Modest step in response to egregious specialist fees

This article was first published in John Menadue’s Pearls and Irritations blog

The announcement of Federal Government plans to establish a website listing medical specialist fees may seem a modest response to a problem that causes financial distress to many patients already struggling with their physical pain.

However it also represents an important watershed moment in terms of an attitude shift towards recognition of the need for transparency concerning the egregious out of pocket costs billed by some specialists.

“Egregious” has passed into common usage when referring to high medical fees. The word was first used in this context by medical leaders themselves and now by the Ministerial Advisory Committee on Out-0f-Pocket Costs which has recommended some form of authoritative website to help patients ascertain the out of pocket costs they might face.

Egregious fees may have always been with us but it has been only more recently as scrutiny of the issue has sharpened that government and the profession have begun publicly acknowledging high fees as a problem requiring action.

Reports by the Consumers Health Forum over the years culminated in our Out of Pocket Pain survey last year revealing a disturbing prevalence of high out of pocket bills with a quarter of breast cancer patients for instance stating their direct expenses totalled more than $10,000

There is still resistance to admitting the scope of the problem. The Australian Medical Association has continued this week to refer to one official figure which asserts that 87 per cent of medical services are under no-gap arrangements.

A different picture is presented by the advisory committee report which refers to official hospital statistics showing that 35.6 per cent of patients have experienced out of pocket costs “which vary from a few hundred dollars to tens of thousands of dollars”.

Further it states that figure is likely to be an underestimate of the proportion of patients experiencing out of pockets as some patients will have been charged additional booking or administrative fees.

The report says there is evidence of financial hardship caused by these out of pockets, with patients reporting the need to take out a loan or an additional mortgage and others seeking special early access to superannuation.

CHF believes the proposed website will only offer value to consumers if there is across-the-board participation by specialists. The website’s worth will be devalued if its content is patchy and/or not meaningful. It makes sense to start with the ‘hot spot’ cost areas like cancer care and obstetrics and gynaecology and build on that development. Results and participation will need to be closely monitored and other measures considered if participation is poor.

Of broader importance is the potential for a fees website to shine more light on private health costs and strengthen the provision of informed financial consent and public education about private health and how it fits with our health system overall. It is worth remembering that we have a whole generation of citizens who have only ever known Medicare and have not experienced the uncertain impact of hospital and medical costs previously.

The AMA has argued this week for full transparency in the website listings to include what patients can expect from Medicare and their expected health insurance rebates. We would support full transparency also to include providing performance data of individual specialists where possible.

A fees website is only part of the solution – albeit important.

As the advisory committee said, higher fees are not necessarily an indication of higher value or quality care and patients should be able to access information available to hospitals and health funds about the performance outcomes of specialists where available.

The out of pocket costs issue raises significant policy questions about the values and equity of our health system. A joint Melbourne University-CHF position statement released earlier this year makes the point that costs and lack of transparency around quality and performance of specialists “are having an adverse impact on large numbers of consumers and undermining the overall performance of the health system”.

The paper says specific problems caused by out of pocket costs and lack of transparency include barriers to care particularly for those on low incomes and those with chronic conditions, disincentives to use private health care and geographic maldistribution of health practitioners.

It recommends innovations such as bundled payments for single episodes of care by combining multiple service costs into a single payment, to help consumers plan and have more certainty about their healthcare expenses. The position statement also recommends increased fee transparency and more focus on quality of outcomes.

Many of the prescriptions in the Melbourne University-CHF paper are echoed and added to in a recently released road map for tackling out of pocket health care costs by Dr Lesley Russell and Jennifer Doggett . Russell and Doggett’s calls are equally strong: the rapid growth in out of pocket costs has undermined the universality of Medicare and the effectiveness of private health insurance: tenets of the Australian health care system that Australians hold dear.

The out of pocket crunch underlines the necessity for a searching inquiry into the cost effectiveness of the multi-billion-dollar government assistance to the private health system. Are we getting the best value health system for our money when increasing numbers of people are either missing out on needed care or paying thousands on top of their health insurance premiums? These issues pose a range of complex and inter-related questions which demand a thorough examination of a Productivity Commission inquiry which we have long-called on the Federal Government to order.


About the author

Leanne Wells

Leanne Wells

Leanne was Chief Executive of the Consumers Health Forum of Australia from 2014 until August 2022