Costly surgeons targeted
Health insurer Sovereign hopes to drive down the cost of treatment for policyholders by reining in the highest-charging surgeons and specialists.
Last week Sovereign unveiled new health policies aimed at improving affordability, including paying its customer's health insurance premium if they choose not to claim on a new policy and use the public health system instead.
But behind the scenes it has been working on measures to drive down spiralling treatment costs and help policyholders avoid shock bills following their treatment.
Currently Sovereign pays the "reasonable" cost of treatment for policyholders, less whatever "excess" they have opted for.
The trouble is some surgeons and specialists charge more than what Sovereign considers are"reasonable" prices and the policyholder gets left with a bill for the difference.
Joyce Au-Yeung, Sovereign's chief officer health business, said there was a huge variation of charges for some treatments. "It can range up to two to three times the average."
Au-Yeung said Sovereign had built a team of ex-DHB experts and former employees of not-for-profit rival Southern Cross to tackle the issue.
It hopes to convince surgeons and other private medical providers to sign contracts with it to treat policyholders for prices it believes are reasonable, a move mirroring Southern Cross' "affiliated provider" programme.
At Southern Cross, the country's largest health insurer, many policies are "shared cover", where the policyholder pays a percentage of the cost of treatment, though there are also maximums that will be paid for each procedure, so if a policyholder goes to an expensive surgeon they can end up paying more.
In a bid to ensure it is paying a fair price for treatment, and to help dampen future price rises, Southern Cross has been building a network of "affiliated providers" which sign contracts with it to provide treatment at an agreed price.
Sovereign also hopes to negotiate lower prices on behalf of policyholders referred by their GPs to expensive treatment providers, Au-Yeung said.
When policyholders seek pre-approval for treatment, Sovereign aims to help them understand whether there will be a gap the policyholder must pay.
Policyholders not willing to fund that gap are then steered towards treatment providers who charge less. "The intention is not to disadvantage our customers but to stamp out the real outliers," Au-Yeung said.
She said medical inflation - the year-on-year rise in the cost of treating the same conditions - is running at around 9 per cent and Soverign hopes this will help reduce annual premium rises which have been hurting older policyholders in particular.
- Sunday Star Times