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Private health insurance rebates restrict consumer choice

Some registered professions are being excluded from rebates for services they can provide. Image from

The pre-Christmas announcement that private health insurance premiums will rise by an average of 6.2% in 2014 has raised concerns about affordability. But while consumers aren’t expected to drop their cover because of the price rise, it ought to prompt closer scrutiny of the services insurers pay for.

Indeed, a recent Australian Competition & Consumer Commission (ACCC) inquiry concluded the practice of providing rebates for some health professionals but not others – for the same or similar services – had serious consequences for both consumer choice and health professions.

Scope of practice and legitimacy

All regulated health professionals work within a “scope of practice”, which specifies the procedures and actions that they can competently undertake. The ACCC investigation found great variation between private heath insurers in providing rebates for services within allied health occupations’ “scope of practice”.

Orthopaedic surgeons, for instance, are more likely than podiatric surgeons to be rebated for foot and ankle surgery; nutritionists are more likely than dietitians to get recognised for nutrition services; psychotherapists, counsellors and psychologists are more likely than clinical hypnotherapists to be rebated for hypnotherapy; and physiotherapists are more likely to be funded for hand splints and orthoses than occupational therapists.

There’s overlap between the procedures of different professions, but the ACCC report shows that some registered professions are being excluded from rebates for services they can provide; while other professions performing similar services are recognised.

Getting private health rebates for services is a particularly important signifier of the value of health professions. The rebate indicates to the public that such a provider and their service is legitimate.

While it’s arguable that as long as a service is covered, it doesn’t matter who provides it, that fails to acknowledge that legitimacy in the form of rebates is critical to the growth of the diversity of occupations we need to tackle future health issues, such as chronic illness.

It also doesn’t acknowledge that not all Australians, particularly those in living in rural and remote areas, have a choice about who provides the services they need.

Lack of evidence

Insurer preferences entrench views about particular occupations in health that may not be based on research evidence. Such perceptions of legitimacy can have a cascading effect.

Even when there are rebated services for evidence-based interventions, our research on chronic diseases found doctors are less likely to refer to occupational therapists than physiotherapists, indicating that even health professionals may not be aware of the scope of practice of various allied health professions.

Health care is a competitive market. The ACCC noted that “the non-recognition of a category of allied health-care provider can affect the employment prospects and income of those providers”. This raises the question of how decisions about which providers to rebate are made.

Insurers claim that there are “common elements” of their decisions, which are:

  • clinical efficacy of the service offered by the provider
  • legal requirements relating to accreditation and registration
  • the administrative costs to the insurer in recognising a provider and
  • issues relating to member demand and expected cost of claims.

While consumer demand is important, according to the ACCC, “it can be difficult for consumers to identify the categories of allied health care provider recognised to provide a particular service covered under a PHI [private health insurance] product”.

Great expectations

Private health insurers seem to expect that consumers are aware of the scope of practice of the range of allied health professions. And, even more unrealistically, that consumers will know which therapies have an evidence base.

The selection of particular providers is not made transparent to consumers, and at the very least, calls for clearer communication about what providers and services are covered in health insurance policies.

Apart from reference to clinical efficacy of both services and providers as one of the factors taken into account, very little of the decisions appear to be based on evidence of benefit. Rebates for allied health services appear to be more of a commercial decision than linked to provision of best health care.

Similarly, the rebating of complementary and alternative health services by insurers indicates clinical efficacy may not be the primary driver of which services are rebated. The process behind rebates is not communicated clearly to consumers who may erroneously assume that rebated services have been found to produce health benefits.

In Australia, one of the key consequences of such disparity in service relates to access. If people in rural and remote areas don’t have ready access to an approved service provider, they can seek the services of another practitioner, but they will pay more, even if they also pay for private health insurance cover.

Australians need more information about what professions and services are rebated in private health insurance. And they need to know how rebates come to be assigned.

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