• Health insurance giant Bupa Australia has provoked a furious customer backlash after dropping cover for some common procedures and changing how it covers treatment options in public hospitals.
• While this is always a busy time of year for people assessing their health insurance, competitors have seen an unusually high volume of calls from Bupa customers asking about switching providers.
• Bupa will now only provide cover for many treatments when it has a contract with the hospital. Chief among the concerns of customers is what happens when they get into an accident and want to use their private insurance cover in a public hospital.
• Bupa says the changes increase transparency, while critics say it is a step towards a “US-style” healthcare system where insurers can dictate where patients need to be treated.

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Australia’s biggest health insurer Bupa has been dealing with an angry customer backlash after policy changes that critics, including the nation’s doctors’ lobby, say is a step towards “US-style healthcare”.

Two major competitors confirmed they have seen a surge in Bupa customers making inquiries about switching providers and Bupa’s social media channels have seen a deluge of messages from people saying they will be cancelling their policies.

Business Insider understands the surge in these inquiries to rivals runs into tens of thousands of calls over the last eight weeks, and at a significantly higher volume than usual.

Bupa has also indicated it has had to apply extra resources to deal with the influx of customer queries on a range of changes to its policies, including dropping cover for some common treatments such as hip and knee replacements and obesity for over half a million people.

The insurer also shocked some in the medical profession with a change that means full cover will only extend to hospitals that have a contract with Bupa.

The company says its change to what’s known as “no gap cover” will increase transparency in the health system.

While the current system is convenient for doctors who want to treat patients under private rates wherever they work, the change means patients who seek to use their private cover in a public hospital could face significantly higher out-of-pocket costs.

APRA statistics for the 2016-17 financial year show Bupa, with almost $6.4 billion in premiums, was the biggest health insurer in the country on that measure last year. It also had one of the highest net margins, at 7.2%. Former federal health minister Nicola Roxon was appointed chair of the company last November.

Australian Medical Association federal president Dr Michael Gannon has accused Bupa of “helping wreck the value proposition of private health insurance” in Australia by reducing patient choice.

“The reason we worry specifically about Bupa is not only are they the insurer holding the greatest number of polices and the biggest player in the game, they are the closest to being able to have contracts with doctors that force doctors and patient to use Bupa hospitals,” Gannon told the Guardian earlier this month.

“That is US-style care and it will be resisted by our profession at every level. We can’t have a situation where an insurer decides what care patients can and can’t get. Bupa already owns dental facilities, and to have complete control they’d own hospitals and employ doctors.”

This pushes patients towards Bupa-contracted hospitals, and incentivises doctors who want to treat private patients to work in facilities with Bupa deals.

The company says the changes will increase transparency for patients.

Adam Longshaw, director of health and benefits at Bupa Australia, said: “Public hospitals have been unwilling to create formalised arrangements with private health insurers, and therefore we cannot check hospital charges for accuracy, correct charging or audit. It’s critical that our members are charged fairly and accurately on every occasion so that our health system, public or private, is sustainably affordable for the future.

“Patients who go to hospitals and day-stay facilities which have chosen not to contract with Bupa are likely to experience out-of-pocket costs, as they do today. We believe that our changes will make the system more transparent, and more importantly that our members will be greater visibility up-front about any additional costs, when making a decision about where to go,” Longshaw said.

Health insurers update their policies at this time each year but key Bupa competitors say they have seen an unusually large number of inquiries from the company’s existing policyholders this year.

A spokeswoman for Medibank, Bupa’s top competitor, confirmed an increase in inquiries from Bupa customers, as did HCF.

Danny Saksida, HCF chief officer, business growth, said: “We’ve seen an increase in enquiries from BUPA members this month looking to switch. It’s worth noting we’re in one of the busiest times of the year for the industry, we had the lowest average premium rate increase of the major funds and have made positive changes to some of our products. All of these factors will be contributing to people reviewing their policy and looking to us as a great alternative option.”

The Australian Medical Association has been encouraging GPs to speak to patients with Bupa insurance and ensure they are “fully aware of the implications” of staying with the insurer.

The AMA wants GPs to raise the issue with people who are insured with Bupa.

“Until a reversal of this poor decision on the part of BUPA can be achieved, we would advise you to make sure your BUPA-insured patients are fully aware of the implications that staying with their insurer may have upon them and their families,” Prof Brad Frankum, NSW AMA president, wrote in a note to members.

President of the Australian Orthopaedic Association, Lawrie Malisano, recently summarised the impact of the changes:

When Australians suffer trauma, fracture and the consequences of injury, they can be assured that world-class care can be provided promptly and swiftly by orthopaedic surgeons participating in emergency surgery rosters.

Bupa’s unilateral and non-consultative decision regarding their Medical Gap Scheme threatens this system, especially in public hospitals. Bupa intends for injured patients and their treatment to be entirely the responsibility of the state. This change in policy effectively dissuades patients from exercising their right to be treated as private patients.

Patients who exercise a choice to use their private health insurance have been told Bupa will no longer participate in this scheme if they are admitted in an emergency to an Australian public hospital. This decision threatens the delivery of expert care to insured patients and the private contracted arrangement that may exist between a surgeon and a patient.

Bupa has clarified that it will still contribute 25% of the scheduled cost of private treatments that result from emergency admissions, as well as covering hospital costs.

However, it will not cover costs over and above the scheduled rate, and this is what has alarmed some customers.

Take this comment from one of the company’s customers on Bupa’s Facebook page:

Bupa my private health insurance gives me peace of mind that in an emergency my family with four young children, who are more likely to require emergency care then a planned surgery will be provided with the best level of care at any facility. That we will have choice always. That we can choose the best at anytime especially in an emergency. That attending a public hospital as a private patient gives us choice. Your changes have totally destroyed this confidence that my children would get the best level of care and minimises my ability to choose. Unfortunately I don’t get to choose when my children may get ill or injured to plan ahead and suit the needs of your new policy. Mean while you continue to up my fees and payout less for the service I am paying you to provide me. Let’s watch all the good Drs walk away from providing emergency coverage. Your attempt at creating creating policy change without consulting your customer base is a massive fail! Your choice to increase fees ???? and totally undercut services has prompted our choice to look elsewhere!????

This is not atypical of the publicly-available customer feedback on Bupa’s social channels, where staff have been busily responding to hundreds of customer queries.

The Private Health Insurance Ombudsman is reviewing Bupa’s changes, and federal Health Minister Greg Hunt is understood to be following the issue closely.

Longshaw said Bupa was prepared for the influx of customer complaints.

“As we expected, Bupa has received an increase in calls and comments from our members regarding premium increases as well as our recent changes. This increase in volume happens every year at this time,” he said.

“That said we expected this and so all efforts were made to be prepared to respond to our members. We deliberately announced our changes during the rate review period, as we wanted our members to be fully informed about what we are doing and why. We have been transparent and open with our members about these changes, and with our various stakeholders.”

Health insurance premiums will rise by a government-approved average of 3.95% next month, the lowest annual increase in 17 years.

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