2019 private health insurance reforms: What are the new clinical categories under hospital cover?

Private health insurers will be required to use consumer-friendly medical terms across all their documentation and platforms.

One of the problems with understanding your health insurance policy is the confusing medical jargon that's often used. The Australian government plans to put an end to this by introducing standard clinical categories for all medical terms.

The move comes as part of a range of reforms set to improve the private health insurance (PHI) industry across Australia. The government hopes the new changes will help stem rising premiums and attract more of us towards using PHI.

What's changing?

To make it easier for everyday Australians to understand, a new list of clinical categories for hospital cover will be made mandatory for all insurers by April 2020. Private health insurers will be required to use these standard clinical categories everywhere, across all of their documentation and across all platforms.

The Clinical Definitions Working Group, established by the Private Health Ministerial Advisory Committee, helped come up with the list. The new list of standard clinical categories is far more consumer-friendly, easy to understand and will cover all services.

How will this affect you?

The problem with clinical categories is that, until recently, they haven't been catered to a general audience. Whether you're a teacher or a plumber, it's often very difficult to understand the clinical categories, what is and isn't covered.

Take for example, the clinical category "Ear, nose and throat". It's short, simple and to the point so you understand what's covered. However, previous versions of this category included a reference to "the eye and surrounding structures". The working group felt that "surrounding structures" was too broad a term. The problem with terms like this for the average person is that it can make you think you're covered for conditions that aren't included in your policy. Say for instance, you developed a dermoid cyst, you could mistakenly think this is included in "eye and surrounding structures" services.

By clearly defining inclusions and exclusions, you'll be able to make a more informed choice about your private health insurance.

It's also worth remembering that insurers are required to implement these changes by April 2020, so while your policy coverage should stay the same, make sure you understand that the terminology will alter.

Will it impact your wallet?

The clinical categories could help you keep money in your wallet. The changes will be introduced to prevent you from being hit with unexpected out-of-pocket expenses. It will stop you from paying for services you thought you were covered for because of ambiguous wording or confusing medical terminology, so it could easily save you heaps.

Why is it changing?

According to the 2017–18 Private Health Insurance Ombudsman (PHIO) report, confusion about benefits was among consumers' highest complaints. There were 1,641 complaints made, largely as a result of unexpected exclusions and restrictions on member's policies, while 476 complaints were made as a result of people misunderstanding information.

The numbers show that it isn't just a few careless people neglecting to read their policy properly. Clearly, better information needs to be provided which is what the clinical categories aim to do. They provide us with a broad overview, before going into greater detail as to what is and isn't included.

When's it changing?

The clinical categories were officially introduced on 1 April 2019 but insurers will have until 1 April 2020 to adopt the clinical categories for all products. The changes will take some time to be implemented as insurers have to make sure changing existing policies doesn't leave you with less cover than before.

What else is changing?

Other changes to come out of the reforms include:

  • Tiered hospital cover. Many hospital insurance policies now fall into four tiers: Gold, Silver, Bronze and Basic. These simplified product categories make it easier for you to understand your own product and to compare providers. By 2020, all policies will fall into one of these tiers.
  • Saying goodbye to natural therapies. There are also improvements to mental health services and cuts to some natural therapies.
  • Discounts for 18- to 29-year-olds. Those under the age of 30 can get a 2% discount on their hospital insurance premiums for every year that they hold a valid hospital policy.

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