MTAA submission to the Senate Committee on Community Affairs Inquiry into the Prostheses List Framework

The Medical Technology Association of Australia (MTAA) welcomes the opportunity to make a submission to inform the Senate Committee on Community Affairs with respect to its inquiry into the Prostheses List (PL) framework. This submission clarifies existing arrangements for prostheses and addresses concerns about their impact on Private Health Insurance (PHI) affordability.

We offer suggestions to improve existing arrangements to ensure patients with PHI have timely access to a range of contemporary clinically and cost-effective technologies which have been recommended for them by their physician.

The MTAA is the national association representing 71 manufacturers and suppliers of medical technology used in the diagnosis, prevention, treatment and management of disease and disability. MTAA works with all stakeholders to ensure the benefits of innovative and reliable medical technology are delivered effectively to provide better health outcomes to the Australian community. Over 80% of MTAA members are small-medium enterprises (SMEs) (less than 200 employees) and only around 15% are subsidiaries of large multinational companies. The PL framework contributes to the value proposition of PHI whilst suppressing benefit inflation and should therefore be retained.

Specifically, the value proposition of private hospital insurance over the public hospital system relates to patients having their choice of physician and prostheses, a greater capacity for individualised care and shorter waiting times for elective surgery. The PL framework supports the value proposition relating to choice as it ensures that patients receive the prostheses chosen by their treating physician, based on individual clinical need, with no out of pocket cost.

In considering options for reform, it should be noted that the proportion of benefits paid by PHI in relation to PL benefits is only 14% of the total, and the rate of growth in the average PL benefit has been zero for a number of years. This means that extracting savings from the PL to support the affordability of PHI is likely to have very limited impact.

The key areas of growth in benefit expenditure have related to hospital costs. These costs have continued to rise and as these represent 70% of PHI benefit payments, a review of these costs is likely to generate more substantial savings.

Notwithstanding the above, there are various opportunities to strengthen existing PL arrangements.

The MTAA supports PL reforms which ensure a sustainable, value-based funding mechanism for the supply of medical technology that delivers improved health outcomes and operational efficiencies to the Australian healthcare system. Reform should also support access to innovative technologies which improve patient outcomes and quality of life.

In this context, the MTAA supports reforms to refine the existing value-based mechanism to set prostheses benefit levels and the existing reference pricing system whereby prostheses with the same therapeutic value are grouped and priced similarly. It also supports the introduction of mandatory price disclosure based on the following principles:

  • Benefits set with reference to competition should be bounded to the appropriate competitive environment that is subject to the same policy settings and same economic dynamics. This excludes international benchmarking and public pricing as relevant factorsand is consistent with how the Pharmaceutical Benefits Scheme (PBS) price disclosure model operates.
  • The benefits model should foster and encourage innovation by providing economic incentives to allow Australia to be world leaders in adopting new and improved medical technologies.
  • Data sourced to investigate market competition must be derived from a credible source and commercial sensitivity must be secured in operation.
  • Benefit reviews should have an appropriate cadence and allow stakeholders/market appropriate time to adjust.
  • Physician choice of prosthesis should be maintained.
  • Costs of operating any model must be sustainable into the future and ensure equity of costs incurred.This will efficiently address Government’s desire for savings and pricing transparency whilst minimizing risks to patients and the healthcare system from reforms based on inappropriate data.

There are also other opportunities for improvement to the framework which will maximise efficiency, reduce red-tape and ensure PL benefits support contemporary models of care and advances in technology.

The MTAA considers that initiatives to achieve the above reform elements would strengthen the sustainability of the PL, improve the value of PHI to consumers and assist in generating savings in the context of PHI.

Government has already commenced a range of activities to reform the PL framework. The MTAA has been and continues to be, a collaborative and active participant to support and inform this process.

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