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Review of Measures to Reduce Costs in the Private Health Insurance Market 2013

This report was prepared independently by Mr McLoughlin with the insurers’ support, for consideration by the Minister for Health and the insurers.  All parties were very conscious of the importance of respecting competition law when dealing with issues such as prices and costs.

The Phase 1 report contains 32 recommendations under 9 headings as follows:

  • Controlling costs in private health insurance
  • Care settings and use of resources
  • Age structure of the market
  • Clinical audit and utilisation management
  • Industry approach to private psychiatry
  • Fraud, waste and abuse
  • Chronic disease management
  • Claims processing
  • Admission and discharge procedures and processes.

Most of the recommendations in the Phase 1 report could be implemented on an administrative basis, while a small number, if adopted, would require legislation.

Some of the key recommendations to drive down costs are can be summarised as follows:

  • In order to ensure that patients are treated at the lowest possible cost consistent with quality, insurers should use existing information on the appropriate treatment locations for individual procedures. Insurers should use information of this kind to query cases claimed as an in-patient which might have been carried out on a day basis.
  • Insurers will provide data to aid a more detailed analysis of the drivers behind rising costs in the PHI industry. A template agreed with the industry is to be completed within the next 6 weeks to aid further analysis for the Phase 2 report. In future, the HIA should collect this data from insurers on a regular basis.
  • The current clinical audit and utilisation arrangements by insurers should be assessed in Phase 2 to determine if they are in line with the robustness of international practice. The extent of clinical audit being carried out by each insurer should be independently evaluated in Phase 2 of this work.
  • In line with the plans for implementing Money Follows the Patient, case-based charging should be implemented using DRGs which would mean a fixed, pre-established payment for each case or patient episode.
  • Health insurers should publicly acknowledge that fraud/malpractice exists and should publish data on the extent of monies recovered from hospitals and consultants.
  • The Minister for Health should consider introducing measures to encourage younger members into the market and discourage, by means of a financial penalty, people who take out health insurance for the first time after age 30. (This is known as lifetime community rating).
  • Health insurers should prove their commitment to retaining and attracting persons in the 18-29 age group by discounting premiums for full time students up to age of 23, which is allowed at present under health insurance legislation.
  • The speed of claims processing in the PHI industry needs to be addressed by both hospitals and insurers. Public hospitals should have debtor management performance that is at least equivalent to that applying in private hospitals.
  • Health insurers should seek to agree written ‘terms of trade’ with HSE hospitals and voluntary hospitals regarding how they interact in relation to claims and payment arrangements.  There should be a specific agreement on the timescale for submission of completed claims by hospitals, and for final processing by insurers (i.e. clarification of queries, payment of claims or rejection).