ACCC alleges anti-competitive boycott arrangement by regional obstetricians to stop 'No-Gap' billing

The Australian Competition and Consumer Commission has instituted proceedings against three specialist obstetricians who provide private in-hospital obstetrics services in Rockhampton alleging they agreed to boycott 'No-Gap' billing arrangements offered by a number of private health insurance funds.

The ACCC alleges Dr Mark Leyden, Dr Stephen Robson and Dr Paul Khoo made arrangements in December 2000 and January 2001 that none of them would provide private in-hospital obstetrics services to their patients on a 'No-Gap' billing basis.

The ACCC alleges that this amounted to an exclusionary provision (primary boycott) in breach of the Trade Practices Act 1974. The ACCC alleges it meant about 200 women in the Rockhampton region incurred an out-of-pocket-expense (gap) for private in-hospital obstetrics services that would have been covered by the patients' health funds but for the alleged arrangement. It is alleged that many rural/regional patients each paid up to about $700 more than they would have, if the alleged agreement had not existed.

The ACCC is seeking court orders including:

• declarations that the obstetricians contravened the Act and the Queensland Competition Code;reimbursement of the expense incurred by patients in meeting the gap between the fee charged by the obstetrician and the reimbursement by the health fund
• the publication of information notices in the local media
• injunctions restraining each obstetrician from engaging in such conduct in the future
• findings of fact
• costs.

Background

Health funds: In recent years there has been growing community awareness of the extent to which private health insurance leaves members with substantial expenses for private in-hospital medical treatment, known as the medical expense 'gap'. One reason for the existence of the gap is that funds were restricted by legislation to only pay benefits up to the fee prescribed in the Medicare Benefits Schedule (the Scheduled Fee) for medical services provided in-hospital and many practitioners charge in excess of the Scheduled Fee.

However, since 1995, funds have been able to pay benefits to members in excess of the Scheduled Fee for the provision of private in-hospital medical services, and thus cover the gap, where a negotiated agreement exists between:

• the practitioner and the fund

• the practitioner and a hospital, where the hospital has an agreement with the fund.

Initially, because of opposition of some doctors these agreements were in limited use. This issue was discussed in the ACCC's first report to the Senate on anti-competitive and other practices by health funds and providers. A form of such 'agreements' began to be developed with the introduction by AXA Health Fund of an 'EzyClaim' system which tended to be a transaction by transaction process providing practitioners with the freedom to opt in or out of a 'No-Gap' arrangement for each particular patient. Under these agreements the practitioner accepts the fund negotiated benefit for all episodes of care provided to the fund's member. Participating practitioners bill the health fund directly, by-passing the member.

In addition to the benefits provided under 'No-Gap' Arrangements, the Health Legislation (Gap Cover Schemes) Act 2000, which came into effect in August 2000, has enabled funds to cover the gap without the need for an agreement between funds and practitioners. Under Gap Cover Schemes there is no requirement for a practitioner to enter into a contract with a fund. If a practitioner wishes to provide 'No-Gap' billing to their patient for a particular medical procedure under a Gap Cover Scheme then the practitioner must charge at the rate provided for in the patient's fund's schedule of fees. Many funds which have such schemes offer participating doctors the option to bill the patient directly. A key aspect of developing and enacting this legislation was the Commonwealth Parliament's acknowledgment and concern for out of pocket expenses incurred by patients leading to the public/consumer demand for effective 'No-Gap' arrangements.

Primary boycott: The Trade Practices Act 1974 and the State Competition Codes prohibit persons who are in competition with one another from collectively agreeing to prevent, restrict or limit the supply or acquisition of goods or services to or from particular persons or classes of people.