Medibank has been accused of jumping the gun in a move that could leave millions of Australians facing hefty out-of-pocket costs.
The nation's biggest private health insurer has been told by a federal government agency its policies are based on inaccurate information.
Medibank on Monday ramped up its campaign in a dispute with hospital operator Calvary, despite Health Minister Sussan Ley warning the warring parties to stop using patients as ransom in a cynical "Game of Thrones".
The insurer has publicly released a list of 165 "highly preventable" events, the cost of which it wants hospitals to cover.
That's despite Ms Ley fast-tracking a government review that has been working on a national list.
Professor Debora Picone, chief executive of the Australian Commission on Safety and Quality in Health Care, says Medibank would be "very unwise" to proceed with its list.
All items on its list that related to falls in hospital resulting in fracture and head injury - which account for 131 of the 165 events - are based on inaccurate information, Prof Picone says.
"This came up in our study with a big red flag from the audits we did as not being accurate at this stage, so they shouldn't be using it," she told AAP.
"Medibank Private has jumped the gun - I don't understand what the rush is.
Inaccuracies in the way complications are recorded on medical records mean hospitals could end up unfairly paying for a complication they didn't cause.
Medibank has set up an independent avenue of appeal for hospitals and will press ahead with its list, insisting it is based on Australian and international evidence.
It says 40 hospitals including "some of the larger and most prestigious in Australia" have already signed on.
"These hospitals understand that this means facing the challenge of improving care, and tackling affordability together," a spokesman said.
St Vincent's Health chief executive Toby Hall says his hospitals have been operating under Medibank's list for nine months and believes it's driven improvements.
"It's easy to say we should wait around for the government review process to take place but Medibank is a commercial organisation ... in negotiation with hospitals," he said.
Medibank's contract with Calvary expires next week. The hospital group has refused to agree to the list, arguing many of the events can and do occur despite full preventative measures.
Australian Medical Association president Brian Owler believes Medibank never had any intention of waiting for the commission's review, insisting the insurer is concerned with cost-cutting, not quality.
He also took a swipe at Ms Ley for not taking action.
"References to a fictitious Game of Thrones is not appropriate when this has real impact for patients," he said.
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