APRA update confirms the immediate impact of surgery shutdown

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Australia's private health insurers paid out $21.75 billion in benefits over the twelve months to the end of March 2020, according to the latest statistics from the prudential regulator.

The quarterly statistical update from the Australian Prudential Regulation Authority has also confirmed the immediate impact of the COVID-19 pandemic and the shutdown of elective surgery that is now in the process of being restarted.

The number of private hospital episodes fell by 3.7 per during the first three months of 2020 and 6.9 per cent for episodes in day hospital facilities. Benefits for general or 'extras' cover fell by 4.4 per cent compared with the final three months of 2020.

Premium revenue compared to the final three months of 2019 was down 1.59 per cent with net profit after tax falling over $300 million. There was almost no change in the number of Australians covered by private health insurance.

The statistical update triggered further discussion on prostheses with a decline in related services and benefits in the first three months of 2020 compared to the final three months of 2019.

"Total benefits paid for prostheses decreased by 10.9% in the March quarter compared to the December quarter 2019," said the Medical Technology Association of Australia in a statement.

“Our Agreement with the Commonwealth is delivering real and tangible outcomes as we continue to work to hand-in-glove with federal and state governments to supply critical medical equipment,” said Ian Burgess, MTAA CEO.

Private Healthcare Australia pointed to the year-on-year increase in prostheses services and benefits. "The annual growth in benefits paid for prostheses (medical devices) (5.8%) and prostheses utilisation (7.5%) have continued to increase out of proportion with growth in hospital claims (0.5%)," it said.

Total benefits paid by private health insurers rose by 3.7 per cent for the year to the end of March to $21.75 billion.

According to Private Healthcare Australia CEO Dr Rachel David, “We expect APRA’s next quarterly report, reflecting data from April and May, to show some reduction in hospital claims, however with the lifting of the ban on elective surgery, this will be followed by a surge in claims in coming months.

“Estimates of huge ‘windfall’ gains by some so-called experts have proven to be excessive. Due to the success of the Australian Government’s COVID-19 strategy, we saw an earlier than expected recovery from a short period of service reduction and elective surgery for most urgent and semi-urgent cases has already resumed, and cases rebooked.

“Health funds gave a commitment that any additional funds resulting from COVID-19 related restrictions causing cancellation of some elective surgery and some allied health services would be returned to members.

“Compensation to members can only be calculated when funds have certainty about additional savings which will be late June at the earliest. In addition, health funds must remain well capitalised and prudentially sound throughout and beyond the COVID-19 crisis to fund the backlog of elective surgeries and allied health benefits.”