Doctors have slammed Tony Abbott's response to a dispute between Australia's largest health insurer and a major hospital operator, demanding a briefing with the prime minister.
Medibank and Calvary Health Care, which operates 15 public and private hospitals across six states and territories, are at loggerheads over contract talks which could leave privately-insured patients with hefty out-of-pocket costs.
But when asked about the dispute on Friday Mr Abbott, a former federal health minister, dismissed it as a local Tasmanian issue.
"This is perhaps a local issue that I'm not familiar with," he told reporters in Hobart.
Australian Medical Association president Brian Owler is disappointed by the prime minister's comments and has offered him a briefing.
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"It clearly shows a lack of understanding of the significant nature of this issue," Prof Owler told AAP.
"Hopefully he will be brought up to speed quickly."
Medibank wants to be able to pay a reduced, or no benefit, to hospitals for a list of 165 events it says are "highly preventable".
The health fund says there needs to be a link between health-care standards and payments "otherwise the health-care system has limited incentive to focus on reducing waste and addressing improvements".
Calvary, the AMA and the Australian Private Hospitals Association have come out swinging, saying events such as maternal death can and do occur despite full preventative measures.
They've accused Medibank of trying to cloak a cost-cutting exercise as a concern for quality, saying the company was putting shareholders ahead of patients since it was sold by the government last year.
Prof Owler says Medibank's actions are disgraceful and has urged its members to consider switching insurers.
"This is a real crisis point for Australia's health-care system," he said.
"We cannot allow public companies who are clearly putting profit before patients to go and dismantle our health-care system piece by piece before our very eyes."
Medibank's contract with Calvary expires on August 31 and despite five months of negotiation, the parties failed to reach an agreement during mediation on Thursday.
But while Calvary is still hopeful of reaching a deal before the deadline Medibank says it's already parted ways, insisting the hospital operator would need to change its position.
A source close to the dispute told AAP that any talk of a possible agreement was "wishful thinking", with neither side willing to budge.
Calvary says it will have no choice but to charge patients a gap to make up for any reduction in benefits from Medibank.
Medibank says any members charged extra fees should contact the insurer for assistance.
A Medibank spokesman said the changes were about reducing avoidable mistakes that can occur in hospitals.
"This is not about the money, less than one per cent of admissions relate to these mistakes," he said in a written statement.
