Dollars and sense. Is there a better way to determine private surgical fees in New Zealand?

Abstract

In New Zealand, private insurers reimburse surgeons on a fee-for-service basis. Ideally, the level of reimbursements should reflect competitive market prices. Due to concerns such a market does not exist, other countries have adopted Relative Value Scales (RVS) to estimate a fair reimbursement level for different procedures. No such scale exists in New Zealand for surgeons, but it does for anaesthetists. This study compares reimbursements to surgeons and anaesthetists from private insurers using data from 3186 procedures performed between 1996 and 2002. We calculate an implicit hourly rate of reimbursement and compare the level of reimbursement between procedures and the variance of reimbursements within procedures for surgeons and anaesthetists. The results suggest that there are significantly greater deviations in average reimbursements between procedures for surgeons than for anaesthetists. Furthermore, the variability of reimbursements is greater for reimbursements to surgeons within specific procedures. While the results do not necessarily imply that surgical reimbursements are inconsistent with underlying market rates, the results are consistent with the hypothesis that anaesthetist's fees show greater stability because of the existence of a RVS. We conclude by discussing what would be required to implement a RVS for surgical fees in New Zealand.