The nation’s biggest private health insurer, Bupa, has caved in to criticism from the Commonwealth Ombudsman over hospital policies labelled as detrimental to its members.
Among the changes Bupa was contemplating introducing on 1 July 2018 was removing restricted benefits knee and hip replacements, cataract surgery and obesity-related procedures.
More than 720,000 policyholders would be affected by the restrictions. Around 70 per cent of YourLifeChoices members have private health insurance.
The insurer will now give policyholders until 1 September 2018 to upgrade their level of cover so that they can continue to receive the benefits they have previously come to expect. Policyholders who remain on the basic to mid cover will not receive payments for a raft of procedures.
In a case study (see below) the Ombudsman’s report detailed how a person with a basic or mid-level Bupa policy could receive up to $10,000 in rebates for having a hip replaced in a private hospital. But the changes Bupa wanted to introduce would see that patient having to pay for the entire $25,000 procedure, with no rebate available.
The Ombudsman also reported that Bupa had failed to communicate a number of changes it was introducing clearly. The insurer has since admitted it could have made its communication more transparent.
In a 21-page report, the Ombudsman listed several criticisms of Bupa’s move to save costs by reducing benefits for policyholders.
“The first is policy restrictions becoming exclusions on Bupa’s basic and mid-level hospital policies,” the Ombudsman’s report said.
“The second is alterations that Bupa has made to its medical gap scheme affecting non-contracted hospital and public hospital admissions.
“In summary, the change (to exclude rather than pay partial benefits towards a list of services on its basic and mid-level hospital policies) removes an entire benefit from payment, including the hospital accommodation, prosthesis, medical gaps and other benefits previously eligible for benefit.”
From next month, Bupa had also planned to stop paying doctors above the Medicare Benefit Schedule or the gap benefit for policyholders choosing to be private patients in public hospitals or attending non-contracted facilities.
It will now pay the gap benefit only if the doctor and hospital performing the procedure has a written agreement with Bupa.
The case before the Ombudsman was driven by an official complaint from Health Minister Greg Hunt and just weeks after the insurer increased premiums by 3.9 per cent.
As reported by The Australian late last week after the Ombudsman’s report was released, Bupa Australia chief executive Richard Bowden admitted the insurer “had come to realise its members valued having a choice of doctor in public hospitals, which in some areas may be the only available hospital”.
The insurer will now roll out a modified scheme for public hospitals from 1 August, according to information on its website.
“Members with a participating doctor face no greater than $500 in out-of-pocket costs for pre-booked admissions, while any emergency treatment will be fully covered.”
Hip replacement case study
A consumer holding Bupa basic or mid-level hospital cover is currently partially covered for treatment in a private hospital for a hip replacement.
Up until 1 July 2018 they are covered for the surgeon’s fee, anaesthetic, prosthesis, pathology and other medical services to the same level as a top level hospital cover. For hospital accommodation and theatre charges, they receive a restricted or “minimum default” benefit of between $277 and $394 per day. The consumer is required to pay the balance of the daily hospital accommodation charges and the theatre fee, which varies depending on the treatment and facility.
Under the current policy, a consumer would expect to receive approximately half the cost back on a $25,000 hip replacement surgery, because a standard hip prosthesis costs approximately $10,000 and Bupa also contributes a significant amount of the costs of accommodation and doctor charges.
From 1 July 2018 this consumer will receive no benefits from Bupa for hip replacement surgery. If the consumer proceeds with treatment in a private facility they will pay the entire costs of approximately $25,000.
If the consumer opts to use the public system they will face a waiting list of up to three years for hip replacement surgery depending on where they reside and their medical status. If they upgrade to a higher health insurance policy after 1 July 2018 to avoid the wait time in the public system, a 12-month waiting period will apply as it would be considered a pre-existing condition.
Were you made aware that previous health insurance benefits would no longer apply? Do you intend to upgrade your cover to obtain the same benefits you used to enjoy? Will you look around for a better private health insurance policy?