Medibank Private Limited (ASX: MPL) is currently under pressure from the Australian Competition & Consumer Commission (ACCC).
In ACCC’s own words, the ACCC is Australia’s competition regulator and national consumer law champion.
Medibank is the largest listed private health insurer in Australia with its Medibank and AHM brands. It has been operating for over 40 years and has around 1.8 million policyholders & 3.7 million customers. The company is headquartered in Melbourne.
What’s Going On At Medibank?
Medibank and ahm have responded today to ACCC proceedings about an issue identifying eligibility when responding to customer enquiries and paying claims for joint investigations and reconstruction procedures for customers on ahm Boost and Lite products.
The private health insurer said that in 2017 it discovered that not all Medicare Benefits Schedule (MBS) item codes applicable to the joint investigations and reconstruction procedures category were entered into ahm’s claims assessment system.
The above issue was identified as a result of receiving customer complaints, which resulted in an internal investigation. Medibank said it then established a program of compensation and voluntarily notified the ACCC in 2018 about its customer communication and compensation.
In 2018 ahm contacted around 130,000 customers who were insured by the Boost and Lite products to ensure that people were compensation. So far it has paid compensation of $745,691 to 175 customers.
Management Comments
ahm Senior Executive Jan O’Keefe said: “We apologise unreservedly to our customers who have been impacted by this error.
“While we believed the issue impacted a small number of customers it was the right thing to do to write to all customers who held a Boost and Lite product, to give all customers the opportunity to check whether they were eligible for compensation.
“In conducting the investigation, we also reviewed ahm’s process for developing and managing products, to help ensure this does not happen again.”
Is The Medibank Share Price A Buy?
The Medibank share price is down around 1% in early response. Mistakes of course do happen, but it reduces current and future earnings when it should have been past earnings that were lower.
Medibank is a decent dividend share with an ordinary fully franked dividend yield of 3.6%, but I’m unsure about the medium future of private health insurance with the falling participation of younger policyholders who prop up the system for older users. For dividends and growth I’d rather invest in the reliable and consistent shares in the free report below for my portfolio.
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