Health fund Bupa has admitted it went a step too far amid anger over changes to its gap cover scheme and will now wind-back elements of its controversial plan.

Bupa had informed doctors that from August insured patients would only qualify for gap cover if they were treated at a Bupa-contracted hospital or day-stay facility, causing the Australian Medical Association (AMA) to warn of "US-style managed care" and policyholders to leave.

The fund's managing director Dwayne Crombie told Fairfax Media that "thoughtful" feedback, especially from those in regional areas, made him realise the change to the medical gap scheme was "catching the wrong thing" and he decided on Tuesday night to make re-adjustments.

Managing Director of Bupa Australia Dr Dwayne Crombie.

"The difference here is if you go to a public hospital and you elect to use your private health insurance and it’s a booked or arranged admission we will continue to offer public hospital doctors the Bupa medical gap scheme and the whole point of that is it takes away the chance that you’re going to get an out of pocket," he said.