The Australian Competition and Consumer Commission has raised a number of concerns about the private health sector in its Report to the Senate on anti-competitive and other practices by health funds and providers in relation to private health insurance*, tabled today.
"The report outlines the ACCC's extensive activities in relation to the private health sector during the last financial year, and also raises concerns about some of the current practices in the sector", ACCC Chairman, Mr Graeme Samuel, said.
Exclusions and restrictions
One concern raised with the ACCC was that consumers may not be receiving adequate information about the restrictions and exclusions applicable to particular health insurance products.
"It's very important that health funds provide clear, straightforward information about their products, particularly in relation to those products that are subject to exclusions and restrictions. Providing this information helps to minimise problems for consumers who are unsure about the nature and extent of their coverage, and also reduces the likelihood of a dispute between members and health funds".
Key features guides
A number of funds queried the usefulness to consumers of 'key features' guides, which aim to outline the key features of the products offered by a particular health fund so that consumers are able to compare the products available more easily.
"It's important that consumers are provided with information that allows them to make comparisons of different funds and products. However, in preparing this and previous reports, the ACCC received a number of adverse comments about the efficacy of key features guides. If it is the case that these guides are not an effective means of providing information to consumers, the ACCC would support the development of an alternative mechanism so that this information can be delivered to consumers more effectively".
Health insurance intermediaries
During the period, the ACCC became concerned about the conduct of some health insurance intermediaries. Intermediaries provide advice to consumers about health insurance products.
"Some intermediaries represent to consumers that they are 'independent' or provide 'impartial' advice. It may be, however, that the advice provided by an intermediary is confined only to those health funds that provide a financial benefit to the intermediary. As a result, consumers may believe that an intermediary reviews the policies of every health fund when in fact it reviews only the policies of a very small number of funds. This may raise concerns under the consumer protection provisions of the Trade Practices Act, particularly those prohibiting misleading or deceptive conduct.
"The ACCC has written to health insurance intermediaries, their industry association, and health funds raising these concerns and will continue to monitor the activities of intermediaries in this regard".
Portability
Portability of health fund membership - that is, the ability of members to transfer between funds without incurring penalty - was raised as a significant issue by a number of stakeholders this year.
"The ACCC supports the principle of portability and considers that it is an essential feature of the private health insurance system", Mr Samuel said. "However, some stakeholders have indicated that the practical operation of portability may be problematic in some circumstances.
"For example, in one instance, members of a fund that was having a contractual dispute with a hospital began transferring to other funds. Where this occurs, smaller funds may find it hard to accommodate a large number of transferring members who may already be booked-in for hospital treatments, and may try to impose restrictions on transferring members to address this problem.
"The ACCC would be concerned if a situation such as this were to cause detriment to health funds members. As a result, the ACCC supports the Private Health Insurance Ombudsman’s recent efforts to resolve this issue with the cooperation of the industry".
Contracting between hospitals and health funds
As in previous years, a number of stakeholders (both funds and hospitals) expressed concern at ongoing difficulties in the contracting environment, including:
- delays in the commencement of negotiations
- inappropriate negotiating tactics (such as the use of publicity), and
- 'take it or leave it' offers taking the place of genuine negotiation.
"The ACCC understands that relativities in bargaining power may affect the outcome of HPPA negotiations. This is common in commercial dealings in all sectors and is not, in itself, unlawful.
"However, in some circumstances, the outcome of negotiations characterised by differences in bargaining power may support an inference that the Act has been breached, particularly where no legitimate commercial reason for certain outcomes is apparent. Parties who are concerned about this situation are welcome to contact the ACCC", Mr Samuel said.
Copies of this report will be available from the ACCC's website, or from Publications Unit on (02) 6243 1143.