New Bupa health insurance restrictions hit 1 September 2018

Dramatic policy changes deemed by the Commonwealth Ombudsman to have been ‘poorly communicated’ have left Bupa customers with no choice but to consider their private health insurance options, the Australian Society of Ophthalmologists warned.

The warning comes following the release of The Commonwealth Ombudsman’s June 2018 report into Bupa’s planned hospital policy changes, which are set to take effect on 1 September 2018 (previously advertised by Bupa as 1 July 2018).

The report outlines “detrimental impacts” on consumers and takes the insurance giant to task over the “appropriateness of communications provided to policyholders”.

ASO President Dr Peter Sumich said Bupa had so far failed in its duty to communicate clearly with its customers.

“I have been left confused by Bupa’s recent policy announcements and re-announcements. What hope does the average consumer have to figure this mess out? It breeds distrust and public anger with the private medical system,” Dr Sumich said.

“It seems that BUPA is playing a game of ‘cat and mouse’ with health consumers and providers,” he said.

As a result of the changes, more than 700,000 Bupa customers who hold minimum benefit policies will lose significant benefits after 1 September 2018. The lost benefits would appear to significantly disadvantage older policy holders.

The executive summary of the Ombudsman’s report says, “This report discusses two changes that are being made by Bupa which will have a detrimental impact on consumers. The first is policy restrictions becoming exclusions on Bupa’s basic and mid-level hospital policies. The second is alterations that Bupa has made to its medical gap scheme affecting non-contracted hospital and public hospital admissions.

“The impact of the change to exclude rather than pay partial benefits towards a list of services on its basic and mid-level hospital policies is outlined in this report. In summary, the change removes an entire benefit from payment, including the hospital accommodation, prosthesis, medical gaps and other benefits previously eligible for benefit.”

The report says that policy restrictions will become exclusions on basic and mid-level hospital policies, Bupa is removing restricted benefits for:

• hip and knee replacements
• cataract and eye lens procedures
• renal dialysis for chronic renal failure
• obesity related procedures and surgeries
• abdominoplasty and lipectomy procedures.
• pregnancy and birth related services
• IVF and assisted reproductive services.

Bupa has advised that these changes will affect 720,285 policyholders.

The report said that until 1 July 2018 [since amended by Bupa to 1 September 2018], policyholders are eligible to receive a “restricted” benefit –this is a partial benefit for these services and for the hospital accommodation charges and a standard benefit for the prosthesis and medical gap charges in all hospitals in Australia. From 1 September 2018, these benefits will be removed and no benefits will be paid to policyholders.

Currently 720,285 policyholders have chosen Bupa policies that pay restricted benefits for a range of services. These consumers have elected to forgo being fully covered for all services in exchange for a lower premium. Considering the number of policyholders holding Bupa’s basic and mid-level hospital policies, this represents a large group of consumers whose decision about their health insurance coverage is affected by Bupa’s policy changes. This report provides some case examples to illustrate the potential effect of this change on consumers.

After this policy change comes into effect these consumers need to consider whether to accept the lower level of health coverage, or whether to upgrade to a more expensive level of cover.

Case example from the report – Hip replacement surgery in private hospitals

A consumer holding Bupa basic or mid-level hospital cover is currently partially covered for treatment in a private hospital for a hip replacement.

Up until 1 September 2018 they are covered for the surgeon’s fee, anaesthetic, prosthesis, pathology and other medical services to the same level as a top level hospital cover. For hospital accommodation and theatre charges, they receive a restricted or “minimum default” benefit of between $277 and $394 per day. The consumer is required to pay the balance of the daily hospital accommodation charges and the theatre fee, which varies depending on the treatment and facility.

Under the current policy, a consumer would expect to receive approximately half the cost back on a $25,000 hip replacement surgery, because a standard hip prosthesis costs approximately $10,000 and Bupa also contributes a significant amount of the costs of accommodation and doctor charges.

From 1 September 2018 this consumer will receive no benefits from Bupa for hip replacement surgery. If the consumer proceeds with treatment in a private facility they will pay the entire costs of approximately $25,000.

In response to the Ombudsman’s report, Bupa wrote, in part, “However, we recognise the Ombudsman’s concern that some customers who were affected may not have not known how that change impacted them or what they needed to do to maintain cover for these services.

“As a result, we will extend the period during which those customers who are affected can upgrade their cover without having to re-serve waiting periods.”

The previous date for the removal of benefits set by Bupa, 1 July 2018 has been extended to a new date of 1 September 2018.

Australian Society of Ophthalmologists said, meanwhile, 1.4 million Bupa customers will have new restrictions placed on their choice of hospital (and as a consequence their choice of doctor).

“The unfortunate punchline here is: Over a million Bupa customers now have a pressing deadline (1 September) to figure out what these changes mean in the real world and either upgrade their policy coverage with BUPA or switch to another health insurer who can give them the full range of choices,” Dr Sumich said.

Gap cover to emergency patients in public facilities is to be reinstated which is a small victory but only a partial concession.

See the Commonwealth Ombudsman’s report “Bupa Health Insurance Hospital Policy Changes” at http://www.ombudsman.gov.au/__data/assets/pdf_file/0029/84791/Bupa-Health-Insurance-Hospital-Policy-Changes-June-2018.pdf