Medibank has reported “higher-than-expected” claims which has resulted in $21 million under provision from the company’s June 30, 2019 claims reserve, driven mainly by higher private hospital payments and prosthesis costs.
Medibank said the spike in the hospital claims bill for 2019 indicates that underlying claims growth per policy unit had risen to 2.4%, from the 2% originally disclosed in August, in a trend the Australian private health insurer now expects is likely to continue into 2020.
But Medibank CEO Craig Drummond said they were “curious” why the cost of prosthesis procedures, which can include artificial knees or hearts to screws and plates to reinforce bones, in particular, led to the unexpected jump in claims cost growth, ABC reported.
“You have to sit back and wonder when surgical volumes are flat.... and we’ve got prosthesis volumes close to double digits,” Drummond told investors. “We’re very curious as to what’s going on because there’s something [that] doesn’t feel right.”
Drummond also said people should not be allowed to claim on insurance for certain types of prosthetics to ensure the stability of the private health sector.
“We’ve had a look at our own business and seen some things on the prosthesis list that we’re not sure should be there... and that’s something the government is very interested in,” Drummond said. “It goes to the sustainability of the health system in general — it’s just simply not possible ... the maths do not work.”
Medibank said they remain “on track” to “stabilise Medibank brand policyholder volumes by the end of FY20 and grow in FY21.”
There were no other changes to outlook comments from the company’s FY19 results.
