An interim decision to allow a new buying group to collectively negotiate contracts with healthcare providers is a defining moment in Australian healthcare, says the Australian Society of Ophthalmologists (ASO), which is spearheading a challenge against the introduction of “US-style managed care”.
The Australian Competition and Consumer Commission (ACCC) has authorised Honeysuckle and nib health funds to form and operate the Honeysuckle Health Buying Group that would act on behalf of health insurance companies and other health payers – referred to as “participants”.
The buying group would then collectively negotiate and administer contracts with hospitals, GPs and other health professionals such as ophthalmologists and optometrists. Honeysuckle is an equal joint venture between nib and US-based health services company Cigna Corporation established in 2019. It operates independently from both entities.
The ACCC’s decision is a “draft determination”, allowing further submissions before a final ruling is delivered. A final decision was originally slated for 24 June, but this has been pushed back until October 1 in order for the ACCC “to seek and consider further information to inform its decision”.
The draft decision has sparked a significant backlash, with 204 submissions, compared with just 30 submissions during the initial consultation phase.
In its determination, the ACCC said it received many submissions opposing the application, which included the ASO, Optometry Australia (OA), Australian Medical Association (AMA) and other health lobby bodies.
They were worried about the level of control insurers could possess over clinical care pathways. The size of the group was also of concern, with its potential to have disproportionate market power. OA highlighted potential issues for smaller optical operators and their ability to compete with their larger counterparts who often entered low or ‘no gap’ arrangements with health funds.
“This is a defining moment in Australian healthcare because we now have a major American health insurer with a market cap of US$90 billion dollars (AU$116 b) and 70,000 employees coming to Australia to partner with nib,” ASO vice president Dr Peter Sumich told Insight.
“This isn’t an experiment, nib has always expressed a long-term view on managed care in this country, which they call ‘network care’, and by bringing Cigna across, they’re importing the know-how and the methods to introduce managed care – it’s very clear to those in the industry what’s happening.”
The ASO has since mounted a campaign called Send the Eagle Home, which has the backing of the AMA, Council of Procedural Specialists Australia, Australian Private Hospitals Association and Medical Surgical Assistants Society of Australia.
“Critics might suggest protesting doctors are just protecting their incomes, but ironically doctors can be paid more to take these contracts as long as they adhere to the insurer’s contract requirements,” Sumich added.
“The ASO and other medical bodies will attempt to persuade the Federal Government to protect privately insured patients by strengthening the Health Act and introducing anti-managed care legislation,” he said.
According to the ACCC’s draft ruling, the Honeysuckle application was amended so that large providers Medibank, Bupa, HCF, or HBF in Western Australia could not join the general buying group and acquire Honeysuckle’s contracting services for hospital contracting, medical gap schemes and general treatment networks.
But those health funds can use Honeysuckle’s Broad Clinical Partners Program (BCPP) whereby Honeysuckle signs agreements with medical specialists so customers aren’t charged out-of-pocket costs for hospital treatment.
It also imposed other conditions amid concerns about the potential “uncapped aggregation” for the BCPP that would likely be detrimental to the public, reducing competition between acquirers of medical specialist services.
“To address this public detriment, the ACCC proposes to impose a condition of authorisation that [Honeysuckle] not provide the [BCPP] services to major private health insurers where this would result in the participants in the program representing more than 40% of the private health insurer market in any state or territory.”
With there being two other existing buying groups – the Australian Health Services Alliance (AHSA) and the Australian Regional Health Group (ARHG) – the ACCC believed the Honeysuckle proposal would become a new option for health funds that preferred to be part of a collective, increasing competition.
“On balance, and with the proposed condition of authorisation, the ACCC considers that the proposed conduct is likely to result in a public benefit and that this public benefit would outweigh any likely detriment to the public.”
The authority declined the buying group’s proposal to operate for 10 years, reducing this to five.
‘Insurers want the doctor controlled by a contract’
Sumich accepted that, in the short term, patients who used health services through the Honeysuckle scheme could receive lower out-of-pocket costs. This is because agreements for care would be produced en masse.
“But in the medium to longer term patients will realise they’ve lost their freedom of choice. There are many stories in America, for example, such as the breast cancer patient who has the reconstruction performed by a contract surgeon who may not be a top plastics guy, but is a general surgeon who has an interest in that area, because that’s the package you accept. Or chemotherapy patients told they can have two rounds of treatment, but any more isn’t possible because that’s all that can be accepted.
“Health insurers want the doctor controlled by a contract so cost savings can be made on hospital admissions, cheaper treatments and cheaper prosthetic implants. Under US managed care, the patient must accept whatever treatment the insurer contracts for them. The insurer calls the shots.”
In its submission, the Australian Society of Anaesthetists echoed similar concerns for patients who, for example, would be insured by nib (or a member of the Honeysuckle Buying Group) but whose medical specialist had not entered into a contract with Honeysuckle, therefore meaning favourable rebates would not be available to the patient if they continued to attend their chosen doctor.
“The patient will effectively have no choice of provider. The patient is disadvantaged by having to go outside of the preferred provider network of nib. There is a clear disadvantage to patients who pay the same premium but may get lower rebates for the same service due to the doctor or hospital they choose.”