The Australian Competition and Consumer Commission continues to be vigilant in protecting the rights of consumers using health services, ACCC Chairman, Professor Allan Fels, said today.
The fourth Report to the Australian Senate* on anti-competitive and other practices by health funds and providers in relation to private health insurance was tabled yesterday in the Senate.
The report outlines ACCC enforcement action and a number of the ACCC's concerns about the private health sector including:
- the lack of accuracy and completeness of information provided by funds to consumers about health insurance products
- the lack of signatories in the private hospital/day hospital facility sector to the industry Code of Practice which addresses contract negotiation processes with health funds
- doctors failing to make consumers aware of expected out-of-pocket costs for medical services
- the need for agents who are intermediaries between consumers and health funds to more accurately convey information to consumers about health insurance policies.
Information concerns
"The ACCC is disappointed with the accuracy and completeness of health insurance information provided to consumers by some health funds", Professor Fels said.
"It appears that many health funds do not pay sufficient attention to their obligations under the Trade Practices Act 1974 when making representations about health insurance products to their members or future members", Professor Fels said.
The report outlines enforcement action taken since 1 July 2001 by the ACCC against two health funds for misleading and deceptive conduct over representations made to consumers. The ACCC continues to receive complaints from consumers about information given members or prospective members.
The ACCC acknowledges the work done by the private health industry to prepare and circulate information on matters such as the pre-existing ailment rule and guides to enable easier comparison between health insurance products, but found that not all information conveyed to consumers is clear and accurate.
Codes of practice
The ACCC is concerned with the lack of signatories amongst private hospitals and day hospital facilities to the industry Code of Practice that addresses contract negotiations between health funds and hospitals.
"Whilst the Code is voluntary, it addresses many of the concerns raised with the ACCC by private hospitals and day hospital facilities about their contract negotiations with health funds.
"In preparing the report, the ACCC became aware of the low number of hospitals that have signed to the Code. This is surprising especially given many hospital representatives called for the development of such a Code. The number of signatories is limited to about 50 per cent of private hospitals and 20 per cent of day hospital facilities where these facilities treat privately insured patients.
"These numbers need to be considered against the large number of health funds that have signed the Code: 43 of the 44 funds".
The ACCC does not support the claim by some stakeholders within the hospital sector that they abide by the Code provisions whilst not being signatories to the Code.
"This position fails to offer certainty to funds, and ultimately to consumers, regarding the standard of conduct that is acceptable in contract negotiations.
"This approach does not provide health funds with a clear course of action if the process fails, nor can any Code sanctions be easily applied and enforced by the Code Administration Committee".
The ACCC urges private hospitals and day hospital facilities that provide health insurance-rebatable services to consider the Code's merits and to take part in the upcoming industry review of the Code.
Informed consent
"From the information available to the ACCC, it is apparent that doctors are failing to make consumers aware of expected out-of-pocket costs for medical services", Professor Fels said.
The ACCC believes that medical practitioners are free to charge whatever fee they consider appropriate as long as there is no agreement amongst competing independent practitioners in different medical clinics as to the nature of that fee.
However, from the information available to the ACCC, many health funds report a steady increase in the number of medical services provided under a ‘No-Gap’ billing arrangement.
"The ACCC believes that this trend clearly demonstrates that health consumers support this service arrangement", Professor Fels said. "However, where consumer out-of-pocket costs for medical services do exist, the ACCC believes that doctors have an ethical duty to disclose these costs, where practicable".
The ACCC believes that silence in relation to fees payable may breach the misleading and deceptive conduct provisions of the Act.
"The ACCC would consider the possibility of taking action against any medical practitioner who failed to provide consumers with information, where practicable, regarding the price of services, in advance of the services being rendered, where this amounted to misleading and deceptive conduct.
"As outlined in the report, the ACCC keenly awaits the outcomes of the consultation process with stakeholders conducted by the Department of Health and Ageing and the Treasury in which there will be recommendations as to improving compliance amongst doctors regarding informed financial consent processes.
"The ACCC will be interested to see whether these recommendations bring about significant changes in informed financial consent compliance amongst medical practitioners.
"Whilst the ACCC supports effective self-regulation, the ACCC has indicated to the Department of Health and Ageing and the Treasury that it would support a mandatory Code of Conduct about informed financial consent if self-regulatory processes failed.
"Of course any recommendations promulgated as a result of this consultation process does not exempt doctors from action under the Trade Practices Act in relation to misleading and deceptive conduct", Professor Fels said.
Agent investigated
The ACCC is investigating the conduct of an agent who promotes selected health insurance policies.
"There is an obvious need for agents who have an intermediary role between consumers and health funds to accurately convey information to consumers about health insurance policies.
"In the report, the ACCC indicates that these agents have a direct role in conveying information to consumers regarding health insurance products and services and as such, need to be aware of conduct which is prohibited under the Act including misleading and deceptive conduct.
"Health funds need to be aware that they are responsible for the conduct of any agent for health insurance policies where this relates to conduct prohibited under the Act.
"Additionally, the Act may also apply directly to these agents".
The ACCC urges health funds to take the necessary steps to ensure that their agents are adequately trained regarding the health insurance products they are promoting and that they are aware of their obligations under the Act.
*On 25 March 1999 the Australian Senate passed an order requiring the ACCC to provide a report at the end of every six month period “containing an assessment of any anti-competitive or other practices by health funds or providers which reduce the extent of health cover for consumers and increase their risk of out of pocket and other medical expenses.
This report is the fourth prepared by the ACCC in compliance with the Senate order, covering the six-month reporting period from 1 July 2001 to 31 December 2001. It was tabled in the Senate yesterday.