Medibank Private patients, including a 13-year-old cancer patient who needed a $80,000 prosthetic leg, have been forced to battle for their treatments to be covered.

Health Minister Sussan Ley has announced a review of the industry that counts roughly half of Australians as customers, yet leaves many in the lurch when they need help most.

Ms Arnold paid her Medibank Private premiums every month for seven years, until the day came when she became unwell.

In June this year, the doctor told her she needed surgery to remove an ovarian cyst that was causing her debilitating pain.

“I called Medibank and was told that I wasn’t covered,” Ms Arnold said.

“I was so distressed I couldn’t stop crying for three days. The thought of sitting in this pain for months and months was unbearable.”

Five months later and 15kg heavier, Ms Arnold is still in pain. On the public waiting list, she will be lucky if she has the $12,000 procedure by Christmas. Physical exercise is excruciating, she says, and her two dogs have not been walked for months.

Ms Arnold was frustrated to learn that policy that she was paying $120 a month for did not cover her for the procedure, yet there was a cheaper policy that would have covered it — while leaving off extras like massage and natural therapies.

She has changed to another insurer, but is subject to a waiting period for the condition that is causing her so much pain that she has to work part-time.

Ms Arnold said the policy documents sent to her by Medibank did not make clear to her that she was not covered for was she considers “a very standard operation”.

“The way they write to you is so convoluted, you’d have no idea what’s covered and what’s not covered,” she said.

“It is my belief that Medibank staff were instructed to keep advocating for the old policy I was on as it meant I paid Medibank more for what was less cover.”

She called for better regulation of the health insurance sector to force insurers to give clear, simplified information about which policies covered what.

“They’ve got to do something about it — this is people’s lives we’re talking about,” she said.

A Medibank spokesman told news.com.au the insurer had written to Ms Arnold in 2010, and again in 2011, to notify her that certain surgical procedures, including cyst removal, were now excluded from her $120-a-month My Options cover.

The spokesman said Ms Arnold would have been covered for the operation with $101.15 per month Basic Hospital cover, but that she needed dental cover, so the cheapest policy to meet her needs was $123.50 a month.

Melbourne teen James Tharle was initially told his insurer will not pay for a prosthetic leg he will need after surgery to remove a rare bone cancer in his leg. Picture: Christopher ChanSource:News Corp Australia

TEEN CANCER PATIENT’S BATTLE FOR ARTIFICIAL LEG

A Melbourne family was initially told they were not covered for a $80,000 prosthesis for 13-year-old James Tharle, who last week had surgery to remove a rare bone cancer.

Despite having high-level cover with Medibank Private for the past 20 years, the Tharles were told that the device would not be covered because James had been admitted to a public hospital (the Royal Children’s Hospital) as a private patient, the Cranbourne Leader revealed.

“Medibank Private told us James would have been easier to help if he was being treated in the private system, where the insurer could strike a deal over the cost,” Mrs Tharle told the Leader.

“It’s as though we are being penalised for having private cover.”

To to family’s relief, James’ operation went ahead after the insurer finally agreed to pay $67,000 toward the cost of the prosthesis, with the hospital to pay the cover the remaining $13,000.

The family was initially told that the hospital would have been responsible for the full cost had James been a public patient.

Medibank said in a statement to the Leader that the prosthesis James’ doctor had recommended was not on the Federal Government’s list, which Medibank adheres to for prosthesis funding, and that the insurer was not able to cover the whole cost of the device because his surgery was being performed in a public hospital.

News.com.au understands that there was a delay in the negotiation process, which left the Tharles in doubt as to whether the surgery would be funded.

A Medibank spokesman said the matter was resolved so that the Tharle family had no out-of-pocket expense.

“Our main priority throughout our discussions with the Royal Children’s Hospital over the last few weeks was to secure the best and most appropriate care for James,” the spokesman said.

“We are very pleased that James was able to progress with his operation and wish him all the best for his recovery.”

It’s a happy ending to an ordeal that aptly illustrates the impact of the complex rules governing how procedures are funded in our hospital system.

‘JUNK’ POLICIES LEAVE AUSTRALIANS OUT OF POCKET

The Facebook pages of each of Australia’s major health insurers are littered with complaints by customers who ended up thousands of dollars out of pocket when their claims were refused, or left a huge gap to be paid.

It’s a story that is all too common as insurers’ complicated, ever-changing policy rules make it increasingly difficult for Australians to plan their health care.

NIB customer Pablo Munoz decried the “health insurance rip-off scheme” that saw him saddled with a $1,193.30 bill when the insurer only paid a fraction of his operation.

“Had I saved my $158 per fortnight that I pay for this scam, I would have been able to cover the entire procedure myself without feeling the pinch,” he wrote. “Utterly useless.”

NIB responded to Mr Munoz, saying if he could reduce out of pocket expenses by “seeking out doctors that participate in our Medigap scheme.”

Other patients complained that they were booked in for operations, only to be told they were not covered as their insurer had made sudden changes to their policies, a common practice that can leave patients in the lurch if they do not check their emails.

Health Minister Sussan Ley has slammed “junk” health insurance policies and announced a review of the $19 billion sector. Picture: Lukas CochSource:AAP

Even the federal health minister reckons the system is broken.

Speaking at the National Press Club last week, Minister Sussan Ley slammed what she described as “junk” policies, which — despite being increasingly expensive — contained so many exclusions that they were not worth buying.

“Patients are the reason we have a health system,” she said.

“They should never be regarded as just an input or a number — they should be at the very centre of what the health system does. However, the reality is, this is no longer the case. Their needs have changed, and our system has not changed to match them.”

Ms Ley said Australians were “increasingly concerned with the value for money — or lack thereof — they are currently receiving from their private health insurance products”.

STAFF UNDER PRESSURE TO MEET SALES TARGETS

Former health insurance worker Anne* told news.com.au she left the industry after becoming disillusioned by the ever increasing sales targets she felt put staff under pressure to “screw over” customers.

“The major pressure on frontline staff was to sell as many high valued policies as possible,” she said.

“In order to reach those targets, we were told not to mention certain exclusions or restrictions, or at least not go into heaps of detail, saying that it was all clearly set out in the policy documentation — which it was not.”

After several years spent working for two of Australia’s major health insurers, Anne grew tired of selling policies that she did not believe were in the customers’ best interests.

“I gave up working in the industry as I couldn’t bear not being able to be clear and honest with my members,” she said.

“I had to leave, because I was betraying my own integrity.”

Anne said she felt unable to answer simple questions about which procedures would be covered by each policy, and what out-of-pocket expenses patients could expect, because the rules were so convoluted.

“It’s deliberately made confusing and difficult,” she said

“Members would ask me tricky questions, like ‘what exactly do you mean by this procedure?’ And I couldn’t give a definite answer.”

The problem, she said, was that each fund had its own interpretation of the Medicare item numbers that attached to each procedure, and federal legislation governing the industry.

For example, whether a procedure was classed as gynaecological or obstetrics could make all the difference in determining whether it was covered.

She said many Australians would be better off downgrading to a no-frills hospital insurance and putting the extra cash they would have spent on premiums into savings, which could be used to pay for procedures when they came up.

“Unless you use a lot of dental, psychiatric, chiropractic, don’t have extras — it’s a waste of money,” she said.

“Otherwise you end up paying $1500 a year for extras to claim $200 back.”

INSURERS SHRUG OFF INDUSTRY ‘MYTHS’

A Medibank spokesman told news.com.au the insurer “regrets any confusion that our customers may have experienced as to benefits they have purchased in their cover”.

“We make it clear as possible in our initial policy statements and annual policy summaries that we provide to our customers of the exact benefits they are purchasing in their health cover,” the spokesman said.

“We encourage all our customers to talk to us before going into hospital so they can be certain about what they are and are not covered for. We are always happy to talk to current and future members about the level of cover that best suits their current and future needs.”

Private Healthcare Australia chief executive Dr Michael Armitage welcomed the government’s review, but said it should approach the consultation “with an open mind” and “allow the industry once and for all to address a number of the myths about the industry that are propagated by opponents of the industry and people whom the industry pays for their services on behalf of our members”.

Dr Armitage said health insurers operated on margins of between 2 and 5 per cent and that it was a myth that the industry was “hugely profitable”.

“The industry looks forward to an open and fair minded consultation from the government and to an evidence based analysis of the facts,” he said.

The Federal Government yesterday launched its public consultation on the private health insurance industry, with an online survey that will close on December 4.

* not her real name.

dana.mccauley@news.com.au

@Dana_Adele