New compromise on medical payment reforms

Early last year, WA’s biggest health insurer HBF announced a major overhaul of how it pays doctors, to take effect from July 1, 2022.

Among the changes were plans to scrap the problematic Known Gap agreement, which it said was confusing and unfair, as well as the Limited Surgical Items List, which only pays patients benefits up to the MBS scheduled fee.

HBF also revealed it had revised all payments to doctors under its Full Cover agreement, with some increasing while others – including anaesthetist fees –decreasing.

But the health fund was forced to put the reforms on hold after strong pushback from several doctors’ groups, including the AMA.

This month, Dr Daniel Heredia, HBF’s Executive General Manager Insurance and Health Services, explains revised changes which he says will simplify medical gap arrangements.

HBF is redesigning its medical gap arrangements to provide clarity on out-of-pocket costs and to ensure a simpler experience for members, doctors and our frontline employees.

Currently, WA-based doctors can register with HBF in one of two ways.

They can be part of Full Cover and Specialist Anaesthetist agreements (chosen by 89% of HBF’s provider network).

The doctor agrees not to charge HBF members a gap for in-patient services covered by the Medicare Benefits Schedule. In exchange, HBF pays a premium above the MBS fee.

Alternatively, they can part of Known Gap agreements (chosen by 11% of HBF’s provider network).

They can opt in: the doctor charges our member a fee higher than the MBS but not exceeding the fees set out in our Full Cover schedule. HBF pays a benefit above what is legislatively required under the MBS and the member has a reduced or no out-of-pocket payment, depending on the fee charged by the doctor.

Or they can opt out: a provider can charge our member a fee above the MBS and above the fees set out in our Full Cover schedule. However, HBF will only cover the mandatory benefit (25% of the MBS), leaving the member with a large gap to make up the difference.

Under the Known Gap agreement, a doctor maintains the flexibility to choose either option (opt in or opt out) on a patient-by-patient basis.

HBF's Limited Surgical Items List, which accounts for 0.1% of services, also exists under our medical gap arrangements. Item numbers on this list are excluded from these arrangements and the doctor is free to set their own fees, with HBF paying benefits up to the MBS fee, regardless of the type of provider agreement.

Benefits for anaesthetic services associated with item numbers on this list are also excluded from the arrangements. It should be noted that no other insurer has such an offering.

In the 2022 financial year, HBF paid doctors on the Full Cover and Known Gap arrangements $95 million above what we were required to pay under the MBS, with the aim of reducing or eliminating out-of-pocket fees for our members.

Changes necessary

The Known Gap arrangement is a source of constant confusion and complaint from HBF members because there is nothing ‘known’ about the gap they may face. A member may have no gap, a modest gap, or a large gap when they see a Known Gap doctor.

The same can be said for the Limited Surgical Items List as it provides an exception to the requirements under the Full Cover arrangement.

That is why we proposed changes in 2022 – our intent was to simplify our medical gap arrangements by removing both the Known Gap agreement and Limited Surgical Items List, while also addressing the disparity in fees across specialties under the Full Cover and Specialist Anaesthetist arrangement.

However, feedback from the profession was that doctors wanted to maintain the flexibility to charge a gap on a patient-by-patient basis. Additionally, doctors did not support the redistribution of fees under the Full Cover and Specialist Anaesthetist arrangement, so HBF paused to consider a different approach.

We’ve decided not to amend our Full Cover or Specialist Anaesthetist Schedules.

However, from October 1, 2023, Known Gap will be replaced with ‘Provider Choice,’ a simpler scheme under which a specialist can opt in or out case-by-case. If they opt in, they accept the HBF schedule fee as full payment for the service and a gap is not charged. If they opt out, a fee is charged above the HBF schedule, in which case payment to the provider defaults to the MBS schedule fee and the member is charged a gap.

The Limited Surgical Items List will be removed. A scheduled fee will instead be set for all items currently on the list, and those on Provider Choice can opt in or out of the agreement for those services as outlined above. Full Cover providers who wish to remain on this agreement must adhere to the terms and conditions for these services but can choose to switch to the Provider Choice agreement. We believe this will drive value for members and flexibility and simplicity for providers.

Communication

HBF is sending tailored communications to our providers. We understand changes like this can trigger questions and we want to be transparent about how this may impact our providers to ensure they have time to find out more. Anyone who has queries should contact HBF.

Referrers and members are encouraged to use the Provider Search functionality on the HBF website to determine if a specialist is a participating provider. This information is also available through HealthShare.com.au and within GP practice software.

ED: What do you think of HBF's new plan? Give us your feedback at editor@mforum.com.au