Media releases

March 25, 2010

Medibank simplifying hospital products

Medibank is simplifying a number of hospital products by reducing "restricted services", in order to provide greater clarity for members and help them avoid unexpected costs.

Restricted services are the greatest single source of confusion for members of all private health insurance funds, according to figures from the Private Health Insurance Ombudsmen.

Currently, members receiving a restricted service in a private hospital are likely to incur large out of pocket costs. From June 1 most restricted services will change to either "excluded" or "included" on a small number of hospital products.

Medibank Private Chief Executive Officer, Bruce Levy, said the changes will help clarify what members are covered for.

"Our members tell us repeatedly that restricted services leave them confused over what benefits they are eligible for and where they are fully covered. Worst of all, they often leave members with large financial costs following a private hospital admission.

"For example, members on a basic hospital cover such as First Choice Hospital have experienced up to $20,000 out of pocket for hospital expenses for a hip or knee joint replacement at a private hospital.

"Another example is obstetric care. Members on a basic hospital cover have experienced out of pocket expenses of up to $8500 for obstetric care in a private hospital.

"Simply put, restricted services do not do what private health insurance is designed to do: give members certainty over the provision and cost of care in a private hospital.

"With less than 1% of all hospital claims for restricted services the number of members directly affected by these changes will be small.

"We cover our members for close to 950,000 hospital admissions each year. In contrast, the number of admissions for restricted services is very low - less than 2000 in the last 6 months. This suggests members see very little value in restricted services and those that need these sorts of services are generally already on products that better suit their needs.

"Private health insurance is designed to cover our members in the private hospital system, where they have more control over where they are treated, who treats them and how soon. Restricted services are not aligned with this goal.

"Removing restricted services is part of the effort by Medibank to improve our products and product range. This has included the development of new products and the restructuring of existing products based on research into what members want.

"We want members to be absolutely clear on what they are covered for. We understand this change may cause some distress for some people, but these changes will help bring the clarity our members tell us they want," Mr Levy said.


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