Insurers seek urgent clarity on price increases

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Insurers are seeking urgent clarification from health minister Greg Hunt after the price of some prostheses increased in September.

The increases essentially reversed some price reductions negotiated as part of reforms announced earlier this year. The reductions to a number of prostheses categories, including for hip and knee replacements, were announced in early 2017. 

The reductions, with forecast savings of over $80 million, were designed to reduce upward pressure on premiums. As part of the negotiated agreement, insurers were required to estimate the impact of the reductions on premiums and committed to pass on their full impact in the form of a lower annual increase.

However, following recent publication by the Department of Health of an updated prostheses list, insurers have identified a number of changes indicating the reductions from earlier this year have either been reversed or are now even higher than before.

The sector has written to Mr Hunt seeking an urgent explanation with concern over the impact on negotiated savings and even an apparent lack of control over the prostheses list. 

It appears some prostheses from the hip and knee category, which were subject to a negotiated 7.5 per cent reduction, have been reclassified to the specialist orthopaedic category where no discount was applied.

The effect is a substantial increase in prices, in the case of one hip prosthesis as much as 250 per cent, with increases for some knee prosthesis in the range of 70-90 per cent.

Ongoing reform of prostheses is likely following the reductions earlier this year.

The 2016 Sansom Review recommended Prostheses List benefits be referenced against public sector prices, and international prices from comparable economies, and the introduction of a system of price disclosure.

Price disclosure, which has applied to the pricing of off-patent medicines reimbursed through the Pharmaceutical Benefits Scheme, is forecast to deliver savings in excess of $25 billion over the ten years to 2020.