Surgeons should brace for increased scrutiny after nib said it would be the second player in the $21 billion private health insurance sector to expose the wide variation in price charged for surgeries, leading to shock extra costs for patients.
The listed health fund will pressure doctors to reduce excessive fees and help prevent shock out-of-pocket costs for its policyholders, by publishing a range of information on its website. Alongside the amount Medicare covers for surgeries, such as a knee replacement or removal of the prostate, nib will publish its standard “no gap” rate, as well as the rate the doctors lobby recommends its members charge for those procedures.
The move follows a similar initiative by Bupa, expected to start in late March, to expose fee-gouging surgeons.
“Greater transparency will be good for consumers, particularly around avoiding out-of-pocket costs, and it puts great pressure on doctors to charge prices that are reasonable,” nib managing director Mark Fitzgibbon said.
Bupa, which is the second-largest player behind Medibank Private, controls about 28 per cent of the market, and nib commands about 8 per cent.
Analysis of nib’s 2014-15 claims data, obtained exclusively by Fairfax Media, reveals huge variation in fees paid to medical specialists, with top-end prices often double or three times the relatively high fee recommended by the Australian Medical Association, which lobbies for doctors.
Through Medicare the government pays a rebate of 75 per cent of the MBS price. The private health insurer will cover the other 25 per cent, or in nib’s case, the full amount above the MBS price up to its “MediGap” rate.
If a surgeon charges above nib’s no-gap rate, the individual pays the entire cost above the MBS price.
According to nib’s data, specialist fees for a prostatectomy (surgical removal of the prostate) ranged from $2,000 to $10,000. The Medicare Benefits Schedule price for this procedure is $1935, nib’s MediGap (no gap) offer is $2941 and the AMA’s recommended fee is $4465.
The MBS fee for a knee replacement is $1318, nib’s no-gap rate is $2014 and the AMA’s recommended fee is $3690. In 2014-15 a cluster of surgeons was charging $4500 to $5500.
“We want GPs and consumers to be able to make a more informed decision choosing their specialists. Some surgeons were charging $6000 more than the AMA recommended price, which is a huge impost,” Mr Fitzgibbon said.
“Most specialist surgeons accept the MediGap price as fair and reasonable so we are talking about relatively few doctors, but those relatively few doctors who charge prices we believe are excessive are causing a fair bit of pain out there.”
Shock out-of-pocket costs are a key cause of customer anger in private health insurance and often leads to switching health funds, downgrading cover, or ditching private health cover altogether.
Fee data, including average fees and ranges, MediGap participation, and patient feedback by specialist, will be replicated on nib’s website “in the near future” for the benefit of nib members. The different fees charged by individual specialists will not be published.
The information will subsequently be made available to the broader public on the Whitecoat website.
Whitecoat, a nib initiative, allows consumers to search for healthcare professionals online and to read and write reviews of their experience.
The insurer will also be encouraging its members to ask their GPs for as much information as possible when referring to specialists.
Mr Fitzgibbon said that prior to his preventive colonoscopy, his doctor was able to provide only a list of surgeons he believed were good quality.
“He [the doctor] should have been able to show me his [the surgeon’s] volume, readmission rates, and infection rates. He should have been able to show me what other patients have said about them [the surgeons] and he should have been able to give me an indication of whether he would accept the MediGap price,” he said.
“We are starting to introduce some transparency around costs. We are starting to tackle these information asymmetries [between users and providers of healthcare].”
The move comes as health funds are due to resubmit their requested annual premium increases.
Health Minister Sussan Ley wrote to insurers last month asking them to trim their premium increases or provide reasons they could not go lower.
In response, health funds have demanded that Ms Ley crack down on the rising cost of care, which is putting upward pressure on premiums, prompting an accelerated federal review of medical devices pricing and regulation.
On Friday Ms Ley extended the deadline for revised premiums to Monday.