Private health insurers and medtech have locked horns over device pricing.
The prosthesis list is getting a makeover.
The two main industry stakeholders, Private Healthcare Australia and the Medical Technology Association of Australia, agree that this is just what the doctor ordered.
But their views diverge from here.
PHA argues that Australian consumers are paying more while the medical device companies pocket excessive profits; that some devices are being used inappropriately; and that a more competitive pricing approach is needed.
Meanwhile, the MTAA says the list “is currently under threat by insurers who want a different system – one which would allow them to refuse to fund medical devices”.
The prostheses list changes were promised in the May budget of this year.
Six months on, the details of what exactly that reform will look like are unclear, other than that the list will remain but be supported by the Independent Hospital Pricing Authority instead of the Commonwealth.
The prostheses list, which is currently managed by the Department of Health, sets prices for the more than 11,000 implanted prostheses, human tissue items and other medical devices used in Australia.
Private health funds are required to cover the list price – insurers do not have input over which specific device the patient or their physician chooses, and must pay the set amount “regardless of quality, efficacy, efficiency or safety”.
PHA CEO Dr Rachel David told The Medical Republic that there was no desire to limit patient choice or profit off the prostheses list reforms.
“There’s no proposal either from the Health Department or from health funds to reduce the number of medical devices available in Australia: that’s just simply wrong at every level,” she said.
“What we’re about is Australians paying a fair price for medical technology, relative to other countries in the world and the public hospital system.”
At the MTAA, which launched a campaign last week under the heading “When insurers choose, patients lose”, CEO Ian Burgess had a different take.
“Our main focus is to ensure that private patients can continue to access medical devices and technologies recommended by their doctors, without facing additional out-of-pocket costs,” he told TMR.
According to Dr David and the PHA, commonly used generic medical devices on the current prostheses list cost 30% to 100% more than elsewhere in the world.
“The MTAA is an association which is for a number of medical technology companies, not one of which manufactures in Australia,” Dr David said.
Because of the markup available in Australia, she said, medical device manufacturers had a vested interest in keeping the status quo.
“They’ve all got used to this huge income they’ve been getting out of Australia for because of these inflated prices, and they’re just fighting to protect their own interests and protect the goose that laid the golden egg,” said Dr David.
Another cornerstone of the prostheses list reforms, however, was regrouping the items on the list to “better align devices with similar intended use”.
“There’ll be a number of other measures to ensure quality and safety at the patient level,” Dr David said.
“One of those is a tightening up of the rules around what devices can be used for.
“If you have a TGA indication for one use it’s not permissible to go in and use the item for something else.”
Dr David cited pelvic mesh, which she said was initially designed for hernia repairs in men, as a reason to introduce these regulations.
Mr Burgess said the price comparison across countries was not comparing like with like, and that prices on the prostheses list had been steadily trending downward over the past several years.
“Insurers have been making simplistic comparisons with overseas markets [in terms of pricing],” he said.
“We need to make sure we compare apples with apples, and health systems can be very different: there can be a number of comparisons that insurers make with systems that don’t have the same private-public dual system Australia has.
“They make comparisons with private markets that have a much higher out-of-pocket payment for that device.”
Despite the fact that the two groups are seemingly at odds, the MTAA’s proposed solution – bringing the prostheses list in line with public hospital prices – is not dissimilar to PHA’s vision of re-establishing benchmark prices.
“The public system is a tender-driven, procurement-based system with volume-price trade-offs, and the private system is predicated on choice,” Mr Burgess said.
“The pricing can’t be the same, but [the gap] can be narrowed and referencing that competitive market in the public system will do that.
“That’s the mechanism that would drive ongoing review of prostheses list benefit levels and reductions where there are gaps between private and public.”
Dr Anurag Sharma, a senior health economics lecturer, said the debate appeared to be a “classic case” of the pot calling the kettle black.
“Insurance companies are trying to further squeeze more profits from cost reduction, and it is very unlikely that they will pass on these savings through reduced premiums,” he told TMR.
“As far as patient choice is concerned, patients mainly rely on doctors’ advice due to confusing and mostly unavailable information on medical devices, and these reforms will do nothing to change this scenario,” he said.
