Increased Law Suits Against Health Funds On The Cards – 19 October 1999

Health funds in Australia run the risk of increased law suits as they move from being reimbursers of medical and hospital expenses to pre purchases of cheaper health care, Mr Stephen Milgate, Executive Director of the Australian Doctors’ Fund warned in Sydney today.

MBF has recently announced its intention to put its members’ health care out to tender in order to find more money to pay for no gaps medical costs.

MBF is moving to an American HMO model and yesterday the American House of Representatives voted to give patients more rights to sue these style of organisations.

MBF’s plan is giving the health fund a big say in what hospital and what doctor a health fund member is directed to.  It is using a system of  financial sticks and carrots to shape a referral pattern.  The member still has choice of any hospital outside the MBF network but at a far greater cost than using the pre purchased hospital and medical network.

Americans have previously not been able to sue their health funds because of complex legislation designed to protect the employers who pay for their employees health insurance from company retirement and superannuation funds.

Now the political backlash in the US against managed care has been so strong that Democrats and Republicans have joined to pass legislation to allow patients to sue their health funds.  The US lawyers are lining up.

Australian health funds should take note.

Health funds use terms like “members choice” hospital mask the reality that these hospitals are the health funds management choice based on contract negotiations.

It’s one thing to say you are going to be the buyer of health care, but what happens when the health fund members don’t like what you’ve bought.

“Surely they have some legal rights of redress”, Mr Milgate said.