There are concerns day surgeries and their ophthalmic patients may bear additional costs under newly proposed reforms of the Prostheses List (PL) that would see the removal of consumables involved in elective surgeries, such as intraocular fluids.
The Australian Society of Ophthalmologists (ASO) and other like-minded organisations are also concerned about the potential impact of “bundling” items for surgery, but the private health sector says it’s time to stop disadvantaging patients by cost splitting related items “to maximise revenue”.
The comments come in response to The Prostheses List Reforms Consultation Paper No.1: Prostheses List – Purpose Definitions and Scope, which is part of the Federal Government’s $22 million plan to improve the list over the next four years.
The PL was introduced in 1985 and has been reviewed multiple times. It is the way in which hospitals, insurers and device companies know what benefits are payable for listed items, such as intraocular lenses. Insurers are required to pay the government-mandated price for each listed device, with ophthalmology accounting for around 5% of overall PL payments.
Over time, the government hopes PL benefits will better align with prices paid in the public hospital system. To drive this, policymakers are proposing a raft of reforms.
A key feature of this is clarifying the PL’s scope by defining which prostheses are eligible for inclusion, and “removing ineligible products”.
As a result, ineligible items will instead be funded by “alternative arrangements” between hospitals and insurers. Consumables like intraocular fluids – which costed health funds $14.6 million in 2018-19 – are set to be removed from the list, among a host of other devices, while intraocular dyes and “ophthalmology microcatheters” may also be axed.
ASO vice-president Dr Peter Sumich said it appeared private health insurers had had a lot of influence in the consultation document, and he was not surprised they were attempting to manipulate the process.
“Given an inch they try to take a mile. What started as a prostheses review has broadened into a cost cutting exercise including intraoperative fluids and viscoelastics,” he said.
“They propose this be funded by ‘alternative means’. The concern is: are they going to pay for it at all and, if so, will they allocate just a small amount of money which is not viable in a business sense? Or are they going to cut out the payment altogether, presumably passing the cost to day surgeries or doctors – none of that we know.”
He said private health insurance “would become a joke” if insurers decided to pick apart surgeries and decide which parts to fund. He believed all stakeholders would be better off reviewing each component that determines the funds paid to day surgeries, and setting agreed fees.
According to the government, to ensure clinicians and patients still have access to the de-listed items such as intraocular fluids, insurers and hospitals are working together to agree on an alternative funding arrangement.
“It is expected that market competition and direct contracting will result in more efficient prices and contracting arrangements. The government has an expectation that for those items removed, insurers and private hospitals will reach an agreement on a market based alternative funding arrangement and one that does not involve out-of- pocket costs for the consumer,” the consultation paper stated.
“Some devices that are accessories intended to be always supplied and used together with an implantable or surgically invasive device will no longer be separately funded through the PL. Instead, it is anticipated their cost will be bundled into the cost of the device they are intended to be used with or funded under a different funding mechanism.”
Sumich said the ASO was also against bundling items, which was another example of health funds wrestling control and finding cost savings that could impact the financial viability of day surgeries.
“When items are bundled, all they do is combine a couple of items together and cut the cost of both to save money,” he said. “You may choose a certain fluid to go with an IOL due to its properties and fact it suits your technique, but once they start bundling, it is taking control of what you are choosing, which is being determined by what [health funds] are prepared to pay for.”
An ‘insidious’ practice
Private Healthcare Australia (PHA) – representing 23 health funds – said the consultation paper did not seek a debate on the merits of items. Instead, it was discussing how these items would be paid for – as part of a government-controlled mandated price list or through market mechanisms.
The lobby group said consumables and surgical instruments such as intraocular dyes were generally already included in existing banding or bundled payments, and hence should not be included.
“Splitting devices to maximise revenue is a blight on the current system. It disadvantages consumers, who pay more than necessary, and it disadvantages manufacturers who do the right thing. Any future medical device reimbursement system must stamp out this insidious practice,” the organisation stated.
“PHA supports the proposal that devices that are essential and specifically designed as a single-use aid for implanting a prosthesis, or are critical for maintaining ongoing-function of the surgically implanted prosthesis, should be bundled into the price of the device. In many cases, bundling items will involve summing of the current reimbursement, but in many other cases, bundling will in effect remove items and simply change the description of the main device.”
PHA stated that consumable items which are removed from the PL from 1 February 2022 would continue to be funded by private health insurance, however it did not state to which degree.
“The benefits of reform will be shared by consumers and hospitals. Private health insurers have committed to pass on savings to their customers.”
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