LAST September, insurance companies controlling up to 85 per cent of the Cyprus health insurance market were fined a total of £200,000 and forced to terminate their contracts with clinics after the Competition Commission ruled they had formed a cartel, abusing their dominant decision and violating two laws.
On September 4 last year, Competition Commission Head Christodoulos Tselepos told the Cyprus Mail that the ruling would ensure “healthy competition” within the health insurance market: “Only under a true system of competition is the consumer best served, because it forces an improvement in service at the best prices.”
But nine months down the line, the Cypriot health insurance market appears to be in chaos — medical treatment prices are spiralling out of control, and international reinsurance companies are reluctant to insure insurance companies in Cyprus as a result.
“We have seen reports in the press about exorbitant prices being charged, and some reinsurance companies are withdrawing cover for health insurance in Cyprus because they do not like the idea of not being able to control what is being charged,” one insurance source said. “Prices have gone up by 30-40 per cent.”
The source also defended the decision by 12 insurance companies to sign an agreement with selected clinics.
“The agreement was not an attempt to control costs or to put prices up. The agreement covered prices for standard operations, and some clinics were not contacted for this arrangement because they did not satisfy certain criteria.
“There used to be heavy competition, but now the health insurance market is a loss-making sector, and prices have gone up. Now we are at the mercy of every clinic. And if it wasn’t a profitable business, there wouldn’t be so many clinics springing up everywhere.”
Another source, with wide experience of insurance in the UK, echoed this concern.
“Insurers are facing some problems, with some of the charges raised by the surgeons being totally unrealistic.”
The source cites the example of a hernia repair by laparascopy – for which local and UK insurance companies will pay up to £750 — charged at a total of £1,050, plus operating theatre costs of £200.
“The above (is an example) of a situation that has been allowed to get out of hand. It would be incorrect to say the problem is restricted to Cyprus, because insurers face similar problems in other countries,” he added.
He warned, however, that for UK expats retiring to Cyprus, the local insurance market was “a minefield waiting for the unwary”.
A source at one claims department expressed concern at the situation, noting that a worrying trend was developing, with prices “getting out of control”.
“People, doctors, and the Consumers’ Association don’t understand that when prices go up, it’s the consumer who suffers. When you have an increase of 20-25 per cent in medical expenses, then this is going to be paid by the consumer. Not everyone will be able to have a health plan, and in the end they will suffer.”
The source also criticised the Cyprus Medical Association (CMA) for deciding to challenge the long-standing practice of insurance companies and clinics signing agreements.
“Members of the CMA have signed agreements with insurance companies in the past and it wasn’t illegal at the time, so how can they decide, after eight years, to change this? Why decide to change suddenly?”
The source noted that doctors’ fees had soared since the agreement was forcibly dissolved, making it difficult to justify the ruling against the 12 insurance companies.
“Where an electrocardiogram was £15 previously, it is now £20, plus £6 for the use of the machine – this is ridiculous. That’s an increase of 73 per cent.”
Standard operation fees have showed a similar increase. The cost of a hysterectomy, the source says, has risen from £480 to £675 this year, which makes a total increase of 40.62 per cent. And the removal of Bartholin’s cysts cost £135 in 2002, as opposed to £200 in 2003, a 48 per cent increase.
“Even allowing for the 10 per cent increase in prices in January 2003, these rises are significant.”
According to the commission’s findings, the cartel engaged in price-fixing for treatments and services with clinics it secured to contracts. But, the CMA has this year provided insurance companies and claims handling firms with a price catalogue entitled ‘Medical Fees for Insurance Organisations 2003’.
“Is this not fixing prices?” the source asked.
The source believes the CMA does not have the interests of the consumer at heart. In a document dated November 11 2002, the CMA outlined the issues discussed at an extraordinary general meeting held earlier that month, requesting the Board of Directors to begin negotiating “a revision of prices which (the Association) considers demeaning to the medical profession”.
The document also states that with regard to insurance companies, “the activities of the CMA have the sole aim of serving doctors’ interests and the protection of the dignity of the medical profession”.
Even accommodation fees have been driven up since last September. The cost of a room in an intensive care unit in 2002 was £110 per day, but has risen to £180 per day this year.
The source notes that proper invoices for hospital expenses from smaller clinics were not always received by insurance companies: “We get receipts from big clinics for hospital expenses, but from some doctors we get a piece of paper with no (breakdown of) figures or explanation of the sum – we are talking about tax evasion.”
A source at the Competition Commission yesterday expressed surprise at reports of price rises.
“We have had no complaints at all,” the source said, adding that price rises which went against existing insurance contracts could be seen as breaches of contract. “If this is the case, and prices have increased, then most probably the individual will have a right to compensation, according to contract law.”
The source had no knowledge of the CMA price catalogue, received by several insurance agents — including Nicos Rossos, the BUPA agent for Cyprus – but said “if this is the case, there is a general recommendation of the commission that says a professional association cannot engage in price-fixing”.
Another officer at the Commission added that when the complaint against the cartel was launched “the CMA backed the complaint and did not agree with the insurance companies forming a cartel and preparing such catalogues.”
The officer urged the public to launch a complaint to the Commission, in the event of any irregularities regarding medical insurance.
BUPA, which is challenging the Commission’s decision regarding the insurance cartel in court, said the organisation’s lawyers believed the Commission had made “mistakes” in its findings: “We have very high hopes the case will be overturned.”
But Rossos played down suggestions that prices had risen substantially since the ruling. “The Medical Association has issued a price list that they want us as insurers to pay them. Also, the hospitals and clinics have gone ahead and produced a price list. But the end result is that the prices are reasonable – there is a provision for a 10 per cent increase after two years.
“We always maintained that these kind of arrangements are a beneficial development. Without a price list there is chaos. Otherwise every doctor can charge what he likes.”
He stressed that it was not the CMA that had filed the complaint against the alleged cartel: “The Association was called in to offer its opinion but the case was brought by two clinics, one in Limassol and one in Nicosia.R
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Rossos noted that insurance companies dealing only with inpatient claims paid out more than those dealing with both inpatient and outpatient claims. “Companies that only deal with inpatients, really notice a significant increase,” he said.
He added that in some countries, there was negotiation between insurance companies and the medical association, a practice that does not occur officially in Cyprus.
