Medibank Sale - Now is the time to make Health Cover fairer for all

3 December 2014

The successful sale of Medibank Private (MPL) by the Australian Government now creates a new landscape for Private Health Insurance. Although the Australian Dental Association (ADA) congratulates Ministers Cormann and Dutton on the successful float, the work to ensure that private health insurance delivers for all consumers does not stop there.

Newly elected President of the ADA, Dr Rick Olive AM RFD said today:

“The recent comments by the MPL CEO indicating that MPL’s focus will be to maximise value to investors, to place profits ahead of the interests of policy holders, deeply concerns us.

“As a product that’s partially subsidised by Commonwealth law (via the Medicare Levy Surcharge and the Private Health Insurance rebate), the removal of the Australian Government as an owner of a major Private Health Insurer (PHI) provides the ideal opportunity to put in place requirements that will improve the delivery of health services and insure that all policy holders receive the full value of their insurance cover.

“PHIs already make a surplus of more than $1 billion per annum in excess of rebates paid out for general (ancillary) treatments. A ‘light touch’ approach to regulating the Private Health Insurance industry will not ensure policy holders receive value for money and quality of care. It is time some real action was taken.”

The Australian Government must stop:
  • PHI operated and owned clinics. In these situations the PHI determines the premiums its members must pay to belong to their Fund; owns the practice and therefore employs the dentists that provide the services; determines the price to be charged for the services and, at the same time, sets the rebate level to be paid to the member. Such self-serving arrangements (with the inherent conflicts of interest) are not in the public interest.
  • Payment of differential rebates depending upon who treats the Private Health Insurance member. PHIs market themselves as providing healthcare choice to members. However, PHIs in practise discourage members from choosing their practitioner of choice. They offer higher rebates only to those members who see dentists that have preferred provider contracts with the PHI. What this means is that despite members paying the same premiums, they can receive better rebates only if they visit a dentist of the insurer’s choosing rather than their own. If members pay the same premiums they should be entitled to the same rebate regardless of who treats them. Otherwise those who want to maintain continuity of care with their dentist of choice lose out by receiving lower rebates for treatment.
  • PHIs adopting a quasi-regulatory role. All too often PHIs seek to unilaterally “de-recognise” duly registered practitioners and thus prevent patients from receiving rebates for treatment from the practitioner of their choice. De-recognition often occurs in parallel with the PHI suggesting that members see a provider that is contracted to that PHI. Such activity is anti-competitive and the Australian Competition and Consumer Commission should be directed to intervene to prevent PHIs from acting in this fashion. The Dental Board of Australia (DBA) is responsible for ensuring the Media Release Dr Rick Olive AM RFD Federal President safety and quality of practitioners and it should not be up to a funder of care to make such determinations. Safety and quality is the DBA’s role and should remain its domain, not that of PHIs.
  • Complex and hidden Business Rules. Policies need to be clear and precise so that members know exactly what is being covered by their policies. Provision of “Business Rules” that restrict entitlements or limit payments for certain treatments must be openly disclosed. The Australian Government must immediately amend the Private Health Insurance Act to ensure all anticompetitive elements are controlled, that procedural fairness be adopted in all healthcare provider service reviews and that all members of PHIs who pay the same premium receive the same rebate.