How would a shift to US-style managed care impact general practice?

Earlier this month, the Australian Competition and Consumer Commission (ACCC) issued a draft determination allowing private health insurer nib and US managed care corporation Cigna to form and operate a new health services buying group over the next five years.
 
The buying group, Honeysuckle Health, eventually aims to collectively negotiate and manage contracts with healthcare providers – such as private hospitals, specialists, dentists and optometrists – on behalf of up to 31 of Australia’s 35 private health insurers.
 
In making its determination, the ACCC said the proposed buying group is ‘likely’ to result in public benefits by providing more choice for insurers and other healthcare payers, increased competition between buying groups, and giving participants more input into contracts and better information.
 
However, medical groups are not convinced. The Australian Society of Anaesthetists, Australian Society of Ophthalmologists, Royal Australasian College of Surgeons and Australian Medical Association have all opposed the proposal and warn that it will give nib and Honeysuckle Health too much power, as well as impact care by reducing choice for patients and doctors.
 
Professor Mark Morgan, Chair of the RACGP Expert Committee – Quality Care (REC–QC), also has his doubts.
 
He told newsGP Honeysuckle Health claims it will have the scale and the expertise to use health data to gain ‘efficiencies’ and cost savings, and that its ‘main weapon’ will be a US-style contract with penalties for providers that are deemed ‘below benchmark’ in quality and value of care.
 
‘They believe that they can improve on the current contracts between private insurance companies and providers by managing compliance, outcomes and variations in cost,’ Professor Morgan said.
 
‘The ACCC don’t seem to believe most of the claims made by Honeysuckle Health … [and] were also concerned about the impact of allowing a group to become so dominant.
 
‘The amended proposal is to clip the wings of Honeysuckle Health to contract with no more than 40% of specialists and to re-evaluate after five years rather than 10.
 
‘My concern in this is where is the patient? There is more to high value care than cost, bed-days and re-admission rates.’
 
Professor Morgan’s concerns were matched by Dr Edwin Kruys, a member of the RACGP Expert Committee – Funding and Health System Reform (REC–FHSR), who said the ACCC’s assumption that the new arrangement will result in public benefits is ‘contentious’.
 
‘I find it difficult to believe the “better and cheaper” argument. How can we be sure that this development actually improves the quality of care as claimed, while at the same time reducing upward pressure on premiums by passing on savings to members?’ he told newsGP.
 
‘We have to address over-servicing and expensive low-benefit care that is happening on some occasions, but I’m not convinced this development is the way forward for Australia – the risks are too high.
 
‘Let’s keep commercial influences out of the consulting room as much as possible and leave the decision-making to patients and their healthcare providers, not insurers.’
 
Of the main private health insurance providers, nib reportedly pays the least for 12 of the 19 most common hospital procedures, but charges the highest premiums for its Gold hospital cover.
 
The company’s CEO Mark Fitzgibbon recently told News Corp criticism from the medical profession regarding the new buying group ‘is simply not accurate’.
 
‘Honeysuckle Health has no intention to ever interfere in the clinical autonomy of doctors, [but] rather [to] provide optional tools and services to enhance the care they already provide,’ he said.
 
‘Members will still have their choice of doctor or specialist; however, it should, once these models are working, result in better healthcare outcomes and lower costs. Any savings will be passed onto members in the form of lower than otherwise premiums.’
 
However, Consumer Health Forum CEO Leanne Wells disputed this claim and told newsGP the plan could potentially have a ‘negative impact’ on patients.
 
‘We question whether the best interests of fund members would be served, given nib’s history of placing a priority on profits over the interests of fund members,’ she said. ‘It failed last year to return to members the savings resulting from COVID shutdown of private hospital services.
 
‘The argument made in support of private health insurance is that it provides consumers with choice, but this new business plan would appear to have the effect of reducing choice.’
 
Rather than benchmarking costs to drive down expenses for individual private insurance companies, Professor Morgan said a better approach would be to utilise health data to improve healthcare overall.
 
‘There is scope to carefully interpret data and to provide information where it is needed to both improve clinical decisions and save the system money,’ he said.
 
‘Perhaps the more expensive providers of private hospital procedures provide better rehabilitation or better communication to the patient’s GP.
 
‘What about patient outcome measures such as improved quality of life? What about the patient experience of receiving care? What about the distance people have to travel away from their support networks?’
 
Professor Morgan said while the Australian health system is ‘pretty good’, there is a ‘pressing need’ to evaluate the role of primary care and re-focus on preventive health.
 
‘I am not convinced that groupings of private health insurers have the right motivations to drive system-level improvements,’ he said.
 
‘My guess is that every chance to cost-shift onto Medicare funded services will be taken.
 
‘GPs should expect some Friday afternoon early discharges.’

The ACCC is accepting submissions on its draft determination until 11 June, after which it will release a final determination.
 
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