Industry Working Group on Private Health Insurance Prostheses Reform Outcomes Statement

The Industry Working Group on Private Health Insurance Prostheses Reform (the Working Group) was established by the Department of Health (the Department) in February 2016.

Page last updated: 20 April 2016

The Working Group met four times over February and March 2016. Membership of the Working Group was drawn from a wide range of interested stakeholders.

The Terms of Reference required the Working Group to assess the current system, including the Prostheses List Advisory Committee (PLAC) and its subcommittees, and to provide advice to the Department of Health (the Department) on:

  1. Creating a more competitive basis for purchase and reimbursement of prostheses and devices, including consideration of options for new pricing mechanisms;
  2. Specific products or categories which present opportunities for immediate benefit rationalisation;
  3. Refining the scope of products currently listed on the Prostheses List without adversely impacting on consumer access; and
  4. Opportunities for deregulation.
The Chair met separately with a large number of stakeholders who wished to further provide input to the reform process. Some information provided in these meetings was confidential, but where possible the Chair informed the Working Group of the key concerns raised in these meetings.

The Working Group considered publicly available data on prostheses pricing, in the Australian public system and internationally, to inform its deliberation on opportunities for immediate benefit rationalisation. The Working Group agreed that further information on prostheses pricing was required to inform the Working Group’s understanding of the net revenue for prostheses, taking into account all discounts, rebates and other direct or indirect purchasing incentives.

The Working Group agreed that the Chair write to sponsors to seek their assistance in gathering information on prostheses pricing in Australia. The Secretary of the Department also wrote to his state and territory counterparts to seek information on prostheses pricing in the public sector. Information was received from 20 sponsors and five jurisdictions. The information received was analysed by the Chair and the Department, but due to the confidential nature of the data only a summary was provided to the Working Group.

Issues raised at Working Group meetings, Chair meetings with stakeholders and in submissions to the Working Group, included:
  • A lack of transparency in the current system.
  • Stakeholders agree that there is scope for benefit reductions for some categories on the Prostheses List.
  • That the differentials between public prices and Prostheses List benefits are greater in certain categories of devices, like cardiac devices and intra-ocular lenses.
  • Recognition that there are differences between the public and private hospital systems.
  • Recognition that the current system advantages larger companies who have more capacity for rebating.
  • In some cases the amount of support provided by Prostheses List sponsors in theatre is high.
  • The cost of shipping prostheses and associated instruments can be significant.
  • PLAC should not be replicating processes that are already being undertaken as part of TGA assessment processes, for example, PLAC should not be refusing to list prostheses on the grounds of safety, because assessment of safety is the responsibility of the TGA.
  • The definition of a prosthesis, for the purpose of funding through the Prostheses List, needs to be flexible to allow for new technology. If the Prostheses List is to continue, the types of devices funded through it needs to be re-examined.
  • Encouraging innovation and research and development in the Australian prostheses industry is important, but the Prostheses List may not be the appropriate mechanism for this.
  • Recognition of the value of Clinical Registries, with potential for the data they generate to inform prostheses funding as part of a dynamic process.
At the final meeting of the Working Group on 29 March 2016 the Working Group agreed to the wording and positions in the Working Group Final Report. The Final Report was provided to the Department of Health on 31 March 2016 and provided to the Minister on 4 April 2016.