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Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 Fairer Private Health Insurance Incentives Bill 2009 Health Insurance Amendment (Extended Medicare Safety Net) Bill 2009

CHAIR —Welcome. You have been given information on parliamentary privilege and the protection of witnesses, which is standard practice. I am sure you have an opening statement. If you would like to give us your opening statement, we will then go to questions.

Prof. Illingworth —On behalf of the Fertility Society of Australia, I thank you for giving us the opportunity to make a statement on this important matter. The Fertility Society is a multidisciplinary body consisting of health professionals and others involved in the provision of health care to infertile couples. I am the current president of the society but in my day job I am a medical practitioner who works in the western suburbs of Sydney. Next week you will be hearing from the IVF director of the subcommittee of our society. That group normally has responsibility for discussions with government on the area of medical fees.

Infertility is a medical condition. It affects one in six Australian couples. There are safe and effective treatments which have allowed many Australians who would otherwise have been unable to have families to overcome the distress and heartbreak of involuntary childlessness. Thanks to the longstanding support of the Australian government, access for patients to IVF is the fourth highest in the world. Last year, 11,000 IVF babies were born compared to 6½ thousand only five years ago. In other words, three per cent of Australian children are now conceived through IVF, a figure that represents one IVF child in every primary school class. A recent report issued by ICMART, the worldwide review body for infertility, assured that Australian patients enjoy some of the best success rates in the world. The average age of patients in Australia is 36, and this age group’s pregnancy rate at 40 per cent is comparable with the best in the world.

IVF in Australia is very tightly regulated. All clinics are required to undergo annual inspections conducted by independent accredited auditors, and all clinics are required to adhere to National Health and Medical Research Council ethical standards. This is a level of regulation and compulsory conformity to community standards that is really unparalleled in Australian medical practice. All of this is achieved while Australia leads the world in transfer of one embryo at a time. This is very important: single embryo transfer minimises the risk of multiple pregnancies. The rate of multiple pregnancy in Australian infertility treatments is the lowest in the world. This has two important effects: one is that it ensures the future health of the child and the other is that it cuts down the cost to society of natal care associated with multiple pregnancies. In the five years from 2002 to 2007 the rate of multiple pregnancies fell from 24 per cent to 12 per cent. It has been estimated by an economic cost analysis that that has saved the Australian taxpayer $14 million in healthcare benefits—enough to fund another 5,000 IVF cycles.

We are very concerned that increased cost burdens for patients will cause increasing pressure to return to days of multiple embryo transfers, with adverse consequences for the health of the children and increased cost of natal care. As fertility doctors we appreciate that these are tough times and fully understand the need for a reasonable review of healthcare spending. In parliament last month, Ms Roxon stated that patients who see specialists who charge $6,000 or less for a typical IVF cycle will not be worse off. This seems eminently reasonable. However, Ms Roxon seems to have the numbers wrong and suggestions that patients charged the average fee of $6,000 will not be worse off are wrong. The minister’s suggested caps mean that the average patient’s out-of-pocket costs will rise from about $1,000 up to $3,000 for one IVF treatment.

It is important to make the point, we feel, that IVF services in Australia are delivered for about half the cost of prices in the US and about a third less than prices in the UK. Quoted in the Guardian in the UK on Thursday 31 May 2007, Professor Lord Winston said, ‘It is really rather depressing to consider that some IVF treatments in London are charged at 10 times the fee that is charged in Melbourne, where there is excellent medicine, where IVF is just as successful and where they have comparable salaries.’

It is also important to make the point that the figures that the government has quoted on payments to doctors do not reflect a doctor’s personal income. The money that patients pay for IVF pays for the staff to deliver the complex treatments, the scientific equipment, the culture media and the consumables used in the laboratories, as well as the ongoing research that is required to ensure that technology and results remain the best in the world. For every doctor who is involved in IVF, there are at least 10 scientists, nurses and counsellors delivering IVF care to patients. Around Australia, in excess of 2,000 employees work in the provision of IVF patient services.

Our concern is that the proposed changes to the Medicare safety net will make it significantly harder for all Australians to access infertility treatments. I work in the Western Suburbs of Sydney. My patients already struggle to deal with the emotional and physical burden of IVF. These changes will make the process that little bit harder for them.

Senator XENOPHON —Professor Illingworth, one of the criticisms that has been made is that rate of increase of fees for IVF services for the specialists who perform those services has increased beyond the level of medical inflation. Can you comment as to why that has occurred and why fees have increased faster than fees for other medical services?

Prof. Illingworth —That is a very important and reasonable concern. This has come from the Share report that was conducted on behalf of the government recently. There were a number of aspects that that report did not take into account. The first is the fact that before the introduction of the safety net, patients were previously paying booking fees. The report stated that they could find no evidence of booking fees. However, I previously sat on the independent committee appointed by the last minister, Mr Abbott, to look into this issue. We did find evidence of booking fees that were not considered as part of the cost of IVF to patients as seen by the department. That is part of the rise that was not taken into account by that report.

The second point is that IVF has been an area that has changed significantly in the last five or six years. The technology has developed quite a lot. It is not the same technology that was in place five years. There have been new developments in equipment, particularly in culture media, where advances in freezing methodologies, for example, have led to higher pregnancy rates. The cost of that has had to be passed on to the patients. The equipment has increased beyond the level at which normal medical inflation will have occurred in other areas.

The final concern about that report is that it took no account at all of the change in medical practices resulting in the lower rate of multiple births and the savings that the government has made from that. The issue there is that neo-natal costs are paid out of state government budgets while ART costs are paid out of the Commonwealth budget. Nonetheless, it is a saving to the general public purse as a whole in Australia.

Senator XENOPHON —Firstly, you make references to the technology improving. Could you take on notice providing some more details in relation to the cost increases with respect to the technology. You also made reference to both the UK and the US. I am more interested in the UK system rather than the US system. You said that the costs here are about a third less than those in the UK. Could you provide some further detail on notice in relation to that.

Prof. Illingworth —Of course.

Senator XENOPHON —Thirdly, with respect to the whole issue of neonatal care, there has been a reduction in multiple pregnancies from, I think, 24 to 12 per cent from 2002 to 2007. Have you or has your organisation conducted any research or have any studies been done or consideration been given to, if these changes go through, whether that will mean that patients will seek to have more eggs implanted, to the extent that we will have more multiple pregnancies? Has any consideration been given to that by your organisation?

Prof. Illingworth —There were three questions in that. I accept to take the first two on notice, as you have suggested. I will prepare a written submission for the committee with the information requested in the first two questions. With the third one, there is not really a factual response to that. The evidence that makes us concerned about it is evidence from the United States which shows that the rate of multiple pregnancies, and the rate of multiple embryo transfers leading to those multiple pregnancies, is directly related to the level of insurance rebate that is available to the people doing IVF. So there is clearly evidence that shows that, the higher the level of cost borne by the patient, the greater the pressure there is to transfer more than one embryo at a time. That is clear-cut. Whether that will apply to this specific change I think can only be speculation. But we are concerned about it.

Senator XENOPHON —Finally in relation to this, could you provide, again on notice, details of the United States studies in relation to multiple births? Also, you have mentioned how the state governments pick up the cost of neonatal care for premature births and complications arising out of multiple births. Could you provide some further information in relation to that so that we can draw a direct comparison about unintended consequences or the economics of paying more for neonatal care via the states?

Prof. Illingworth —My comments on that matter come from a report prepared by the National Perinatal Statistics Unit into the effects of multiple pregnancies. They have conducted a cost analysis, from which my estimate of figures has come. I would be very happy to supply the committee with that cost analysis.

Senator XENOPHON —Thank you. Chair, I might reserve the right to chip in at the end of this session.

CHAIR —Sure. Senator Siewert?

Senator SIEWERT —I want to pick up where Senator Xenophon was going with the issue of the evidence around, if costs to the patient go up, that leading to multiple implants. Could you provide that information?

Prof. Illingworth —The study to which I referred to was one carried out in the United States. I would be very happy to supply the manuscript from that to the committee.

Senator SIEWERT —But that is a US experience rather than an Australian experience?

Prof. Illingworth —That is a US experience. There is a worldwide trend—and there is another paper that has been prepared, by a doctor in the UK who has been working with the Australian database comparing practices in the UK and practices in Australia. Australia does lead the way in transfer of one embryo at a time. In speculating on the reasons for that, he suggests that the Australian system of funding a copayment for every cycle contributes enormously to that.

Senator SIEWERT —Pardon my ignorance on these issues—because I am just getting my head around some of the detail now—but I thought one of the reasons in the past for multiple implants was success rate. I would have thought, with improved technology, the success rate of a single implant would have been much better. I am questioning whether it is just cost or whether it is also that improvements in technology have meant that you are likely to have more success. I would suggest that parents would prefer to have a single birth, mostly, than a multiple birth. Has any work been done around that?

Prof. Illingworth —I think that is an important point as well. You are undoubtedly correct that improving success rate is what gives patients the confidence to go ahead with a single embryo transfer. Knowing that they have got a 40 per cent chance of getting a baby from one embryo makes them more confident than in the old days, when they only had a 10 or 12 per cent chance of getting a baby from it. But nonetheless, when people look worldwide at why some countries operate one embryo at a time, while other countries, which have the same success rate, are doing two embryos at a time, the differences that they see between the countries are in the healthcare systems and the funding involved in those healthcare systems.

Senator SIEWERT —Has there been any quantitative work done with parents? Instead of speculating on the issues—and I am not saying that it is not justified to do that as well—has there actually been any talking to parents about the decision-making process?

—There has been. You would probably have to—

Senator SIEWERT —Qualitative, not quantitative—sorry.

Prof. Illingworth —Yes, I understand that question, Senator. You will have to forgive me for not being completely au fait with the details of that. I know that there was a survey carried out in Adelaide. A research group in Adelaide interviewed parents. This was at the time of the introduction of single-embryo transfer. Parents discussed their attitudes towards one versus two embryos and the group found very strongly a high awareness of the serious consequences of twin pregnancies—that it is not all about two little babies and that the serious health risks with twins was an important factor; also that the higher success rate was an important factor. As I recall, that study also found that economic factors played a role.

Senator SIEWERT —I would like to tease out some of the costs. I am interested in the scenario that costs are increasing because technology is developing. Quite often, developing technology actually leads to lower costs rather than higher costs, so I am interested in the whole issue around technology and the significantly increasing costs. As I understand it, out-of-hospital services costs have been increasing significantly whereas in-hospital costs have been reducing. Is that correct?

Prof. Illingworth —When you talk about ART, the distinguishment between in-hospital and out-of-hospital costs is blurred. The reason for that is that, in a typical ART cycle a woman will attend as an outpatient for blood tests and ultrasound scans and she will go into hospital and have a procedure done to have eggs collected in hospital, and then there is the embryology work—the expensive part—which is done in a laboratory. Whether you count the laboratory as part of the in-patient work or as part of the hospital costs is, I think, a little unclear. That creates some of the uncertainty about whether an item number is billed with an in-patient item number, where it is not counted by the safety net, or with an out-patient item number, where it is. It is normal practice for most of the big parts of IVF to be billed as out-patient treatment.

Senator SIEWERT —And that is where you have the significant cost increase?

Prof. Illingworth —Yes, exactly.

Senator SIEWERT —Does the CHERE report detail the issues that you were talking about in terms of increased costs—the culture and all those sorts of costs?

Prof. Illingworth —No, it does not. The CHERE report is quite simply a study that, as far as we can see, was methodically sound—a study of the billing practices for ART in Australia in that five-year period.

Senator SIEWERT —So where do we find the information around the increase—the explanation and the detail around what costs what, where we have seen those significant increases and the reasons?

Prof. Illingworth —When we went back and looked at it we found that a number of our inherent costs had gone up—looking at the laboratory, technology and equipment. As Senator Xenophon suggested, perhaps the best way for me to answer that question would be in a more detailed way.

Senator SIEWERT —That would be extremely useful. Thanks. In terms of funding for these procedures, what happened before the introduction of EMSN?

—The patients paid an out-of-pocket cost, which was quite a lot higher before the safety net came into place. The uptake of IVF was a lot lower at that time; now the uptake of IVF is a lot higher.

Senator SIEWERT —I suspect that is not totally due to the safety net, though. Do you think it is solely as a result of the safety net or are there other cultural factors?

Mr Illingworth —No, I do not think so. I think your comment is probably quite valid that it may not just be the safety net. It may be that, as success rates have got higher, couples have turned to it more quickly. There may well have been a rise in access to IVF without a safety net coming into play as well. I do not know the answer to that question.

Senator SIEWERT —So, in countries that do not have the same funding support that we do in Australia, has there been a corresponding rise?

Mr Illingworth —There has, but not to the same extent.

Senator SIEWERT —Okay. Right—because now we are the fourth highest.

Mr Illingworth —Fourth country in the world.

Senator SIEWERT —And what where we before we had the safety net?

Mr Illingworth —We were down at about 10 to 15, in that sort of area.

Senator SIEWERT —Okay. The other thing is that Australia was one of the leading countries in terms of the development of the technology. Is that correct?

Mr Illingworth —I think that is correct. It is also a hard question to answer. What makes a country a ‘leading country’? Undoubtedly, Australia was the first to do this on a large-scale basis. Modern IVF involves giving women medications to stimulate the ovaries, having eggs collected and having embryos frozen. All of those things were first done in Australia, before they were done anywhere else; many Australian IVF babies had been born before a single IVF baby had been born in the United States, for example. Now, what makes our country a ‘leading country’ nowadays? Our success rates are as high as any other country’s, but they are not necessarily the highest in the world. There is no real league table in that respect. We have the lowest rate of multiple pregnancies, the biggest complication of IVF. We have the lowest rate of that because we put back. At the last estimate, 78 per cent of IVF cycles were one embryo at a time in Australia, which is an extraordinary figure compared with the rest of the world. Apart from that, every other aspect of what is good IVF is a subjective thing: are the patients well cared for; are they happy with the experience that they have had? It is very hard to make comparisons between those things.

Senator SIEWERT —Thanks.

CHAIR —Senator Boyce?

Senator BOYCE —Just following up on that: what drives the decision, Professor Illingworth, to have a single or multiple embryo transfer?

Mr Illingworth —A lot of it is about the practice in the clinic and the practice in the country or the city involved.

Senator BOYCE —So it is the clinician or—

Mr Illingworth —It is mainly the clinician that drives it. Most clinics will take the view that they would nowadays never, ever put back three embryos at a time. We would not allow a patient to put back three, even if they wanted to, because of the very high risk of triplets with putting back three. That would be an unacceptable practice. But the decision between one and two often boils down to the discussion between a patient and her doctor. Almost every doctor in Australia will advise patients to have one put back, but they will give a little leeway for someone, for example, who has been through a number of IVF cycles without success and give that patient the option of having two back if they choose to do so. But, in general, it is really on the advice of the doctor. If a doctor advises a patient to have one then most of the time they will follow that doctor’s advice.

Senator BOYCE —So you would anticipate that, should the changes to the safety net go through, clinicians would be saying, ‘But this will cost you more’?

Mr Illingworth —Exactly, and I think—

Senator BOYCE —or, ‘It would be cheaper if you did two,’ not as the advice but as part of the advice.

Mr Illingworth —It is not quite that. It is that if you have a scenario where you have two embryos sitting in a dish, both beautiful quality, you can do one of two things: either you can put one back and freeze the other one for a transfer in a couple of months time—

Senator BOYCE —Subsequently.

Mr Illingworth —or you can put them both back. If the patient looks at the cost of it, undoubtedly the first approach is one that is more expensive for her—to have to pay for two cycles rather than one. At the moment, in the current setting, that change in cost is not that high and so there is not much pressure. Patients understand the fact that their chance of having a baby, which is what they clearly want, is exactly the same whether they put them both back at once or they put them back as two separate events. As doctors we can see that it is far safer for them to put them back one at a time, as two separate events, so they do have a twin pregnancy—or, at least, there will only be a low risk of a twin pregnancy that way. So we always advise them to do it that way. But if the patient says, ‘Hang on; the difference to me now is a big difference in cost,’ then there will be more pressure over what is ultimately the patient’s decision to make.

Senator BOYCE —Just one other question. You said that the health minister, Nicola Roxon, was wrong in the figures that she used based on a cycle costing $6,000 or less. Could you talk us through in detail what was wrong and what the correct figures are, in your view?

Prof. Illingworth —Let me preface any comment on that by saying that the IVF directors group, who are appearing before you next week, are the people who have done the detailed analysis on that. What I might do is defer on that question and ask them to present the detailed analysis. I think detailed analysis on that is important because it really is the crux of the matter. The general principle is that it is reasonable to change the process by which this costing is sorted out—everybody accepts that. It is a question of the details of the actual numbers involved. To work, as Ms Roxon suggests, to a principle whereby patients who are paying the median level of costs are no worse off would, in our view, be a very reasonable approach, but our concern is that it is not quite that. The IVF directors group, who will be speaking to you next week, will provide you with the detail on that.

Senator BOYCE —You may be going to cover this in answer to the questions you took on notice from Senator Xenophon, but you spoke about the increase in costs around the technology, the media culture and the ancillary staff—the scientists and nurses et cetera—for IVF. Will the figures you intend to provide to give us a breakdown of those costs?

Prof. Illingworth —If that is what the committee would like to see, we will do our best to provide that to you.

Senator BOYCE —That would be good. Thank you.

Senator SIEWERT —What is the percentage success of the first cycle of IVF? What is the success rate of somebody the first time they try?

Prof. Illingworth —It depends entirely on how old the person is. It is also affected by whether that person has ever been pregnant before and it is affected by the cause. For example, if it is a clearly remediable cause, as opposed to someone who has just been trying for a long time with no apparent cause, the success rate is higher. But I think what you are asking is: what is the difference between the first cycle and the second cycle.

Senator SIEWERT —Yes, sorry, I am not familiar with the lingo!

Prof. Illingworth —Let me, in my rather rambling reply, get around to that point. If you, say, take a typical woman aged around 35 who has been trying to get pregnant for about two to three years and has never been pregnant before, her typical success rate from an IVF cycle the first time around would be a 35 per cent chance of having a baby. In a second cycle for that same woman, her chance of having a baby, assuming the first cycle was unsuccessful, would be around 32 to 33 per cent. When I sat on the Abbott committee four years ago, we looked very closely at the effects of different factors on success rates from ART and the success rate seems to drop by about a 10th with each successive cycle. In other words, someone who has a success rate of 35 per cent in the first cycle would have a success rate a 10th less than that in the second cycle and a 10th less again in the third cycle. But the number of cycles that women do is not a huge factor compared to, for example, whether they have ever been pregnant before. A woman who has had a baby from IVF has twice the success rate of somebody who has never had a baby from IVF. There are a lot of factors involved.

Senator FURNER —No doubt there is a deferment of decision making to give birth these days. I take it that is relevant at present?

Prof. Illingworth —Yes, it is. Those of us in our middle ages have grown up in an environment where we look at our parents and realise with horror that, at the time our parents were the same age as we are, we were at university, while our kids are on their way to primary school and high school. There has been this massive demographic change across the whole of the Western world in this. The mean birth age in Australia has gone up from 24, 20 years ago, to just over 30 now. The effect of that is that many more women are now running into their late 30s and beyond, when fertility becomes a much harder thing to achieve.

Senator FURNER —Is that a cause of costs and complications?

Prof. Illingworth —It is a cause of cost, because it means that the same women take more cycles to get pregnant if they are older than they do if they are younger. But it is also one of the factors that you referred to, Senator, with regard to why the uptake might have increased in the last few years.

Senator SIEWERT —The other issue I wanted to follow up on is why the costings are wrong. You made a comment when you were responding to Senator Boyce that in the medium cost range it sounds like it is okay but it is an issue if it is not. Are you able to provide us—and you can take it on notice—what you think is the solution? It sounded as if you were saying that you are not necessarily opposing the fact that we need to look at costs; what you are concerned about is the approach that is being proposed at the moment. Would that be a fair assessment?

Prof. Illingworth —Exactly. That is it exactly.

CHAIR —Are you opposed to the concept of the cap, or just the amount of the cap?

Prof. Illingworth —The amount of the cap.

CHAIR —That was the issue then?

Prof. Illingworth —Yes.

Senator SIEWERT —Thank you for clarifying that. That is what I assumed that you meant. Have you put proposals to government about an alternative approach?

Prof. Illingworth —Yes. This is the area in which the IVF Directors Group will be talking through the detail. They have been working through the details of all of that, and you will be able to ask them about next week.

Senator SIEWERT —So you would be supportive of anything they propose as a way forward?

Prof. Illingworth —Exactly.

Senator SIEWERT —Do you consult with consumer organisations about your proposals?

Prof. Illingworth —Yes, we do. The principal consumer organisation in Australia is Access, and we have had discussions with them about how they feel about things and their concerns about the issues.

Senator SIEWERT —So, when we get that information next week, we can be fairly confident that it has broad support. Is that the point that you make?

Prof. Illingworth —Yes, exactly, and I do hope that these requests for information have been minuted. I do not want to forget—

Senator SIEWERT —Oh, yes. It is all on the Hansard.

Prof. Illingworth —Thank you.

CHAIR —Do you have any further questions, Senator Xenophon?

Senator XENOPHON —No. I look forward to getting the answers to those questions on notice.

CHAIR —Professor, in terms of interaction with the government, I know that the report came down, and I take it the CHERA report is the one that looked at all aspects of cost across the whole—

Prof. Illingworth —That is the principle one—

CHAIR —I thought it was. I had not heard it called ‘CHERA’ before, so I understand—

Prof. Illingworth —CHERA is the body which carried out the report.

CHAIR —Yes. In terms of the interaction, I imagine that your part of the industry would have been fairly concerned immediately that came out because it was quite direct in terms of those figures.

Prof. Illingworth —Yes.

CHAIR —Were there approaches to government in the early stages?

Prof. Illingworth —Yes, there were. The IVF Directors Group has been liaising with department about that.

CHAIR —So the interactions have been going on over a period of time?

Prof. Illingworth —We were particularly concerned by the fact that this was all presented as individual doctors overbilling when in fact the costs of IVF cover such a wide range of costs. There are equipment, consumables and large numbers of staff. The fact that it was so publicly presented by off the record briefings to journalists as being greedy doctors caused us a lot of concern.

CHAIR —Is there wide variation in billing practice in the industry?

Prof. Illingworth —That is a good question. To be honest, I do not know the answer. The department does, because the department sees all the bills. I know what we charge, but I have no idea what my colleagues in other states or departments are charging. It is not something we have ever looked into in detail, so I cannot give you the answer to that question.

CHAIR —So that would probably be an important piece of the puzzle, because that comes down to the kinds of issues you have raised about what has been taken into account. If those things are there for everyone and there is still a great variation, that is a point that we will be following up on as well.

Prof. Illingworth —I agree. I think that is a reasonable question to ask and I have to say, quite honestly, that I do not know the answer to it.

CHAIR —Okay. Thank you very much, Professor. We do appreciate your evidence. Is there anything that we have not asked you that you would like to add?

Prof. Illingworth —I do not think so. I think that our major concerns have been covered in the questioning and I thank you very much for the opportunity to attend.

CHAIR —It is our pleasure. Thank you very much.

[3.35 pm]