Dispute over volume discounts

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Private health insurers have urged the federal government to act while medical device companies say volume-discounts are normal commercial arrangements that apply across many sectors.

According to Private Healthcare Australia, "Revelations by the ABC 7.30 Report yesterday about secret rebates paid against cardiac device benefits must be swiftly dealt with by the Federal Government."

The story reported on rebates paid by medical device companies under commercial arrangements with private hospital groups.

"This is a clear indication medical device prices in the private sector are still overvalued, putting upward pressure on health fund premiums for all health fund members, and exposing patients to the risk of over-servicing and unsafe care, as the incentives are wrong," said the CEO of Private Healthcare Australia Dr Rachel David.

"People seem to forget the medical device benefit paid for Prostheses List implants comes from money which belongs to health fund members. Not one cent of this should be paid out for anything other than direct patient care. Under the current system, it seems nameless third parties are still accessing these funds in the form of undisclosed deals and kickbacks" said Dr David.

"Health fund premium increases are the major reason people are reconsidering their commitment to private health insurance. Forcing health fund members to pay more than is necessary for common medical devices like pacemakers will ultimately damage the whole private health sector, including hospitals, as the system becomes less affordable"

However, according to the Medical Technology Association of Australia, the industry has already delivered $1.4 billion in lower private health insurance premiums through cuts in prices paid for medical devices. 

“These cuts have removed on an aggregate level the total difference in pricing of medical devices between the public and private hospital systems," said MTAA CEO Ian Burgess.

“MTAA is working constructively through our Agreement with Government to deliver reforms of the Prostheses List to make it more transparent while improving patient access to medical devices. As a result of our Agreement, these reforms are being reviewed by a Government-established Industry Working Group that includes consumers, private health insurers and private hospitals.

"If there was any action to constrain surgeon choice, whether it be a private hospital or private health insurer, we oppose that.

"In relation to volume-discounts these are normal commercial arrangements that can apply across many markets in our economy," he said. “The ACCC several years ago considered this issue and was of the opinion that this conduct would not raise concerns under competition law. That is, the Commission believes these commercial arrangements fall outside the competition law.”