Billy Kelleher (Cork North Central, Fianna Fail)
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Question 292: To ask the Minister for Health the basis on which the figure of €143 million was arrived at savings to be achieved on the generation and collection of private income in budget 2012; the contacts he has had with insurance companies before arriving at this figure; and if he will make a statement on the matter. [40253/11]

James Reilly (Dublin North, Fine Gael)
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The €143m comprises €18m being the full year effect of the increase provided for in 2011 following the Value for Money review on private accommodation in public hospitals, €50m for the accelerated income collection from private health insurers; and €75m being the part year effect of the proposal to introduce legislation allowing public hospitals to raise charges in respect of all private patients, irrespective of whether they occupy a designated private bed.

Private patient charges contribute the greatest proportion of income receipts. However, there are difficulties in relation to private patient fees, namely

(i) the full cost of services provided is not covered by the charges;

(ii) a significant proportion of private patients are not currently chargeable due to the current rules in relation to bed designation; and

(iii) there are major delays in recouping the fees from the private health insurance companies

These issues were examined in the Value for Money and Policy Review of the Economic Cost and Charges Associated with Private and Semi-Private Treatment Services in Public Hospitals which was published by the Department in December 2010. Under the average per diem costing methodology currently used by the public hospital system, the full cost of treating private patients is not charged. While the gap between the cost and the charge has narrowed significantly in recent years due to increases in the level of charges that apply, a shortfall still arises. The Value for Money Review recommended that increases in the charges should be implemented to bring the charge to the level of average cost. This approach was targeted to yield an additional €75m for the Exchequer in 2011 with a further €18m in 2012.

I have also announced a major change in the charging regime for private patients in public hospitals. Under existing legislation, public hospitals cannot charge private patients who occupy public beds. This represents a loss of income to the public hospital system and provides a significant subsidy to private insurance companies. It is intended to introduce new legislation next year to allow public hospitals to raise charges in respect of all private patients in public hospitals. This new system is fairer and entirely in keeping with the changes required along the road to universal health insurance. Removing this subsidy to private patients will help to protect services for public patients. It is estimated that an additional €200m per annum would arise, for which €75m has been anticipated next year as given the need for legislation, a full year effect will not apply until 2013.

While the HSE and voluntary hospitals recoup a considerable amount from private health insurance companies in return for private and semi-private treatment services provided to patients with private health insurance cover, lengthy delays often occur between the discharge of patients and the receipt of payment from the health insurance companies. This has led to an unacceptably high level of debtor days/months with a significant amount in fees outstanding. Some hospitals are much more efficient at collecting income than others, and for this reason, a target of €50m accelerated income has been set for 2012 which would aim to bring more hospitals to the standard of the better performing hospitals.

The Secretary General of my Department met with representatives of the three insurers on the day of the Government announcement relating to changes to private charges for public hospitals. I intend to meet with the insurers myself shortly. It is my intention to outline to the insurers my firm belief that the level of claim costs and the underlying base cost of those claims must be examined in detail and must be addressed urgently, in order to protect the sustainability of the private health insurance market.