Honeysuckle Health: ACCC draft decision cannot stand

Originally Post on InsightsPlus by Aniello Iannuzzi

The Australian Doctors Federation and many other medical professionals and associations are dismayed at the Australian Competition and Consumer Commission’s Draft Determination (ACCC-DD) regarding the Honeysuckle Health (HH) proposal, prompting numerous submissions.

On Christmas Eve 2020, the Australian Competition and Consumer Commission (ACCC) received an application by Honeysuckle Health (HH), a merger of nib health funds and the US-based Cigna corporation, seeking permission to form a buying group. Cigna refers to itself as a “global health service company”, with $160.4 billion in annual revenue and over 70 000 employees.

As I stated in my previous article on this subject, in my opinion the HH (nib/Cigna) application will introduce US-style managed care into Australia, and represents a direct threat to Medicare and Australian private hospitals.

The HH application requires considered analysis and assessment of the implications of the proposed conduct on the welfare of the Australian public in regard to the delivery of health care services. As stated in the ACCC-DD:

“The ACCC understands there is no specific regulatory oversight or limitation on how parties contract with each other in the medical supply chain, and any such limitation (for example, to prevent value-based contracting) would be a matter for Government, through the Commonwealth Department of Health, to determine.”

As such, the Australian Doctors’ Federation, which I represent, believes the ACCC should refer the application to the federal Department of Health for a public inquiry into the proposed benefits and detriments of such a significant change to Australia’s health care delivery system and its impact on the future confidence of the Australian public and medical profession in private health insurance and private sector health care.

Moreover, in the current COVID-19 environment and its unprecedented disruptions, the Australian public and a considerable number of medical practitioners, medical organisations, as well as other health and patient welfare groups are either unaware of, or do not have the resources to respond to, the ACCC-DD. The HH proposal was lodged on Christmas Eve 2020. The time frame to respond to the ACCC-DD was less than one month.

This is despite the fact that all Australians are potentially impacted by the conduct.

No formal consideration of possible health outcomes

The ACCC-DD states:

“if ‘value-based contracting’ leads to reduced practitioner or procedure choice or worse health outcomes, consumers have the ability to move and HH participants will lose members to other insurers.”

To the best of the Australian Doctors Federation’s knowledge, the ACCC has not had the benefit of any formal patient safety impact evaluation in regard to the short, medium and long term implications of the HH application on patients’ health, despite acknowledging that the proposed conduct could lead to “worse health outcomes”.

The ACCC is correct in its identification of this possibility, given that no one has seen or approved a copy of the proposed unregulated “value-based contract” – value-based contracts “often reflect pay-for-performance arrangements which reimburse for pre-specified outcomes” – which the applicants intend to implement. As I said earlier, health care is a complex, ever-changing domain that cannot be assigned a value simply in monetary terms.

In order for the ACCC to fulfil its purpose, namely “protecting the interests and safety of consumers, and supporting fair trading in markets affecting consumers and small business”, it would be proper for the ACCC not to authorise any proposed conduct until a thorough independent public evaluation of potential health implications has been conducted with wider consultation.

It is also in the public interest to consider the behaviour of the applicants in relation to consumer behaviour in all jurisdictions in which they operate, both in Australia and overseas. Given the novel and unregulated nature of the proposed conduct in the Australian context and the unprecedented implementation of “value-based contracts”, it is essential that the ACCC consider the possible impacts on patients, particularly those with chronic health conditions, that are likely to arise from considerations of value “from the healthcare payer’s perspective”, according to the ACCC-DD. Our concern is that the elderly and those with multiple chronic illnesses are vulnerable to higher, perhaps unaffordable, premiums. They may possibly be excluded. This is a potential threat to community rating in health funds.

Disturbingly, such practices in the US have been described by former Cigna PR Executive Wendell Potter as follows:

“To help meet Wall Street’s relentless profit expectations, the for-profit insurers that now dominate the industry routinely dump policyholders who are less profitable or who get sick. Insurers use several techniques to cull the sick from their rolls. One is policy rescission, the common but until recently largely unknown practice in the insurance industry of retroactively cancelling policyholders with large medical bills.”

Although all such claims by former industry insiders must be subject to careful evaluation, the repeated intervention by US Government agencies into similar practices indicates clearly what is possible once the principle of community rating is sufficiently undermined and substituted with risk rating, which the Australian Doctors Federation contends is the ultimate result of the proposed conduct. Is this really what the Australian public and Australian Government want? The Australian health insurance industry is now mainly in the hands of “for profit” organisations. Given that we have not been shown the contracts, it is a risk.

How will use of patient data be regulated?

Cigna, one of the parties of the HH proposal, is a multinational corporation operating in the health industry, with substantial capacity in health data and health analytics. The proposed conduct involves using this expertise as noted in the ACCC-DD:

“… the ACCC also notes the Applicants’ submissions that HH is a health data science company with significant capability in data science, analytics and forecasting, and the HH Buying Group will have access to sophisticated data analytics, which the Applicants consider are superior to existing offerings. The Applicants state that HH’s data analytics undertaken as part of its Contracting Services will use claims and Hospital Casemix Protocol data of all Participants.”

The Australian Doctors Federation contends that all data related to medical practice – irrespective of whether the holder of the data is government or a private entity – are patient-related, and have written about such concerns relating to use of patient data by insurers in the past.

Given that patient-related data are the subject of cybersecurity concerns, both in Australia and overseas, it is imperative that there be a comprehensive assessment of the potential public detriments and national interest concerns resulting from the proposed conduct. This is especially so given we are yet to see the proposed contracts. Furthermore, it is unclear what information the applicants will be entitled to under Australian law, including access to My Health Records.

According to Cigna’s website:

“Cigna is a global health services company dedicated to improving the health, well-being, and peace of mind of those we serve. With more than 180 million customer and patient relationships in more than 30 countries and jurisdictions, we are able to harness actionable insights that address whole-person health and drive better health outcomes.”

Cigna states that it operates in Asia–Pacific, Europe, the Middle East and the Americas and provides specialised insurance to intergovernmental organisations and non-governmental Organisations.

It should give the public and health professionals no comfort that previous data leaks from health funds in Australia were not prevented despite the myriad of complex privacy and data protection regulations.

The ACCC-DD does not mention how data collected by HH shall be used, including third party use.

Health care provider autonomy

The ACCC-DD states:

“The Applicants have not sought authorisation for the HH Buying Group to engage in the collective boycott of any services of a Provider. This means that no Provider would be obliged to deal with the HH Buying Group and the HH Buying Group would not be permitted to boycott any Providers that refuse to deal with the group.”

But does this really protect those medical practitioners (small businesses in ACCC terms) who do not wish to participate in “value-based contracts”? Such practitioners may be forced out of locations due to lack of access to diagnostic services and hospitals. As these large payers get larger, they are likely to absorb more doctors and allied services. Therefore, those not in their groups may not be able to access those services. This is particularly risky for doctors with hospital visiting rights, as these groups are also buying hospitals or doing deals with private hospitals that may exclude doctors who are not signed up. There are only so many visiting positions at public hospitals, so the risk is that we create a generation of specialists with plenty of skill and nowhere to work. The Australian Doctors Federation wonders how this complies with the ACCC’s remit of “supporting fair trading in markets affecting consumers and small business”.

The HH intends to represent third-party funders, including health funds, in a major campaign to sign doctors into unregulated and as yet unseen “value-based contracts”. There is nothing to stop health funds altering existing rules of no-gap and known-gap products in order to drive medical practitioners into proposed contract arrangements by making it extremely difficult, to the point of non-viability, not to participate on “take it or leave it” conditions.

We only need to look at the way Cigna and similar companies operate in the US for evidence (for those who have time this podcast paints the picture very well). There is no reason to believe that such corporate mischief won’t happen here. Indeed, the Australian Dental Association (ADA) in its submission to the ACCC on this matter stated:

“[BUPA] recently wrote to all dentists in Australia [and possibly all primary health care providers] indicating that the mere provision of a service to a person who had purchased [a BUPA] insurance product is an acceptance of contractual terms [determined by BUPA]. [BUPA explicitly stated that if those] terms are not accepted, [a practitioner is to notify BUPA and that] practice will be ‘de-recognised’, [upon which BUPA] will not pay any claim by the patient [under the patient’s policy for treatment by that provider].”

The way forward

Submissions on the ACCC-DD were due before 11 June 2021. The overall message from the parties that submitted was clear: the ACCC must reconsider its draft decision and reject the HH proposal in toto.

Any future application should be subject to a full, transparent public inquiry and appropriate regulation of the proposed conduct to protect Australian consumers and health care professionals.

Regardless of the ACCC final determination, this matter is far from over. Beyond any consumer and competition considerations, the health, data and privacy concerns need further scrutiny by parties other than the ACCC. It is up to all of us to show interest and make our voices heard.

Dr Aniello Iannuzzi is Chair of the Australian Doctors’ Federation. He is a rural GP.

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