Private health insurers are being put on notice to foot the full bill of public hospital stays in NSW under new payment arrangements.
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The existing system costs taxpayers almost $150 million each year after it was revealed some insurers only pay half the daily cost of a bed rate for a private patient in a public hospital, NSW Treasurer Daniel Mookhey said.
"It was an arrangement that has been in place since 2013, which meant that private health funds were meant to be paying the full rate," he told 2GB Sydney radio on Monday.
"From about 2019 onwards they all started withdrawing from paying that rate.
"In effect, the NSW taxpayer has been paying half the cost of what it takes to treat one of their members in public hospitals."
Describing the set up as unsustainable, Mr Mookhey pledged to work with the industry to ensure companies pay their fair share of costs.
"We've got about six months to sort it out but otherwise we are going to have to take action to ensure that these funds are paying their bills," he said in a statement.
"Every dollar (not paid) is picked up by taxpayers and it comes at the expense of other investments we should be making in our health system."
The six-month timeline comes ahead of the state budget next week.
NSW Premier Chris Minns said he was encouraged by early conversations with some private health care funds not paying the full fee.
"I don't want to put the cart before the horse and start speculating on a potential sanction when we're working well," he told reporters on Monday.
"But what I will say is some private health funds today are paying the NSW bed rate (and) it's clearly unfair if there's other funds that are trying to dip out."
Mr Minns said the government would reserve its right to take action if it was unable to get a breakthrough with some private health funds.
Australian Associated Press
