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Behind the headlines on hospital waiting times lies a murky story about lack of structural accountability

Not surprisingly, the headlines were fierce when a recent Australian Institute of Health and Welfare report revealed that patients in public hospitals with private health insurance have shorter waiting times for elective surgery than those without private health insurance.

Public patients were found to have a median waiting time of 42 days for elective surgery, more than twice as long as the average waiting time of 20 days for patients who used private health insurance to fund all or part of their admission.

Headlines like these must have generated a deal of heat in health ministers’ offices around the country: Private patients treated faster in public hospitals than public patients, data show  and Hospital waiting list queue jumpers outrage and Private patients beat public for treatment.

In a subsequent analysis for Croakey, Jennifer Doggett said the report raised significant questions about how to reconcile a commitment to equity and universality within our public health system with a system of private health insurance that promises preferential treatment for some.

“Health Minister Greg Hunt may soon find himself in deep waters if he insists on wading into the murky depths of health financing reform without understanding the complexities and co-dependence of public and private funding systems,” Doggett wrote.

The #LongRead below by medical billing expert Margaret Faux illustrates just how deep and murky those waters are, while also arguing the importance of real structural reform. She writes:

We can all feel our healthcare system tipping. We are paying more at the front door to the system (our GPs), our private health insurance premiums keep rising and yet still we are hit with unexpected out of pocket costs when we go to hospital.”


Are private health funds on a path to self-destruction?

Margaret Faux writes:

Have you ever wondered why it is that our best specialist doctors want to work in public hospitals? I mean, why would you choose to work in an under resourced, cash strapped public hospital on a fixed salary, when you could make much more money in the private sector where everything is more comfortable?

FauxbriefingYet many of our internationally renowned doctors actively seek public hospital positions, which are hotly contested. As a medical specialist in Australia, securing a senior position at a leading teaching hospital is considered prestigious.

It’s a phenomenon that has not escaped the attention and curiosity of other countries including India, where I am working on a project examining and mapping the regulatory landscape of health insurance laws and practices. Part of the India project briefing included this request:

Why do Australian doctors want to work in your public hospitals? How did you do that? All your citizens, not just the rich, have equal access to the very best doctors. Most of our doctors work in the private sector. Can you help us with that? We need to make more of our doctors want to work in public hospitals.”

We are so lucky. It is interesting to consider our good fortune in the context of a recent article in which one commentator sought to undermine one of the key pillars of our success in this area – having private patients in public hospitals – suggesting it was nothing more than a competition for private health dollars.

This simplistic explanation, though unfortunate, was not particularly surprising given the private health industry in Australia is facing enormous challenges at the moment.

However, it needs to tone down the attack on public hospitals because if patients are forced to choose between access to free universal health cover in a public hospital or paying ever-increasing gaps in a private hospital, the latter will ultimately lose. History has taught us that.

Is history repeating?

Recently, it has been alleged that public hospitals are bumping privately insured patients up the surgical waiting list queue. There can be no question that such conduct, if it is occurring as alleged, is deplorable and should be addressed as a priority.

But this does not mean the entire practice of having private patients in public hospitals is the problem. We tend to catastrophise when it comes to health system issues in Australia and are quick to take to the system with blunt instruments rather than addressing specific problems.

I often think the reason we can’t ask sensible questions to determine where problems lie and target the problem itself rather than the system as a whole is because nobody actually understands how specialist medical billing and hospital costs work, so no-one knows where to begin.

This would also explain our obsession with GPs – simple billing, mostly outpatients, mostly timed consultations that are easy to count and measure, and only one payer to deal with – Medicare. GPs are unfortunately, easy targets.

We can all feel our healthcare system tipping. We are paying more at the front door to the system (our GPs), our private health insurance premiums keep rising and yet still we are hit with unexpected out of pocket costs (OOPs) when we go to hospital.

At the same time, the government continues to roll out meaningless bulk billing statistics, hoping it will somehow make us think we are imagining it.

But the reality on the ground is starting to play out just as it did in the late seventies, when the combination of GP co-payments and high private health insurance premiums lead consumers to drop private health insurance in their droves, leaving the private health industry on the verge of collapse.

In blended health systems like Australia’s, where approximately half the population has adopted private health insurance, change can be difficult. Sometimes countries make decisions that they are basically stuck with because it is too late and too hard to turn back once vested interests become entrenched.

During Franklin D. Roosevelt’s administration in the United States, a decision in 1943 by the Internal Revenue Service to make the cost of health insurance a deductible expense for employers and not taxable income for employees, led the US down a path of no return, with private health insurance being the backbone of its health system forevermore.

BookPPAs Stuart Altman and David Shactman write in their book, Power, Politics and Universal Health Care, The inside story of a century-long battle:

In 1940 less than 10 million Americans had health insurance. By 1950 that number had exploded to 76.6 million. Suddenly over half the American population had private health Insurance and enrolment was growing rapidly… The tax advantage sowed the seeds for the emergence of private health insurance and the failure to enact a public program enabled those seeds to blossom”

When you consider the small size of our population, particularly in comparison to countries like the US or India, it would make more sense for us to have a single payer system similar to Canada’s.

But the reality is that almost 50 percent of Australians have private health insurance, a private health industry has become entrenched and, if the experience of other countries is anything to go by, our complex blended public/private system is probably here to stay.

We therefore need to work cooperatively and find a way to make it work, and the private sector peddling misleading information about the conduct of public hospitals in relation to private patients will not help its cause.

Public hospitals charging for private patients has always been legally permissible in Australia and is an important component of what makes our public hospitals strong. Non-financial incentives for doctors are also important and tend to focus on career and training paths, links to academic institutions, research opportunities, access to the latest technology and so on, all designed to get doctors competing with each other.

However, this type of competition is healthy because it benefits us, the public. It is in our interests that our best clinicians compete to build world-leading centres of excellence in our public hospitals. In fact, it is a sign of a healthy health system when working in a public hospital is viewed as a career pinnacle for medical practitioners.

Other health systems around the world use similar incentive strategies because public hospitals depend heavily on a high quality medical workforce, which can rarely be achieved without both financial and non-financial incentives for doctors.

What do the rules actually say?

The current iteration of the Australian arrangements is found in the Business Rules of the National Health Reform Agreement (NHRA), the relevant provisions of which are in the boxed text at the end of this article.

The rules make clear that electing to be a private patient does not automatically mean access to a private room, and whilst the private health funds may see accommodation in a private room as an important additional benefit that public hospitals are failing to deliver for their policy holders, not only is it a heavily qualified benefit under the NHRA, but for most very sick patients, having a room with a view and a bar fridge is not front of mind. They just want to be well again.

What the NHRA does make clear is that the main benefit of a private election in a public hospital is the ability to choose a doctor, but even that benefit is qualified in stating that a lack of private admitting rights or doctor availability will prevent such choice.

It is also worth remembering here the mechanisms that lead people to public hospitals, because, for most, there will be little or no choice. They will either be delivered to an emergency department by ambulance, present there themselves after an accident or with an acute illness, or a GP referral will direct them to a public hospital outpatient department from which a decision to admit may be made.

Once a patient arrives on the doorstep of a public hospital, it is both legal and good management practice to have arrangements in place for someone to ask patients, where possible, whether they have private health insurance and if they would like to use it.

Further, it is a requirement under the NHRA that appropriately trained staff are made available for this purpose. It follows therefore that it is not only appropriate but, I would suggest, commendable to advertise and actively recruit specific personnel to fill these roles because they require a high level of specialised skill and knowledge.

The rub

But therein lies the rub. It is almost impossible to find ‘appropriately trained staff’ because there are none. It is not possible to advertise for a medical billing/public hospital costs expert in Australia because that category of person does not exist.

There is no national curriculum on the enormous complexities of Medicare billing and never has been. Therefore, anyone doing the ‘private election communication to patients’ job would at best have a rudimentary understanding of billing, replete with myths and misconceptions, usually obtained from working in a doctor’s surgery.

In addition, very few people read the NHRA. Most doctors and hospital administrators don’t even know it exists, much less understand how to interpret it and its interface with the Health Insurance Act and Regulations, Right of Private Practice Agreements and the myriad health fund contracts that are all in play when a patient makes a private election at a public hospital.

It is usually therefore not a case of hospitals deliberately failing in their obligations to explain how it all works, or deliberately engaging in questionable practices by offering free parking incentives; hospitals simply cannot manage this correctly because they don’t have staff who know how to do the job and there is nowhere to go for help.

If they call Medicare, they will be advised that public hospitals are not within Medicare’s remit and redirected to the relevant State Ministry of Health. If they call them, they will be told it’s not the Ministry’s job to interpret Medicare and they should call Medicare. And if they call the private health fund, they will be told to speak with the hospital about the specific arrangements for the doctor they are enquiring about, and when they do that, the hospital will say, well you’re the revenue team, aren’t you supposed to be the experts on revenue?

How could a hospital front desk administrator possibly know, understand and communicate to a patient that you are less likely to have OOPs if you are a medical admission than a surgical admission, but even if you are surgical, it will ultimately depend on whether your surgeon is a Visiting Medical Officer (VMO) or a Salaried Medical Officer (SMO). But you may also end up being treated by both VMOs and SMOs (say a surgeon VMO and an anaesthetist SMO), meaning one of your treating doctors (the SMO) will usually not personally receive any money for services provided to you – that will go to the hospital – but the VMO will receive personal payment at higher rates, some of which may or may not be paid by you. And then there’s accommodation, operating theatre fees, pharmacy, radiology and prosthetics…

Further, it may surprise Australians to know that while the private funds continue to bleat about increased costs, some years ago they actually reduced the amount they pay and now only reimburse at the schedule fee for SMOs, which has effectively put them back in the pre-simplified billing scheme era (presumably realising they were better off). This amount is designed to offset and render cost neutral the private patient service adjustment made to the National Weighted Activity Unit under activity based funding requirements.

Confused? Imagine how hard it would be to find and recruit anyone able to explain all of this to privately insured consumers entering public hospitals, particularly when it is information that is not contained in any course or training program anywhere in the country.

Lack of accountability

The real problem, of course, has nothing to do with allegations of coercing consumers, inappropriate practices of bumping patients up queues, or competitions between public and private hospitals; the real problem is ownership, which starts at the highest level.

The Department of Human Services (DHS) does not own the Medicare Benefits Schedule, it just administers it. The Department of Health owns it but because they don’t administer it, they cannot help you with it. The DHS also has no jurisdiction over the Private Health Insurance Act (even though Medicare money goes to private health insurers) and, because the private health insurers don’t have jurisdiction over Medicare, they create their own billing rules, which do not always align with Medicare’s. Neither has jurisdiction over the NHRA.

Veterans Affairs has its own jurisdiction and the Workers Compensation and Third-Party Insurers (both of whom use Medicare rules and services) have their own enabling legislative schemes, loosely connected to the AMA schedule of fees, which is often inconsistent with the MBS. Then there is the Australian Health Practitioner Regulation Agency also marching to the beat of its own regulatory drum, no-one knows who to ask about the NDIS and that’s just the beginning. The rules keep changing, there are no referees and therefore no-one to call and nowhere to go for accurate and reliable advice and support about billing and related money matters.

Basically, no-one owns health, and that is what we need to address. It is a structural issue that transcends healthcare homes and MBS reviews and all the other tinkering going on at the moment and until we address it, there can be no meaningful reform.

In the meantime, those of us who work at the transaction level of the health system, passing the money around (including public hospital finance departments), will keep muddling along, always bracing for the next government initiative, which we know will inevitably have been concocted by someone who has never themselves processed a medical claim.

Returning to the issue of private patients in public hospitals… Public hospitals need private patient revenue if they are to survive. It is a legitimate and legally permitted source of additional revenue that does help to provide valuable services, equipment and research that ultimately benefits the communities that public hospitals are there to serve.

We should also not forget that we are extremely blessed that the level of trust in our public hospitals remains high. In stark contrast, in India, the level of trust in public hospitals is so low that even the poor will present at private facilities, knowing they will likely be plunged into catastrophic debt, rather than present at a public hospital where they fear they may die.

It is irresponsible for the private sector to seek to erode our trust in our excellent public hospital system by taking pot shots at public hospitals for the way they manage a very complex and poorly understood process.

But the private sector should also be careful what it wishes for because, if the cost of private health insurance continues to rise and the government were to ever try and control where and when we can use it, Australians will vote with their feet just as they did in 1979 – and private health insurance will be the first casualty.

Extract from Business Rules of the National Health Reform Agreement

Table1

Table2• Margaret Faux is a lawyer, the founder and managing director of one of the largest medical billing companies in Australia and a registered nurse. She is a research scholar at the University of Technology Sydney. Follow on Twitter at @MargaretFaux


Previously at Croakey

Increasing Medicare rebates in the bush will not reduce patient out of pocket costs

The privatisation of Medicare: Risky business or the plan that never was?

No payments, copayments and faux payments

 

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