Australia's private health insurance industry has blamed rising health premiums on the high cost of devices such as pacemakers and replacement hips and knees.

Key points: Knee replacement costs three times more in Australia than in Canada

Knee replacement costs three times more in Australia than in Canada Private health industry calling on Government to reform the pricing system

Private health industry calling on Government to reform the pricing system More than 12 million Australians are signed up to private health insurance

The industry's peak representative body has produced data showing that a knee replacement costs three times more in Australia than in Canada.

The Government announced a review in February and the private health industry has called on them to reform the pricing system.

In 2006, the Federal Government fixed the price that health funds pay for common medical devices including replacement hips and knees and defibrillators.

Dr Rachel David, the chief executive of Private Healthcare Australia, said prices of the medical devices were set at high levels by world standards.

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"Private patients in Australia through their premiums are still paying two to five times the real market value of the medical device," she said.

Dr David said they wanted the Government to work with them on a price mechanism, or reference pricing, to bring the costs of benefits down to match other hospital prices in Australia.

"And benchmark prices around the world in comparable economies like Europe and the UK," she added.

More than 12 million Australians are signed up to private health insurance and Dr David said recent market research had shown that there was widespread concern about the rising premiums.

"That's one of the main reasons why we're urging the Government to make this change, because we will pass on any savings made by funds from prosthesis reforms into a reduction on the premium increase," Dr David said.

AMA says certain price variations 'don't stack up'

Dr Michael Gannon, the president of the Australian Medical Association (AMA) said Private Healthcare Australia had a case in some areas for reforming the system for pricing devices.

"We know for example that the public hospital system and the private hospital system can sometimes pay wildly different amounts for prosthesis, so that just doesn't stand up," he said.

Dr Gannon said the reasons for those price variations could be because of the rules that dictate how the different systems of private prosthesis work.

"I mean you can make a case that, for example, it might be cheaper with economies of scale or transportation costs, licensing costs, why something might be cheaper in another part of the world compared to Australia," he said.

"But that doesn't stack up when you're talking about two hospitals that might be across the road from each other."

Susi Tegen, the chief executive of the Medical Technology Association of Australia MTAA, said the private health insurance industry needed to not "blame everybody else".

"Comparing one country against another on price alone is misleading. You could ask the same question, 'Why does it cost $37,490 for a new Volkswagen Golf 2.0 TDI in Australia but in Ireland you pay $48,720 but in Singapore you pay $173,220?'," she said.

"Rather than blame everybody else the private health insurance industry needs to take a good look at itself first.

"If the private health insurance industry had their way they would be quite happy to see the Americanisation of our health care system."