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Health Legislation Amendment (Gap Cover Schemes) Bill 2000

CHAIR —I welcome representatives from the AMA. Witnesses are reminded that the giving of evidence to the committee is protected by parliamentary privilege; however, the giving of false or misleading evidence may constitute a contempt of the Senate. We have before us your submission. Do you wish to make any alterations to your submission?

Dr Brand —Mr O'Dea wishes to make one alteration.

Mr O'Dea —It relates to chart 1. It is barely noticeable on that chart but we are reporting a level of uptake of Lawrence contracts of about 13.5 per cent, interpreting the PHIAC quarterly returns in what we thought was a logical way, but we have since been advised that we should not have done that. In fact, the figure is about 9.6 per cent and is, in fact, the figure that is in the department's submission. It relates to services and it is about 13.5 per cent there, but it should be about 9.4 per cent. It also affects a conclusion we draw in the submission that this would indicate that doctors are taking up Lawrence contracts at the lower fee end. I think we would have to withdraw that part of the submission as well. It is not a big point.

CHAIR —Thank you. Dr Brand, do you wish to make an opening statement?

Dr Brand —Just briefly, thank you. Gaps have clearly been a problem for our patients. Gaps are not a problem of the doctors' making. Increases in medical fees, increases in AMA fees, have kept in line with the usual economic indices. However, the rebates for medical services have been kept at a very low level and increases have been well below inflation and well below other normal indices for Medicare rebates. The fact that gaps have grown and have increased has not been a problem of overinflation of doctors' fees; it has been an underinflation of Medicare rebates. It is, however, the problem that is left to be solved with private health insurance, given that the rebates and Lifetime Health Cover have come in, or are coming in. The AMA has certainly recognised that they are a problem that needed to be addressed. We have had long-term policies that have supported private health insurance above 25 per cent of the schedule fee and long-term opposition to the solution that was offered by previous governments, known as the Lawrence legislation or the contracts that were previously in place.

However, bringing our members along to convince them that the gaps are a problem that we should be actively involved in addressing has not been an easy task in the AMA. It is certainly something that the AMA leadership has had to work hard at, convincing doctors that they need to be looking at addressing this problem. Sceptics and concerned members of the profession still abound.

Senator CHRIS EVANS —They even appeared as witnesses previously!

Dr Brand —I was trying to avoid drawing the obvious conclusion! However, having said that, in addressing some of the evidence of the previous two witnesses, we share their concerns too about the impact of managed care, the potential impact for insurers on the appropriate delivery of care. As I understand it, the commercial-in-confidence nature of this particular scheme that has been referred to from one of the insurers in the submission was simply to protect its structure prior to it being launched. But once it is launched we understand all these schemes would be something that should be known publicly. Certainly, they need to be known publicly by the people who wish to purchase them. We would certainly have no difficulty with those schemes being made known, either on the Net or wherever else, so that people can see what has been approved and what is in there. We do not anticipate that there will be any restrictions on what procedures or care can be provided, but if there are we would certainly want to know about it too.

Certainly the profession itself in supporting this legislation, and the AMA in supporting this legislation, have taken a bit of risk here. We have left the approval, or otherwise, in the hands of the minister, and ministers change. What the minister giveth the minister can taketh away at some stage. Under this legislation the Lawrence legislation will still exist and it is not proposed to be removed. It is something that we have been very concerned about for a long period of time.

What is proposed is a marketplace for medical fees where patients are able to increase the amount of knowledge about what fees will be so that they can make some decisions about their care and the costs of their care prior to having their care performed. Obviously, informed financial consent is the key to doing that. We would certainly be keen to see some standardised approach to that with an industry wide standard form. Some forms have been submitted in some of the submissions—one from us and one from the department. I understand that there is even another one from the department which we would certainly like to try and address.

However, having said that, I do not believe some of these issues are best dealt with through legislation. Legislation has to cope with all the exceptions to the rules. I think the two previous witnesses indicated a whole range of different scenarios, and even the commissioners from the ACCC acknowledged that this is not something that can be 100 per cent hard and fast nailed down. I think it is much better dealt with through a constructive approach to the problem, with the insurers obviously having a product that is likely to be supported by the profession in general and with the added safeguard of the minister making sure that he or she approves these schemes as being something that is appropriate.

We want to make sure that these issues are addressed, that informed financial consent is certainly addressed. We want to make sure that this legislation puts in place the ability for that to be dealt with in a broad-brush way rather than going to all the detail about whether it is 97 per cent of times that informed financial consent is given or it is 95[half ] per cent, acknowledging that 100 per cent of informed financial consent would be exceptionally difficult, if not impossible, to address. It is certainly something that we want to work constructively with in addressing the problems. Informed financial consent is AMA policy. It is also the policy of many other medical organisations, including anaesthetists organisations and the surgical organisations. It is something that the organised profession believes should occur. I think this will go a long way to making sure that it does occur. I will now be happy to answer any questions.

CHAIR —Thank you.

Senator CHRIS EVANS —Perhaps I could start with that philosophical point you touched on. This legislation is really just setting up the framework and a lot of those issues that would be a concern to the profession are really not nailed down in this legislation. This question of financial consent, of how the whole thing is going to work in practice, is really left to the funds and the approval by the minister.

You said you took a bit of a risk. I guess I want to explore with you what the view of the profession is about some of those issues, because it seems to me that we are not in the legislation dealing with most of those hard questions. They are all being put off. Everyone is in favour of no gaps. Everyone is in favour of informed financial consent. We are all in favour of that, but when we get down to the detail it gets hard, and none of that detail is in the legislation. Those are some of the issues that previous witnesses raised, really trying to work through the practical problems. Is this just a decision that, on balance, you think you have to go with? Why would you endorse it when you do not actually know what the health funds are going to offer?

Dr Brand —This has been a solution that we have been keen to pursue and support, so that we could look at avoiding the excesses that were potentially there under the previous contractual arrangements to cover more than 25 per cent of the schedule fee. Our members want to see more than 25 per cent of the schedule fee covered. We want to see the issue of gaps addressed. The only possible solution up till now has been through a Lawrence style contract. We have been very concerned that they will be covered by commercial-in-confidence. Lawrence style contracts are not tabled in parliament, are not public knowledge, are commercial-in-confidence between the insurer and the doctor, are not made known.

We could regale you with 20,000 stories in relation to managed care in America, but I am sure most of you have heard them before, if not from me then certainly from other people. Our concern has been that we wanted to put in place something that was better for patients, better for doctors—in that they were more likely to support it—more open and something that people could see what it looked like, and to make sure that patient treatment was not going to be compromised by any of these arrangements.

Senator CHRIS EVANS —Do not talk about managed care because I think Mr Schneider is away—

Dr Brand —No, I won't.

Senator CHRIS EVANS —and it would not be fair if we did not have the other side of the argument.

Dr Brand —I could hear him—

Senator CHRIS EVANS —Yes. I have visions of him entering to have a go. It seems that you are saying that it is the lesser of two evils and that there is a political problem that has to be fixed. But what about some of the issues such as what informed financial consent means for your members? Don't you think there is a problem that if we do not have single billing and we have not addressed some of these issues they are going to be caught in a bit of a legal minefield about what they have done to the stuff?

Dr Brand —I think this has to be a stepwise process, where we have to bring along a somewhat guarded and concerned profession. We have stretched that elastic to the limit in the AMA, making sure that we have got them behind—and that the AMA is behind—this legislation. There are clearly still some doctors that are concerned even about this and want to see it, touch it, feel it, smell it before they do anything, and I think that is also important for insurers.

This has got to be a step towards addressing what I believe is one of the most important issues. You are right: everybody holds their hands on their hearts and says that they believe in informed financial consent. The evidence is that it is not happening as often as we would like it to occur. It is probably happening 50 or 60 per cent, according to the insurers. We certainly want to make it 80, 90 or 95 per cent—acknowledging that 100 per cent is probably not feasible. We need to move to that state steadily. I think that we can bring doctors along and bring everybody along in a process that could gradually evolve—I think this will allow that to occur—rather than trying to nail it all down hard and fast in legislation in a way that is likely to embroil us in months if not years of ongoing debate and not progress the issue.

Senator CHRIS EVANS —Doesn't informed financial consent in that sort of relationship of somebody explaining to the patient what their financial need is really run counter to all the philosophical approach that your members have traditionally taken—about them having a particular relationship with a patient? We have now got a series of those professionals having to be grouped into one person providing that advice?

Dr Brand —In regard to that particular issue about informing everybody, I do not think there is a big problem at all in people informing patients about their own fees. The views range a little. The current leader of the Australian Association of Surgeons tries as hard as he can to inform all his patients about the likely fees everybody will charge. Not everybody wishes to do that or is in a position to do that, but it is something we want to move towards doing and achieving—bringing more of that on side. The difficulty that has been raised is all those practical issues we heard before—about you seeing somebody and saying, `I am going to do this operation in two weeks time, but I do not know who the anaesthetist is going to be. I use this practice that has 12 different anaesthetists who are all associates and cannot agree to the same fee, because of the ACCC legislation. Some charge this and some charge that.' It is a very difficult issue, but that does not mean to say we should not be doing something and that we should not be looking at putting this in place to make sure we move towards what would be an ideal situation. I think this legislation lets that happen—lets us move towards improving a situation that is not as good as we would like it to be now.

Senator CHRIS EVANS —This is a bit off the point: you are putting a lot of faith in the minister to protect your interests in this process, aren't you? Do you support the suggestion that each of these gaps ought to be a disallowable instrument in the Senate?

Dr Brand —We thought if it was a disallowable instrument in the Senate the insurers would never put one up, because it would sit there in the Senate for 15 sitting days and then, if it is challenged, it would have to go to a Senate inquiry. We would be looking at trying to keep a commercial product commercial-in-confidence before it is launched, and that might take six months. I do not think commercial organisations are prone to letting that occur.

When you are trying to launch a product you are winding up your advertising and everything else; you are looking at millions of dollars head of steam to get a product on the market. It was just an impractical exercise. That is the reason why we were not terribly keen about having it as a disallowable instrument. It was not that we did not want what was in it known; we were perfectly happy about that. It was simply the practicalities of getting a disallowable instrument through. You are right: ministers can give and take away, and ministers come and go. If it is not something that is going to work and it is not going to deliver for consumers, I do not believe there is a minister that is going to approve it at the end of the day, politically, if it is just going to favour one group over another.

Senator CHRIS EVANS —Apart from your interest in the consumers, isn't there your interest in your own members' interests, though? As you say, this has been an issue that has been pretty hot inside your own organisation. I am a bit surprised that you do not think there needs to be more of a safeguard. What about these issues about the contracts between doctors and the funds—do you think they ought to be public?

Dr Brand —Absolutely. This particular legislation is meant to try and obviate the need for that. This particular legislation is about trying to make sure we put in place a framework that does not need the previous Lawrence-style contracts for more than 25 per cent of the schedule fee to be paid. I would certainly like to see the previous Lawrence-style contracts made public as well, so people know exactly what conditions have been put on care.

In America where these contracts have come into place, part of the contract says that you cannot tell anybody there are any restrictions, and if there are five different therapies you can only tell the patients about three and not the other two because they are too expensive and you cannot even tell them the other two exist. They are the sorts of things that can exist in contracts which we would be very concerned about, which is why we have had our ardent opposition to them.

Senator CHRIS EVANS —What is to stop that sort of practice developing under this no gap—

Dr Brand —Under this particular arrangement, if you provide informed financial consent, provide some arrangement to minimise the number of bills—whether you call it simplified billing or patient friendly billing—then there is no need for a contract to exist for over 25 per cent of the schedule fee to be paid to the doctor. There may be terms and conditions about that payment, but that contract is between the insurer and their customer. So the customer knows what the arrangement is, he knows he will get this much if this happens, and the customer or patient then goes to the doctor and says, `If you tell me what you are going to charge me beforehand then the insurer will pay more of your fee'. What we want to see is that relationship. It was touched on earlier by the ACCC. I think there is a role for the insurers to play in educating patients, and a role for us to play as well.

Senator DENMAN —And there is a role also for you to play in educating your own members.

Dr Brand —It has certainly been something they have been aware of over the last few months.

Senator DENMAN —I am sure they have.

Senator CHRIS EVANS —Are you saying you do not think there will be development of contracts between doctors and funds under these propositions?

Dr Brand —There may be. The Lawrence legislation will still exist.

Senator CHRIS EVANS —Putting that to one side, under the no gap proposals—

Dr Brand —We would certainly like to see that there would be no need for that. The customer purchases a product from an insurer that says that under these conditions there will be extra payments. The people who buy the insurance will know exactly what the arrangement is, and the doctor should know what that is as well. They should be informed mostly because they will deal with a small range of insurance products.

Senator CHRIS EVANS —How will the funds be able to offer that to customers if they do not know what the doctor is going to charge?

Dr Brand —That is the proposal they have got now with Lawrence where they opt in and opt out. Even on specific cases, if at some stage you use the Lawrence legislation or the Lawrence contracts there is nothing to stop you not using it at all with the next patient.

The key to this is getting informed financial consent operating, having patients know what the fees will be before they get the procedure done—and I agree with you before they get to hospital where that is at all possible—so that they can take that information into account when they decide whether they need that procedure or not, and whether they go with that provider or not. Clearly, that relationship between the patient and the provider is one that is going to be based on a whole range of factors, the least of which is accessibility, whether they practice in the area, what hospital they might use, what their GP may or may not tell them, what their friends and relatives may or may not tell them, quite apart from what the fee might be. But if they do not know it they cannot factor that in.

Senator CHRIS EVANS —But there is a clear issue here for your members about whether they join the no gap schemes or participate in them or not, and how they will then be treated by hospitals, private hospitals, and other colleagues. What is your perspective on those issues? A specialist who does not want to be in a no gap scheme, operating at a private hospital, would have been consulted normally. Will they still be consulted?

Dr Brand —If that was not occurring, if there were conditions put on them from the hospital that they were not able to participate, then I believe that would be in clear breach of the ACCC rules and we would be certainly pursuing members' interests vigorously and pointing it out to Professor Fels. In fact, I think he said something like that. We wrote it down.

Senator CHRIS EVANS —That means that you accept that the scheme is going to work only if there is quite a deal of participation from your membership?

Dr Brand —Absolutely. Our surveys would indicate that 80 per cent of our members are prepared to participate in something that does not involve Lawrence style contracts. I agree with you entirely that one of the reasons why we have been doing this and pursing this legislation is to try and find something that the majority of doctors would support because an absolutely crucial part to these schemes being useful is that the vast majority of doctors participate.

Senator CHRIS EVANS —Maybe I am missing something here, but traditionally you have been concerned about the way the funds operate and the conditions they want to impose. What comforts you that you are not going to be exposed to the funds seeking their best results at the expense of what you see as the independence of the profession and best medical practice?

Dr Brand —This will be an episode of eternal vigilance on our part to protect not just our members from what we would believe is undue interference but also our patients from those sorts of things. Under this arrangement there is still no need for a Lawrence-style contract to exist for that gap to be remunerated, which is why we are supporting this as a way to address the issue gaps rather than the previous legislation. Could other excesses occur? I am very happy to see these schemes made public; I think that that is not a problem. I do not believe it would be a problem with the funds either once they put them to the minister.

Senator CHRIS EVANS —What has been made public, Dr Brand, is what they offer the consumer or what is at the heart of it, the contracts that underpin it for providers?

Dr Brand —Under this would be the arrangement between the insurer and the providers, the insurer and the customer or the patient, which would be the basis for the scheme—that is, everybody knows under what terms and conditions the more than 25 per cent of the schedule fee will be covered by the insurance scheme, by the insurer and on what basis they pay more than 25 per cent. Whoever buys the product needs to know that, and for that matter so should the doctor. Now that may occur through the insurer telling the doctor what is happening, but the patient may say, `This is the scheme I am in. If you tell me what it is, if you participate in this thing, then I get more coverage for your fee so what is the deal?'

Senator DENMAN —Where I live, which is a great example, there is only one provider so that provider can charge well above the schedule fee. Will what you have just said cover all those contingencies?

Dr Brand —I think at the end of the day doctors are free to participate or not. We have got to make sure it is a scheme that is attractive, that meets the concerns that the doctors have. This is why we have gone for this particular scheme. Under the previous Lawrence-type arrangements, at 9.4 per cent of services provided, it has hardly been a major success. We want to see 80 per cent plus of doctors participating, and they are telling us that is what they would like to do. If that is the case then we are more likely to see 80 per cent of services covered rather than 9.4 per cent. Even in smaller areas that may very well be the case.

Senator CHRIS EVANS —So you are supporting informed financial consent for all patients not just those using the gap cover schemes?

Dr Brand —I certainly would, yes. We would certainly like to see it occur for all patients, not just those using schemes. It will be something that those people with private health insurance will be asking of their doctor because, we hope, the insurer's having informed them and said, `You had better ask your doctor and we will be informing our doctors they ought to be doing it anyway.' I think the best way to bring about changes for both sides in that participation is to be expecting it and to be doing it.

Senator CHRIS EVANS —What about this argument about additional undisclosed fees not being enforceable? What is your attitude about that? There is an argument about that legal interpretation, but do you support the fact that a number of submissions argue that if they were not disclosed they ought not be enforceable?

Dr Brand —I think at the end of the day it is not something that happens in any other form of commerce or industry in this country. There are state based consumer protection arrangements in place to protect consumers from those sorts of arrangements if other providers transgress in billing or fee arrangements. The current guidelines and systems that are in place should be adequate to deal with the sorts of problems that may arise if they do.

Senator CHRIS EVANS —In your submission you talked about the inflationary question. You were not dismissive but I think you sought to downplay the concern about that. It seems to me that a lot of the other submissions and the government's approach put a lot of the onus back on doctors to ensure that there is not inflation as a result of the known gap. What is the AMA going to do to deal with that?

Dr Brand —I guess there are a couple of things. We have got to work within the constraints of the ACCC as well. We cannot tell our members what to charge or what not to charge other than certainly pointing out to them that this is about reducing gaps. If all it does is inflate fees and, instead of putting more money in patients' pockets it puts more money in doctors' pockets, then the minister, I am sure, will exercise the right that the minister has to withdraw the schemes and put them back on the basis of a Lawrence-style contract. You are right, it puts a lot of pressure on the medical profession to make sure that it understands completely what these schemes are. If they are abused and become non-gap schemes, then there are likely not to be any on the market and we will be stuck with the sorts of contractual arrangements that the AMA and the rest of the profession has been so concerned about.

Senator CHRIS EVANS —The bogey of the Lawrence contracts is the discipline in this area?

Dr Brand —I am sure it is at least one of the disciplines in the area. We will certainly be taking a role—

Mr O'Dea —And the market.

Dr Brand —And the market. If people know what the fees are and they ask around, they can ask around. That is their right as free agents to go and do that. The bogey of the Lawrence contracts might be one of those issues, but they do need to say if they do not do something about this and they do not look at it. We have taken a lot of heat in the AMA about this issue and we have got a leadership role to play in it as well, so we are not going to minimise our role in trying to educate our members about being responsible, but we have to do that within the confines of the ACCC legislation.

Mr O'Dea —The way it is structured is that the funds put the thing forward. We are presuming they will not put anything forward that is mad or that is against their commercial interests or the interests of consumers.

Dr Brand —Mr Schneider is not renowned for being overly generous to the medical profession, so I am sure he will make sure that—

Senator CHRIS EVANS —If the ACCC is watching them too, that they are not acting in collusion, yes, maybe.

CHAIR —Thank you very much for attending this afternoon.

[3.47 p.m.]