adverse impacts, safeguards have been built into the legislation. The
Minister is permitted to approve a scheme subject to conditions. In addition,
funds will have to report annually on the operation of the scheme and the
Minister can periodically review the schemes. The proposed legislation also
provides for revocation of a scheme if it is not meeting the required criteria
as set out in the regulations.
The best method to measure inflation and the process for revocation of
schemes which fail to meet this criteria
3.11 While the approval process provides that
schemes should not have an inflationary impact over and above gap cover
products already developed under existing arrangements, the Committee received
a number of views on measuring inflation. The impact of inflation was seen as
most significant when viewed from the perspective of the consumer. To assist
the protection of the consumer it would be necessary to measure the known gap
over a period of time, including the amount of benefits for medical fees paid
by health funds and the total amount charged by doctors, especially additional
fees such as booking charges.
3.12 The criteria for ministerial approval of a
scheme provide for the scheme to be revoked if criteria are not met. To gain
approval there must also be a demonstration that members would not be
disadvantaged should the scheme be revoked. Arguments were put that there
should be further specification as to how the minister would exercise this
discretion, including assessing the inflationary effect prior to ministerial
intervention and allowing funds a period of grace to remedy any unforseen
impact. The criteria on members disadvantage was also seen as possibly being
open-ended in its requirement on health funds.[16]
3.13 The Department advised that the provision
for revocation of schemes is provided as a last resort. Revocation of a scheme
would only occur if the scheme no longer met the essential criteria, and the
fund was not complying with a previously imposed condition. The Department
emphasised that contributors should not be disadvantaged if a scheme is
revoked, giving by way of example that funds may provide that contributors will
be able to transfer to an alternative product without additional cost.[17]
The definition of ‘informed financial consent’ and ‘known gaps’
3.14 As noted earlier informed financial consent
is seen as central to the successful operation and uptake of gap cover schemes.
It was this issue which raised the most debate and concern in submissions and
evidence. The concerns related to questions of clarity and certainty. Due to
the framework nature of the legislation there is no precise definition of
informed financial consent, with it ultimately being an arrangement between the
funds, doctors and patients.
3.15 The Private Health Insurance Ombudsman
proposed a formal definition in his submission that included all the elements
necessary to ensure the consumer had sufficient information on which to judge
the cost of the procedure to be undertaken. However, he conceded that ‘actually
it is the administration of the information rather than the definition that is
important’.[18]
3.16 The operation of informed financial consent
was questioned in evidence including issues such as the detail of cost
information to be provided, what would be an acceptable level of cost
variation, cost escalations resulting from clinical complications or other
unforeseen events, the timing of advice to consumers, information problems in
emergency situations, should doctors and/or funds provide information, and
should information be coordinated by the medical team leader.
3.17 The Department confirmed that informed
financial consent is an integral part of gap cover schemes. They recognised
that many doctors already have their own systems of providing informed
financial consent in place that work well for their patients. The wording in
the regulations requiring informed financial consent reflects that in the
existing agreement legislation. This requires the practitioner to inform the
contributor of any amounts they can reasonably be expected to pay, where
practicable, at any time before treatment, or otherwise as soon after treatment
as the circumstances permit. The Department advised that:
The Government does not seek to make the requirement any more or
less prescriptive than this. It would
not be appropriate to impose a standard informed financial consent system when
individual practitioners and funds are in the best position to determine the
ways of communicating information about costs that will best suit their
patients.[19]
3.18 The provision of information in relation to
a ‘known gap’ was seen as crucial for consumers within this legislation. With
the rhetoric surrounding this subject and the perceived high costs associated
with private health insurance, consumer expectations are for no gaps in either
the hospital or medical component of their treatment. The existence of such expectations
places considerable pressure on the practitioners and funds in the development
of gap schemes and the provision of information to and outcomes for consumers.
3.19 The Department noted that the Government
had not indicated a preference for either no or known gap policies as both
would be an improvement on the current situation. It stated that ‘if consumers
are provided with known gap cover, this is acceptable in the short term, as
this addresses what is currently one of the most often reported complaints
about the gap - the element of surprise’.[20]
The form of disclosure of costs to patients and the enforceability of bills
when there has been no disclosure
3.20 There was widespread agreement of the need
for a written form for the disclosure of costs. A number of groups have been
working on the development of a standard form and some models were submitted to
the Committee. The AMA felt strongly that there should be an industry-wide
standard form.[21]
3.21 The Department was relaxed over the exact
format such disclosure should take saying that in the final analysis it is
between the fund and the doctor as to what type of informed financial consent
arrangement they would like to use. However, the Department’s expectation was
that all would have a certain basic form ‘based on the principle of some sort
of quote, some sort of concept of what the procedure is to be, how much you
would be expected to be charged and how much out of pocket you would need to
pay’.[22]
3.22 There was also general agreement that
informed financial consent should apply to all consumers and not just those
with gap or known gap policies. Discussion about enforceability was not
restricted to just those cases where there had been no disclosure, but also to
where there was a failure to met an agreed fee or where additional unexpected
services were required by a patient for proper clinical care. Many groups
believed that the practitioners should be bound by their quotes, while
acknowledging that this needed to be balanced by clinical considerations. The
ACA argued that ‘where a patient either is not properly informed of a fee or
where they are misinformed, they should not have to pay any more than the
Schedule fee amount’.[23] Some felt that
market forces would come into play with practitioners who do not adequately
advise their patients of anticipated costs or adhere to their quoted fee being
avoided by patients and possibly excluded from participation in approved
schemes.
3.23 The legal situation applying to the enforcement
of fees through the courts where there is no prior agreement on the fee may not
support the consumer. The Private Health Insurance Ombudsman advised that:
Although a South Australian
magistrates court case held that in the absence of fee discussion, the consumer
had a right to rely on the MBS fee as a reasonable fee, it is doubtful if this
would be upheld in all jurisdictions.
This office has informally received advice that indicates to us,
that we should not rely too heavily on the South Australian case as it may not
always apply. The circumstances of this advice make it all the more important
for the practitioners to engage in proper advice to patients to enable them to
make an informed decision.[24]
The impact of the schemes on existing medical purchaser-provider agreements
3.24 The intention of the legislation is to
provide an alternative approach additional to the existing arrangements. There
should be no impact on the operability of the existing provisions. The AHIA
emphasised that member funds have no desire to abolish or alter existing
arrangements that have been implemented for the elimination or reduction of the
gap problem.[25] The AMA noted that it
is not proposed that the agreement provisions of the existing legislation be
removed, nor does the AMA seek their removal although it hopes they become
redundant. The AMA believes that ‘the ultimate test for the profession is to
have these schemes work or face a return to contracts and the threat of managed
care’.[26]
3.25 Some submissions hinted at a possible move
to redundancy of agreements by suggesting that the introduction of fair and
reasonable gap cover schemes would be likely to decrease the uptake of MPPAs.
In particular, MBF thought that ‘where MPPAs are currently being utilised by
doctors on an opt in/opt out basis, an approved gap cover scheme is likely to
replace the use of or be used as an alternative to MPPAs on an episode of care
basis’.[27]
3.26 While there are few MPPAs in place, the
Department expects that those doctors already participating in agreements would
continue to do so under the current framework. However, the APHA ‘expects that
health funds with existing MPPA arrangements and existing no or known gap
insurance products will modify existing products to comply with the
requirements of the legislation’.[28]
The AHSA suggested that there is a possibility that some doctors will choose to
move from an existing MPPA to an approved scheme and, if so, that this should
not present any problems to member funds.[29]
The effectiveness of the reporting and review provisions
3.27 The Committee received little comment on
this issue, though the AHSA noted that ‘in our view, the reporting provisions
appear more than adequate. In an industry that is already highly regulated, a
balance is needed to ensure that consumer rights are adequately safeguarded
without imposing undue requirements (and costs) on insurers.’[30]
3.28 The AMA offered a cautionary word that ‘if
the reporting arrangements become too onerous, the Gap Cover Schemes will not
be successful’ and suggested that ‘targeted and small audits would be a more
successful strategy than whole of industry reporting arrangements’.[31]
3.29 The Department noted
that the legislation aims to provide reporting and review mechanisms that are
not overly bureaucratic, but are still able to protect consumers by allowing
the minister to monitor whether schemes continue to meet the essential criteria
and to take action if problems arise.
The need for any additional consumer safeguards
3.30 The proposed legislation provides many
additional consumer safeguards over those contained in the current agreement
framework. The CHF commented that ‘known gap’ products should provide for
simplified billing arrangements wherever possible and argued that the wording
of the regulations providing for simplified billing ‘where appropriate’ should
be strengthened to ensure that the criteria cannot be abused.[32]
3.31 The ACA observed that
the legislation in dealing only with gap cover schemes implies that only
consumers with a ‘known gap policy’ will be properly informed of their medical
fees. The ACA believes that it is the right of all consumers to be clearly
informed about the nature of their medical expenses and argued that this
legislation ‘presents an opportunity to require all medical providers to inform
consumers of out-of-pocket expenses and, where this does not occur for
consumers to have some recourse’.[33]
4.
RECOMMENDATION
4.1
The Committee reports to the Senate that it has
considered the Health Legislation Amendment (Gap Cover Schemes) Bill 2000 and recommends that the Bill proceed.
Senator Sue Knowles
Chairman
May 2000
Minority Report - Australian Labor Party
Health legislation amendment (gap cover schemes) Bill 2000
MINORITY REPORT
Overview
The Opposition agrees that gap charges are a major problem
for private health insurance. Patients are quite rightly upset about large
additional costs being incurred above the costs paid by Medicare and their
private health insurance.
The Department estimated that privately insured patients
paid around $215 million in gap charges for in-hospital, medical services in
calendar year 1999. The AMA used a higher figure of $249 million for all gap
charges in 1997/8. The average amount paid is difficult to calculate because of
uncertainty about how many patients receive gap charges. However the evidence
suggests the average is between $120 and $200 per private patient and that some
patients pay gap charges ranging up to thousands of dollars.
Some patients with private insurance still find themselves
facing a bewildering pile of bills that can amount to thousands of dollars in
out of pocket expenses, which are covered by neither Medicare nor their private
health fund. This situation is unsustainable.
In recent years, a number of successful gap cover schemes
have been introduced under the 1996 amendments allowing “medical
purchaser-provider agreements”. These schemes should continue as they have a
demonstrated record of dealing with the problem without causing fee inflation
or costs feeding back into increased premiums.
Doctors have argued for a different kind of agreement being
allowed, subject to Ministerial approval. This Bill is intended to deliver such
an alternative.
However there are a number of major concerns which should be
addressed if this legislation is to have the desired effect.
The Opposition will move amendments to improve the
legislation to deal with these issues when it is debated.
Lack of Objectives
The Bill takes the form of general enabling legislation with
the specifics of the scheme contained in regulations. It is not possible to get
a clear idea of what the intent of the legislation is from just reading the
Bill.
The Department emphasised the degree of discretion being
left to the funds and stated it would not produce any Guidelines on the form of
the Gaps cover schemes and would only discuss the Schemes if approached by the
Funds.[34]
This is an unsatisfactory situation because the nature of
the issue requires the legislation to be more specific about how Gap cover
schemes are intended to work. It is also
a concern that the Department has advised that the legislation gives no
certainty that a person who purchases a “no gaps” policy will in fact have no
gap charged if they are treated by a doctor who is a member of that scheme. The
best that the legislation can offer is apparently “an increased likelihood”
that they will be charged no gap.[35]
There is a need for the legislation to broadly describe the
objectives of the legislation and contain the key elements of the process for
approval and revocation of a Scheme. If this were not the case the powers given
to the Minister could be used very broadly indeed to authorise schemes which
lie well beyond the scope of what the doctors advocating these amendments would
have had in mind.
Inflation in medical fees
There was a common recognition - even amongst the scheme’s
proponents - that success of gap cover schemes depends on them not resulting in
doctors simply increasing their fees.
The AMA recognised that there was an onus on doctors to make
the scheme work in a non-inflationary way. Dr Brand summarised his views as
follows:
“If all it does is inflate fees and
instead of putting money in patients pockets it puts money in doctor’s pockets
then the Minister, I am sure, will exercise the right that the Minister has to
withdraw the schemes and put them back on the basis of a Lawrence style
contract.”[36]
Unfortunately, past experience suggests there is a serious
risk of fee inflation and the measures proposed do not sufficiently come to
grips with inflation.
Several submissions highlighted the two kinds of inflation
that contribute to the total cost for patients. Increases in total medical fees
due to doctors increasing their charges in response to the higher rebates
received and the flow on costs of increased rebates being recovered by
increases in health insurance premiums. Both of these problems need to be
solved.
It would be too easy for doctors to rationalise that because
they were now obtaining higher rebates from health insurers (significantly
above the Schedule fee) then they could still extract as a “known gap” a
substantial direct contribution from their patient. Some have even tried to
argue that both the doctor and the patient could be better off.
This is a nonsense. The health system, the contributors to
health funds and other doctors would all be worse off if such action was
condoned. Any rapid escalation of medical fees would be a serious threat to the
access and affordability of health services.
If the “gap cover schemes” established under this Bill are
predominantly used to offer “known gap” products where the total medical fees
are significantly increased then they will have failed both the short term and
long term objectives.
The Minister should be required to ensure that the proposed
scheme will not have an inflationary impact on fees or total medical costs
before deciding on the approval of the scheme. The current wording is very
vague on this point and there is a need for a specific provision in relation to
inflation in the legislation.
Inflation in insurance premiums
The Department advised that if all existing gaps were
covered by health funds the estimated premium increase would be 6.2%. [37] The Department also noted the AMA
findings from a survey that 80% of their members would be interested in such a
scheme.
It is important therefore that the schemes not simply
transfer existing charges onto the total bill or there will be a sizeable
increase in the cost of health insurance and a flow on cost to the Government
through the 30% rebate. A 6% increase in hospital benefits by the funds would
add around $200 m to the expenditure by the funds and $60 million to the
Government’s own costs.
The major funds have indicated in their submissions that
they have so far been able to extend their no gap contracts without any impact
on their premiums.
It is also noted that the 2000/1 Budget proposes a new
pooling arrangement to share the increased costs of gap schemes amongst funds.
However there is still a need to place a particular cap on
the rate of increase in insurance premiums to discourage funds from engaging in
behaviour which might drive up costs.
Measuring inflation
Several submissions drew attention to the need to be more
specific about how inflation is to be measured. Steps need to be taken to
ensure that the Health Insurance Commission and the Private Health Insurance
Administration Council collect the necessary data on:
- the movements in premiums
- the average above schedule fees paid,
and
- the size of known gaps
As MBF suggested, the “known gap” should include any
additional fees such as booking fees so that it is a true measure of the total
amount paid. [38]
The rate of increase in premiums is easier to measure and,
because of an Opposition amendment in 1999, is now transparent. The Department
of Health is required to publish quarterly figures on movements in premiums.
The Bill and its regulations lack any definition of what is
“inflationary”. The Consumers Health Forum has called for the Bill to set out
in further detail how the inflationary impact is to be assessed and the extent
of inflation that would trigger Ministerial intervention. [39] The benchmark is also required to
determine the standard that the scheme must meet in order to gain approval.
Direct comparison to the CPI is not necessarily the most
appropriate measure. Other possibilities might be the ABS Index for hospital
costs (generally in excess of CPI) and
index of salary movements for other professional groups or a figure based on
the cost index used for funding the public health system.
The AMA proposes that the benchmark should be that the gap
cover schemes should be no more inflationary than products under MPPA’s and
PA’s. [40]
The legislation should set a benchmark but the exact index
can be left for the government to resolve on technical grounds.
Another unresolved issue is the extent of leniency to be
provided in any one year if a fund is forced to push its premiums up by more
than the inflationary amount. The Consumer Health Forum proposes that a fund
should have a period to rectify problems if in one period the level of inflation
is excessive.
The Bill gives the Minister the discretion to review the
approval of a particular scheme if it fails to perform but it does not give the
Minister an obligation to do so and it sets no benchmark for what would be an
unacceptable degree of inflation.
This situation runs the risk of allowing damaging inflation
to run for some time unchecked, which would weaken the health system
irreversibly. Some funds have already reported pressure for increases in their
fund rebate schedules to match the most generous of their competitors. In other
words the competition to attract doctors to sign up for schemes is proving
inflationary as they will sign up for the best available rates and then demand
other funds match this.
The test that needs to be applied to “no gap” schemes is a
lot simpler than the tests that must be applied to the more complicated “known
gap” schemes.
It is relatively easy to measure the increase in fees and
premiums for “no gap” schemes. The focus of negotiation for these schemes rests
solely between the fund and the doctor and there is little room for
complication.
Under a “known gap” scheme there are three way interests as
the fund-member relationship is triggered along with the doctor- patient
discussion of fees. For this reason the reporting requirements under “known
gap” schemes should be more detailed to ensure that the intent of the Bill is
not defeated.
The provision that allows “known gap” schemes to cover
defined percentages is too uncertain and fails the criterion that patients are
properly informed about costs.
Publication of the details of schemes
Several witnesses raised the importance of greater
transparency in the design of the scheme to ensure that the objectives were
achieved.
The ACCC urged health funds to set up their own database of
specialist fees for their members to access. It expressed serious concern about
a case in Western Australia where a GP wrote to 20 specialists and only one
offered details of fees. [41]
Dr Buntine raised his concern that the insurance funds might
insist on restrictive clauses which would impact on the clinical independence
of doctors and argued for all such agreements to be publicly released or tabled
in Parliament. [42] Other witnesses
agreed that it was the intention that agreements should be public. The Bill
should make this clear.
Revocation of schemes failing the criteria
As MBF [43] has
pointed out there is a logical contradiction in the criteria set out in the
regulations applying to revocation of failed schemes. The regulations propose
that funds be required to show in their application that no member would be
worse off if the scheme is later revoked.
However the scheme is designed to deliver benefits for
members and if it is stopped they will lose those benefits and have to transfer
to other products - where presumably they will no longer have no gap coverage.
The Consumers Health Forum [44]
proposed the Bill be amended to provide for annual or biannual review of
schemes. The Bill already provides for annual reporting.
The objective could therefore best be achieved by
establishing a requirement that a review be undertaken if the annual report
reveals that a scheme has failed to meet the criteria applying to the scheme in
a significant way
Informed financial consent
The Consumers Health Forum[45]
strongly supported the adoption of informed financial consent but was critical
of the lack of transparency for consumers. In particular the provision for a
known gap to comprise “a specified percentage of the total cost” was seen as
too open ended.
In its submission, the AMA states that it strongly advises
its members to provide informed financial consent and that other professional
organisations such as the Australian Association of Surgeons and the Australian
Association of Anaesthetists support this view.[46]
At the hearing the AMA expressed its strong support for
informed financial consent applying to all patients, not just those in gap free
schemes.[47]
The Consumer Health Forum[48]
saw a need to specify the nature of the advice provided by doctors including :
- the advice to be provided in writing
- for the principal practitioner to
inform the consumer of the fees of other practitioners involved in the
treatment
- an explanation of the circumstances
under which the fee might be varied.
The CHF endorsed the AMA form “Estimate of Fees” as a good
model that could be improved on to meet these criteria.
The Private Health Insurance Ombudsman [49] provided the Committee with
considerable detail on his work to define “informed financial consent” and a
draft set of forms on which consultation was proceeding for the preferred form
of notification of patients of the estimate of fees. These highlighted the need
for information held by the health funds to be confirmed to ensure the advice
from the doctor was correct for the type of cover that the patient has.
MBF[50] stressed the
importance of gap schemes encouraging the participation of all the doctors
involved in an episode of care.
The Opposition believes the obligation to provide informed
financial consent should be entrenched in the legislation in the form of a
requirement for medical service providers to give an Estimate of Fees where
these will exceed the MBS Schedule fee. This need not be done prescriptively
and the best way of moving towards better practice nationally is through Guidelines
and education of practitioners. The AMA endorsed an approach of progressively
increasing the proportion of doctors providing Estimates of Fees.
In order to maximise participation, providers should be
given the option of providing the Estimate of Fees on behalf of other providers
they know will be involved or of each provider separately providing informed
financial consent to the patient. The long-term goal should be “simplified fee
estimates” to match “simplified billing”.
Enforceability of Bills
The Australian Health Insurance Association argued
forcefully that some constraint was needed to charging of fees above the
Schedule fee unless the fee had been clearly and knowingly agreed by the
patient in advance. [51] The Association
cited a SA Magistrates decision in March 1994 concerning a person who was found
not to be liable for a fee not disclosed in advance.
There are laws in NSW applying to legal professionals
requiring disclosure of fees in advance and limiting the enforceability of
bills which had not been made known to the client. The AMA argued that State
consumer laws should be relied on when billing disputes arose but this does not
address the core of the argument concerning undisclosed bills.
It was generally agreed that such a provision should not
apply in the relative minority of cases where it was not practical or
appropriate for the patient to receive fee advice prior to treatment.
Holding of patient funds
There was broad support for maximising the use of simplified
billing procedures. There was concern that the use of the term should not be
seen to limit such services to existing simplified billing agents. The Bill
provides for patients to assign their rebates to hospitals, day hospitals,
health funds or other prescribed people.
The Australian Doctors Fund[52]
argues that if this is to occur then the simplified billing regulatory
arrangements should also apply to the funds - most notably in regard to the
obligations to hold patient funds in trust and to discharge payments within a
maximum period of 90 days.
The Department made a detailed response but failed to
establish why health funds should be exempted from these requirements. Indeed
it confirmed that should a health fund become insolvent doctors would not be
entitled to direct access to any money that was being held by the fund on their
behalf.
On balance the provisions applying to the protection of
money held following assignment should apply equally to all bodies given this
special right. The Bill should be amended to make this clear.
Review of the Legislation
The Australian Health Insurance Association called for a
sunset clause to be enacted to ensure that the market behaviour anticipated by
the Bill’s supporters does not change in a way contrary to the interest of
contributors.[53]
Catholic Health Australia proposed that the legislation
should be reviewed in 12 months to ensure that funds have achieved an uptake
rate of 25% for their no gap products.[54] This seems perhaps too short a period but it
is proposed that a clause be added to require an independent review of the
legislation after July 2002 to be reported back to the Senate by
31 December 2002.
The Government has set no target for the anticipated
penetration of no gap and known gap schemes. Currently about 16% of all claims
are made as part of the existing no gap schemes. The Opposition would hope
that, if these schemes are successful in the way that their promoters have
argued, that over 50% of all medical claims by mid 2002 should be part of these
schemes.
Senator Chris Evans
(ALP, Western Australia)
May 2000
Appendix One - Submissions and additional information
received by the committee
|
1
|
Dr Keith
Woollard
|
|
2
|
Australian
Health Service Alliance (AHSA)
|
|
3
|
Australian
Consumers’ Association (ACA)
|
|
4
|
Department
of Health and Aged Care (DHAC)
Additional information
- Response to Ombudsman dated 14.2.00 and
Department Circular dated April 2000
re informed financial consent, provided 3
May 2000
- Response to requested information on
billing arrangements, dated 4 May 2000
|
|
5
|
Doctors’
Reform Society (DRS)
|
|
6
|
Australian
Health Insurance Association Ltd (AHIA)
|
|
7
|
Private
Health Insurance Ombudsman (PHIO)
Additional information
- Letter to DHAC dated 10.1.00 re informed
financial consent, provided 4 May 2000
|
|
8
|
Australian
Healthcare Association (AHA)
|
|
9
|
Australian
Medical Association (AMA)
|
|
10
|
Australian
Private Hospitals Association (APHA)
|
|
11
|
Mr John A.
Buntine
|
|
12
|
Catholic
Health Australia (CHA)
|
|
13
|
Medical
Benefits Fund of Australia Limited (MBF)
|
|
14
|
Consumers’
Health Forum of Australia Inc. (CHF)
|
|
15
|
Australian
Doctors’ Fund (ADF)
|
Appendix Two - Public
hearing
A public hearing was held on the
Bill on 8 May 2000 in Senate Committee Room 1S2.
Committee Members in attendance
Senator Sue Knowles (Chairman)
Senator Kay Denman
Senator Chris Evans
Senator Brett Mason
Senator Tsebin Tchen
Witnesses
Australian
Competition and Consumer Commission
Professor
Allan Fels, Chairman
Mr Sitesh
Bhojani, Commissioner
Mr Hank
Spier, Chief Executive Officer
Ms Isabelle
Arnaud, Assistant Director, Compliance Division
Mr Jim O’Brien, Manager, Health Unit
Mr John A Buntine
Mr Peter Woodruff, Treasurer, Royal Australasian College of Surgeons
Australian Medical Association
Dr David Brand,
President
Dr Robert Bain,
Secretary General
Mr John O’Dea, Director, Medical
Practice
Catholic Health Australia
Mr Francis
Sullivan, Executive Director
Mr Jeff Simper, Director, Private
Health
Consumers’ Health Forum of Australia
Mr Matthew
Blackmore, Executive Director
Ms Rachel Stephen-Smith, Policy
Development Adviser
Department of Health and Aged Care
Dr Robert
Wooding, Assistant Secretary, Private Health Industry Branch
Ms Christine
Francis, Insurance Policy Section
Ms
Jennifer Badham, Director, Health Financing Advisory Group