Hospital billing review abandoned

The states have scrapped plans to challenge claims public hospitals ‘harvest’ privately insured patients to offset costs.

South Australian Health Minister Stephen Wade. Picture: AAP

The states have abandoned their bid to challenge federal evidence of public hospitals “harvesting” privately insured patients, paving the way for federal Health Minister Greg Hunt to pursue long-­debated reforms.

Public hospitals bill more than $1.1 billion in treatment to health insurers each year, offsetting costs that would normally have to be covered under state budgets.

Pat­ients are even offered private rooms and other perks to be treated privately.

Mr Hunt and health funds have accused the states of cost-shifting and driving up insurance premiums for treatment public hospitals are otherwise obliged to give ­patients without charge.

The states insist the practice is legal, helps public hospitals recruit specialists, and gives health-fund members an option in areas where there is no private hospital.

At a Council of Australian Governments Health Council meeting in August the states argued ­that ­affordability issues in the private sector were to blame for the ­increasing number of members being treated in public hospitals. The meeting agreed to “commission an independent review of a range of factors regarding utilisation of private health insurance in public hospitals”.

South Australian Health Minister Stephen Wade at the time said there was a need to “get a better understanding” of the practice.

But with the review due to have been completed by this month, and sources suggesting it had been abandoned, Mr Wade’s spokeswoman would only say “the progress of the review is a matter for the COAG Health Council”.

A spokeswoman for Mr Hunt yesterday confirmed the review had not been undertaken, saying: “Significant progress on the drafting of the 2020-25 National Health Reform Agreement has meant that the states and territories, in consultation with the commonwealth, have determined that the review is no longer necessary.”

It was unclear yesterday what that progress entailed. A heads of agreement put forward by Mr Hunt a year ago, setting the par­ameters for negotiations, has yet to be signed by Queensland and Victoria. Those states are contesting public hospital funding reconciliations from previous years.

The heads of agreement ­requires governments to note the long-diminished Medicare principle that only public patients treated free of charge are prioritised according to clinical need. Concerns have been raised that public hospitals may fast-track private patients for financial reasons. Any reforms talks are likely to focus on whether patients should be asked their insurance status in emergency departments, as now occurs, and the rationale provided by hospital staff.

The heads of agreement seeks to “ensure the final agreement supports access to public hospital services by all patients on the basis of clinical need”.

Public hospitals have been spending or forgoing tens of millions of dollars a year through covering members’ excess and front-end-deductible payments so there are no gap fees.

However, they will be financially more exposed from April, when the maximum permitted ­excess will rise from $500 to $750 for singles, and from $1000 to $1500 for couples and families.

Government documents suggest “public hospitals that continue to waive the excess will face reduced revenue, and will therefore have a slightly reduced incentive to continue with their policies of encouraging patients to elect to be treated as private patients”.