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How Medibank discharge its accountability

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How Medibank discharge its accountability

Introduction

Medibank is a government-owned health insurer based in Australia that was founded established by the Fraser regime through Medicare Australia. Medibank is Australia’s biggest health insurance giver with over 3.4 million subscribers under two leading brands and having operations in all the Australian states. Medibank has had an aggressive approach towards providing healthcare insurance as illustrated by the numerous mergers and acquisitions that led to increased services such as the Health Solutions Division, health coaching initiatives and preventative treatment efforts. Other services include Nurse-On-Call and Healthline services that allow distant patients to access Medibank facilities. Apart from medical services, Medibank also has a non-profit perspective to it although this aspect is largely inactive with most of the revenues being returned t the federal government. The analysis of the methods and processes through which Medibank discharges its accountability will form the major part of this paper. This section will be accompanied with an evaluation on the effectiveness of the method of accountability and conclude with a discussion on the pertinent issues raised throughout the paper.

Method

The medical and administrative staff at Medibank uses the capitation system to control the disbursement of salaries and allowances. More importantly, the capitation method allows for greater accountability within the organization. In definition, capitation refers to the payment system that is commonly used by health care service providers such as general practitioners or nurses. Through the capitation system, all the physicians are paid a set sum for each enrolled patient allocated to them, for a set period, despite whether the patients’ intention was to seek treatment or not. Normally, providers are contracted by establishments known as independent practice association that enrolls the providers to care for health maintenance organizations patients. The amount of payment depends on the average predicted health care consumption of every patient, with higher payment for patients having longer and elaborate medical histories. These payment rates are also influenced by age, ethnic background, gender, where they are employed, and their residence as these elements naturally affect the cost of health care. Apart from the capitation system, Medibank also uses internal and external audits and quarterly and annual reports to increase the level of accountability in their organization. The next section addresses the internal audit process within Medibank.

Internal Audit Process

The Audit and Risk Management department within Medibank carries out internal audits in a fashion that complies with the provisions outlined in the company audit plan. This plan is revised and endorsed yearly by the same management committee as well as the board. All important audit reports and an outline of other reports are evaluated by the audit and risk committee and endorsed by the company board. KPMG was contracted to conduct the internal audit in the last year. The methodology used in the risk management within Medibank was developed on the Australian risk management standards. A significant element of the operational appraisals and planning was the recognition and assessment of possible business threats. Through a joint audit comprising of members from internal and external audit committees, Medibank ensures that its financial and administrative actions and decisions are reviewed by qualified experts and the outcomes of the audit released to the public domain for scrutiny. In this way, Medibank earns the trust and legitimacy of the public who form the largest number of customers. The next section discusses the different dimensions of accountability that concern healthcare insurance providers.

Discussion of accountability and its dimensions

All health insurance organizations contain accountability associations of diverse forms that operate with changing levels of success. Frequently, the awareness of unsuccessful or inadequate accountability provides the drive for reforms. However, as a guide to the proper way of developing health systems, calling for more accountability will not help the situation (Sorensen, Roslyn & Rick 79). The notion of checks and limitations on authority and judgment seems clear-cut, but for accountability to guide actions, further theoretical, systematic, and operational effort needs to be exerted.

Enhanced responsibility is often necessary as an aspect in advancing health system operations. On the surface, the concept of enhanced responsibility seems uncomplicated, but it encloses a high level of intricacy. For accountability to serve successfully as a systemizing standard for health systems reorganization, theoretical and systematic lucidity is necessary. This section of the essay clarifies the definition of accountability as far as answerability and approval are concerned, and separates the three varieties of accountability: democratic, performance, and financial. The function of health sector stakeholders in accountability is evaluated. With the use of an accountability lens, an analysis will assist in generating a system-wide angle on health sector changes as well as pointing out the associations among individual enhancement intercessions. These results can sustain multiple conclusions, improve system performance, and add to improving the sustainability. A vital aspect of this analysis lies in the very definition of accountability. Focus must be given on answerability as the main aspect in this issue lies with the health insurance provider being able to answer all the queries concerning their choices and actions. The other major aspect of accountability is the sanctions involved. These are normally penalties such as fines, requirements and other methods contained in the organization or national laws. The next section is divided into three subsections that contain the different dimensions of accountability that relate to Medibank directly.

Financial Accountability

Financial accountability involves following and creating reports on allotment, payment, and consumption of financial resources using accounting, budgeting, and review instruments. The functional foundation for financial accountability starts with internal organization financial systems that comply with standardized accounting regulations and principles. Above the single organization borders, the Ministry of Finance, and in specific circumstances, the Ministry of Planning, implement oversight and control tasks concerning the related ministries and other implementing agencies. Since numerous implementing agencies enter into contracts with private organizations and entities some of which may be non-governmental, these oversight and control tasks stretch to envelop public contracting and procurement (Maher 261).

Health insurance organizations play a vital function in financial responsibility that offers their clients certain prearranged packages that have essential services. Members of Parliament pass the budget bill that acts as the foundation for ministry expenditure goals, for which they accountable to. Evidently, a serious matter for the feasible implementation of financial accountability is the institutional competence of the diverse private and public bodies concerned. For instance, hospitals require an ability to account for the nature of the funds they obtain from different sources if they are to be given higher amounts of independence.

Performance Accountability

When mentioning performance accountability, it denotes the manifestation and accounting for performance in view of the discussed performance goals. Performance accountability concentrates on the outcomes, outputs, and services of public entities and agendas. Performance accountability is closely connected to financial accountability in that the financial assets to be accounted for were expected to produce services, goods, and advantages for the public, but it is distinctive in that financial accountability concentrates on conformity with the procedures while performance accountability focuses on the outcomes. For instance, provider payment plans that capitalize on efficiency, high quality, fair play, and public satisfaction require competent financial and management information systems that can generate relevant information. Performance responsibility is related to democratic accountability in that one of the criteria for performance is receptiveness to the public and realization of service delivery goals.

Democratic Accountability

Fundamentally, democratic accountability is concerned with the entities, processes, and devices that try to ascertain that government carries out the electoral promises, gains the public confidence, collects and finalizes the public’s interests, and reacts to current and new societal demands and issues. In many nations, health care matters form the crux of most political agendas and campaigns. Developing health infrastructure or offering reasonably priced medication can be striking alternatives for vying officials in searching electoral support. After the elections, however, democratic accountability entails the public expectations for how politicians act to draw up and put into practice policies, offer public services and goods, accomplish the public confidence, and execute the social contract.

How they discharge its accountability

Medibank Private Limited is categorized as a government business enterprise that means it has a strong relationship with the government. Similarly, the government also has a strong bond with Medibank that extends into evaluating its financial proceeds and performances. The relationship between the two entities also entails accountability and reporting provisions, management independence and boards that are accountable. Therefore, Medibank is subjected to several measures to increase its public accountability such as Statement of Corporate Intent (SCI) and other similar controls (Sorensen, Roslyn & Rick 64). These documents will provide the necessary information for the assessment of the accountability approach adopted by Medibank.

Medibank is very transparent in most of their operations within the organization. All of the company annual reports are posted on their website where the public can easily access them and evaluate the performance of the health insurance provider. The company places a high priority on providing better results, choices and increasing the public trust in their services. Concerning the statement of accountability, Medibank have prepared a system of regular reporting that is assessed by the Australian government. The major elements in the accountability plan for Medibank include quarterly progress reports, annual reports, a Corporate Plan and any provisional reports that can be demanded by the Government.

These four sets of documents will form the foundation of the analysis of the adequacy of the accountability methods for Medibank. The Commonwealth Auditor General is responsible for auditing Medibank’s financial records. Through the Australian National Audit Office (ANAO), the Ernst & Young Company were given the leeway to carry out the assessment on behalf of the government (Maher 67). However, the audit is a joint effort between the Audit and Risk Management committee and Ernst & Young where prior discussions are made to clarify any internal and external audits that can influence the financial statements, assess the outcomes of both auditors and conclude the yearly reports and any other alterations.

Evaluation the adequacy of their accountability

In the evaluation of the capitation method, the following issues were realized that significantly affected the provision of affordable and quality healthcare in Australia. One was the issue of setting the capitation rates. It was discovered while they were flexible enough to cater for different patient demographics, this trait also held its flaw. There was prepaid health schemes that served particular populations located in cities. These patients were employed and were, therefore, enrolled under their respective employees. Such health plans set their own capitation rates. This was in direct opposition to the set rates prescribed by different HMOs and insurance plans that set the rate using ‘community based’ considerations, that were expected to be affordable to that particular community.

It was also discovered that, currently, these private and public medical plans could not make their own capitation rates and had to depend on a joint negotiation process. However, this process was also flawed because Medibank was the strongest player in the Australian medical sector and, therefore, chose their own rates that were autonomous of the other insurance plans. In this arrangement, Medibank became a superior partner and even negotiated with the government on equal terms in a manner that was different from the other parties.

Other issues were also discovered in the implementation of the capitation system. In the allocation of the capitated budget, the level of provider independence came up as a possible issue that might hamper its full implementation and interfere with accountability. This is because when the finance is allocated; all the participating providers become limited on the clinical and administrative behavior of their colleagues. Therefore, increased coordination becomes necessary or else the finances allocated to them might be overspent. Providers end up having deliberations to thrash the way forward concerning referral rates, plan utilization and other interventions. Any mismanagement or incompetence by one of the providers results in severe financial consequences for all of them.

The capitation method also held great flaws when it came to risk adjustment. When it came to establishing the extent to which the capitation rate could be regulated, it became very difficult for the provider. This is in consideration of the disparities that exist in the health risks within the district and within specific groups that made it highly difficult to have a single, uniform rate. Maintaining capitation rates at a standardized level would excessively trouble providers who require more resources, as they tackle comparatively unhealthy populations such as, slum dwellers or industrial workers. Conversely, if the rating system distinguishes several risk groups, the capitation and risk-adjustment process is transformed into a complex matter, demanding large amounts of information for sustaining and revising a highly differentiated capitation rate program. To reap the benefits of the capitation system fully, healthcare providers have to organize their financial and clinical conduct. Financial viability is an important quality that has to be embraced by all providers if the capitation system is expected to yield good outcomes. This means maintaining a fixed hospital budget as well as sustaining the enrollment turnout. Achieving these targets requires controlling the costs, improving customer satisfaction and attracting potential patients (Sorensen, Roslyn & Rick 196).

Discussion

Role of Health Sector Actors in Accountability

It is imperative that when addressing the issues in the health care system concerning accountability, that the roles played all the actors in the health sector are identified and evaluated. The questions of who is accountable and to who are the responsible should be answered satisfactorily. One of the major actors in the health sector is the patients themselves. Even though health care recipients form the crux of service delivery, conventionally, they have been awarded little accountability. Information bottlenecks and other restrictions block most health care recipients from demanding accountability, or imposing penalties. Matters concerning health care often feature significantly in political settings, and therefore, depending on how well the politician implements the healthcare reforms, the recipients may apply various indirect penalties on the health system during the election period.

Ministry of Health

The ministry of health (MOH) in any country is a major player in accountability associations, one, ensuring accountability among health care providers and being answerable to the various government departments and to the public. The ministry of health can implement supervision of a considerable number of other players: public sector health care providers from the national to the local level; private sector health care providers; logistics, budget, resources, and apparatus management units; procurement and contracting parties; policy and regulatory functions (Maher 15). Having this extensive oversight authorization goes together with strong penalties: the ability to appoint, demote, and promote; the privilege to give or withdraw contracts; and the power to formulate and implement policy, controls, and performance principles. In many states, the ministry of health’s ability to accomplish this responsibility is restricted, and therefore, health system changes often concentrate on boosting or developing the organizational systems and processes required for the ministry of health to apply its accountability requirements effectively. For instance, the World Health Organization’s idea of stewardship recognizes ascertaining accountability as one of the major areas for accomplished health systems and a major duty of the ministry of health as the principal policymaker and administrator of the health system.

Funding Agencies

These entities are the most influential set of actors as far as accountability in the health system is considered. In most third world states, the finance ministry is responsible for awarding annual budget allocations to all the sectors, which are usually generated through a budget prediction and conciliation process. These finances are then paid out against those goals. Expenditures demand that the ministry of health has to be accountable for the finance and make a report on how it was used, and in some instances, to make changes in the future expenditure plans. In health systems having separate provision and payment structures and providers are paid back for services based on a different method, the insurance fund agency becomes a vital player in the accountability affiliations. While the most evident accountability function insurance funds play are connected with financial control, these finances can deeply affect accountability in the provision of quality care and other assurance purposes, as well as performance accountability (Worley & Richard 390).

It is important to mention payment systems when mentioning performance accountability because they create motivations for both providers and patients that can have significant influences on health system performance and the realization of health results and fairness. For instance, in Thailand, a mandatory social insurance plan implemented a system of major contractors and minor contractors that contributed to intensified antagonism among contractors and forced contracting hospitals to adopt utilization assessments and supervision of patient grievances. These alterations forced contracting entities to be more answerable for performance and patient satisfaction. Insurance fund agencies are not left out of the accountability cycle. Based on how they receive their finances, such agencies are accountable to the Ministry of Finance and other bodies that regulate accounts or in some instances to oversight entities, boards of directors, or to Parliament. They have an essential fiduciary accountability to explain the finances they obtained and expended. Depending on the level that the information systems they have installed, they can also, report on performance measures additionally (Maher 45).

Conclusion

From the essay, the following conclusions can be made. The capitation method of disbursing payments and allowances to the staff is not fully accountable. Although it is the main system in place in most healthcare organizations, the outcomes from the evaluation section paint the picture of a flawed approach. Capitation has been proved to lead to disorganization and miscalculations and these problems interfere with the accountability of the provider. Another aspect that was mentioned in passing was the growth of ACOs within Australia. The concept of running accountable healthcare organizations trend is catching on rapidly as many providers throughout the country are officially switching to become Accountable Care Organizations (ACOs) and take up new structures that promote populace management and cost reduction. While the ACO trend will unquestionably thrive for several years into the future, it still fails to effectively cater to the larger healthcare demands in Australia. Establishing whether the many organizations that are carefully observing ACOs from the outside will take the risk and embrace accountable care approaches will mainly rely on the achievements of these initial adopters.

Works Cited

Maher, Edward J. Regional Health Authorities and Federalism: Australia and Canada. , 2003. Print.

Sorensen, Roslyn, and Rick Iedema. Redefining Accountability in Health Care: Managing the Plurality of Medical Interests. Health. 12.1 (2008): 87-106. Print.

Worley, Paul, and Richard Murray. Social Accountability in Medical Education — an Australian Rural and Remote Perspective. Medical Teacher. 33.8 (2011): 654-658. Print.

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