Medibank says reform of device pricing 'essential'

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Medibank's head of healthcare and strategy Dr Andrew Wilson says reform of medical device pricing is 'essential'.

Dr Wilson said every Australian with private health insurance pays for medical devices, directly or indirectly, because the cost contributes to premiums.

"The Federal Government made some changes to how prostheses are priced in 2017, and since then, Medibank has been able to pass on more than $80 million in savings to our customers," said Dr Wilson.

"This year, we expect to be able to deliver another $20 million in savings to our customers due to these reforms. However, device manufacturers continue to add devices to the list, and growth in the utilisation of prostheses has consistently exceeded the growth in procedure volume."

He said Medibank has passed on the savings generated from the medical device sector's agreement with the federal government. However, Dr Wilson said he believes they "continued to game the system."

"Lower prostheses prices for private patients (prices that are in line with what is paid in the public system) mean lower private health insurance premium increases - it’s that simple," he said.

The federal government has been consulting on a round of potential new reforms to the pricing of medical devices with private insurers, including Medibank, pushing for the adoption of a system based on episodic diagnosis-related groups (DRG).

This proposal, which is thought to currently have support within the government, would involve the independent setting of reimbursement amounts based on the 'bundled' prosthesis component of a procedure. 

The Medical Technology Association of Australia has argued these reforms will restrict access to new technologies.

Dr Wilson said further reform is "essential".

"Every $200 million in prostheses benefit reductions will decrease private health insurance premiums by one per cent," he said.

"The DRG model works well in the public system, but some claim this will limit consumer choice and will result in poorer outcomes than the current system," said Dr Wilson.

"These claims are not about consumers and not about clinical autonomy - they’re about the medical device manufacturers protecting their profits.

"Choice of device is, and should remain, the domain of clinicians. And the reality is that consumers are rarely, if ever, informed which specific devices/brands will be used in a procedure and what the clinical outcomes of those devices are. We strongly support clinical autonomy.

"Some say prostheses reform will increase out-of-pocket costs for consumers. But why should this happen if prices reflect those in the public system? The answer, of course, is because device manufacturers want to maintain their profits and they are looking for a way to charge consumers to do so. Some devices cost five times more in the private system compared to the public system."

Dr Wilson said the new model will not allow consumers to be charged an out-of-pocket cost.

"This is because any prosthetic device would be paid for by the private health insurer as part of a contract with the hospital, and these contracts ensure patients cannot be charged an out-of-pocket for those costs," he said, adding, "And rest assured, there would be allowances for complex cases or new technology, to ensure patients can access the prostheses they need. So any argument that patients would be worse off is misleading."