Why claimants shouldn’t have to “wear the gap”
If the insurance company admits liability for your CTP claim, then the insurer is required to pay for your “reasonable and necessary” medical expenses as they arise.
In the early stages of my clients’ CTP cases, I frequently contact insurers seeking either approval for medical treatment to be had in the future, or reimbursement for medical expenses already paid for by my clients.
CTP insurance companies have a policy that they will only reimburse you “up to the relevant AMA rate”.
What is the ‘AMA rate’?
The AMA rate is a rate set by the Australian Medical Association (AMA), to reflect the appropriate costing for various types of treatment. There is nothing stopping medical practitioners charging their services at above the AMA rate, and many medical practitioners do.
Unfortunately, this means that you are often left out of pocket, or to put it another way, you are left “wearing the gap” between what your treatment actually costs you, and the amount you will be reimbursed by the insurer.
Can you give me an example?
Suppose you are charged $120 for a session of physiotherapy, but the ‘AMA rate’ is only $90*. This would mean that for every session of physiotherapy, you would end up $30 out of pocket because the insurer refuses to reimburse only $90 of what it actually cost you.
But that’s unfair! Why should I have to ‘wear the gap’!?
I agree, you shouldn’t have to!
I strongly disagree with this policy of having the claimant ‘wear the gap’ for the following reasons:
- At the conclusion of your claim, you are entitled to compensation for what the treatment actually costs, regardless of the AMA rate. To use the example above, you are compensated for the $120 per session that you spent on physiotherapy, not the AMA rate of $90.
- It is beyond the your control as an injured person, as to whether your doctor charges above the AMA rate. Whilst some practitioners will accept only the AMA rate to see a CTP patient, this acts as a financial disincentive for doctors and medical specialists to treat persons injured in motor vehicle accidents, and so some refuse to see patients injured in car accidents altogether.
- This policy often limits the treatment options available to injured people, as many people already suffer financial hardship due to not being able to work, let alone having to pay expensive medical bills. There will be some very good medical specialists who injured people simply cannot afford to see, because they don’t have the means to incur the gap between the AMA rate and the actual cost of the treatment for each appointment.
- Insurance companies are well resourced, and it is, to use a colloquialism, no skin off an insurer’s nose to wear the $30 gap between the actual cost of treatment and the AMA rate. Especially when compared with an injured person, who is having to endure the pain, suffering and financial hardship caused by a car accident.
- New South Welshmen living in regional areas often have limited treatment options already, and there may be only one specialist within a reasonable distance who can provide the treatment you need. If that specialist charges above the AMA rate, and you can’t afford to ‘wear the gap’, you could be denied treatment altogether.
- In our fault-based system, all of the people who are making claims were injured due to no fault of their own and in circumstances where they are simply in the wrong place at the wrong time. Why should we have a system which unfairly disadvantages injured people even further?
What can be done about this?
Unfortunately, the reality is that you have little choice but to abide by this policy of being reimbursed only up to the AMA rate. However, claimants who do not have the benefit of legal representation will always end up personally ‘wearing the gap’ between actual cost of treatment and the AMA rate.
That’s why it’s so important for you to have the right to access legal representation. It’s the only way you can be sure you are protected and that you are being fully compensated for your expenses.
I would encourage the State Insurance Regulatory Authority (in its capacity as the regulators of insurer behaviour) and the insurers themselves, to consider a revision to the Claims Handling Guidelines to do away with the policy of reimbursing claimants only up to the relevant AMA rate, as this policy unfairly disadvantages the often vulnerable claimants, unnecessarily.
If the AMA rate is still considered the appropriate mechanism for reimbursement of expenses, then the AMA would be well advised to consider implementing a system to ensure across-the-board compliance by medical practitioners, so that victims of motor vehicle accidents are not denied access to treatment for purely economic or commercial reasons.
How can I be confident that I am being fully compensated for my medical expenses?
If you have been injured in a motor vehicle accident, and the insurance company is only reimbursing you up to the AMA rate, contact Stacks Goudkamp on 1800 25 1800 or make an online enquiry. It’s the only way you can be sure that you will be fully compensated for your injuries at the end of your case, and you aren’t left ‘wearing the gap’ forever.
Written by Brett Watts.
*This is purely given as an example and does not reflect the actual AMA rate for physiotherapy sessions. For information about the actual AMA rates, contact a solicitor at Stacks Goudkamp