Analysis: Corporate healthcare trusts – addressing over-treatment and affordability

There is little doubt that corporate healthcare trusts can give employers more flexibility about scheme design. But, as Nic Paton reports, the issues of over-treatment and cost control remain a challenge

Last month saw the first batch of submissions being made to the Competition Commission’s (CC) investigation into the private healthcare market, a probe that is expected to cast an at times uncomfortable spotlight on the industry between now and its likely end point in April 2014.

The CC’s move, launched in April following a referral from the Office of Fair Trading, as has been extensively reported in Health Insurance, is focused on a number of elements, not least a perceived lack of transparency in the market when it comes to pricing, quality of care and the evidence base of interventions.

Within this, the issue of unnecessary intervention or over-treatment is likely to be a key area of questioning for the commissioners, given that it is something providers such as Bupa and Aviva are already beginning to highlight. Moreover, in a tough economic climate, the willingness of employers to, in effect, grant their insurers or scheme administrators a blank cheque to treat up to the maximum limit is equally being questioned.

So, how much of a problem is over-treatment and/or complacency in how private healthcare operates and is funded? And what can employers do to respond? Furthermore, are vehicles such as healthcare trusts, which technically are supposed to offer employers greater flexibility and control around cover, a viable answer?

When it comes to the scale, or not, of the problem – or even whether it exists at all – the consensus seems to be a rather unsatisfactory 'yes, probably'. Richard Saunders, sales director at healthcare trust provider Healix Health Services, concedes that, especially within the fully insured arena, there are clear signs there may be a serious issue here for employers.

“It is easier to be overpaying on a fully insured contract because there is a sense the insurer is always going to be picking up the bill. Some insurers will have an authorisation code that can carry on a claim without that many checks,” he says.

“This year we have picked up a number of clients who have been on fully insured contracts and one of the biggest things is ongoing checking for treatment that happened a long time ago. In one case we picked up 50 cases within the first month,” he adds.


Nick Reynolds, head of PMI at Aviva UK Health, argues it would be wrong to overstate the problem. He says it is not “endemic”, but concedes it could become "a far bigger issue”.

There is, in general, not enough challenging by insurers, administrators, providers or employers of the evidence base or questioning whether an approach is right or needed.

Matthew Judge, director at Jelf Employee Benefits, adds: “There may be over-treatment or it can be a case of people automatically being treated privately when there is no need for it because there is more than adequate provision within the NHS.”

However, Judge suggests that is “almost impossible” to prove statistically that over-treatment is taking place, while Elliott Hurst, health consulting director at AXA PPP healthcare, also sounds a cautionary note.

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