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Bupa will publish price information to put pressure on surgeons charging above-average fees. Photo: iStock
Health fund Bupa will start publishing price information on surgical procedures such as hip replacements to put pressure on fee-gouging surgeons and reduce customer anger in relation to shock out-of-pocket costs.
The nation's second-biggest private health insurer plans to have price data by procedure, on a state-by-state basis, in the hands of consumers in the first three months of 2016.
Bupa private health insurance managing director Dwayne Crombie said that most doctors do the right thing, but there is a "small but significant minority" who are being unreasonable in the prices they charge.
"Every surgeon is their own sole trader so they are free to charge whatever they think the market will bear … what we are trying to do here is get a bit of peer pressure. People are getting quite significant fees," he said.
"If you are going for a knee replacement you are probably interested to know how much does Medicare pay, how much does the health fund pay and how often are there out-of-pocket costs."
Seven-figure surgeons
Dr Crombie said it is not uncommon for cardiologists and orthopaedic surgeons to be earning "well over seven figures" and Bupa wants to expose the most expensive operators.
"An out-of-pocket for a knee procedure might have a big difference of $500 to $10,000. If you go along to your doctor and they tell you that you need a hip operation you usually just go where you are told. If that guy says that will be $8000 and you thought you had insurance, that is pretty hard," he said.
Bupa covers just over 3.9 million Australians, a little more than 27 per cent of the market.
The health fund's data show a huge variation in costs for the same surgery.
Over the past 12 months, costs for an oesophagoscopy ranged from a low of $177 to a high of $2000; selective coronary angiography from $532 to $2104; knee arthroscopic surgery from $674 to $4375; prostatectomy from $1042 to $5702; hip replacement from $1317 to $8000; and knee replacement from $1317 to $9999.
Dr John Quinn, executive director of the Royal Australasian College of Surgeons, said there are a small number of surgeons charging "exorbitant" fees.
"We think it is an ethical issue. Surgeons should not be charging very large fees for people in need."
He said that GPs may change their referral patterns if they are aware of the pricing policies of certain surgeons to better protect patients from out-of-pocket costs.
"There is a problem with overcharging. The referring GPs often don't know the pricing schedule of the surgeon," Dr Quinn said.
"It is not going to alter the healthcare … just because someone charges a very high fee doesn't mean they are providing the best surgery."
Helping consumers shop around
Bupa's Dr Crombie said consumers are quite comfortable shopping around for the best quote when getting a car fixed and he hopes to inject some similar price competition into the surgical world.
Between 80 to 85 per cent of Bupa's member interaction involve zero out-of-pocket costs, about 10 per cent involve a small gap fee in the order of $500, and the remaining 5 per cent have significant gap fees in the thousands of dollars.
Policy holder shock over large and unexpected out-of-pocket costs is one of the biggest drivers of extreme customer dissatisfaction.
In a business where rising premiums are already pushing consumers to downgrade their policies or leave the private health system altogether, preventing shock out-of-pocket charges is a big priority for insurers.
Rival health fund nib has been pushing to get more information into the hands of consumers and to give them more choice through its Whitecoat website, which nib boss Mark Fitzgibbon calls "Trip Advisor for healthcare".
Health funds have become increasingly vocal of late about the need to cut waste in the health system and get a better deal for consumers. Most of these initiatives would, of course, boost the insurer's own bottom line as well.
The most high-profile example has been Medibank Private's refusal to pay for what it calls "hospital-acquired complications" and unplanned hospital readmissions.