Insurers continue to mislead on devices

“The devices industry was the sole contributor to lower private health insurance premium increases both in 2017 and in 2018. MTAA’s Agreement with the Government is on track to exceed $1.1 billion in expected savings,” said Ian Burgess, CEO of the Medical Technology Association of Australia (MTAA) today.

“The claim that the listing of new, innovative and more clinically effective technologies is somehow a negative, is completely absurd and demonstrates that the insurers have lost focus on patients,” Mr Burgess said.

Meanwhile, insurer profits continue to increase, with NIB reporting a 9.2 per cent increase in annual profit recently to $201.8 million, with a share price increase of 31 per cent over the past six months, and Medibank Private’s share price up 16 per cent.

The recently released AlphaBeta report, Keeping Premiums Low: Towards a more sustainable private healthcare system, found that insurers have collected 50% more profit from each of their members over the past five years, far outpacing the 21% growth in benefits paid out.

It also found that private health funds have not extracted sufficient economies of scale in the wake of significant revenue growth and many funds are well above the industry average of 9% in operational expenditure, this includes an estimated marketing spend of $400 million.

“After tax profits for insurers are up 15% over the past three years as affordability for ordinary Australian families goes down,” Mr Burgess said.

“Patient and clinician choice is a key part of the value proposition of private health insurance, one that risks being eroded by the false claims made by insurers about the cost of devices,” said Mr Burgess.

“The medical technology industry believes access to a full range of medical technology is one of the key benefits of having private health insurance and we’re committed to helping ensure all Australians lead healthier and more productive lives,” Mr Burgess concluded.

MTAA AGREEMENT DELIVERING SAVINGS

[vc_row][vc_column][vc_column_text]As reported in the media recently, private health insurers have seized on the June 2019 APRA Prostheses List (PL) data to claim that volume growth is excessive and savings under the MTAA-Government Agreement have not been realised.

The claims made by private health insurers are false. These are the facts:

  • Savings on the PL in the premium year 2018 were $224 million, $35 million more than forecast under the Agreement
  • Volume growth of 8.6% to June 2019 is not significantly different from the compound annual growth rate of 7.8% over the last 10 years
  • Average benefits have dropped 16% since Quarter 4 2016 from $794 to $665, and is expected to fall further with more cuts to come in 2020.

“The medical devices industry has made the only direct contribution to keeping the cost of private health insurance down, delivering the lowest premium increase in 18 years,” said Ian Burgess, MTAA CEO.

“The cost reductions are a direct result of the $1.1 billion dollars in cuts delivered by MTAA through the Agreement and demonstrate MTAA’s active contribution to the affordability of healthcare in Australia,” Mr Burgess said.

Meanwhile, insurer profits continue to increase, with NIB recently reporting a 9.2 per cent increase in annual profit to $201.8 million, with a share price increase of 31 per cent over the past six months, and Medibank Private’s share price up 16 per cent.

“Insurers are once again misrepresenting the savings delivered to them under the Agreement in order to avoid a reduction in their considerable profit margins,” said Mr Burgess.

MTAA commissioned the AlphaBeta report to constructively identify areas for savings to keep private health insurance sustainable.[/vc_column_text][/vc_column][/vc_row]

TGA releases 2019-2020 Business Plan

[vc_row][vc_column][vc_column_text]The 2019-2020 plan details how TGA intends to advance the Government’s Regulatory Reform Agenda.  Of particular note in the plan is the implementation of the Action Plan for Medical Devices, a significant program of regulatory reform, also with a focus on greater transparency and more consumer involvement in the regulatory process.

Some of the key actions included in the plan are:

  • how TGA intends to meet public expectations in relation to the safety, efficacy, performance, quality and timely availability of therapeutic goods
  • how TGA is responding to innovation in therapeutic goods and emerging public health issues to maintain the best possible outcomes for the Australian public
  • implementation of the Action Plan for Medical Devices
  • international collaboration between regulators to build regulatory best practice, increase collaboration on product reviews and post market monitoring as well as influencing international regulatory policy
  • ongoing education and better, clearer regulatory guidance for industry
  • how TGA plans to undertake appropriate and targeted compliance and enforcement activities.

Should you have any questions or comments in relation to the Business Plan please contact RegulatoryEngagement@health.gov.au[/vc_column_text][/vc_column][/vc_row]

U.S. DELEGATION VISITS AUSTRALIA

Based in Washington D.C., the U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million business of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

The delegation, comprised of representatives from the U.S. Chamber of Commerce’s member companies, was in Australia as part of the GIPC’s efforts to champion innovation and creativity through enhanced intellectual property standards around the world.

GIPC senior vice president Patrick Kilbride said that now at the beginning of the new term of the 46th Parliament was an ideal time to discuss with the nation’s key decision-makers the importance of Australian ideas, innovation and local intellectual property to competitiveness in a globalized knowledge economy.

“In today’s dynamic and disrupted global economy, IP and innovation are of paramount importance, particularly in relation to economic growth and development,” Mr. Kilbride said.

“Australia and the United States have a long history of mateship and collaboration, with many shared values particularly around innovation and IP, generating jobs, fostering mutually beneficial trade and protecting our own sovereign capabilities. It is important to continue the dialogue about ways Australia and the United States can continue to work together to further foster our tremendous bilateral partnership.”

The U.S. delegation discussed with key decision-makers the International IP Index, produced by the U.S. Chamber of Commerce, which benchmarks the IP environment in 50 global markets around the world.

The Index spotlights key elements of Australia’s regulatory environment for IP that significantly impact the viability of biomedical research, Australia’s attractiveness for foreign investors and the production of new lifesaving cures.

Accordingly, GIPC is calling for Australia to enhance its patent notification system to add transparency and predictability to the supply of innovative, new medicines. Strengthening these elements of Australia’s IP regime would help life sciences innovation to thrive, stimulate economic growth, and bolster Australia’s economic competitiveness.

What are the four ways we can keep private health insurance premiums lower?

Australia’s private health insurance system is under strain. Despite government efforts to encourage more Australians to take up private health insurance, rising premiums and policy changes have driven membership numbers to 11-year lows.

Hospital benefits and allied health benefit payments have contributed most ($4 billion) of the $5 billion increase in benefits payments since 2013. Medical device benefits and surgeon benefits have driven a much smaller portion of overall growth in benefit payments. At the same time, PHI fund operating expenditure and margins have grown relative to payouts.

The medical device industry has been the sole contributor to reducing cost pressures on PHI premiums, through the 2017 Agreement with Minister Hunt. Devices have not been a key driver of premium increases, with the benefit paid per device declining 1% p.a. over this period. Devices represent only 9% of premium revenue growth since FY2013, with growth in device benefits driven entirely by demand.

The report identifies four specific buckets of savings that combined could put downward pressure on premiums in the order of $1B by 2022:

  • Streamline insurer opex
  • premium restraint from the most profitable providers
  • optimise models of care
  • reshape the allied health offering

Over the last five years, insurers have collected 50% more profit from each of their members. This has far outpaced the 21% growth in benefits paid out. Operational costs have also outpaced benefit payouts, growing by 28%.

If top performing private health insurance funds constrained their premium growth directly – while still sustaining profitability, $210million can be saved in premium increases for consumers.

Private Health funds have not extracted sufficient economies of scale in the wake of significant revenue growth and many funds are well above the industry average of 9% in operational expenditure. Marketing alone is estimated to be $400m, which is 18% of operating expenses. With improved efficiencies, such as through consolidation of smaller funds, $210million can be saved.

Policy levers such as reducing the number of potentially preventable hospitalisations (PPH), reducing overtreatment of patients, promoting care in the community and reducing readmissions can provide a $290m saving to private health insurance premiums.

Optimising models of care is important for short term savings, and critical for the longer-term sustainability of the health system.

For example, there are a number of measures that have proven to substantially reduce the incidence of falls in the elderly (removing rugs, regular exercise, vitamin and calcium supplements), which are a significant contributor to PPH.

Reshaping allied health to deliver better value for consumers can generate $250m worth of savings. The Federal Government has already implemented reforms which exclude ‘natural’ therapies for which there is no evidence of medical benefit. Insurers could continue to tighten the rules around benefit payouts for alternative therapies for which there is no evidence base.

Medical technologies can improve preventive and primary care greatly improve healthcare outcomes while also reducing costs. Telehealth, remote diagnosis, patient monitoring apps and even advances in home movement monitoring for ‘at risk’ patients can all reduce costs to the system. Many of these devices are not covered by private health insurance and there is often no consistent public funding pathway to facilitate widespread adoption.

DEVICE COSTS GO DOWN AS INSURER PROFITS GO UP

[vc_row][vc_column][vc_column_text]According to APRA figures, MTAA’s Agreement has already saved insurers $314 million and is on track to exceed the $1.1 billion in expected savings.

“The medical devices industry has made the only direct contribution to keeping the cost of private health insurance down, delivering the lowest premium increase in 18 years,” said Ian Burgess, CEO of the Medical Technology Association of Australia (MTAA) today.

“The cost reductions are a direct result of the $1.1 billion dollars in cuts delivered by MTAA through the Agreement and demonstrate MTAA’s active contribution to the affordability of healthcare in Australia,” Mr Burgess said.

Meanwhile, insurer profits continue to increase, with NIB reporting a 9.2 per cent increase in annual profit yesterday to $201.8 million, with a share price increase of 31 per cent over the past six months, and Medibank Private’s share price up 16 per cent.

“After tax profits for insurers are up 15% over the past three years as affordability for ordinary Australian families goes down,” Mr Burgess said.

“The suggestion that an increase in use of medical devices by privately insured patients is somehow a negative is a clear demonstration that the private health insurers have lost focus on consumers.”

Volume increases are being driven by an ageing population, an increase in chronic disease and the growing demand for new treatments due to the benefits provided by medical devices.

“Patient and clinician choice is a key part of the value proposition of private health insurance, one that risks being eroded by the false claims made by insurers about the cost of devices,” said Mr Burgess.

“The medical technology industry believes access to a full range of medical technology is one of the key benefits of having private health insurance and we’re committed to helping ensure all Australians lead healthier and more productive lives,” Mr Burgess concluded.[/vc_column_text][/vc_column][/vc_row]

Keeping Premiums Low: Towards a sustainable private healthcare system

[vc_row][vc_column][vc_column_text]“The medical device industry has already delivered $1.1 billion in savings to private health insurers – here’s four ways that another $1 billion can be saved,” Mr Burgess said.

According to APRA figures, MTAA’s Agreement with the Government has already saved insurers $314 million and is on track to exceed the $1.1 billion in expected savings.

APRA data shows that over the last three years, the average benefit paid per device has decreased by 15%, while health insurer profits have increased by 15%.

“MTAA welcomes Health Minister Greg Hunt’s commitment to work with industry to improve the viability of our private healthcare system through existing and new reforms,” said Ian Burgess, MTAA CEO today.

 “This report outlines a range of collaborative sector-wide measures that can be taken to ensure the ongoing sustainability of our private healthcare system.”

Insurers have collected 50% more profit from each of their members over the past five years, far outpacing the 21% growth in benefits paid out. Operational costs have also grown more quickly than benefit payouts, growing at 28%.

Direct constraint of premium growth by high performing health insurance funds, while still allowing continued profit growth, could save $210 million in premium increases for consumers.

Private health funds have not extracted sufficient economies of scale in the wake of significant revenue growth and many funds are well above the industry average of 9% in operational expenditure, this includes an estimated marketing spend of $400 million. Efficiencies in this area could save $210 million.

The need to address operating efficiency was recently acknowledged by Craig Drummond, CEO of Medibank Private.

“For both short and longer-term sustainability of the private healthcare system, optimising models of care will be critical,” said Mr Burgess.

Specific measures such as reducing readmissions, promoting care in the community and reducing overtreatment of patients could deliver $290 million worth of savings towards reducing premiums.

Another $250 million worth of savings could be found through reshaping the allied health offering to exclude therapies for which there is no clinical evidence base.

“In the longer-term, medical technology will be crucial to improving healthcare outcomes and system efficiency,” Mr Burgess said.

“Increased uptake and better funding pathways for emerging technologies such as telehealth, at-home patient monitoring apps and remote diagnosis will help drive better patient outcomes and lower costs.

“’This report proposes a sensible path to reform, with a range of short and longer-term savings and structural solutions.

“On one hand, insurers are patting themselves on the back for skyrocketing share prices, on the other they’re desperately looking to others for solutions, as recently called out by APRA, and even proposing to abolish Medicare.

“We have one of the best healthcare systems in the world, and it is up to all stakeholders to work together to continue to make it better,” Mr Burgess concluded.

The AlphaBeta report can be read here.

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Enough Talking – Time for Action on Long-Term Health Policy Vision

Dr Bartone begun his address by talking of his own personal story and experience with the health system – his mother’s patient journey.

He spoke of being in Brisbane in November 2018 to launch the AMA Indigenous Health Report Card when, that same night, his elderly frail mother fell at home and was admitted to hospital.

“She has not been able to return home since that night. She was eventually admitted to an aged care facility”, Dr Bartone said.

“It gave me, as AMA President and a community GP, an unwelcome front row seat to the care journey of a loved one in our health system. Unfortunately, my mother’s story is not uncommon. It is the same story for many patients in our health system.”

Dr Bartone discussed the significant changes to the health system in 2018, including the 2019 election which he mentioned that “two months on from the election, the need for significant health reforms remains – and it must still be the Government’s highest priority”.

The speech slammed the current health system for its under-funding, under-resourcing, poor access, waste, inequality, and inefficiencies. “From maternity services to primary care, prevention to public hospitals, private health insurance to the Medicare Benefits Schedule, mental health care to indigenous health to aged care” he didn’t hold back on his criticisms.

Dr Bartone said that, for Health Minister Hunt, the time for talk was over. It was now time for action.

Included in his critique of the health system, Dr Bartone called on the Federal Government to ensure the private health sector remains efficient, robust, and productive.

The private health insurance sector has experienced 15 successive quarters of decreasing coverage despite a comprehensive Government review and the transition to the new Gold, Silver, Bronze and Basic policy structure.

However, Dr Bartone said he believes the situation is even worse, citing the “increases in premiums averaging 3 to 5 per cent a year, when wages growth is firmly stuck at around 2 per cent”.

“Sooner or later, the number of people with private health insurance will fall further – and dramatically. This would mean the option of private hospital access would be unaffordable for many Australians,” Dr Bartone said.

“This reform needs to start now – we can’t wait for another dozen quarters of decline. The death spiral is already underway.”

Dr Bartone rounded out his address with a clear call for economic rationalism, highlighting that health care in Australia employs 14 per cent of the nation’s total workforce.

“Driving economic activity through our largest workforce sector would also add extra capacity in general practice, hospitals and other front-line areas.”

Informed Financial Consent Guide launched

The AMA’s Informed Financial Consent Guide, a collaboration between doctors and patients, is aimed at helping patients better understand medical treatment fees and out of pocket costs.

The Guide will be made available from doctors, medical practices and organisations, and the AMA website.

Providing an estimate of fees and the costs payable by a patient after any government and health insurer rebates is the foundation for informed financial consent. Most doctors do it well already.

The new Guide will complement the Federal Government’s activities to provide improved medical specialists’ costs transparency, to make our system more effective and sustainable.

The Government announced that the improved transparency will help people choose the right specialist, taking cost into account without waiting for an appointment when they may feel locked in regardless of cost.

The Government’s out-of-pocket costs transparency website is being developed in consultation with consumers, medical professionals and insurers to make sure it includes appropriate information and features to assist and support consumers about decisions on their health care.

The website is expected to incorporate MBS benefits and information about insurer gap payment arrangements, in addition to the doctor’s maximum fee and the most common out-of-pocket costs for a treatment.

The Grattan Institute Confronts The Private Health Insurance ‘Death Spiral’

[vc_row][vc_column][vc_column_text]“It’s inevitable that government will have to make tough decisions about whether more subsidies are the answer to the impending crisis,” said lead author and Grattan Institute Health Program Director Stephen Duckett.

“Governments have failed to clearly define the role of private health insurance since Medicare was introduced in the 1980s. The upshot is we have a muddled health care system that is riddled with inconsistencies and perverse incentives,” Professor Duckett said.

The working paper has generated a broad-ranging set of responses, with the Consumers Health Forum CEO Leanne Wells urging the Federal Government to establish a Productivity Commission inquiry into the role of private health insurance, a call that has been echoed by a number of other healthcare stakeholders.

Australian Private Hospitals Association Michael Roff said that the report shows a lack of understanding of the private health sector to Australian health care.

“The report – which by its own admission raises questions but provides no answers – fails to understand the basics of private hospital care. This is concerning when it claims to be the basis for discussing Government support of health insurance,” said Mr Roff.

“As a basis for policy-maker decision making, its failure to understand what private hospitals offer Australians it is a poor starting point for the debate,” Mr Roff said.

Private Healthcare Australia CEO Rachel David criticized the report for being “light on solutions” and claimed to “already know what the issues are with private health and how to fix them”.

“It is time to repeat the successful collaborative effort demonstrated through the Government’s PHI reforms package,” said Ms David, who then went on to point the finger at the medical devices industry, who are to date the sole contributor to delivering the lowest PHI premium increase in 18 years.

According to Medical Technology Association of Australia CEO Ian Burgess, the costs for medical devices have fallen in every quarter since the Agreement with the Federal Government signed in 2017.

“These cost reductions are a direct result of the $1.1 billion dollars in cuts delivered by the MedTech industry through the Agreement and demonstrate the our industry’s active contribution to the affordability of healthcare in Australia,” Mr Burgess said.

“The Agreement signed in October 2017 will save private health insurers $1.1 billion in payments for medical devices over the next four years.

“Recent APRA data on private health insurers shows them continuing to enjoy strong profitability, with after tax profits up almost 20% over the past three years as affordability for ordinary Australian families goes down,” said Mr Burgess.

APRA recently called out the private health insurance industry for being too reliant on lobbying government to provide solutions and underprepared for the challenges that lie ahead.[/vc_column_text][/vc_column][/vc_row]