Prostheses List Reforms

The AMA has recently supported extensive reform of the Prostheses List which underpins our private sector (in much the same way that the MBS and PBS do). The Prostheses List sets out which medical devices health funds must pay benefits for, and how much they must pay.  

For instance, if a member of a health fund has hospital orthopaedic cover and requires a hip replacement, their health fund would be required to pay the minimum benefit for any artificial hip listed on the Prostheses List. 

There are approximately 11,000 items on the Prostheses List which gives specialists a wide range of choice. Examples of products on the Prostheses List include:

• hip, knee or shoulder joint replacement devices

• cardiac implantable electronic devices, like pacemakers and implantable cardioverter defibrillators

• vascular and cardiac stents

• human tissue items, like bone or bone fragments, vascular grafts, corneas and heart valves

• insulin infusion pumps.

Currently, the Prostheses List delivers well against a range of key criteria including: 

• supporting the clinical choice of prosthesis by the medical practitioner, to ensure that the best prosthetic product is used for any particular patient;

• providing for the medical device companies to support Australian specialists in their use of specific prostheses;

• providing access to a full range of prosthetic items to suit patients’ different clinical needs; and 

• ensuring that patients do not have out of pocket costs for a prosthetic item regardless of its expense.

The one criterion that current arrangements do not support well is price, and the AMA agrees reform is needed. The current policy parameters do not deliver the efficiency outcomes that are required to increase the sustainability of private health insurance.

In December 2020, the Government announced proposals to reform the Prostheses List. They put forward two models, but the AMA firmly rejected the proposal to introduce a Diagnosis-related Groups (DRG) bundled funding model this has been pursued by private health insurers.

The DRG model would improve the bottom line for health funds but is fraught with danger for patients. It would also mean a reduced choice of prostheses, increased out-of-pocket expenses for patients, and an increased likelihood of poorer health outcomes.

The AMA will support the introduction of reference pricing for items on the List, using the prices paid by Australian public hospitals as a guide, and allowing for particular features of the nation’s private sector, including the extra support offered by medical device companies. However, we believe that this option still requires extensive work in consultation with the whole industry to achieve the best possible outcomes for patients and the sector.

The AMA has also called for changes to the listing process to improve the evidence supporting prostheses use, which will further improve patient outcomes. 

You can find the AMA’s submission at /ama.com.au/articles/ama-submission-department-health-consultation-relation-options-reforms-and-improvements. 

The Government is currently reviewing the submissions it has received and we expect an announcement on the future of the Prostheses List in the May 2021 Budget.

About the author

Associate Professor Julian Rait is chair, AMA Council of Private Specialists and President of AMA Victoria.