General use items decision welcomed by the industry

The federal government has announced that general use items (GUIs) will no longer be removed from the Prescribed List on 1 July.

In 2021, the former government committed to removing general use items from the list of medical products, devices and prostheses that private health insurers must pay for, with the change due to come into effect on 1 July 2024.

General use items cover a wide range of items commonly used in surgeries, like staples, sutures and glues. Reforms to reduce the prices of general use items have already been estimated to save over $78 million dollars, putting downward pressure on private health insurance premiums.

The removal of these items from the Prescribed List raised questions over whether those costs would now be carried by patients with private insurance through higher out-of-pocket fees, or private hospitals.

Health Minister Mark Butler said, “The government has listened to the concerns about the pressure removing general use items would have caused and decided that this achieves the best outcome for patients.”

More than 15 million Australians hold private health insurance. The decision aims to prevent the risk of placing further pressure on household budgets or private hospital balance sheets at this time of heightened cost pressures.

“To maintain access to quality health care and to provide certainty to private hospitals and patients, the cost of these common surgery items will continue to be funded through the Prescribed List,” Butler said.

This change is supported by private hospital operators and the Australian Medical Association, as well as some private health insurers.

Australian Private Hospitals Association (APHA) CEO Michael Roff said removing GUIs would have made some surgeries untenable for many private hospitals.

“Procedures like bariatric surgery, knee replacements and cardiothoracic surgery would have been at risk in the private sector, potentially leading to increased demand on overstretched public hospitals,” he said.

“The health insurance sector had not been able to devise a sustainable funding model for GUIs, which would have left private hospitals managing increased costs at a time they could least afford it.

“Despite a range of proposals from different health insurance companies, none offered a viable alternative funding model with all of them shifting financial risk onto private hospitals. Potentially, this could have added $250 million in costs to the private hospital sector.”

Health insurers have already achieved significant savings on these items as they have been subject to full public sector reference pricing. This has contributed to an industry-wide profit of $2 billion for health insurance companies.

“While private hospitals have been facing significant financial pressures, with services and in some cases entire facilities closing, health insurance companies have enjoyed a period of super profits,” Roff said.

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