The Morrison Government has quietly moved to impose new guidelines on the certification required for certain medical procedures to be performed on insured patients in private hospitals.

The move is intended to avoid disputes between health insurers, who pay the bills, the hospitals who provide the facilities, and the doctors who demand clinical autonomy. It has the potential to reduce insurance costs, however the impact on the quality of care remains to be seen.

A report by the Department of Health reveals the disputes have caused uncertainty for patients about whether they have insurance cover for procedures (including out-of-pocket costs), disincentives for doctors to deliver legitimate services in hospital, and “potentially higher premiums if insurers increasingly pay hospital accommodation benefits for services that should not be provided as hospital treatment”.

“A major hospital provider estimated that over 400,000 certifications occur each year,” the department said.

“A very small proportion of these have, and continue to, cause intractable disputes between insurers and private healthcare providers, where insurers have not paid benefits based on Type C certificates claiming they did not provide sufficient information to justify hospitalisation of the individual patient. The majority of these disputes are resolved.

“A major insurer group has indicated that there are six hospitals (with a correspondingly low number of medical practitioners) that have business practices that they consider encourage inappropriate Type C certification.”

Not only will there be new guidelines, but the government will now allow for doctors whose practices are in question to be referred to the Professional Services Review for investigation. When the department consulted on possible solutions to the problem, stakeholders regarded the PSR option as overkill, however it was included in the final reforms to help ensure compliance with the guidelines.

It is the latest in a series of interventions by the Federal Government to reduce the costs that have been driving up premiums, and provide more certainty and transparency for health fund members.

The latest data shows the exodus from health funds has slowed, with 44.2 per cent of the population recorded as having hospital cover at the end of March. Queensland has lower rates of coverage due to its strong public hospital system and the lack of private alternatives in some areas.