Dissatisfaction over certain private medical insurers' financial arrangements with consultants has spilled into the political arena. Edward Murray examines what lies behind the headlines
Worried about erosion of choice, diminished quality of treatment and the poosibility of discriminatory benefits being offered to individuals, Lord Walton of Detchant has raised the issue of consultant fixed fee schedules in the House of Lords.
The peer asked, ‘Her Majesty's Government' whether the imposition of fixed fee schedules and restricted hospital and consultant networks for the provision of services to private medical insurance subscribers, as now practised by the two principal insurers in this field, is in the public interest."
Lord Walton further outlined his fears over the behaviour of BUPA and Axa PPP writing on the open access politics website ePolitix.com: "AXA, for example, has applied differential reimbursement rates which have raised new issues of discriminatory benefits for both patients and consultants. Some patients, who persist in seeking the advice of a consultant of their choice, may now face shortfalls on fees for consultations and operations.
Corporate health plan pathway
"In addition, AXA has established new arrangements with the BMI group of hospitals under a corporate health plan pathway. These are likely to divert AXA policy holders for treatment through a limited number of consultants based at BMI hospitals. In June 2010, BUPA introduced its own fixed fee policy for young, newly-appointed consultants. It is now consulting on whether or not to impose this schedule upon existing, established consultants."
Lord Walton also cited the view of the Federation of Independent Practitioner Organisations (FIPO) that these new policies were creating considerable consumer detriment by interfering with the clinical pathways which have previously allowed patients and GPs to determine where they can most appropriately be referred for specialist treatment.
Whether Lord Walton's fears, and indeed those of FIPO, are justified remains to be seen, but by raising the matter in such a public fashion, the peer has stuck it on the top of the news agenda, raised the level of debate around the possible problems and will hopefully help move the market to a situation in which any potential policyholder detriment is dealt with.
Fixed fee structures and restricted hospital networks have been debated in the healthcare market for many years and as far back as 1994 the Competition Commission (CC) conducted a report entitled: ‘Private medical services: A report on agreements and practices relating to charges for the supply of private medical services by NHS consultants'.
In this report, the CC said there was little competitive pressure on the prices charged by consultants and that "the countervailing power of the insurers is of crucial importance."
The question now, however, is whether BUPA and Axa PPP are exerting a counter balance that is itself out of kilter and which ultimately skews the market in another direction, rather than balancing it up and putting it on a level footing for policyholders across the board.
Fixed fees
Certainly, so far as Alistair Sclare, head of healthcare at Groupama, is concerned the fixed fee schedules and fixed hospital networks do not work to the benefit of the overall market, although they obviously help the two insurers involved keep a cap on costs.
He explained: "If you introduce fixed fee schedules on to which there are a limited number of consultants signing up then you restrict choice and therefore it has an impact on the overall attractiveness of the product."
When the two biggest players in the market take this approach, Sclare believes it can create an impression that this is how every provider operates, when this is not the case.
He added: "When they do squeeze the cost of medical treatment very tightly, the impact is, in effect, for those doctors to seek to increase the cost they will charge to anybody else, whether it is another insurer or to someone who goes to source that treatment directly from them, and so you have an increase of cost absolutely everywhere else except those areas where the fixed fee schedules are in operation. We do not think that is a positive thing for the overall market."
This criticism clearly does not rest easy with the big two insurers, and in response Samantha Maslen, corporate communications manager at BUPA, said: "The private medical insurance sector is a highly competitive marketplace and companies use hospital and consultant networks to ensure high clinical standards while also controlling costs for their customers."
Similarly, Sharon Lyons, head of provider management at AXA PPP, commented: "Perceptually policyholders understand why we do what we do. We cannot possibly have an open cheque book and let anybody charge what they want to charge."
The nightmare scenario for policyholders is that following a referral from their GP they find out that the best person for the job is not approved by their insurer and receiving treatment from them will lead to a shortfall in the bill that they will have to meet.
This is hugely stressful for people at a time when their medical insurance should be easing the financial burden and letting them concentrate on fighting their way back to fitness.
Sticky situation
Some policyholders may get themselves into a situation where they simply go ahead with the treatment and unwittingly find themselves with a shortfall to cough up for.
This, so far as Glen Smith, managing director at intermediary Healthcare Partners Ltd and chair of BIBA's Health Insurance Focus Group, is where the real problem lies in the fixed fee debate.
Smith questions whether some consultants are charging over the odds unnecessarily and asked: "Are a few people making it difficult for everybody?" After all, if the medical profession stuck within the fee structures for every insurer across the board, then there would not be an issue for anybody."
Smith also believes that altering the way referrals are made by GPs would help and that perhaps offering three names without preference would allow policyholders to seek out one that met the requirements of their insurer without becoming predisposed to any of them.
However, such an approach would not help those with an existing relationship with their consultant when they find they are no longer able to use them as they have been taken off the approved list.
It may also be difficult to give numerous options at referral, depending on the type of treatment required by the policyholder.
FIPO does not believe for one minute that fixed fee structures are helpful and argues that many of the consultants who have been blackballed do not overcharge in any sense of the word.
Clear and present disclosure
However, where it does agree with Smith is in the need for early and clear disclosure of the exact terms of the policy and the way they may manifest themselves.
Geoffrey Glazer, chairman of FIPO, commented: "Subscribers should be made aware, when they purchase their policy, of any potential limitations or shortfalls including not just potential consultant fees, although this only occurs in a minority, but for other treatments such as ITU care, cancer care and also when an acute condition becomes chronic and thus loses insurance benefit."
Transparency is something that most people in the market would be keen to see, but it is not something that is always so easy to attain and making policyholders aware of how things might play out at the point of sale is often very difficult.
People do not know which illness they may get at some point in the future, what treatment they will need, which consultant will be suggested and whether they will be approved or not.
As such, the discussion is a difficult one to have and is ultimately a theoretical one based around things, which may or may not happen. Trying to introduce this sort of uncertainty at the point of sale, while retaining client confidence in the product, is certainly difficult and may ultimately frighten people inappropriately.
Equally, not giving the matter due importance and making clients understand how things might play out is an equal disservice.
Balancing the need for the best possible healthcare with the ability to pay for it is always going to be a problematic issue. However, when BUPA and Axa PPP control around 70% of the market, it is very difficult for other providers to exert the same ‘countervailing power' that they in turn seek to impose on medical costs.
Whether this is ultimately detrimental to policyholders is still being discussed furiously, but now that the debate is back on the news agenda, hopefully the market will be able to move it closer to something like resolution.
