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14 Mar 2018

The AMA has forced an investigation into Bupa, after the private health insurer reworked its medical gap scheme and told its Australian customers their cover for a range of procedures will change from a minimal benefit to total exclusion. 

AMA President Dr Michael Gannon described the announcement as a big leap towards US-style managed care and he demanded a ‘please explain’.   

Dr Gannon called on the Government to launch an investigation into the move.

Federal Health Minster Greg Hunt subsequently ordered the Private Health Insurance Ombudsman to do exactly that.

The affected procedures, which will apply to one third of Bupa’s Australian customers, include hip and knee replacements, IVF services, cataract and lens procedures, and renal dialysis.

Bupa made the announcement initially via letter to medical practices, suggesting to them that: “Prior to the commencement of any treatment, patients should be encouraged to contact Bupa directly to confirm their cover entitlements, and any possible out-of-pocket expenses that may be applicable.”

Bupa’s Head of Medical Benefits Andrew Ashcroft also wrote: “Customers affected by these changes will be given an opportunity to upgrade their cover should they wish to receive full coverage for services that were previously only restricted cover.”

The punitive changes were announced just weeks after Mr Hunt approved a 3.95 per cent increase to private health insurance premiums.

Dr Gannon told the Minister that the Government should urgently seek advice from the Health Department and the Private Health Insurance Ombudsman as to the legality of Bupa’s actions. 

“The fact that the change has occurred straight after a premium increase, straight after agreement was made to retain second tier rates for non-contracted facilities, and straight after an announcement by Government to work collaboratively with the sector on the issue of out-of-pocket costs, is unconscionable,” Dr Gannon said.

"The AMA will not stand by and let Bupa, or any insurer, take this big leap towards US-style managed care.

“The care that Australian patients receive will not be dictated by a big multinational with a plan for vertical integration.”

Dr Gannon said customers were right to be concerned with the new list of exclusions, but that there was even more bad news hidden in the fine print of Bupa's new business plan.

“From 1 August 2018, no-gap and known gap rates will now only be paid to the practitioner if the facility in which the procedure takes place also has an agreement with Bupa,” he said.

“Medical benefit rates outside those facilities will now only be paid at the minimum rate that the insurers are required to pay – that is, 25 per cent of the MBS.”

Mr Hunt’s office said: “The Minister has written to the Private Health Insurance Ombudsman and asked him to review and investigate this action.”

Dr Gannon has written to all AMA members to explain the changes and why they are bad for patients and the medical profession (the full letter can be viewed at

“They are bad for the reputation of private health insurance. They are bad news for the contribution that the private system makes to the Australian health care system,” he said.

HBF, which is planning to merge with HCF, has also announced it will remove services such as cochlear implants, weight-loss surgery, and dialysis from entry and mid-range hospital policies.

Dr Gannon said private health insurance policy holders should start asking questions about whether or not their policies are fit for purpose.

“If it does nothing more than give you treatment in a public hospital, how is that better than relying on the public system?” he said

“If it does nothing more than give you a whole list of exclusions where you can’t access care when you’re sick, when you’re scared, that’s not worth it.

“So, what we’re saying is there needs to be more focus on the value in the policies. We’re worried about the changes in the industry, we’re worried about the junk policies throughout there.

“We do have a Private Health Insurance Ombudsman, and when you look at the complaints there, you get a real feel for the problem. We see a lot of talk in the media about out-of-pocket expenses being the real problem with the value proposition. If you look at the Ombudsman’s report, that’s not the problem.

“Nearly 90 per cent of operations are provided by doctors at no-gap; another five or six per cent at known gap of less than $500.

“We don’t think we’re the problem, but when we see unilateral action like we’ve seen from big insurers like Bupa to say what they won’t be covering, we encourage individual policyholders to ring up, ask, and make sure they’re covered if and when they get sick.”



Published: 14 Mar 2018