The dispute comes as the private health insurance industry faces what has been called a"death spiral",with funds paying rising hospital costs and members leaving the system due to the resulting above-inflation increases in membership fees.
Health insurers will submit their proposed annual premium increases to Health Minister Greg Hunt this week for approval,and have warned a failure to deal with high prostheses costs will lead to higher member fees.
A federal government"prostheses list"sets the amounts funds must pay for more than 10,000 prostheses and implanted medical devices,and insurers have long complained they are significantly higher than what is paid in Australia's public health system and in comparable countries.
New analysis of healthcare system data by PHA shows the price of four leading-brand hip replacement devices,at $10,477,is double the price in New Zealand and the UK,and triple the price in France.
The $2484 insurers pay for four common heart stents is twice as high as in France and three times as high as in New Zealand and the UK. Australian insurers would save $28 million a year if they paid New Zealand prices for those stents,based on how many of the products they paid for last year.
Craig Drummond,chief executive of the nation's largest health insurer,Medibank,said it was"unreasonable"that Australians were paying these prices through their insurance premiums and that"unquestionably,more needs to be done".
"Clearly,the pricings that we are still paying for devices compared to global benchmarks and the public system are still well in excess of where they should be,"Mr Drummond said."We don't want people dropping out of the system ... but we have to change,and this is part of the change."