Medibank software deal to keep experts honest on big gap fees

New arrangements between Medibank and Healthshare will factor in finances when discussing referrals.

Australia’s largest health fund will take a harder line on out-of-pocket expenses, signing a deal with a clinical software provider that will allow GPs to identify specialists who leave patients with significant gap fees.

Amid ongoing concern over rising costs, the new arrangement between Medibank and Healthshare will make financial considerations a factor in traditionally sacrosanct conversations between GPs and their patients about referrals.

Medibank chief customer offic­er David Koczkar said the software — accessible by 85 per cent of GPs — would identify specialists who had participated in the insur­er’s “no gap” or “known gap” schemes in the previous 12 months. “We talk to our customers all the time and we know that they have a very high desire to use the schemes so they have certainty over their out-of-pocket costs,” Mr Koczkar said.

He said patients, including Medibank members, were often referred to a specialist without knowing how much they charged. Discussing financial considerations with a specialist might be awkward and, if a patient wants to find a cheaper specialist, necessit­ate a return visit to the GP for a differen­t referral.

“The choice of specialist is a very big part of the proposition (in the private sector) and out-of-pocket costs remain a very big concern for our customers,” he said.

While there has been a slight decline in average out-of-pocket expenses for hospital patients, there is significant variation betwee­n specialties and providers, let alone between different types of insurance cover.

Medibank released data last month showing that for a knee replaceme­nt the average out-of-pocket charge to patients had increas­ed by 20 per cent in four years to $1278, while for childbirth the average charge to the patient increased 21 per cent to $484.

The second-largest insurer, Bupa, also has “no gap’’ and “known gap’’ schemes. Last year, it reported that 17 per cent of radical prostatectomies were fully covered but 28 per cent carried gap fees of $5001-$10,000 and 35 per cent gap fees of $2001-$5000.

There were also significant variations in the cost of breast reduc­tion surgery — 28.7 per cent of procedures had gap fees of $5001-$10,000 — and orthopedic surgery such as knee, hip and shoulder replace­ments. Health funds will share their cost burden with members and increase premiums by an average 4.84 per cent in April.

Negotiations with hospitals and clinicians are becoming more complicated, while the Private Health Ministerial Advisory Committee is working up reform options­ for Health Minister Greg Hunt. The committee has prioritised work on new Gold, Silver and Bronze categories, noting that out-of-pocket fees are a “major issue” in product design, and wants standard definitions to improve transparency. There are also plans to guarantee patients a single bill.

In December, the committee discussed reducing out-of-pocket costs, noting legal and political difficultie­s. The proportion of Australian­s with hospital cover continues to decline, while exclusions and excess payments rise.