Australian health insurance firms have been accused of anti-competitive conduct, as they expand their reach to also become major healthcare providers.

Key points: Medibank Private and Bupa account for about 60 per cent of health insurance policies in Australia

Medibank Private and Bupa account for about 60 per cent of health insurance policies in Australia Many dentists have now signed contracts with health insurers in the hope their patients will get better rebates

Many dentists have now signed contracts with health insurers in the hope their patients will get better rebates Some in the industry fear this gives too much control to insurers and is sending independent dentists to the wall

The issue is particularly acute in dental care, where many dentists have signed contracts with health insurers, in the hope of getting more patients and higher rebates.

But, with rising health insurance premiums and out-of-pocket costs, patients are finding that a visit to the dentist is often hurting their wallets more than their mouths.

The Federal Government approved an increase to premiums of 4.8 per cent this year that will take effect from this week.

Adelaide dentist Tharaka Narayana said patients could not afford it.

"It makes it very hard for average patients to afford dental care," he said.

"With a lot of these [insurance] companies, they're finding that the very little they are getting back is a real impediment to seeking care."

Just two companies, Bupa and Medibank Private, account for about 60 per cent of policies in Australia, and clinicians warn that their market concentration is starting to bite.

In South Australia, the majority of dentists have now signed contracts with health insurers, in the hope their patients will get better rebates.

Bupa has more than half of that market.

Apart from hospital cover, insurers pay out the most for dental claims.

Bupa said the higher rebates it offered through its contracted dentists could save patients money.

But last year BUPA sent this demand to the clinics it endorses.

"All recognised general dental practitioners within your practice must apply to be part of the Members First dental network … "If we do not receive a completed agreement prior to June 1, 2016, your current agreement will end with us from June 1, 2016."

Bupa said it sent the letter because customers had complained that at Bupa-endorsed clinics, patients visiting a contracted dentist would get more money back, but patients who saw a dentist who had not signed up would get much less.

The Australian Dental Association's (ADA) Hugo Sachs shared a different view.

Dr Sachs said Bupa's letter was evidence of coercion — an anti-competitive act he said was potentially in breach of consumer law.

"If that's not evidence of third-line forcing I don't know what is," he said.

But the peak industry body Private Healthcare Australia's chief executive, Rachel David, said health funds were well regulated.

"There's absolutely no evidence whatsoever that health funds are engaged in anti-competitive conduct or breaking the law in any way," Dr David responded.

"This is about providing access to dental care that our members can afford, and making sure they're not ripped off by fees and charges they don't expect."

The ADA believes insurance call centre staff are pushing patients to use their contracted dentists, and increasingly to visit so-called super-clinics, run by the insurers themselves.

Dr Sachs argued these super-clinics were sending independent dentists to the wall.

"The establishment of those clinics has meant that they've either had to move or that they've had to fold up altogether," he said.

But Dr David argued the contract arrangements provided patients with choice, and could save them money, and said dentists did not have to sign up.

"There is nothing compelling a dentist to enter into a contract with a health fund, and there is nothing compelling a health care fund to use a particular dentist," she said.

Insurers get inside data about their clinical competitors

The Hicaps machines at dental clinics register every claim that is made and feed the information back to health insurers, which can find out what clinics are charging and how much money they are making.

If insurers are in the business of owning clinics as well, it means they know everything about their competition.

This opens the door for insurers potentially misusing sensitive market information to decide where to set up their own clinics.

ADA's Dr Sachs said he believed insurers were sharing information with other branches of their businesses.

PHA's Dr David admitted health funds did make use of this data.

"Health funds will use data to ensure that care is provided where it's needed and where their members might be able to best access care, so there's no point in putting a dental clinic somewhere which is already well supplied," she said.

For its part, Bupa insists its clinics and its insurance business are totally separate, in accordance with the law.

Health insurers 'destroying independent clinics'

This is a conflict that will soon play out across the health services industry, with health insurers setting up in other fields, including optometry, physiotherapy and podiatry.

Several dentists were too scared to speak to the ABC, fearing the cancellation of their contracts, or an insurance audit of their clinic.

One dentist contracted to Bupa told the ABC the company was predatory, taking a stranglehold on the market and destroying independent clinics.

Dentists say that big private health insurance clinics are inflicting pain on their businesses. ( AAP: Alan Porritt )

Another clinic manager said call centre staff at one insurer had even given patients health advice that could have compromised their care.

Health insurance is a huge business in Australia, with $22.6 billion in revenue increasing by 5.5 per cent over the last year.

Payouts have gone up by slightly less at 5.1 per cent, and there has been a jump in profit of 15 per cent.

The industry is under scrutiny in the Senate, with a wide-ranging inquiry into the industry to report in November.

Regulators are keeping a close eye.

The ACCC is already involved in legal action against Medibank Private over allegations it failed to notify members about changes to its benefits.

The consumer watchdog has also warned it is planning to take legal action against more private health insurers this year.