THE REVIEW OF THE HEALTH LEGISLATION
(PRIVATE HEALTH INSURANCE REFORM) AMENDMENT ACT 1995
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CHAPTER 4 - ISSUES RELATED TO THE REFORM ACT
Introduction
4.1 While the purchaser-provider agreements discussed in Chapter 3 were
the major initiatives contained in the Reform Act, a number of other reforms
were introduced which have had an impact on private health insurance.
Many of the submissions to the inquiry commented on the implementation
of these aspects or on other issues associated with the reforms. In this
chapter the Committee will discuss these reforms under the general issues
of community rating, billing reform, consumer concerns and data collection.
Community rating
4.2 The community rating principle is the cornerstone upon which the
Australian health insurance system has been built. It has ensured that
all Australians have access to private health cover without discrimination
in relation to age, family circumstances or state of health. In practice
it means that participants in private health funding pay the same amount
for the same level of cover irrespective of their demands on the system.
In simple terms community rating is commonly described as resulting in
the elderly and the chronically ill being subsidised by the young and
healthy.
4.3 Community rating is supported by the reinsurance scheme which balances
a component of risk across all funds. Reinsurance protects funds with
expensive, ie elderly and chronically ill, members by sharing their costs
across all funds. Basically, money is transferred from funds with relatively
low-cost members to those with high-cost members. The administration of
the reinsurance account arrangements is undertaken by the Private Health
Insurance Administration Council (PHIAC). [1]
The Australian Private Hospitals Association (APHA) commented that:
Reinsurance is an effective method to redress fund benefit imbalances
arising from community rating. It does not, however, address the fundamental
difficulty of community rating that healthy members are not receiving
benefits commensurate with their outlays on health insurance. This leads
them to drop insurance first, resulting in a worsening risk profile
for the insured population and increasing premiums. [2]
4.4 The principle of community rating enjoys broad support by all parties
within the industry, including widespread political and public support.
[3] The Queensland Department of Health
typified this view by endorsing the retention of community rating not
only from an access and equity point of view but to ensure that people
in the high risk group are not forced out of private health insurance.
[4]
4.5 However, there are problems seriously effecting the operation of
community rating in its current form. The decline in the number of people
retaining private health insurance includes a significant number of young
and healthy people. Their departure makes it more expensive for an insurer
to provide for the elderly and unhealthy. Premiums rise and more young
and healthy members leave private insurance. Health Care of Australia
(HCoA) summed up this dilemma for the delivery of health care by stating
that:
The disincentive for the community at large to take out expensive
health insurance produces two scenarios people either pay for private
health when required, out-of-pocket, or they encroach further upon the
public purse through accessing the apparently "free" public
health system. [5]
4.6 The Australian Private Hospitals Association suggested that `the
term community rating is now a misnomer...[It] reflects the risk profile
of the insured population only, rather than that of the general community'.
[6] Other organisations similarly submitted
that the principle was being undermined or eroded. [7]
4.7 The AMA summed up a range of views about community rating which were
put to the Committee when it stated that:
The principle has been eroded by the dramatic decline in the
overall number of people privately insured to the point where most of
the community is not included, by the segmentation of private insurance
products, deep discounting for corporate clientele and self risk strategies
by individuals now permitted in the Medicare environment. [8]
4.8 Organisations variously proposed that community rating could `no
longer be promoted in its present form', [9]
that its real objective `should be addressed in a different way' [10]
and that as the principle underpinning private health insurance it needs
to be reconsidered. [11] MBF encapsulated
this attitude in the title of its paper - `Community rating - At the crossroads'.
4.9 A range of modifications or refinements to the principle of community
rating have been proposed, with a number receiving support from various
organisations. These have included lifetime community rating whereby members
joining at a young age could be offered a lower premium than members joining
later, discounting for long membership, and permitting a larger and more
flexible range of insurance products. [12]
4.10 APHA has advocated that if any `refinements' are made to community
rating, two goals must be met:
- those people currently holding private health insurance, who would
be worse off under alternatives (eg the elderly in a move to risk rated
insurance), must be protected from any adverse effects; and
- any proposed scheme must be able to meet future health care financing
needs better than the current system. [13]
Conclusion
4.11 The Committee recognises the reality of the current situation in
relation to the principle of community rating whereby gradual evolution
is occurring. Issues which were raised in a number of submissions, such
as the need to redefine the principle or refine its operation by allowing
relaxation within existing parameters to permit the introduction of new
and differently targeted products, will be considered by the Committee
in greater detail as part of the second stage of this inquiry.
Billing reform
4.12 The need to reform billing procedures has been widely recognised
as necessary to improve the private health insurance system. The Reform
Act provides for the establishment of an Aggregate Billing Advisory Committee
(the Billing Committee), whose membership is to consist of the Departmental
Secretary, and nominations from the Australian Medical Association (AMA)
and Council of Procedural Specialists (COPS), the three Hospitals' Associations,
the Australian Health Industry Association (AHIA) and Consumers' Organisations.
The Billing Committee's functions include the requirement to investigate
and recommend to the Minister on the most appropriate way of moving to
a system of aggregate billing for an episode of hospital treatment, covering
all hospital and related services including medical services. [14]
4.13 The Department of Health and Family Services (DHFS) advised the
Committee that it wrote in June 1995 to the specified organisations seeking
nominations for membership. However, the AMA and COPS declined to nominate
a representative for the Billing Committee. DHFS noted that the AMA `cited
as a major obstacle to improved billing arrangements the specification
in the reform legislation that only patients treated by medical practitioners
with contracts are able to assign (to the funds) the Medicare benefit
in respect of in-hospital medical services'. [15]
4.14 The AMA argued that `the previous Government used the efficiency
of the billing system afforded to contracted doctors as a means of forcing
doctors into contracts with the funds...[Its actions] denied improved
billing capabilities to patients who attended non-contracted doctors'.
[16] However, the AMA advised the Committee
that if the Health Insurance Act was amended to allow direct billing for
private hospital services, the profession `would work with the other sectors
of the industry to establish a voluntary aggregate billing system'. [17]
4.15 DHFS decided that, although other Associations sought to be included
on the Billing Committee, it was not a sensible idea to proceed because
`having the Aggregate Billing Advisory Committee without the AMA is pretty
much like having Hamlet without the prince'. [18]
The Billing Committee has not been convened.
4.16 The Committee considers it regrettable that the Billing Committee
was not established, but commends the willingness of the AMA and other
parties to now progress billing reform. DHFS was optimistic in its comments
about the possibility of the Billing Committee being convened in the future,
by recognising that the concept is one which everyone is interested in
pursuing and that it was not beyond `the wit of people to come up with
an aggregate billing system' which would overcome current differences
of view. [19] The Committee notes the
assurance given by DHFS to the AMA and COPS that:
the Department had not closed off any options for an aggregated
billing system and that as members of the [Billing] Committee they would
have the opportunity to put their views on the best system to both the
Minister and Parliament. [20]
4.17 The Consumers' Health Forum (CHF) expressed disappointment at the
lack of progress towards a single billing system for private hospital
episodes. It referred to feedback from consumers which:
suggests that the fragmented and confusing billing system, together
with the lack of informed financial consent arrangements is still causing
a series of nasty and distressing surprises. CHF emphasises that until
some predictability and competitiveness is introduced to the billing
practices of private medical practitioners, it is likely that significant
out-of-pocket expenses will continue to cause private health consumers
financial hardship and result in disappointment with private health
insurance products and private hospital experiences. [21]
4.18 Whilst there is general, but not as yet universal, agreement within
the industry on the need for billing reform, there are differences at
the direction it should take.
4.19 AHIA expressed a strong preference to retain the status quo, believing
the legislation will work best if it is allowed to operate unchanged.
Nevertheless the AHIA offered an alternative approach which it suggested
may `facilitate the situation in the interests of contributors'. [22]
See the section in Chapter 3 on gap insurance for details of this proposal.
4.20 Medibank Private believed that to achieve the concept of a single
bill would require `almost universal cooperation amongst funds, hospitals
and the medical profession'. It suggested that:
Rather than pursue the single bill concept, the establishment
of agreements between financiers (funds) and both hospital and medical
specialists will present an opportunity for consumers to receive no
bills the accounts being raised directly with the financier who processes
the account and remits payment to the provider according to their agreement.
[23]
4.21 HCoA believed that `reduced (if not single) billing should be the
aim of nearly all private health care industry players'. [24]
Similarly, APHA acknowledged that `standardisation and simplification
of billing and payment regimes is an industry issue'. [25]
HCoA referred to its research showing that separate bills for the main
doctor and associated anaesthetist was not the real concern to the patient.
It argued that no patient would object to insurance covering doctor `gaps',
but that the resolution of the issue required the full support of the
medical profession and the insurance funds. HCoA found that the real concern:
is the volume of billing by the additional service providers
in the episode of care. These include the hospital, pharmacy, physiotherapy,
pathology, radiology, intensivists, residents, dietitian, speech and
occupational therapists, social workers and others. The hospital accommodation
bill has been addressed by a "100% cover" initiative by the
industry for some time. The other bills are the ones to which the industry,
including the government, should be working together to place under
the umbrella of single billing. [26]
4.22 The AMA, whilst not nominating a member to the Billing Committee,
has been developing jointly with the APHA a proposal representing `a broad
industry view' on the question of aggregate billing. The AMA informed
the Committee that the proposal, outlined in a paper titled Aggregate
Billing Industry Position, had broad support from a group comprising private
hospital and health insurer representatives, and medical representatives
including COPS and AAS.
4.23 The AMA/APHA proposal considers that the key features of any successful
introduction of aggregate billing would be that there be realistic expectations
about what can be achieved, that the new arrangements be voluntary, that
the billing system be made so efficient and attractive that doctors will
want to use it rather than being forced to use it, and that there be no
expectation that doctors forego their right to submit accounts to patients.
4.24 The basis of the proposal is to enable patients to assign benefits
to a third party, with expertise in billing systems and access to relevant
technology, who can also receive and disburse payments. This could be
achieved by amending s.20 of the Health Insurance Act to enable patients
to assign their Medicare benefits to a third party for private in-patient
episodes of care. It is argued that:
Such an amendment would enable a private hospital, a billing
agent or any other third party acceptable to doctors, hospitals and
patients, to aggregate doctors' accounts, arrange payment by health
insurers and Medicare of appropriate benefits, disburse monies to the
doctor and arrange gap payments by the patient as necessary. [27]
4.25 The AMA/APHA proposal advocates that if progress can be achieved
on the question of more efficient billing arrangements and the aggregation
of accounts, informed financial consent becomes a more easily resolved
matter.
Conclusion
The Committee strongly supports the necessity for urgent reform of the
billing system and recommends accordingly.
Recommendation 11:
| The Committee recommends that the Aggregate Billing
Advisory Committee be convened as provided for in the Reform Act.
|
Recommendation 12:
| The Committee recommends that the proposal contained
in the industry paper provided by the AMA/APHA, including the
amendment of the Health Insurance Act to enable patients to assign
benefits to third parties for private in-patient episodes of care
and the relaxation of restrictions on the payment of Medicare
benefits, be the basis of further investigation and debate by
the Aggregate Billing Advisory Committee. However, the consideration
of reform by the Billing Committee should not be restricted only
to the ideas in the AMA/APHA proposal. |
Private Health Insurance Complaints Commissioner
Establishment, functions and powers
4.26 The Reform Act provides for the establishment of a Private Health
Insurance Complaints Commissioner (the Complaints Commissioner). The Complaints
Commissioner's Office, which is based in Sydney, became operational on
4 March 1996 and has a staff of five. The Office is indirectly funded
through a levy on the private health insurance funds based on contributor
numbers. The levy is collected by DHFS and paid into the Consolidated
Revenue Fund, with the Complaints Commissioner then being funded through
a one-line appropriation in the budget.
4.27 The main functions of the Complaints Commissioner are:
- to deal with complaints which may be made by health fund contributors,
health funds, hospitals and medical practitioners about matters associated
with private health insurance arrangements;
- to investigate the practices and procedures of registered organisations;
- to publish data about complaints;
- to make available certain information to the public; and
- to make recommendations about regulatory and/or industry practices
relating to registered organisations. [28]
4.28 In dealing with complaints, the Complaints Commissioner may make
inquiries, undertake investigations, make recommendations, request conciliation
and refer matters to other bodies. However, the Complaints Commissioner
submitted that her functions, powers and duties are not as clearly and
fully prescribed as they are for other similar dispute resolution bodies,
comparing her functions and powers with those contained in the Ombudsman
Act 1976, the Superannuation (Resolution of Complaints) Act 1993, and
the Health Complaints Act 1993 of the ACT. The Committee was informed
that:
For example, the Complaints Commissioner can examine health funds
records and rules but has no express powers to interview staff or any
other people. There are no powers to make or request copies of records.
There are no sanctions applying to health funds or their staff for failure
to comply with requests for information... There is no right to examine
practitioner and hospital records... Remedial powers are confined to
making recommendations to health funds, practitioners and hospitals.
The Complaints Commissioner cannot direct that specific action be taken
and there are no sanctions for failure to act on a recommendation. [29]
4.29 The Complaints Commissioner proposed legislative changes to deal
with complaints management and financial accountability and to allow for
delegation of powers, which would assist in providing an effective and
efficient operation over the next few years. A particular area of concern
related to the powers of investigation and enforcement of recommendations.
The Complaints Commissioner suggested that additional powers in this area,
modelled on provisions in the Ombudsman Act and other legislation, be
provided, [30] noting that:
This dearth of [investigative] powers is unusual for a complaints
body. While the health funds have been most cooperative in dealing with
complaints to date, stronger investigative powers with associated sanctions
are needed to give the Complaints Commissioner credibility, especially
when dealing with complaints from practitioners and hospitals. [31]
4.30 APHA also supported in-principle proposals to strengthen the investigation
and enforcement powers of the Complaints Commissioner, subject to the
form of the proposals. [32]
4.31 Other areas suggested by the Complaints Commissioner for amendment
included:
- conducting such investigations as the Complaints Commissioner considers
appropriate;
- proceeding with informality and speed, and generally improving flexibility
in dealing with complaints; power to conciliate between registered organisations
and complainants;
- discretion to decline to investigate or discontinue action in certain
circumstances;
- discretion as to form of advice that complaint will not be investigated;
prohibition on disclosure of personal or otherwise confidential information
obtained in the course of duty;
- protection from civil action; and
- delegation of all or any powers and discretions conferred by the Act.
[33]
4.32 When questioned by the Committee on the adequacy of the Complaints
Commissioner's powers and functions, DHFS advised that the establishment
of the Complaints Commissioner was a new procedure and the Department
was uncertain as to the extent of functions and powers which would be
required. The Department agreed that perhaps with a few more months experience
of operation it would be timely and sensible to discuss with the Complaints
Commissioner possible changes to her powers. [34]
Operation of the Complaints Commissioner
4.33 The establishment of a Private Health Insurance Complaints Commissioner
has been welcomed in the community sector, [35]
although certain health funds were more circumspect. The Health Insurance
Restricted Membership Association of Australia (HIRMAA) expressed support
for the provision of a complaints resolution system to cater for appropriate
concerns that cannot be resolved within the funds normal administrative
systems. However, it was concerned that the system which has been created
is not a cost effective process for the number of complaints which have
been referred. HIRMAA considered that the funds' financing of the Complaints
Commissioner's Office through their levy `to be an unjustified expenditure
of members funds and recommends a review of this arrangement be undertaken
(with industry consultation) to determine what would be a more appropriate
and cost effective solution'. [36] Medibank
Private expressed similar concerns with value for its members' money and
suggested combining the Complaints Commissioner with PHIAC, arguing that
this would provide administrative efficiencies, concentrate private health
sector consumer rights and product information functions, and ensure a
more comprehensive understanding of the industry. [37]
Nature of consumer complaints
4.34 The majority of complaints made to the Complaints Commissioner's
Office are by telephone (including a nationwide, toll free complaints
hotline), or in writing, by fax or in person. The Complaints Commissioner
has advised that between 4 March and 4 August 1996 her office had received
319 complaints and 297 general inquiries. [38]
4.35 The Complaints Commissioner has been examining the complaints received
during the relatively short period of her operation to identify any patterns
in the problems raised, which may require further remedial action by funds,
service providers or government. The Complaints Commissioner has indicated
that to date health funds have been cooperative in attending to complaints
quickly, without significant differences of opinion over remedial action.
4.36 The most common complaints have been with benefit entitlements,
including level of cover, amount of benefit and lack of notification of
changes to benefit entitlements; and with waiting periods, in particular
the pre-existing ailment rule. The Complaints Commissioner has suggested
that the majority of complaints indicate that consumers do not understand
what their policy covers or what they can and cannot claim from their
policy. [39]
Conclusion
4.37 The Committee considers that the operation of the Complaints Commissioner's
Office in the period since its establishment has demonstrated that it
provides a valuable contribution to the health industry and its consumers.
The Committee acknowledges that the limitations in the powers and functions
referred to by the Complaints Commissioner may affect the service provided
to consumers, although this has yet to be demonstrated on such a limited
period of operation. The Committee believes more time needs to be given
to assess the types and quantity of complaints and the effectiveness of
their resolution before making any firm recommendation as to any possible
expanded role and powers for the Complaints Commissioner.
Recommendation 13:
| The Committee recommends that a re-assessment of
the functions, powers and funding arrangements of the Private
Health Insurance Complaints Commissioner be part of the ongoing
monitoring of the operation of the Health Legislation (Private
Health Insurance Reform) Amendment Act 1995 to be undertaken
by the Committee in accordance with recommendation 1. |
Private Health Insurance Administration Council
4.38 The Private Health Insurance Administration Council (PHIAC) is established
in Part VIAA of the National Health Act, which sets out the Council's
powers and functions. Its major functions include:
- to monitor the financial performance of registered health funds to
ensure statutory reserve requirements are met;
- to administer the reinsurance account arrangements;
- to collect and disseminate financial and statistical data, including
tabling of an annual report to Parliament on the operations of registered
health funds; and
- to establish uniform reporting standards for funds.
4.39 The Reform Act provided PHIAC with additional functions which include:
- to collect and disseminate information about private health insurance
to enable consumers to make informed choices about private health insurance;
- to distribute copies of the Private Patients' Hospital Charter to
funds for distribution and display, and to make copies of the Charter
available through PHIAC's office. The existence and availability of
the Charter should also be publicised in PHIAC's brochures and other
publicly available documents;
- modelling, evaluation and research of data derived from the Hospital
Casemix Protocol (HCP).
4.40 PHIAC's implementation of these additional functions is discussed
in the next sections.
Private Patients' Hospital Charter
4.41 The Reform Act inserts a new s.73F into the National Health Act
which provides for the Minister to issue a statement called the Private
Patients' Hospital Charter (the Charter) that:
- informs people of what they could, as contributors, reasonably require
from registered organisations, medical practitioners, hospitals and
day hospital facilities; and
- advises people of matters to consider in making decisions about becoming
contributors to such funds.
4.42 The Charter was gazetted on 10 January 1996 following consultations
with organisations representing hospitals, doctors, health insurance funds,
consumers and State and Territory health authorities. Legislation requires
that health funds, the Complaints Commissioner and PHIAC make copies of
the Charter available to contributors and the public. DHFS indicated that
over 250,000 copies of the Charter in brochure or booklet form have been
distributed and that a reprint is in progress. Once reprinted the Charter
will also be available in private hospitals. [40]
4.43 The initial distribution of the Charter to registered health funds
was organised and paid for by PHIAC, which also makes copies available
to the public at its office and by mail upon request. PHIAC advised that
its staff are briefed to mention the Charter to casual inquirers regarding
private health insurance. [41]
4.44 The Committee received conflicting evidence as to the benefit of
the Charter. The Consumers' Health Forum (CHF) submitted that the Charter
`represented an important step towards recognising the rights of private
patients, and improving awareness in the community of these rights'. [42]
Conversely, MBF wrote that `the Charter has been of interest to virtually
no health fund members (who were not consulted on the legislation's so-called
consumer services). Funds have been forced to display the Charter in branches,
but there has been little response from members'. [43]
While DHFS advised the Committee that there has been no formal process
for obtaining stakeholder feedback on the Charter, [44]
PHIAC indicated that feedback from its telephone inquiries was `very positive'
as people found the Charter `useful'. [45]
4.45 A perceived deficiency in the Charter was highlighted by the Privacy
Commissioner who commented that `the statements in the Charter on confidentiality
do not appear consistent with the provisions in section 73G [of the National
Health Act relating to the disclosure of patient information]'. [46]
In fact, the Privacy Commissioner considered that the section may well
override patient expectations and other undertakings about the protection
of patient information currently contained in the Charter. The Australian
Doctors' Fund (ADF) also noted that `it is of great concern that this
Charter makes no mention of the legislative provision [s.73G of the National
Health Act] with relation to the disclosure of patient information'. [47]
Conclusion
4.46 The Committee considers that the Charter is an important component
in the education of consumers about private health insurance and in particular
as to their rights and expectations within the system.
Recommendation 14:
| The Committee recommends that the Private Patients'
Hospital Charter be revised to include reference to the disclosure
of patient information pursuant to section 73G of the National
Health Act 1953 and ensure that the Charter does not contain
information or advice which may be inconsistent with the provisions
of section 73G. |
Information dissemination
4.47 Consumer awareness and information on health insurance products
have been a continuing problem for the private health industry. Consumers
require information to enable them to make considered decisions on complex
issues such as which fund to join and in determining which insurance product
is most suitable for their particular circumstances, to understand the
detail of their policy and its coverage and to be aware generally of their
rights including recourse to complaints processes at Commonwealth or State
level.
4.48 To enable consumers to make informed choices about private health
insurance, PHIAC met its new legislative requirement to collect and disseminate
information about private health insurance through the production and
distribution of a booklet entitled Insure? Not Sure? This document
complements the Charter.
4.49 Insure? Not Sure? provides a range of information about Medicare
and private health insurance, how private health insurance works including
general rules affecting the privately insured, the types of private health
insurance cover and questions to ask a private health insurance fund either
before or after joining.
4.50 Insure? Not Sure? has been published in English only. PHIAC
submitted that, according to advice from health funds, `there is very
little demand for information on private health insurance in languages
other than English'. [48] In fact, it
had not received any requests for the booklet in languages other than
English. The Committee suspects that this may be a case of being unable
to request something if its existence is not known! PHIAC advised that
nearly 300 000 copies were sent to health insurance funds to be available
through their shopfronts. [49] The Committee
believes that PHIAC needs to be more pro-active in providing information
to NESB communities.
4.51 The Committee considers that Insure? Not Sure?, which is
an informative and useful booklet for consumers, would have greater impact
with a wider distribution and by ensuring that when displayed it was clearly
differentiated from insurance fund product advertising.
4.52 The Reform Act introduced provisions which improve the availability
of relevant health insurance information to consumers, through the establishment
of a Complaints Commissioner, and the distribution of PHIAC publications,
such as Insure? Not Sure?, and the Charter. These initiatives are a positive
start but from the evidence the Committee received there is still a long
way to go. The CHF, whilst expressing disappointment at the lack of progress
in relation to a number of key issues of concern to consumers, did note
that consumers are `starting to reap the benefits of improved information
about private health insurance, including the private patients' hospital
charter'. [50] However, the Complaints
Commissioner indicated that the complaints received by her office during
the short period of its operation suggested that `members [of funds] need
to be better informed about their membership and benefits'. [51]
4.53 Evidence to the Committee indicated that confusion and ignorance
among consumers about private health insurance apparently remains widespread.
Unfortunately, the major players in the industry attribute blame to each
other and consider the problem to be the responsibility of others to rectify.
4.54 APHA argued that the expanding array of insurance products leads
to significant costs in providing meaningful customer information. Many
fund members are unaware of the nature of the health insurance product
they have purchased and are completely ignorant of the range of non-hospital
costs, such as medical, surgical or allied health services, that may be
incurred during an episode of hospital care. APHA notes that as a result,
hospital staff are required to spend considerable time with each patient
contacting the relevant fund to establish membership details and personally
explaining this information in terms of the particular fund and fund product
to which the patient belongs. APHA believes many difficulties `can be
ameliorated through improving the level and quality of information provided
to consumers... Ideally, where possible, consumers should receive such
information at the time they purchase health insurance'. [52]
4.55 Medibank Private submitted that confusion among consumers is on
two levels understanding the health system and Medicare entitlements;
and comparing private health insurance products. It argued that health
funds generally provide detailed information in their product brochures.
The complexity for consumers arises where there is variation between fund
products due to a combination of product differentiation and/or funds
restricting benefit entitlements to control fund utilisation and drawing
rate. Medibank Private considered that to provide a comprehensive consumer
comparison of products, without knowledge of the purchaser's requirements,
such as assessment of personal risk, family medical history, treatment
preferences etc, is an impossible task. It concluded that while such requirements
cannot be included in a comprehensive comparison of fund products, a comparison
of fund products needs to be widely distributed focussing on improved
education about Australia's health delivery system, choices that are available
under that system and differences between health insurance products. [53]
4.56 The dilemma with product choice lies in the balance between funds
being able to offer a greater range of products to consumers, possibly
through a level of deregulation, and the need to ensure that a larger
diversity of available product does not simply create greater confusion
for the consumer.
4.57 Providing product comparison creates difficulties which were referred
to by PHIAC. PHIAC advised that it had given consideration to compiling
consumer information based on a product by product breakdown and comparison,
but submitted that it is:
both extremely difficult and potentially controversial in comparing
products that are so diverse. As well, products are constantly changing
in the details. Such consumer information, were it possible to compile,
could not be published in hard copy format as it would be extremely
expensive and lacking in timeliness by publication. One alternative
way of publishing any such data would be on a medium such as the Internet.
Even if PHIAC is eventually able to provide such information,
it should not provide advice on particular products or funds. Ultimately
the consumer needs to ask the right questions to ensure that what they
buy meets their needs. Insure? Not Sure?
already addresses the consumer information role in terms of its general
coverage of generic products. Consumers would need to determine specifics
for themselves as health insurance products are an individual choice.
[54]
4.58 The only detailed comparative work that has been undertaken on different
insurance products was by the Australian Consumers' Association in an
article published in Choice in July 1996. [55]
4.59 Medical practitioners are also regarded as being at fault with the
provision of information. Insurance funds have been vocal about the difficulties
in providing a product which can cover medical expenses with any degree
of certainty and APHA has indicated that hospital staff are invariably
blamed when patients receive additional bills from doctors who routinely
charge well in excess of the MBS fee. [56]
4.60 The CHF considered that `medical practitioners have failed to meet
their part of the deal by providing honest and informative medical and
financial details prior to procedures which would enable the patient to
make informed decisions'. It suggested `that strengthening informed financial
consent provisions for medical services would be a simple and logical
way to improve consumer satisfaction with privately insured services,
to reduce the incidence of unexpected financial hardship, and to encourage
more competition on price among medical practitioners'. [57]
4.61 Support for strengthened informed financial consent was also given
by APHA which recognised:
the substantial practical difficulties in providing exact information
on likely medical charges prior to treatment. However, it is clearly
possible to inform consumers that these charges exist. It should also
be possible to provide better information on the range and level of
likely charges for most consumers. [58]
Conclusion
4.62 The Committee remains concerned at the problems still evident in
the dissemination of information about private health insurance products.
It believes that all parties in the industry should accept greater responsibility
in the production of information for consumers, the format of this information
and in the methods by which consumers attention is drawn to the available
information. Practitioners, funds and hospitals should establish a method
of wider distribution of factual and informative material regarding private
health insurance and their products.
Recommendation 15:
| The Committee recommends that insurance funds, medical
providers, hospitals and consumer-oriented organisations accept
greater responsibility in the production of information for consumers,
the format of this information and in the availability and distribution
of this consumer information. |
Recommendation 16:
| The Committee recommends that documents such as the
Private Patients' Hospital Charter and the PHIAC booklet Insure?
Not Sure? be given a wider distribution and that it be a requirement
to give these documents prominence when displayed in `shopfronts'.
|
Recommendation 17:
| The Committee recommends that these and other consumer
information brochures be made available in languages other than
English and that areas with large NESB communities be identified
and targeted with the distribution of consumer information in
the relevant language. |
Recommendation 18:
| The Committee recommends that PHIAC should, as part
of its statutory function of collecting and disseminating information,
publish comparative details (including cost) of major insurance
products on a regular basis. |
Recommendation 19:
| The Committee recommends that the Government investigate
the constitutional basis and feasibility of legislation to require
informed financial consent for medical and hospital services,
irrespective of whether or not a purchaser-provider agreement
exists. |
Recommendation 20:
| The Committee recommends that funds be required to
include information relating to the Complaints Commissioner in
their published material and to draw their customers' attention
to the role and functions of the Complaints Commissioner. |
Data Collection issues
4.63 Amendments in the Reform Act require that hospitals and day hospital
facilities transfer the information specified in the Hospital Casemix
Protocol (HCP) to their contracted health funds. The information specified
in the HCP is prescribed by regulation which describes the data items
to be collected and the format of that collection. Items include clinical
and demographic information about the patient and charges. The Reform
Act also requires health funds to forward this data together with extra
billing information to the Department and PHIAC.
4.64 DHFS advised that HCP data collection commenced on 1 October 1995.
From this date casemix information on separations of privately insured
patients has been collected by private hospitals and transferred to contracted
health insurance funds as part of their contracts. According to DHFS,
the collection is becoming reasonably well established with data from
health funds having been transferred to DHFS since February 1996. [59]
4.65 PHIAC advised the Committee that at this stage it does not receive
any data from the HCP and it is not certain yet that PHIAC would need
most of the HCP data. However it is envisaged that the level of analysis
undertaken by PHIAC would use aggregate data for example at a state level
or by AN-DRG. Such data would not identify individual hospitals. [60]
4.66 APHA suggested that there were significant problems with PHIAC receiving
any HCP information. APHA claimed that:
As the PHIAC Board comprises representatives of health insurance
funds, it would be commercially inappropriate for these individuals
to obtain access to details of the specific charges levied by hospitals
for different episodes of care. It would also be inappropriate for the
fund representatives to receive information about their competitors'
benefit payments. [APHA argued that] if PHIAC is to receive any HCP
data, hospitals should be given the right to limit the scope of any
such data provision. For example, it may be appropriate for PHIAC to
obtain aggregated data without hospital (or fund) identifiers, which
monitors the level of out-of-pocket charges in line with PHIAC's consumer
information responsibility. However, as such information is likely to
be readily available from data published by the Department, there is
no valid justification for PHIAC to obtain special access to HCP data.
[61]
4.67 PHIAC indicated that it `has no use for data identifying individual
hospitals and it could only receive de-identified data for individuals.
In addition, any such data provided to PHIAC would be with the permission
of the Minister and would be clearly protected under the requirements
of the Act. Any identifying information on hospitals would be protected'.
[62]
4.68 The importance of accurate and timely collection of data was emphasised
by funds. AHIA wrote that for `many years the private health care sector
has suffered from a lack of data which can assist both the public and
private sectors in planning. The provision of more data, not less, assists
all concerned with policy formulation, including legislators'. [63]
HIRMAA and Medibank Private also referred to the benefits to be gained
from data collection, such as enabling funds and hospitals to manage their
respective business needs, being able to progress towards standardising
elements used to define an episode of care and achieving future health
financing models. [64]
4.69 Medibank Private indicated that it had worked with DHFS in establishing
processes for the receipt of HCP data from hospitals via health funds
and, in conjunction with APHA and the National Consultative Group, in
guiding the collection of data to electronic means.
4.70 The provisions in the Reform Act for the collection and transfer
of data created considerable concern during the passage of the legislation
through Parliament. The Committee's March 1995 Report on the Bill noted
that the issues of cost and of privacy were particular concerns for a
number of organisations. [65]
4.71 The introduction of HCP and associated changes in data management
systems has provided an added cost impost for hospitals, especially for
the smaller hospitals, both financially and in human resource terms. A
number of submissions referred to the considerable expense borne by hospitals
to introduce or upgrade information technology infrastructure and systems,
provide ongoing administrative support often through the employment of
additional staff, train staff and educate professional and medical personnel
about casemix funding and reporting. [66]
4.72 An area of cost constantly referred to was in the duplication of
data collection. The Australasian Day Surgery Association (ADSA) commented
that:
There is a need for significant effort to be made by Government
to amalgamate existing State and Federal level data collections to eliminate
duplication and increase efficiency in the management of private health
sector data. Therefore, at the very least the State morbidity data collections,
the Australian Bureau of Statistics private hospital data collection
and the data collected by the Hospital Casemix Protocol should be managed
as one collection. [67]
This view was echoed in a number of submissions. [68]
4.73 Medibank Private suggested that to gain efficiencies within the
data collection processes, the National Health Information Management
Group review areas of duplication in the collection of health care delivery
data, encompassing Commonwealth and State collections. [69]
ADSA made a similar recommendation. The Committee considers that this
apparent duplication is unwarranted and wasteful, and supports this suggestion.
4.74 In relation to privacy considerations, the funds did not accept
that existing data arrangements endanger patient privacy. [70]
MBF argued that at this stage it had no concern in relation to protection
of the privacy of members in data being provided to DHFS or PHIAC because:
MBF's greater concern is with the potential for the data to be
used to impose restrictions on future negotiations between hospitals
and funds which may reduce the attractiveness of hospital insurance.
[71]
4.75 The Privacy Commissioner referred to the provisions of section 73G
of the National Health Act, inserted by the Reform Act ostensibly to remove
any impediment under law which would prevent the disclosure of information
by hospitals relating to the provision of hospital treatment. The Privacy
Commissioner believes that this section raises privacy concerns as it
appears to widen the range of people and organisations who may have access
to personal health information. The Committee has noted earlier the concerns
expressed by the Privacy Commissioner and the ADF at the lack of reference
to the operation of s.73G in the Private Patients' Hospital Charter.
4.76 The Committee was informed that in recent speeches the Privacy Commissioner
has expressed concern about the increasing pressures for the disclosure
of identifiable health information without consent and pressures to use
personal health information for purposes other than which it was collected,
that is, secondary uses. The Privacy Commissioner suggested that:
secondary uses of health information should be the subject of
community wide debate on the implications and desirability of such practices
and the safeguards which should attach to any such disclosure or secondary
use of personal health information. Safeguards which may be considered
include notification to the individual if their record is to be accessed,
giving individuals an opportunity to prevent the secondary use, audit
trails and reports of such activities to external authorities. [72]
4.77 ADSA was similarly concerned at `the lack of appropriate guidelines
for dealing with the use and release of data by all agencies to whom such
data will be provided' either by health insurers, DHFS or PHIAC. ADSA
believed that `potentially data currently being collected can be disseminated
in the absence of adequate guidelines to control and safeguard their use'.
[73] It recommended that guidelines
for the use of any data collected via HCP be developed as a matter of
urgency.
4.78 A particular incident was drawn to the Committee's attention which
appeared to be a breach of privacy, though it was argued by the medical
profession as demonstrating the funds' agenda to introduce a form of managed
care. [74] The AHIA informed the Committee
that the particular incident arose from a health fund seeking information
on psychiatric treatment relating to each day program for which the hospital
was seeking rebates to enable the fund to assess the level of classification
of a given program. A consultant was employed by the fund to visit hospitals
to determine whether documented procedures and protocols were being followed
by hospital staff. As part of the process the fund had requested access
to copies of de-identified patient notes, in accordance with agreement
between the fund and hospitals that such de-identified notes would not
lead to any compromise of patient confidentiality. However, in one review,
the consultant was apparently supplied accidentally by the hospital with
some patient notes that had not been de-identified. Once the error was
discovered the notes were immediately returned to the hospital.
4.79 The AHIA commented that the supply of identified notes was `unfortunate'
but should not be considered anything but a `genuine error'. The AHIA
noted that the provisions of the Reform Act for hospitals being required
to give funds `all reasonable assistance' relate to the payment of specific
claims. The discussions between the funds and hospitals relating to the
psychiatric programs were part of the health fund offering to extend benefits
to support changes occurring in psychiatric patient care. The portrayal
of the incident as evidence of `US-style managed care' was simply incorrect.
[75]
Conclusion
The Committee is concerned about any incidence of breach of privacy or
security of data, however isolated. To ensure that data exchange is effective,
it is essential that all parties have complete confidence that the information
they provided in relation to the operation of the legislation is treated
with absolute respect and security.
Private Hospital Data Bureau
4.80 Amendments to the Health Insurance Act provide for the establishment
of a Private Hospital Data Bureau (the Data Bureau). The provisions of
the Act require that when the Data Bureau is established it will receive
HCP data from private hospitals on all episodes of care regardless of
contract or insurance status. DHFS informed the Committee that consultations
were held with the private health sector, particularly APHA, to establish
an interim bureau to collect data for two years. It was envisaged that
during this interim period, further consultation and experience would
assist in the drafting of relevant legislation for a self-funding independent
bureau. Despite the calling of tenders and a recommendation from a selection
panel, the Data Bureau has not been established. [76]
4.81 APHA has strongly supported the establishment of the Data Bureau.
It believes that `the bureau will assist hospitals to assess their performance
against industry peers and partially redress the information imbalance
in the negotiation process between hospitals and health insurance funds.
[77]
4.82 In recognition of the delay in the Data Bureau's commencement, APHA
argued that the Government should extend its funding to cover data collection
until the end of 1998, to allow the bureau to develop its services so
that it can become self-funding in the future. APHA's `intention is that
private hospitals, governments and researchers purchase their data requirements
from the data bureau, thereby reducing the need for private hospitals
to prepare multiple datasets. This objective can only be achieved if the
data bureau has had sufficient time to collect, compile and validate initial
datasets'. [78]
4.83 The AHIA was concerned that the proposed Data Bureau could breach
privacy concerns if it decided to become self-funding by `selling' the
data provided to it to external users. The AHIA believes that if a bureau
is desired by the private hospital industry it should be funded by that
industry, not by taxpayers. It also believes that the provision of cost
data, in addition to charge data, would improve the managerial efficiency
of private hospitals as well as the negotiating process. AHIA suggested
that the Bureau be enabled to collect cost data on a basis to be determined
by DHFS, APHA and AHIA. [79]
Recommendation 21:
| The Committee recommends that the Private Hospital
Data Bureau be funded to operate on an interim basis until the
end of 1998, and be operational from 1 January 1997. During this
period consideration should be given to the Bureau's role, functions
and funding base. The Bureau should aim to become self-funding,
though with tight security guidelines to ensure privacy breaches
in the `selling' of data do not occur. A combination of industry
funding, particularly by the private hospitals in an arrangement
similar to that operating with the funds and the Complaints Commissioner,
should be considered. |
Recommendation 22:
| The Committee recommends that a review of data collection
at Federal and State levels be undertaken by the National Health
Information Management Group to ensure any duplication of effort
and resources is prevented. This review should consider the role
of the Private Hospital Data Bureau in the future collection and
dissemination of data. |
Recommendation 23:
| The Committee recommends that the disclosure of data
under section 73G of the National Health Act 1953 be the
subject of community and industry consultation and debate as to
what are acceptable secondary uses for personal health information
and what are appropriate safeguards to be applied in using such
information at this wider level. |
Recommendation 24:
| The Committee recommends that the relevant privacy
guidelines be revised to ensure that situations such as that which
led to the disclosure of private patient information do not recur
and that the use of data collected under the HCP is appropriately
covered by such guidelines. |
Senator Sue Knowles
Chairman
September 1996
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FOOTNOTES
[1] For a description of the operation and administration
of reinsurance, see Submission No.25, pp.40-7 (APHA) and PHIAC Annual
Report 1994-95, pp.17-18.
[2] Submission No.25, p.45 (APHA).
[3] See for example Submission No.2, p.24 (AHIA);
Submission No.25, p.34 (APHA); Submission No.20, p.4 (HIRMAA); Transcript
of Evidence, p.233 (DHFS).
[4] Submission No.43, p.3 (Queensland Department
of Health).
[5] Submission No.39, p.6 (HCoA).
[6] Submission No.25, p.34 (APHA).
[7] Submission No.27, p.4 (AMA); Submission
No.11, Attached Paper Community rating - At the crossroads, p.2
(MBF).
[8] Submission No.27, p.4 (AMA).
[9] Submission No.23, p.2 (COPS).
[10] Submission No.39, p.6 (HCoA).
[11] Submission No.54, p.2 (RACS).
[12] eg. Submission No.8, p.6 (AAS); Submission
No.20, p.11 (HIRMAA); Submission No.25, p.36 (APHA); Submission No.37,
p.4 (ACA); Submission No.55, p.6 (Medibank Private).
[13] Submission No.25, pp.35-6 (APHA).
[14] s.132A, National Health Act 1953.
[15] Submission No.45, p.6 (DHFS).
[16] Supplementary information, AMA, 2 August
1996, p.1.
[17] Transcript of Evidence, p.5 (AMA).
[18] Transcript of Evidence, p.231 (DHFS).
[19] Transcript of Evidence, p.232 (DHFS).
[20] Submission No.45, p.6 (DHFS).
[21] Submission No.26, p.2 (CHF).
[22] Submission No.2, pp.34-5 (AHIA).
[23] Submission No.51, p.3 (Medibank Private).
[24] Submission No.39, p.2 (HCoA).
[25] Submission No.25, p.19 (APHA).
[26] Submission No.39, p.2 (HCoA).
[27] Supplementary information, AMA, 2 August
1996, Attached paper Aggregate Billing Industry Position, p.3.
[28] s. 82ZRC, National Health Act 1953.
[29] Supplementary information, PHICC, 13 August
1996, p.1.
[30] Supplementary information, PHICC, 13 August
1996, pp. 7-8, 10-11.
[31] Submission No.32, p.17 (PHICC).
[32] Submission No.25, p.14 (APHA).
[33] Submission No.32, pp. 14-18, (PHICC) and
Supplementary information, PHICC, 13 August 1996, passim.
[34] Transcript of Evidence, p.231 (DHFS).
[35] Submission No.26, p.2 (CHF).
[36] Submission No.20, p.5 (HIRMAA).
[37] Submission No.51, p.23 (Medibank Private).
[38] Supplementary information, PHICC, 5 August
1996, provides a breakdown by subject of these complaints and inquiries.
[39] For discussion on complaints, see Submission
No.32 pp.6-11 (PHICC) and Transcript of Evidence, pp.114-16 (PHICC).
[40] Submission No.45, p.4 (DHFS).
[41] Submission No.5, p.4 (PHIAC).
[42] Submission No.26, p.2 (CHF).
[43] Submission No.11, p.6 (MBF).
[44] Supplementary information, DHFS, 8 August
1996, Q.3.
[45] Transcript of Evidence, p.211 (PHIAC).
[46] Submission No.60, p.3 (Privacy Commissioner).
[47] Submission No.44, p.12 (ADF).
[48] Submission No.5, p.3 (PHIAC).
[49] Transcript of Evidence, pp.208-11
(PHIAC).
[50] Submission No.26, p.2 (CHF).
[51] Submission No.32, p.11 (PHICC).
[52] Submission No.25, p.17 (APHA).
[53] Submission No.51, p.23 (Medibank Private).
[54] Submission No.5, p.4 (PHIAC).
[55] `Do you need health insurance?' and `Choosing
a health fund', Choice, July 1996, pp.14-30.
[56] Submission No.25, p.17 (APHA).
[57] Submission No.26, p.2 (CHF).
[58] Submission No.25, p.17 (APHA).
[59] Submission No.45, pp.1-2 (DHFS).
[60] Submission No.5, p.5 (PHIAC).
[61] Submission No.25, p.33 (APHA). HCoA provided
a similar argument - see Submission No.39, p.5 (HCoA).
[62] Submission No.5, p.5 (PHIAC).
[63] Submission No.2, p.29 (AHIA).
[64] Submission No.20, p.8 (HIRMAA) and Submission
No.51, p.26 (Medibank Private).
[65] Senate Community Affairs Legislation Committee,
Report on the Health Legislation (Private Health Insurance Reform) Amendment
Bill 1994, March 1995, pp.10-11.
[66] See Submission No.25, pp.30-31 (APHA),
Submission No.29, p.5 (ACHCA) and Submission No.58, p.5 (ADSA).
[67] Submission No.58, p.5 (ADSA).
[68] Submission No.25, p.31 (APHA), Submission
No.29, p.6 (ACHCA) and Submission No.39, p.4 (HCoA).
[69] Submission No.51, p.27 (Medibank Private).
[70] Submission No.2, p.29 (AHIA).
[71] Submission No.11, p.16 (MBF).
[72] Submission No.60, p.2 (Privacy Commissioner).
[73] Submission No.58, p.5 (ADSA).
[74] Submission No.12, pp.1-2 (Dr Shirley Prager).
See also Transcript of Evidence, p.34 (COPS) and p.55 (ADF).
[75] Supplementary information, AHIA, 6 August
1996, pp.1-2.
[76] Submission No.45, p.7 (DHFS), Submission
No.25, p.29 (APHA).
[77] Submission No.25, p.30 (APHA).
[78] Submission No.25, p.30 (APHA).
[79] Submission No.2, pp.29-30 (AHIA).