Health Insurer Accused of Anti-Competitive Behavior

A former Bupa executive says the company is limiting choices for its members.

In short:

Bupa, a health insurer, is accused of anti-competitive behavior with private hospitals.

Critics say this reduces consumer choice. Bupa denies the claims, saying it saves patients money.

What's next?

Private hospitals want the competition regulator to intervene and create a new national pricing system.

Bupa has been accused of anti-competitive behavior in its dealings with private hospitals, reducing choice for customers.

Leaked documents show how Bupa's contracts affect small hospitals with little bargaining power.

Bupa's Medical Gap Scheme is a concern, as it prevents doctors from charging patients extra fees.

Former Bupa executive David Du Plessis supports the claims against the company.

The complex billing system forces hospitals to sign contracts or face lower payments from Bupa.

Patients may lose out if they are not aware of Bupa's deals with hospitals.

Doctors cannot use Bupa's Medical Gap Scheme at non-contracted hospitals, causing patients to face extra costs.

Mr. Du Plessis says Bupa is removing choice from its members.

Bupa's scheme limits patient choice and forces them to bear extra costs if they choose a non-contracted hospital.

Bupa claims its gap scheme is designed to help customers pay less for medical costs.

What is the Bupa gap scheme?

Bupa's Medical Gap Scheme has been in operation since 2021.

The scheme applies when patients are treated as 'No Gap' or 'Known Gap' patients in private hospitals.

Documents show the extent of Bupa's contracts with hospitals.

Typically, insurers detail what they will pay hospitals for theatre and room fees.

Doctors decide independently whether to apply No Gap schemes on their share of the procedure.

Bupa's Medical Gap Scheme operates differently, using hospital contracts to prevent doctors from charging gap fees.

Bupa No Gap doctors cannot use the scheme at uncontracted hospitals.

This forces Bupa customers to use contracted hospitals for no out-of-pocket expenses.

Patients unaware of Bupa's deals may face thousands in out-of-pockets for major procedures.

Jane Griffiths says Bupa's Medical Gap Scheme is different from other insurers.

Mr. Du Plessis warns that doctors may leave hospitals that are not contracted with Bupa.

That's a huge disadvantage for hospitals.

Hospitals are forced to enter contracts with Bupa, even at unsustainable prices.

It comes down to a moral question of whether Bupa should be doing this.

A Bupa spokesperson says the scheme aims to help customers avoid unexpected bills.

Uncontracted hospitals are in Bupa's sights.

Bupa has been trying to impose conditions on doctors at uncontracted hospitals since August last year.

Bupa stated its specialists could use the No Gap scheme at some uncontracted hospitals if they comply with certain conditions.

The Australian Private Hospitals Association chief executive describes this as 'beyond the pale'.

The association has called on the ACCC to act, alleging anti-competitive behavior.

Bupa argues its gap scheme benefits patients, but APRA data shows its benefits-ratio payment is lower than competitors.

Bupa's benefits-ratio payment is 82.4 per cent, compared to Medibank Private's 85.6 per cent and HCF's 87.8 per cent.

Terms could be anti-competitive.

Bashi Hazard says Bupa's Medical Gap Scheme could be an example of anti-competitive vertical restraint.

What is No Gap and Known Gap cover?

No gap cover means patients receive no out-of-pocket charges for doctor fees.

Known gap cover means patients are charged a fixed out-of-pocket amount for treatment.

Out-of-pocket charges occur when patients do not use No Gap or Known Gap cover.

Agreement or network hospitals have agreements with insurers relating to room, nursing, and theatre fees.

Source: Department of Health and Aged Care.

Bupa said it had contacted non-contracted hospitals to outline 'voluntary contracting options'.

Bupa said doctors were never asked to ensure hospital fees were waived, and any arrangements are optional.

Hospitals are free to negotiate with other insurers, which could promote competition.

Bupa said it doesn't set doctors' fees or hospitals' charges, nor does it ask doctors to influence hospital fees.

Power of Bupa's market share.

Bupa is one of Australia's largest health insurers, with nearly 4 million customers and a quarter of the market.

It is the market leader in South Australia with more than 40 per cent market share.

Bupa reported a full-year after-tax profit of $594 million in 2024-25.

In states where Bupa has a huge market share, it becomes doubly problematic.

A Bupa spokesperson said patients in regional areas could have fewer choices.

Small hospitals feeling the brunt.

Mr. Du Plessis said small hospitals have difficulties getting contracts with Bupa, especially new hospitals.

When he worked at Bupa, they had about six staff to negotiate with over 600 private hospitals.

The contracts obtained by the ABC showed the long arms of these contracts.

Hospitals must get permission from Bupa if they intend to open a new unit or wing.

While legally allowed, the Australian Private Hospitals Association said it was onerous and broke the compact with customers.

Mr. Du Plessis said the business rules hampered flexibility for even big hospital groups.

Brett Heffernan says moves by Bupa are 'beyond the pale'.

Mr. Heffernan said secrecy provisions in contracts prevented anyone from objecting publicly.

Bupa said its contracting practices complied with competition law and operated under regulatory oversight.

Peak body Private Healthcare Australia said No Gap arrangements were designed to avoid surprise medical bills.

*In this story 'No Gap' refers to both No Gap and Known Gap charging.

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