REVIEW OF SA MEDICAL SCHEMES REGULATIONS URGENTLY NEEDED
Last year, SAMWUMED and Genesis Medical Scheme took the Minister of Health, Aaron Motsoaledi, to court to have the regulation requiring cover of prescribed minimum benefits (PMBs) at cost to be set-aside. SAMWUMED has subsequently withdrawn its court application on the amendment of Regulation 8 in pursuit of a negotiated agreement with the Minister.
According to Neil Nair, Principal Officer of SAMWUMED, both the Scheme and the industry as a whole were promised that the amendment would ensure that PMB charges would be restricted to an agreed scheme tariff. “What this would mean is that schemes would continue to pay in full for PMB conditions without benefit limits, however, these costs would be charged at a prescribed rate.”
Nair explains that having to pay PMB claims at whatever cost a provider charges has a negative impact on the affordability of schemes. “This is exacerbated with small to medium-sized schemes, such as SAMWUMED, which have a smaller economy of scale to negotiate with providers.”
He says that PMBs are definitely needed to protect members from restrictive benefit limits for life threatening illnesses and chronic conditions. “We do not want to a situation whereby members are left in the middle of their treatment without funding. The best interests of the patient should remain the priority and these treatments should be paid in full.”
“What needs to be made clear is that we completely support the idea that PMBs must be paid in full and that patients should not face co-payments for these services,” adds Nair. “With providers charging at a regulated/pre-determined tariff, funders will be able to quantify and measure risk. A regulated tariff will allow more money in the risk pool, which means that more beneficiaries will be able to enjoy more care and it will also allow for a more sustainable and equitable healthcare system.”
The best intentions of the Medical Schemes Act, particularly the PMB provisions, began to unravel in 2004. Prior to 2004 the private health services industry was content with annual price determinations negotiated between the Board of Healthcare Funders of Southern Africa (BHF, representing medical aid schemes), the Hospital Association of South Africa (HASA, representing private hospitals) and the South African Medical Association (SAMA, representing medical practitioners). The result of the annual negotiations resulted in the industry accepted BHF tariff. This negotiated tariff generally satisfied all parties and to some measure acted as a mechanism to prevent super profits in respect of all parties. It created an equilibrium of costs.
In 2004, however, the Competitions Commission concluded that the determination of tariffs was uncompetitive. While the Competitions Commission may well have believed that market forces would create price equilibrium, instead this resulted in a pricing free-for-all.
Nair points out that healthcare must be separated from the market – as its structure is inherently different to other products and services, in that patients are not able to exercise choice and knowledge.
In 2008, the Health Professions Council of South Africa (HPCSA), withdrew its ethical tariff for healthcare professionals in favour of a more equitable benchmark tariff based on the National Reference Price List (NRPL). This was opposed by the private healthcare provider sector and resulted in the HPCSA initiative failing.
Nair says that while many bodies have tried to address this issue, the buck stops with the NDoH and the Minister himself to deal with the issue of managing private health costs.
To put this into perspective, he says that funding an unquantifiable risk is negligent as it may lead to over or under-provisioning of contributions/premiums – either could have a severe impact on sustainability.
“The call by organs of civil society, such as the Treatment Action Campaign (TAC), to maintain the status-quo is ill-informed,” he added. “The issue is not about limiting care, it is about an equitable cost of care. If payment at cost for PMBs prevails we would eventually have no benefits to offer any members and medical schemes would cease to exist, as health costs would simply be completely unaffordable.”
He says that while SAMWUMED supports NHI, something still needs to be done to deal with this issue until it is realised. “In our pursuit to ensure greater treatment and care, our responsibility is to ensure an equal playing field. Regulation of payment cannot exist without regulation of cost.”
“Healthcare providers, like most professions, must subscribe to a benchmark tariff, otherwise it is nothing short of ‘economic lawlessness’. Without a review of the regulations and the way that PMBs are managed in South Africa, medical scheme members will continually have to carry the burden of uncontrollable costs,” concludes Nair.