Bill shock undermining the sector, say health funds

Have you ever had a medical procedure in hospital? Then you may have experienced ‘bill shock’, where unexpected (and often excessive) charges are added to your bill as you’re leaving to start your recovery.

Hang on, wasn’t your private health insurance meant to cover that? Why do you even have the policy then?

It turns out that Australia’s private health insurance sector agrees with that sentiment. In a new research paper, health insurance industry group Private Healthcare Australia (PHA) calls on the federal government to enact legislation to prevent doctors from ‘surprise billing’ or hiding the true cost of procedures until after they’ve been done. PHA says these practices undermine the value consumers get from their health insurance policies.

According to the paper, there are four main problem areas:

  • split billing, where the full cost of the service is not disclosed to various payers
  • high out-of-pocket charges not disclosed beforehand
  • charges that are related to the service, but not described as part of the service (for example, ‘administrative fees’)
  • where the scope of service changed during the service (for example, where a complication during surgery required an unexpected intervention).

Read: Why do you have health insurance?

The PHA wants much greater scrutiny of split billing, where a doctor charges Medicare, the private health fund and the patient separately but does not inform the other parties of the charges. This effectively creates a situation where the same work is paid for three times, it says.

“It’s a simple consumer reform which echoes things that happen throughout the economy,” PHA director of policy and research Ben Harris told The Australian.

“You don’t go to a shop and expect to pay three different bills, you don’t walk up to a counter and get surprised by what something costs at the fruit shop. There’s no reason why doctors should be treated differently.”

The Australian Competition and Consumer Commission (ACCC) says that even if the total cost of a service is to be broken up, the full amount must be conveyed to the customer.

“If you promote a price that is only part of the total price, the total price must also be displayed at least as prominently as the partial price,” ACCC guidelines say.

Read: Private health insurance exodus

But the Australian Medical Association (AMA) cautions against making any penalties too extreme and says the responsibility for getting an accurate quote before surgery falls on the patient.

“I’m not sure that legislation and criminal charges are the way to go in this area,” AMA state president (SA) Dr Michelle Atchison told ABC Radio Adelaide.

“My view, and the AMA’s view, would be that patient education is really where the money is at the moment. So, you as a patient going in to have a service, you need to know that you should ask, ‘What’s the cost going to be, doctor?'”

What do the AMA’s own guidelines say about out-of-pocket costs?

“If a medical practitioner has signed a contract with a private health insurer, the billing requirements must be adhered to. Circumventing contractual arrangements by issuing a second, separate bill for a single course of treatment is inappropriate,” the guidelines read.

Read: Signs you’re missing out on a better deal on your health insurance

The PHA also has the support of health industry consumer groups, which echo the view that surprise medical costs severely undermine the value of insurance.

“At the very least, consumers should receive a single, detailed quote covering all components of their care beforehand,” says Consumers Health Forum chief executive Leanne Wells.

“The surgeon or leading doctor should take responsibility for providing the patient with this information and be required to adhere to informed financial consent guidelines adopted as a national standard. To help make it clear that there may be additional costs if there are complications, these should be routinely explained to consumers in the single quote.

“Out-of-pocket costs and ‘bill shock’ continue to erode the value of private health insurance. Changed practices to support consumers to do this are long overdue. We support the PHA’s recommendations as consumer protection measures worthy of exploration.”

Have you experienced bill shock after a medical procedure? Has that almost become ‘normal’? Do you still have your private health cover? Let us know in the comments section below.

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Brad Lockyer
Brad Lockyer
Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.
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