Consultation to begin on a proposed shake-up of medical device payments

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The Department of Health has launched a stakeholder consultation process on options for the reform to the Prostheses List, including the adoption of health technology assessment, cost-recovery and new funding arrangements for low-cost high-usage items.

The process has been launched following the release of two reports. These reports are the Options for a Revised Framework for Setting and Reviewing Benefits for the Prostheses List and the Review of the General Miscellaneous Category of the Prostheses List.

"The purpose of their release is to facilitate more complete consultations on potential reform options," said the Department of Health in a circular.

It said, "This consultation process builds on consultation over recent years through the framework of the government’s 2017 agreement with the Medical Technology Association of Australia (MTAA) and stakeholder discussions over recent months."

The first paper was prepared based on discussions by the Prostheses List Revised Benefit Setting and Review Framework Industry Working Group (BSRIWG).

The BSRIWG is comprised of representatives of consumer organisations, private hospitals, private health insurers, medical device manufacturers, reimbursement consultants, the Independent Hospital Pricing Authority and the Commonwealth Department of Health. It is chaired by Emeritus Professor Terry Campbell AM, the Chair of the Prostheses List Advisory Committee.

The paper includes three options for the reform of the Prostheses List (PL), starting with retention of current arrangements but with the extension of the criteria to allow the listing of non-implanted devices with a therapeutic purpose, but with fewer listed items. 

This option could include the full adoption of health technology assessment (HTA) with medical device companies subject to cost-recovery arrangements.

Under the second option, which will also include a form of HTA, devices would be included and grouped on the PL according to therapeutic procedure.

"PL benefits would be paid for the collection of medical devices and device components used during a single procedure on an individual patient, rather than for individual devices or device components (e.g. all of the orthopaedic devices and instruments required to repair a femur, or an implanted cardiac device with all of its associated leads, battery etc)," says the options paper.

The third option is based on diagnosis-related groups (DRGs). Prostheses would be grouped into existing and possibly new private sector DRGs and a private health insurance benefit set for the prostheses component of each DRG.

The second consultation paper, Review of the General Miscellaneous Category of the Prostheses List, has been developed by EY and also proposes significant changes, including the potential removal of low-cost high-usage items from the PL.

This paper says these items, which include those involved with the administration of drugs, bleeding control and wound repair, could be funded through case-based or bundled payments, such as DRGs.

The payments could be negotiated directly by private health insurers and hospitals.

The Australian Private Hospitals Association (APHA) welcomed the new papers and planned stakeholder consultation.

The aim should be to make the system work more effectively for patients, said CEO Michael Roff

“We welcome the opportunity to be part of these discussions, which to date have not fully involved private hospitals, consumers or the medical profession. Considering doctors determine which prostheses they use in surgery, particularly in the private setting, it is important this anomaly is corrected.

“APHA is supportive of reform of the Prostheses List, but reform developed without consulting all stakeholders is dangerous and could have a number of unintended consequences for patients.”

Mr Roff said, “Neither report released today has been able to reach definitive conclusions. Both acknowledge the significant risk of unintended consequences that could limit access to care, increase costs and cost-shift from insurers to patients. There is little gain from prostheses list changes if health insurance premium growth slows momentarily, only for out-of-pocket costs for patients to increase.”

Mr Roff said reform of the Prostheses List should be used to make new technologies available to patients.

“We want to ensure sustainable access to technologies for patients without having out-of-pocket costs. Australia has a first-class health system and patients should have the benefit of first-class surgical advancements.

“We look forward to continuing our discussions with the Federal Government to find a workable solution benefiting patients, not just private health insurers,” added Mr Roff.