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SUBMISSION

ACCC Report to the

Senate on Private

Health Insurance

Medtronic Australasia welcomes the opportunity to contribute to the preparation of the Australian Competition and Consumer Commission (ACCC) annual report to the Senate on anti-competitive and other practices by health funds and providers in relation to private health insurance for the period 1 July 2014 to 30 June 2015.

The examination of key issues impacting consumers, together with the Department of Health’s Private Health Consultations 2015-16, presents an opportunity to ensure timely, equitable and affordable access to diagnostic and therapeutic medical technologies for Australians who will benefit.

Our submission to the Private Health Consultations 2015-16 provides a number of recommendations to improve the current process and concludes that the failing of many crucial free market conditions in healthcare – particularly related to information asymmetry – points to a strong need for Government intervention.

We strongly recommend the continuation of the Prostheses List arrangements as an appropriate and vital

regulation to enable privately insured patients continued access to the best, innovative medical technology and to support the value of private health insurance to consumers. There is also the opportunity to expand access to non-implantable technology to further improve patient outcomes, reduce health system cost, and enhance value to privately insured patients.

ABOUT MEDTRONIC

As a global leader in medical technology, services and solutions, Medtronic improves the health and lives of millions of people each year. We believe our deep clinical, therapeutic and economic expertise can help address the complex challenges — such as rising costs, aging populations, and the burden of chronic disease — faced by families and healthcare systems today. But, we can’t do it alone. That’s why we’re committed to partnering in new ways and developing powerful solutions that deliver better patient outcomes.

Founded in 1949 as a medical repair company, we're now among the world's largest medical technology, services and solutions companies, employing more than 85,000 people worldwide, serving physicians, hospitals and patients in more than 160 countries. Our technologies encompass several areas, including:

• Cardiac Rhythm Disease Management (pacemakers, defibrillators);

• CardioVascular (heart valves, surgical ablation, coronary & endovascular stents); • Neurovascular (revascularisation and embolisation technologies);

• Venous (endovenous therapy);

• Diabetes (insulin pumps & continuous glucose monitoring);

• Neuromodulation (neurostimulation including brain, spine & sacral, intrathecal baclofen pumps); • Spine & Biologics (fixation & stabilisation plates, rods & screws);

• Surgical Technologies (ear, nose & throat and surgical navigation equipment); and • Minimally Invasive Surgical Therapies (stapling, trocars & access instruments).

In Australia, Medtronic employs more than 800 people, is an active member of the Medical Technology Association of Australia (MTAA) and supports the Medical Technology Industry Code of Practice. To learn more about

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As an active participant in the Australian medical technology environment for more than 40 years, and

internationally for over 65 years, Medtronic Australasia is well-placed to comment on issues the ACCC is interested in examining this year, specifically those that limit consumer access to, or choices of healthcare.

Improving availability and access to medical technology forms part of Medtronic’s total commitment to take healthcare Further, Together – to lead continuous progress, to meet the challenges of today’s environment – in new ways and with new partners.

ISSUES IMPACTING CONSUMER ACCESS TO, AND CHOICES OF HEALTHCARE

While the ACCC is specifically interested in examining issues relating to policy ‘changes’, the issues of clarity, transparency and consistency around the services that are covered by a policy is much more systemic - potentially impacting consumers from the day they purchase their hospital cover policy and therefore negatively impacting the clarity and understanding surrounding subsequent communications. If there is no clarity in the base

communications, it could be argued that regardless of future communications about changes to policies – there is no context and therefore on-going potential for ‘bill shock’.

The Government’s Prostheses List has been very successful in ensuring privately insured patients have access to implantable medical technology that improves their health and quality of life. However, health funds are not required to reimburse non-implantable devices used in procedures, and given this discretion, there is often limited or no funding for these devices.

Given this antiquated approach to medical technology – which also contradicts a wider society desire for minimally invasive procedures, healthcare delivery outside of traditional healthcare facilities and innovation – privately insured patients access to, and choices of healthcare are limited. A number of technologies that do not meet the criteria of the Prostheses List fall into this category. Examples include cardiac ablation catheters used to treat atrial fibrillation and fractional flow reserve devices for measuring coronary pressure.

For therapies that use non-implantable devices, different coverage arrangements by health fund, hospital and device exist in every instance. It has been suggested that some hospitals may actively discourage their doctors from utilising these procedures and technologies due to cost concerns, despite evidence demonstrating the clinical and economic effectiveness of the therapy. This can lead to confusion and in some cases either cost shifting to public hospitals, or, privately insured patients not being offered access to these technologies.

Access to ‘unfunded technologies’ may be considered through ex-gratia payments meaning that the health fund makes a discretionary decision, on a case-by-case basis, as to whether they will provide a benefit. This decision making process results in a situation where only some health funds or hospitals provide cover for some patients – there is no certainty for the consumer as to whether they are covered or not, or at which hospital they may receive cover for their recommended treatment. Given the circumstance, this uncertainty prevails regardless of the policy or health insurer – confusion is blanketed across the entire system.

It is also not possible to identify a clear precedent in health fund decision-making related to ex-gratia funding requests. Anecdotally, the decision making process often appears to be ad-hoc with non-clinical reasons influencing the outcome. These may be related to health fund business arrangements with an individual private hospital (or group) or based upon the patient’s length of membership or claims history – which is concerning given the premise of community rating.

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When ex-gratia funding requests are not granted, patients may not receive the most appropriate treatment option, resulting in poorer health outcomes, associated cost and carer burden, and potentially the need for more frequent re-hospitalisation.

An example of health fund practice that limits consumer access to, or choices of healthcare is demonstrated when patients seek ablation technology to treat Barrett’s oesophagus (see Box below).

A patient perspective:

A new endoscopic procedure replaces the need for oesophagectomy in patients who have pre-cancerous changes in the lining of the oesophagus and are at risk of developing oesophageal cancer.

Radiofrequency ablation of mucosal metaplasia for the treatment of Barrett's Oesophagus (Item 30687) was listed on the Medicare Benefits Schedule (MBS) in November 2012 (following Medical Services Advisory Committee recommendation).

However, while listing on the MBS provided reimbursement for the doctor to provide the procedure, funding for the ablation catheter technology was not addressed.

As the ablation catheter technology is not implantable, products do not meet eligibly criteria for inclusion on the Prostheses List. As a new procedure, the technology was assessed by the National Procedure Banding Committee on a number of occasions. Although the committee recommended health funds provide additional funding to the hospital for the catheters, this recommendation is not binding.

The current situation is that many health funds are rejecting requests by doctor and hospital to fund the

radiofrequency ablation catheter technology. This is the case even when the consumer has purchased a hospital policy without any exclusions or restrictions on services covered. Only a small number of health funds, more focused on improving patient outcomes and experience, are approving funding requests, albeit on a case-by case basis.

The alternative for many of these patients is open surgery to remove all or part of the oesophagus. If the patient is denied access to the ablation therapy, or forced to pay for the procedure at their own out-of-pocket expense, access to, and choices of healthcare is acutely impacted.

Further, for the treating doctor, there is also no certainty of access when determining their patient’s most effective treatment plan under this arrangement. The ex-gratia funding requests are required to be submitted to the health fund for their consideration prior to the procedure (often 72 hours prior) and therefore do not allow ‘on the table’ decision making - there are some procedures where the doctor will not know until the patient is in theatre if they require to use a non-implanted device, or indeed, how many devices are required.

Case by case ex-gratia funding requests do not represent an appropriate pathway for private insured patients to access innovative, clinically effective non-implanted medical technology. Instead, the current pathway manifests in unexpected costs, limiting choice of healthcare and potential to cause the consumer harm or detriment.

The difference in access arrangements for implanted and non-implanted medical technology is inconsistent with the principles of equitable access to therapy and a doctor’s ability to determine the most appropriate treatment option for their patients.

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The value of private health insurance is diminished when consumers have no or limited access to non-implanted technology which has been determined to be the most suitable treatment option for their condition.

It has been reported that consumers feel private health fund choices are too complex to understand and lack transparency. There are basic assumptions that come with the delivery of private health insurance that the medical technology determined by your healthcare professional as the most appropriate treatment option for you will be available. This is simply not the case. For example, a privately insured patient with the highest level of cover offered by their health fund, with no exclusions or restrictions, may find that if diagnosed with atrial fibrillation – a very common heart condition – they are unable to access catheter ablation therapy as a treatment option.

This is a concern given the direction of healthcare delivery and the potential for future innovation. The adoption of a rising number of minimally invasive therapies, that are not ‘left in the body’ but which provide clinical equivalence or superiority, is simply not considered in the current private health insurance arrangements. An inability to fund these technologies is detrimental both to the potential patient benefit and the potential to further advance treatment.

THE PATH FORWARD

The Prostheses List should be expanded to include non-implantable technology (including diagnostic and monitoring technology) that provide improved health outcomes / cost savings and are aligned with best clinical practice. This would support the use of medical technology based on the most appropriate treatment option rather than the availability of funding.

Expanding the Prostheses List criteria so that there is equitable access to non-implantable technology for privately insured patients is expected to help improve patient outcomes and reduce health system cost.

For consumers, this would provide access to the range of medical technology for which they have the appropriate level of cover regardless of their member health fund or the provider hospital. Inclusion of these products with the Prostheses List arrangements would also help to reduce the administrative burden for hospitals by providing certainty of device payment. For doctors, they have access to range of clinically and cost-effective devices to determine the most effective treatment option for their patients and the process of providing informed financial consent to patients is also greatly simplified – directly benefiting patients.

Examples of selected products that are impacted by this situation, and that demonstrate how patients often don’t have access to optimal healthcare from their private health insurance, are highlighted below:

a) Cardiac catheters used in ablation of Atrial Fibrillation (AF):

Atrial Fibrillation (AF), a cardiac condition causing an irregular heart rhythm, is the most common cardiac arrhythmia. The annual costs to the Australian economy in 2008-09 resulting from AF was approximately $1.25 billion per annum, based on medical costs, costs of long term care for those with a disability, and lost productive output. This equates to $5,200 per annum for every person with AF.1

Catheter ablation therapy using single use non-implantable cryoablation or radiofrequency cardiac catheters is a proven treatment for patients with AF and is supported by the Cardiac Society of Australia and New Zealand in their Position Statement on Atrial Fibrillation.2

Catheter ablation procedures receive funding from the Australian Government through the MBS system and are performed in major public and private hospitals throughout Australia. However catheter ablation procedures are increasingly not being performed for patients with private health insurance. Current funding in the private health

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Private patients, despite purchasing a hospital policy which includes cover for cardiac-related procedures, are denied access to a clinically and cost-effective procedure in a private hospital. These patients may be forced into the public system, further exacerbating public hospital waiting lists and adding additional costs on the public health system. There is also a missed opportunity to realise savings from reduced pharmaceutical expenditure on the PBS, reduced hospitalisations and specialist visits, as well as through improved work force participation.

The issues relating to reimbursement for catheter ablation for patients with AF has also been recognised by the Cardiac Society of Australia and New Zealand (CSANZ).

“Currently there is significant inequity of access to these procedures and the CSANZ supports calls to redress this

imbalance to ensure all patients have access to best practice” 3

b) Fractional Flow Reserve devices:

Coronary pressure measuring systems (eg. pressure wires) - used to assess the extent of cardiac ischemia (via measurement of fractional flow reserve – FFR) are non-implantable technology used in the management of patients with coronary artery disease. FFR improves the practice of coronary percutaneous intervention (PCI) and has demonstrated clinical and cost benefits – including cost savings for health funds.4 However, the uptake of FFR in

Australia has been slow.5 The absence of definitive funding arrangements for FFR measurement devices is

considered to be a major reason for suboptimal uptake. If access to FFR was optimised, it is predicted that this would result in annual savings of $4.0m to the MBS.5

1 PWC. The Economic Costs of Atrial Fibrillation in Australia. 2010

2 The Cardiac Society of Australia and New Zealand Position Statement on Atrial Fibrillation Ablation. May 2013 3 ibid

4 Murphy et al. Cost Benefit for Assessment of Intermediate Coronary Stenosis with Fractional Flow Reserve in Public and Private Sectors in Australia. Heart,

Lung and Circulation. 2014. 23, 807–810. Over the 2-year time period of this analysis, mean savings in the private sector the savings were $5000 per patient.

5 Harper et al. How changes to the Medicare Benefits Schedule could improve the practice of cardiology and save the taxpayer money. MJA, 2015. 203 (6).

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