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Private Health Insurance Ombudsman turned aggrieved customers back to Medibank



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Medibank accused of secret policy changes: ACCC

ACCC chairman Rod Sims says Medibank may have affected many customers by allegedly failing to inform them of a 2014 policy change.

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Medibank members who sought help from the Private Health Insurance Ombudsman about shock hospital bills after an alleged secret policy change say they were left to “fight it out” alone.

The Australian Competition and Consumer Commission launched court action against Medibank last week, accusing it of misleading policyholders by failing to notify them of slashed coverage of common hospital tests such as X-rays and CT scans.

Medibank has been taken to the Federal Court by the ACCC over secret policy changes.

Medibank has been taken to the Federal Court by the ACCC over secret policy changes. Photo: Glenn Hunt

Since late 2014, when the policy changes were made, dozens of impacted customers lodged complaints with the ombudsman, only to be told to go back to Medibank, which it said was in the right.

The ombudsman told complainants the health fund had no obligation to inform them of the changes because it was an alteration to its “agreements with health care providers” – in stark contrast to the ACCC’s position.

An IT consultant from Melbourne, who asked not to be named, said the ombudsman “did not support me and left it to me to fight it out with Medibank” in relation to an unexpected pathology bill following a colonoscopy procedure.

Sam Harrison was told by the Ombudsman to take her complaint back to Medibank.

Sam Harrison was told by the Ombudsman to take her complaint back to Medibank. Photo: Justin McManus

“I told the ombudsman and Medibank that I do not need to be updated about [contract negotiations], but if, as a result, it impacts my policy outcome then I need to be informed,” he said.

“By not letting me know about the changes, I had to incur an additional cost.”

Fairfax Media revealed in April last year about 30 people had complained about the same issue and that all complaints had been resolved by Medibank without requiring further investigation by the ombudsman.

Medibank slashed coverage of common hospital tests such as blood tests but didn't notify policyholders.

Medibank slashed coverage of common hospital tests such as blood tests but didn’t notify policyholders. Photo: Patrick Fallon

The ombudsman refused to say whether it still held the same position or divulge the latest complaints figure, saying it did not want to influence the court case.

“There’s been a handful of similar complaints since them,” a spokesman said. “We encourage people to come back to us if they’re not happy with the result.”

The Private Health Insurance Act says insurers must notify members of changes that might be “detrimental” to the policyholder within a reasonable period of time before the changes take effect.

Furthermore, Medibank is signatory of the industry’s Code of Conduct, which says if “significant detrimental changes” occur, it should “provide the affected consumer with details of the change giving at least 60 days’ written notice”.

The ACCC is alleging Medibank engaged in misleading and unconscionable conduct, in breach of the Australian Consumer Law.

Sam Harrison, a TAFE teacher from Melbourne, said she was “furious” when the ombudsman referred her complaint about an unexpected $256 hospital bill back to Medibank late last year.

For 15 years she paid for Medibank’s most comprehensive policy, giving her peace of mind she wouldn’t pay out-of-pocket fees in hospital, even when her chronic Crohn’s disease saw her admitted up to 10 times a year.

“They said there’s nothing else we can do and that Medibank would investigate themselves, and clearly if you investigate yourself, the outcome is going to be beneficial to yourself,” the 47-year-old said.

“They’re a purposeless, toothless tiger, because I thought they would investigate these matters and take appropriate action.”

The ACCC’s court filing shows that Medibank made only “ad hoc payments” to members who complained loudly.

Ms Harrison eventually paid the hospital bills out of fear she could be denied treatment if she didn’t cough up, and later switched insurers.

Rachel David, chief executive of peak body Private Healthcare Australia, said the term “detrimental change” in the voluntary code was, like other terms, open to interpretation.

“With new waves of regulation and in light of concerns and issues, we do review the code to improve it,” she said.

“There inevitably will be shades of grey, and that’s why if someone makes a code complaint, it will be looked at by a committee and an auditor.”

The ACCC alleges Medibank knew or expected that many members incorrectly assumed their in-hospital medical expenses were covered, and that most members didn’t make inquiries about out-of-pocket expenses before being admitted to hospital.

The ACCC also alleges the misconduct impacted most hospital policies in place since January 2012.

ACCC’s chairman Rod Sims says despite Medibank co-operating with investigators, the health fund had still not notified members of the policy changes.

The watchdog also alleges Medibank kept quiet to prevent brand damage and not lose customers ahead of the $5.7 billion public float in November 2014.

Medibank has 3.9 million members through its Medibank and ahm brands.

It rejected the ACCC’s claims, saying it “takes its obligations under the Australian Consumer Law seriously, and has appropriate processes in place to ensure compliance”.



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