Dispute over prostheses pricing evidence

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Private insurers want urgent action on prostheses pricing in time for next year's 1 April premium increase. At the same time, device makers have challenged data purporting to show significantly higher prices for prostheses in private hospitals compared to public hospitals.

Price cuts earlier this year to a number of prostheses categories reduced costs by over $80 million. Further reforms are anticipated, with talks continuing across the relevant stakeholder groups as insurers raise concerns over device makers circumventing the previous price cuts, and health minister Greg Hunt is expected to announce further changes in the coming months.

One of Mr Hunt's advisers, Alex Caroly, is meeting with the medical device sector later this week to provide an update on discussions towards an agreement with government.

The Medical Technology Association of Australia (MTAA) has rejected data from the Independent Hospital Pricing Authority (IHPA) that suggests a significant premium for prostheses in the private system compared to the public hospital system.

The IHPA data collects information on the price of several different types of prostheses used for a range of procedures and reports an average prosthesis price.

According to MTAA, the average price is influenced by the number and different types of prostheses used for the same procedure and these will vary with the complexity of the surgical case, specific patient requirements and the age of the patient. 

"Without adjusting for these factors, the use of the IHPA data to determine price adjustments to prostheses on the Prostheses List would be flawed and would lead to significant consequences for privately insured patients," it says.

According to MTAA CEO, Ian Burgess, “MTAA recognises the importance of the need for PL reform and increased transparency but it needs to be based on real world evidence.

“MTAA is working with Government to deliver reforms which improve patients access to the best medical devices in the private system.

“The industry has also undertaken a significant data collection exercise which captures approximately 80% of the total PL benefits paid during 2015-16 (based on APRA private health insurance expenditure data) and 70% of all billing codes on the February 2017 PL.

“The analysis shows what MTAA has been saying all along, the scope for reductions to PL benefit levels is not as large as some have suggested and to use the IHPA data to determine cuts would be irresponsible and result in significant consequences for Australian patients and the healthcare sector.”