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by Mr Donald Sheldon, F.R.A.C.S
AIC Conferences
1 May 1998
The first issue I am asked to address is whether agreements between doctors and hospitals are possible.
Let me say firstly that proceduralists are aware of and very anxious to simplify the financial aspects of an episode of hospital care. We believe there are a number of ways in which the present system can be refined and made more patient-friendly.
However, there are several wider issues we need to acknowledge before the more subtle aspects of these reforms are debated.
The government has made it clear that it accepts Medicare rebates for surgical, anaesthetic, and obstetric care are too low. This is supported by research we have commissioned which showed that Australian surgical fees are about half those of New Zealand, one third of the USA, and one fifth of those in Hong Kong and Singapore.
Government sources have informed us that increases in Medicare rebates would cost very little of the total budget, but such an increase is the carrot they hold. In return for increased rebates they insist on a single-billing agreement with capping of fees.
This determination by government to fix surgical fees and institute a bulk-billing system for in-hospital surgical services is one of their top priorities. Note however how readily the Minister is able to adapt the law to permit above CMBS payments for Melbourne hospital surgeons who are prepared to submit to government pressure. My understanding is that rebates in excess of CMBS schedules are only legal if the practitioner signs a 'Lawrence' contract. Perhaps someone can explain this unique anomaly to me?
Because rebates are held at artificially low levels by government policy, gaps for surgical care are commonplace. Gaps are a function of deliberate Government policy. Claims are made that medical gap payments are causing the decline in insurance. Private health insurance however is essentially private hospital insurance. Medicare is the monopoly insurer for medical costs, and because Medicare rebates have not kept up with CPI indexation as promised, gaps do occur. However, the average gap for the medical component of an in-hospital treatment episode is only $50. Hardly a cause of mass abandonment of private hospital insurance! Our own research showed gap payments were a source of irritation but not a cause for dropping out of the fund!
'Principle One' embraced by the Council of Procedural Specialists states: "Proceduralists will not enter into agreements with government or other third parties which prevent the specialist submitting his account directly to and seeking payment directly from his patient". Any agreement reached between surgeons and private hospitals must observe this fundamental contract between patient and doctor.
Since the private contracting specialist arranges the admission to the hospital he assumes the role of primary contractor and essentially sub-contracts the other services on his patient's behalf. We believe the contract for providing surgical care should involve the payment for that care. How the patient gets reimbursed for that care is a matter between the patient and his insurers - Medicare and the Health Funds. Here again the government and the funds are the cause of patient aggravation and dismay. They control the payment systems but refuse to make them patient-friendly. They try to blame the doctors and billing systems for the complexity of the system but in effect they create the difficulties by refusing to simplify the payment system!
Patients do not really care how many bills they receive - it is getting payment for them that hurts and annoys. If the government were to make health fund offices agencies for Medicare a one-shop payment system could be achieved. The fund would in effect become a Billing agency where the patient deposited their accounts. Our associations have repeatedly put this proposition to government and funds. Why won't they do it?
Why create another industry in the form of billing agencies when the system could so easily be adapted with the present infrastructure?
It seems unlikely given the professional ideology of the doctors and the deliberate intransigence of governments and funds that workable agreement between doctors and hospitals will occur.
Should hospitals in effect become the payers then the same problems we foresaw with the Lawrence legislation would exist. Contract renewal would become dependent on the doctors complying with hospital based rules of patient care and eventually clinical guidelines would become enforceable.
The other side of this equation is the issue of patient empowerment. The only real authority the purchaser of a service has in any contract is the withholding of payment should he/she be dissatisfied with that service. Once a patient has assigned his benefits prior to the completion of the service he has waived his most important power - fiscal control of the transaction.
Single Billing has been consistently rejected by the procedural bodies since we enunciated our paper on single billing 3 years ago. The Health Minister knows that, and that is why today we are talking about Simplified Billing and not Single Billing or Aggregate Billing. The Minister personally agreed to the nomenclature at a special meeting of funds, profession, hospitals and government.
Whether other medical attendants at an episode of hospital care determine to accept a single billing system is their decision. Since some have little patient contact and are essentially sub-contractors they might adopt the different approach to that of the proceduralists.
Billing agencies appear to be growth industries. if they sort out your bills and arrange to collect your rebates and facilitate payment of gaps they are entitled to a fee. We have no problem with such activities. However, as stated previously, it is contrary to our professional credo to submit our account directly to third parties. If the patient chooses to use a billing agency that is his decision. If he/she fails to pay the doctor's bill, however, then the practitioner will look to the patient not the agency for payment.
The question of how a doctor arranges remuneration for his services has traditionally been a complex and often sensitive issue. Prior to universal insurance surgeons would frequently waive their account completely. In other circumstances he might charge very large fees when treating very wealthy patients. That is his prerogative and we agree with the ACCC that fixed schedules of fees are not applicable to surgical services.
There are many situations where discussing fees with the patient is inconsistent with traditional ethical concerns for the patient's well-being. Patients are often terrified when told the nature of their condition and the surgical treatment required. They place their trust and their lives on the person they have chosen to look after them. They assume that the individual will discharge his management of their care with utmost dedication and commitment. To start talking fees in this environment is often inappropriate and distressing for the patient. It may lower the dignity of the consultation to that of a purely commercial transaction. That is not the nature of a professional surgical consultation and should not be.
Having said that, we agree that huge unexpected and unannounced gaps are distressing and try to avoid that situation. Some surgeons issue a written document which is essentially a contract for payment. Others rely on their secretaries to explain the financial aspects of the care to the patient and relative.
We have accepted the concept of informed financial consent and most surgeons attempt to observe that concept where possible. It is relatively easy to do so in purely elective treatment but more difficult in urgent circumstances or in situations where the surgery contemplated may not be what is actually done.
With those reservations we do not see any great problems with informed financial consent, including the explanation of anticipated gaps. We also reserve the right to explain that gaps are a function of deliberate government policy designed to coerce proceduralists into third party payment systems.
Although occasional patients express resentment of the gap, most are astounded at how small the surgical fee actually is and agree that the gap is fair under the circumstances. The rebate for resection and graft of an abdominal aortic aneurysm is $1,061. The same week I did an aneurysm I had a dental bridge inserted for $3,600! Suggestions that gap payments are sending the funds insolvent of course is misleading. Health funds pay only 6% of their payments to doctors in the form of gap payments - being restricted to hospital insurance by Medicare legislation, 94% of their payments go to hospitals. If we are worried about the survival of health funds we should be directing our attention to hospital management and cost structures not doctors' charges.
I suspect the hospitals will develop more efficient systems for collating and presenting their so-called "hotel" bills and that some diagnostic and paramedical services may be included in that account. However, most proceduralists will continue to present their account for professional services directly to the patient. If the government is genuine in trying to simplify the financial aspects of in-hospital care they should simply permit funds to have access to Medicare payment systems and act as billing agents for the patient. Remember that it is the payment system not the billing system which is the cause of the present difficulties.
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