Australia's largest private health insurer is under fire for secretly slashing its coverage of common hospital tests, such as X-rays and CT scans, leaving some patients with large unexpected bills.
In September, Medibank Private - which covers nearly four million Australians - cut the amount it would pay private providers for some diagnostic tests carried out in hospitals to match medicare payments for the same tests delivered to uninsured patients.
The change meant that if a private pathology or radiology company performing the tests charged more than the Medicare Benefits Schedule (MBS) price for it, patients would have to pay the difference - an "out of pocket" or "gap" fee.
For Phyllis Dixon, 89, the change resulted in a shocking $1500 bill from a diagnostic imaging company shortly after she was discharged from a private hospital in Melbourne late last year. Her daughter, Gail Robins-Browne, said her mother was not told she would face such fees before having a range of tests done in hospital.
"My mother has on file many letters from Medibank Private informing her of other changes to premiums and the cover provided, but they seem to feel that it was not necessary to inform their clients of this very significant change," she said.
"Had we known that we were paying the gap for these investigations, we would have asked if all the tests were essential given the costs involved."
Ms Robins-Browne said after receiving the unexpected bill, a clerical manager at the diagnostic imaging company told her other Medibank customers had had similar experiences and that upon complaining, their gap fee was covered by the insurer. But so far, Ms Robins-Browne has had no such luck with Medibank and the diagnostic imaging company is now threatening to deploy debt collectors.
A spokeswoman for the Private Health Insurance Ombudsman said about 30 people had complained about the same issue and that all complaints had been resolved by Medibank without requiring further investigation by the ombudsman.
While the Private Health Insurance Act 2007 says insurers must notify members of changes that might be "detrimental" to the policy holder within a reasonable period of time before the changes take effect, the ombudsman's spokeswoman said Medibank Private had no obligation to inform members of this change because it was an alteration to its "agreements with health care providers".
A spokeswoman for Medibank Private declined to comment on whether the insurer had written to all members advising them of the September change. But in a written statement, she said: "We encourage all our members to get in contact with us before they go to hospital or to a health provider to make sure they know what they are covered for so they can make an informed financial decision about the treatment they are about to receive."
The spokeswoman said Medibank was aware of some companies charging gaps "significantly higher than the amount that Medibank used to fund". She said before Medibank changed its payment for diagnostic tests in September, it was paying one company $516 for a CT scan of the abdomen compared to the medicare price of $385.
Chief Executive Officer of Consumer Health Forum of Australia Leanne Wells said the change, which coincided with Medibank floating on the stockmarket, was "a further worrying sign of the unsustainable merry-go-round of increasing health insurance costs confronting consumers saddled with an average 6.18 per cent premium rise this month".
"Medibank has marked its privatisation by implementing above average premium rises. The fact that it decided to reduce its cover for private diagnostic services last year we believe came as a surprise to patients," she said.
