The private health insurer Bupa has watered down changes that would have seen patients only qualify for gap cover if treated in Bupa-approved facilities, following a backlash from doctors and consumers.

Doctors including the Australian Medical Association president, Michael Gannon, accused Bupa of heading towards a US-style health system when the insurer announced that from 1 August “the higher scheme benefits will only apply when participating providers choose to use the scheme at hospital facilities that have an agreement with Bupa”.



But Bupa has softened its stance, saying doctors and their patients opting to use the public hospital system would continue to qualify for the Bupa medical gap scheme, so long as the procedures were for elective surgery and they were pre-booked.

“However, Bupa firmly believe having people forced to declare their private status without choice of doctor, or hospitals electing to give priority admission due to being privately insured, does not uphold the integrity of Medicare or our public system and as such ensuring any private payments go along with true pre-booked private admissions supports our public funding initiatives,” the insurer said in a statement.

The Bupa medical gap scheme is designed to eliminate or significantly reduce medical costs associated with hospital treatment by paying doctors significantly higher benefits than those paid under Medicare. Insured patients can currently choose which hospital they receive their treatment at, including at any public hospital their surgeon may work at.

Bupa’s managing director, Dr Dwayne Crombie, said he recognised that a patient should be able to make the choice to receive a private experience in a public hospital – and in fact a public hospital may be the best setting to do so.

“As such, we support patients and doctors and believe ensuring any Bupa customer receives the private experience they are being billed for occurs is a good thing for all involved,” he said. “When a patient is admitted to a public hospital as an emergency or acute patient and treated as a public patient, they should use Medicare to fund that treatment as it is designed to do so.”

Bupa also drew criticism for telling one-third of its Australian members that their policies would no longer cover hip and knee replacements, pregnancy and other major procedures. On Tuesday the federal health minister, Greg Hunt, ordered the ombudsman to investigate Bupa over the changes to polcies and gap cover.

Bupa did not respond to questions from Guardian Australia about whether it had seen a rise in complaints following the policy changes. But on social media, the insurer has been responding to confusion from members and accused the media of “scare-mongering”.

The recent scaremongering articles around ‘managed care’ could not b further from the truth. Hope u don't leave us, but if you do,pls visit https://t.co/7wsFn0VTle This link has FAQs what do the changes to the medical gap scheme mean for u? #pleasedontleavepenny TN — Bupa Australia (@BupaAustralia) March 8, 2018

The chief executive officer of the Medical Technology Association of Australia, Ian Burgess, said he welcomed Hunt’s call for an ombudsman investigation into Bupa.

“However, we urge the government to immediately bring forward a much needed productivity commission inquiry into private health insurance,” he said. “Despite a recent Senate inquiry calling for increased transparency, we need a circuit breaker and a Productivity Commission inquiry is the right vehicle.”