WHILE most of us were organising ourselves for our first COVID-19 Christmas, others were boldly plotting a major paradigm shift in our health care system.

On Christmas Eve 2020, the Australian Competition and Consumer Commission (ACCC) received an application by Honeysuckle Health (HH), a merger of nib health funds and the US-based Cigna corporation, seeking permission to form a buying group.

Cigna refers to itself as a “global health service company”, with $160.4 billion in annual revenue and over 70 000 employees.

Quoting the ACCC document:

[The Applicants] are seeking authorisation for ten years for HH to form and operate a buying group to collectively negotiate and administer contracts with healthcare providers (including hospitals, medical specialists, general practitioners and allied health professionals) on behalf of participants. The participants of the HH buying group may include private health insurers, international medical and travel insurance companies, government and semi-government payers of health care services, and any other payer of health services as notified by HH to the ACCC.

Between 12 January and 5 February 2021, the ACCC invited submissions by its list of interested parties. The ACCC has now processed and posted the submissions and the applicants’ reply.

The ACCC will next make a draft determination and invite public comment. This is likely to be in late March or early April 2021.

In my opinion, the HH (nib/Cigna) application will introduce US-style managed care into Australia. Moreover, I consider the HH application a direct threat to Medicare and Australian private hospitals. Such concerns have also been aired in the majority of the submissions, which were strongly against the application. Some mainstream media have also expressed concerns.

Some of the major themes in the submissions presented to the ACCC are listed below:

Questionable public benefit

Health care is a complex, ever-changing domain that cannot be assigned a value simply in monetary terms.

Consideration of “public benefit” must be more than a consideration of “cost”. Australian Society of Ophthalmologists

The Application does not provide any benefit to Australian patients and merely seeks to provide the Applicants with greater revenue, control, and profits. Spine Society of Australia.

Potential market dominance and lack of competition

While not perfect, Australia’s system of a generous Medicare complemented by a strong private health care sector serves our nation very well.

However, in recent times, more and more practices have moved to corporate models. Private health insurers are now dominated by for-profit corporations, rather than member-based mutual organisations.

The irony of this is that when we need more individualised, diverse care, the opposite may be occurring.

The more the business of HH is diversified the more likely its business model will reduce competition and take on cartel style characteristics. Specialists who do not sign up would inevitably find themselves blocked from a referral stream from other third party payer organisations within the HH system. (Spine Society of Australia)

The ASA [Australian Society of Anaesthetists] submits “value-based” contracting in fact reduces competition and choice by concentrating market power in the hands of insurers. The value-based payment systems rely upon large volumes of work to which collective pricing is applied. This treats patients as identical, not individual. It also obliges Providers to respond by working collectively. This makes it practically impossible to exist in the system as an individual Provider. (ASA)

Dangers of data sharing, patient confidentiality, quality targets, benchmarking – patient safety

In 2017, I raised concerns about the dangers of data sharing with respect to My Health Record. The HH proposal takes these concerns to another level, as we are not dealing with the Australian Government but rather multinational corporations, which are heavily invested in gathering health data.

The Australian Society of Ophthalmologists summarises the problem as follows:

The medical specialists also agree on data sharing and quality target requirements.” This element raises serious questions about patient confidentiality in relation to data sharing and patient safety in relation to the potential ill-conceived setting of target requirements. Importantly, in terms of potentially critical safety and quality service provision, the application outlines that HH would “compare the value of services from a provider against peers in the region.” This is possibly the most dangerous aspect of the application and certainly here the “public benefit” must fail. We have seen this attempted previously and with predictably outrageously unreliable results. Many clinicians operate on different levels of complexity which sees some clinicians appear high quality but only because they operate in a very limited range and on simple conditions. In other cases, highly talented and reputed clinicians, who operate on most serious and complicated conditions, are marked down in this simplistic non-qualified system.

Threat to choice of doctor, doctor-patient relationship and clinical autonomy

Should a patient be insured by nib (or a member of the HH Buying Group) but their medical specialist has not entered into a contract with the HH Buying Group, then favourable rebates will not be available to that patient if they continue to attend their chosen Provider. The patient will effectively have no choice of Provider. The patient is disadvantaged by having to go outside of the preferred provider network of NIB. There is a clear disadvantage to patients who pay the same premium but may get lower rebates for the same service due to the doctor or hospital they choose. (ASA)

[The Australian Orthopaedic Association] would emphasise that a system that allows third parties to intervene in the doctor patient relationships is not acceptable as it results in perverse incentives and non-transparent relationships. (Australian Orthopaedic Association)

Unfair bargaining position

HH intends to share information about Providers including, but not limited to cost information, adverse incident information, breach of contract information and discovery of fraudulent claims (see paragraph 2.34: Application). This information will presumably be shared without the knowledge of the Provider — resulting in a lack of procedural fairness and, unless consent is provided, in breach of the Provider’s privacy. Further, the proposed information sharing will increase information asymmetry as Providers will have less information about the price and quality of other Providers than HH. The Provider will not be fully informed. (ASA)

Access — reduction in treatment options offered/benefits to members

Our concerns include that funds/buying groups that limit particular contracting arrangements to particular providers deny smaller optometry providers the opportunity to participate, compromising fair competition and can disadvantage policy holders in areas (typically rural) where such providers are not available. (Optometry Australia)

The optometrists’ concerns also apply to medicine and allied care disciplines in general.

Inappropriate for Australian context

Applying US data to the Australian context is a flawed and weak argument. Specifically in relation to private health insurance, the AMA [Australian Medical Association] has expressed ongoing concerns about the current regulatory environment, particularly the lack of an independent regulator. Existing regulatory arrangements do not adequately protect consumers in their interactions with the private health system and the proposed buying group could easily exploit this to the detriment of patients. (AMA)

While globalisation may have some benefits, do we really feel that our health care system in Australia would be a beneficiary?

Would not reduce transactional and administration costs for hospitals, providers or funds

Solicitor Margaret Faux is an academic scholar of Medicare and health insurance law. Here’s what her submission to the ACCC said:

Medicare determines billing rules not the PHI [Private Health Insurance] and as such the PHI have little or no ability to create simplicity. The PHI marketed the exact same concept – simplicity – when Gapcover schemes were introduced in 2000. But, instead of simplicity, what transpired was complexity and administrative burdens imposed on medical providers of such magnitude that a new medical billing industry (of which I was a part) quickly appeared. What is most likely to eventuate is an increased burden on medical providers as HH and nib seek to further contain and control medical fees (such as by delaying legitimate payments), and medical practitioners will have no option other to increase their engagement with medical billing companies, who will charge for their time advocating to ensure legitimate claims are correctly paid. These administrative costs are inevitably passed to consumers as [out-of-pocket costs].

Savings would not be passed on to fund members

With regard to HH’s submission that reduced transactional and administrative costs are a public benefit, the ASA submits this is a business benefit to HH and nib (and other health insurers). They are not a public benefit unless the reduced costs result in reduced insurance premiums and/or reduced gap payments by consumers. There is no evidence to suggest that these cost savings will be passed on to consumers. (ASA)

Conclusion

In the 1990s, the Australian Doctors Fund (now the Australian Doctors Federation) and the AMA ran a successful campaign: Say No To US-Style Managed Care! The campaign featured radio and newspaper advertisements, as well as a poster campaign in surgeries. Our excellent Australian health system was saved from destruction caused by US-style managed care.

Placing medical practitioners on individual contracts raises the substantial risk of introducing inappropriate third-party payer intervention into clinical decision making, the use of incentives to drive clinical behaviour, and a focus on shareholder returns.

The result will be an inevitable undermining of the doctor–patient relationship and ethical clinical decision making.

I have some trepidation about what may spring from such a proposal:

  • Will doctors and hospitals sign up to the buying group out of fear of survival?
  • Once a certain market share is achieved, will doctors on contract be restricted – or incentivised – to use hospitals contracted to the buying group?
  • If market dominance or monopsony is achieved, will Australian medicine still be a worthwhile investment for some of our most talented young people? Or will they be doing more and more for less and less?
  • How will the role of the referring GP stand up to corporate advertising that tells Australians to trust their corporate health fund for all their important health decisions?
  • What protections shall be put in place when patients and clinicians have complications or disputes with a foreign multinational corporation?

And even more important than the five questions above, what will happen to the uninsured population that relies on Medicare and the public hospital system? Will the number of contracted doctors reach a point where the care of public patients is compromised?

A foundational principle of Medicare is to support the right of patients to choose their own treating doctor. If the HH proposal is approved by the ACCC, this freedom that we all enjoy will be severely compromised. If other large corporations and multinationals follow HH, this freedom will soon be extinct and so will independent private medical practice, sold out to corporate interests.

It is my hope that the AMA, medical colleges and the Australian public will strongly object to the HH manoeuvring. It should also be a clarion call to promote the merits of independent private practice to our younger doctors.

We should all demand that the Australian Government rejects the introduction of US-style managed care into Australia.

Dr Aniello Iannuzzi is a GP in Coonabarabran, NSW. He is the Chair of the Australian Doctors Federation.

 

 

The statements or opinions expressed in this article reflect the views of the authors and do not represent the official policy of the AMA, the MJA or InSight+ unless so stated.

 


Poll

Any move to a US-style managed care model will be bad for patients and doctors
  • Strongly agree (90%, 359 Votes)
  • Agree (4%, 15 Votes)
  • Strongly disagree (3%, 13 Votes)
  • Disagree (2%, 10 Votes)
  • Neutral (1%, 4 Votes)

Total Voters: 401

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14 thoughts on “Honeysuckle Health proposal is thin end of disastrous wedge

  1. Mark Allison says:

    Somewhat belatedly, I agree wholeheartedly with the sentiments raised.

    I have experienced the USA system of medicine as a patient and the overwhelming recollection I have from that experience is the tales of woe from the other patients in the holding ward had about their HMO. One unfortunate, who I surmised had a complication after recent bowel surgery, possibly an obstruction, had been told that he couldn’t go back to his original surgeon or hospital by his HMO.

    This is all about saving money sure, but directing it to the pockets of the shareholders and the executives of the health funds. Graham Lister in his presidential address to the American Society of Surgery of the Hand, pointed out how the salaries of the HMO CEOs had taken off with the advent of managed care. Twenty years ago the top paid CEO was getting $16m p.a..

  2. Anonymous says:

    Brilliant read !

    Let’s get that on the front page of every news paper.

    First paragraph very pertinent as demonstrates the underhanded behaviour that has occurred, which is indicative of what will continue to occur and what will forever to occur – to everyone’s detriment- except HH of course. Such deceptive behaviour that has been calculated and deliberate.

    The bullish unilateral decision making management style that is being proposed to be integrated into our health care system together with a monopoly over the market is a recipe for a catastrophe.

    I feel sorry for the patients. They will suffer the most and pay the ultimate price.

  3. Anonymous says:

    Nib is already one of the more pricey health funds, which is saying something considering how fast the price of private insurance has been going up . This looks to me like more of an attempt to strengthen their bargaining position with hospitals than an attempt to undermine clinical autonomy. The proposal is basically to let them form a bargaining cartel.

    It’s pretty telling that the organisations above all have plenty of private specialists as their members, who would be the real losers from this. They wouldn’t be able to charge their ludicrously high fees for procedures we can get for free in the public system.

    This all seems symptomatic of a grossly unfair private health system: doctors who want to protect their right to charge outrageous fees and private insurers who take mountains of government support and still keep pushing up prices. This article is just the return salvo from the doctors who have a financial interest in maximising what they can charge insurers. What we really need is to take the massive government support for private health and put it into building a decent public system that’s available to everyone. If individuals want to pay thousands for a famous surgeon – then let them pay from their own pocket (if they feel it’s worth it…).

  4. Patient consumer says:

    Why are bureaucrats messing with Patient-Centres Care? This is terrible for patients. If this was option A, and option B was to have care provided by doctors without third party intrusion then all patients would go with option B. Listen to the patients.

  5. Anonymous says:

    Wherever there is a corporate entity there are shareholders and profits. There are too many already.
    For me the only “shareholder” is the primary stakeholder ie the PATIENT.
    The doctor is the secondary stakeholder (in a professional sense – not talking financially).
    “2 is company, 3 is a crowd” – let’s not fund the 3rd intruder.

  6. Horst Herb says:

    Thanks for this great article!
    It seems terminally stupid to even think about opening the door to a system that has been proven for decades to deliver inferior outcome at vastly inflated costs.
    The only ones deriving benefit from
    such ‘managed care’ are overpaid functionaries and shareholders – patients, doctors, and taxpayers will be the big losers.

  7. Christine Troy says:

    Well written article, addresses all of my concerns. Good experiential comments too that follow.
    Hopefully someone in power who makes decisions, also reads this.

  8. Anonymous says:

    Thank you for this great article! As a GP who has worked in both health systems (US and Australia) over these past 20+ years, I never want to have to do a ‘wallet biopsy’ on a patient ever again – checking that their insurance plan (one of over hundreds) will approve the most basic care options for serious conditions – and if not, helping them sign their bankruptcy papers to fund the medical treatment they deserve as a basic human right. I wish I were exaggerating but I’m not. This is exactly how it starts. Australian patients and clinicians (and Medicare) deserve better protection and support than allowing this 3rd party managed care option to enter a medical system that functions so well and indeed much better on many important indicators, than the broken US system.

  9. Ian Hargreaves says:

    When a powerful monopoly funder like Workcover makes stupid decisions that harm patients, there is nothing the individual doctor or patient can do. I scream inwardly every time I receive a letter from an anonymous Workcover clerk, questioning whether my proposed operation is appropriate, and whether ‘all non-surgical options have been exhausted’ – despite the fact that I have considered all options as part of the informed consent process.

    This proposed concentration of power is precisely the same, but with even sharper teeth: “I’m sorry doctor, your results of treating 70 year olds with this condition are sub-par, permission is declined.”

    By pretending to have ‘quality’ as a treatment metric, the insurer puts pressure either overtly or covertly, so that the practitioner will decline to treat a complex condition. I have sat in consultations where a skilled surgeon has refused to operate on a Jehovah’s Witness patient as the operation was not safe without transfusion, and worked in a cardiac unit where only 1/5 surgeons would take the professional risk of open heart surgery with no transfusion. The patients were willing to accept the risk, the surgeons did not want the poor mortality figures against their names.

    This system can increase its profits by refusing care for expensive conditions like pancreatic cancer, with a smokescreen of “evidence-based medicine”. “Sorry, doctor, your proposed treatment has a cure rate of less than 5%, which is not considered clinically significant.”

    But you can bet your life they’ll funding the ‘Voluntary’ Assisted Dying lobby – that’s a real cost-saver.

  10. Anonymous says:

    The only benefits here are to Health insurer pockets, funded directly by consumers and tax payers( Medicare and Govt subsidies).
    A very big price to pay for loss of control and quality in our health system. Loss of privacy and potential data breaches.
    Would rather keep my health care closer to home.

  11. Nicholas Silberstein says:

    I currently work in New York. All of the concerns raised are totally valid. Medicine becomes totally protocol based and the protocols are determined by the insurers. Insurers have absolute access to medical records. Providers have to be credentialed by an insurer, who can and often will limit the numbers of providers they will cover. Insurers will limit the range of activities that a particular practitioner can undertake. Insurance premiums here are unaffordable to many and health costs are the commonest cause of personal bankruptcies. Nib is highly difficult to deal with, they demand pre authorization for many procedures. Medications are another issue. As a common example, an insurer may insist on a patient taking a statin due to being a type 2 diabetic (not a bad idea), But the insurer will not cover all statins. many insurances do not cover Rosuvastatin for some reason. Many arrangements exist between insurers and pharmacy chains and pharmaceutical companies. For Australia to be considering an application such as this is very worrying.

  12. Anonymous says:

    I find it intriguing that these large health corporations from the United States speak of how much money they’re going to save the country. What they really mean is how much money they are going to make.
    Check out this per capita expenditure by country:
    https://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_per_capita
    The Covid 19 pandemic has exposed the parlous state of healthcare for the a average American.

  13. Chris Davis says:

    Excellent article that alerts us to a threatened additional third party intrusion into the doctor-patient relationship. The medical profession has not done enough to resist turning healthcare into a commodity, to be owned, operated, traded and profiteered from by organizations not bound by professional and ethical obligations. It is vital for patients that the medical profession now regain its pivotal role in determining how healthcare is delivered in Australia, and not leave these decisions in the hands of corporations.

  14. Andrew Renaut says:

    Excellent article Aniello. This needs to be resisted at all costs. Managed health care has been a disaster for the US and will be a disaster here. A doctor-patient relationship free of any confounding influences is absolutely fundamental to the way we practice. It ensures the best outcomes. At 64 I’m in the twilight of my surgical career (although intend to go for another 10 years) and I have experienced a creeping erosion of our independence over those 40 years, from various jurisdictions including the Medical Board, health funds and hospitals. Enough!

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