Government abandons ship: Shifting GUI funding negotiations to private hospitals, insurers and medtech companies

MedTech & Diagnostics News: At the Senate Estimates yesterday, Senator Anne Ruston, Shadow Minister for Health and Aged Care, brought to the forefront the imminent removal of General Use Items (GUI) from the Prescribed List* (PL) on July 1st. She probed the Department of Health (DoH) on the intricacies of arrangements between hospitals, private health insurers, and medical device companies.

Penny Shakespeare, Deputy Secretary of the Health Resourcing Group at the DoH, elucidated on the matter, stating “Contractual negotiations between private insurers and hospitals are how this is being addressed. They frequently enter into agreements about the benefits provided for insurer members undergoing treatment, including the costs associated with items that are not specifically funded on the Prescribed List (PL).”

However, Senator Ruston persisted, delving deeper into the potential ramifications for patients, questioning, “Is the department satisfied that there won’t be any impact on patients as a result of this change in how General Use Items are being dealt with?”

The PL reforms, underway since 2021, has encountered several hurdles. Adriana Platona from DoH clarified, “We have encouraged both insurance companies and private hospitals to collaborate with the [medtech] companies to find a mutually satisfactory solution. These GUIs have crept up on the PL and they do not fit the definition of prostheses.”

Senator Ruston countered, asserting her understanding of a decision to exclude GUI from the PL. She detailed a paper circulated on how to consider these surgical items, only for the plan to change.

“After the sector believed that there will be funding of General Use Items by a different mechanism, the Minister of Health – at the second half of last year – said that was no longer the case. At the time, he clarified that the GUIs were all going to be removed, and they would become part of the general negotiations between the private health insurers, medical device companies and the private hospitals,” she explained.

Senator Ruston’s concern extended to potential disparities between the private and public healthcare systems, raising questions about the accessibility of cutting-edge medical technologies for private health insurance holders.

“Are you concerned that this may have a dilution of the benefit for private health insurance as a value proposition to consumers?” she queried.

Ms Shakespeare reassured but did not answer the question directly. “These reforms aim to provide good value through private health insurance premiums, aligning benefits on the Prescribed List with what is paid in the public hospital sector,” she said.

The genesis of the PL reforms dates back to a Senate inquiry in 2017, which underscored the imperative need to curtail prostheses investment.

Ms Shakespeare noted that attempts were made to develop alternative funding arrangements for the GUIs, including Independent Hospital and Aged Care Pricing Authority’s (IHACPA) suggested payments options. However, the proposed approach faced a setback as the private hospital sector opposed the funding options. Consequently, the focus has shifted back to negotiations between private hospitals and health insurers.

Senator Ruston probed further, inquiring about instances where private hospitals may be paying more for prostheses than the public healthcare system.

Ms Shakespeare admitted ongoing efforts to reduce prostheses list benefits, aiming to align them with public hospital average prices while acknowledging that current levels still exceed public hospital payments.

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*Previously called the Prostheses List