Extracted from an article published in November 2011
Medical schemes that have not established good healthcare provider networks are likely to be the least protected from any increases in charges if healthcare providers change their behaviour after the Board of Healthcare Funders (BHF) failed in their attempt to challenge a regulation that requires schemes to pay prescribed minimum benefit (PMB) claims in full.
As a result of the failure of the challenge, healthcare providers may be less willing to enter into existing network arrangements with schemes, and schemes may also find it more difficult to establish provider networks in future.
The only way schemes can contain the costs of PMB claims is to establish networks of healthcare providers, or designated service providers (DSPs), through which members must access PMBs. Medical schemes negotiate the price of the services that the DSP will provide to their members and in this way are cushioned from facing an open-ended liability for PMBs.
Among the documents that the BHF submitted to the North Gauteng High Court in its application for an order on how the PMB regulation should be interpreted was one from the South African Medical Association (SAMA) that commented on a new DSP arrangement that a medical scheme was trying to establish.
The document, which was distributed to SAMA doctors, drew their attention to the fact that doctors could claim at better rates for treating PMB conditions without contracting with the scheme than they could if they agreed to the scheme's DSP arrangement.
Neil Nair, the principal officer of SAMWUMED says DSP arrangements do not resolve the problem that schemes face of paying PMB claims at whatever rate healthcare providers charge, because these arrangements are subject to change and to competition from other schemes.
The long-term solution is for the tariffs that healthcare providers can charge for PMBs to be regulated, Nair says.
SAMWUMED, which covers about 74 000 lives, has a hospital and specialist DSP arrangement in the Western Cape, where 70 percent of its members are based, and this will to some extent cushion it from providers abusing the PMBs, he says.
MEMBERS COULD PAY 0.6% MORE ON AVERAGE TO COVER COSTS, SURVEY SHOWS
Medical schemes administered by one of South Africa's largest administrators may have to raise member contributions by, on average, 0.6 percent in order to meet the additional cost of paying prescribed minimum benefit (PMB) claims in full rather than at the schemes' rates, a survey shows.
The Gauteng North High Court ruled last week that the Board of Healthcare Funders (BHF), which represents medical schemes and administrators, did not have the legal standing (locus standi) to ask for the order. Judge Cynthia Pretorius did not deal with the merits of the case.
The BHF had hoped to persuade the court that the regulation in question should be interpreted to mean that medical schemes should have to pay PMB claims only up to the rate at which schemes reimburse healthcare providers.
Although the BHF has decided to appeal the case, the Council for Medical Schemes, which regulates schemes, had, prior to the outcome of the case, warned some schemes that they could be deregistered if they failed to pay PMB claims in full.
As a result of this threat, SAMWUMED started to pay PMB claims in full.
SAMWUMED has reserves equal to 70% of the scheme's contributions and has decided to use these reserves to fund what it estimates could be an increase of 10% in PMB costs over the next three years as a result of having to pay PMB claims in full rather than at the scheme's rate, Nair says.
The decision to use the scheme's reserves was made to minimise the impact of a contribution increase on SAMWUMED members, who earn on average between R4 500 and R5 500 a month, he says.
SAMWUMED is hopeful that sanity will prevail and that the country's leaders will make the right decisions about the open-ended liability that schemes face for PMBs, Nair says.
What are the PMB Conditions?
The prescribed minimum benefits (PMBs) are defined in the Medical Schemes Act. They cover all medical emergencies, 270 serious health conditions, such as tuberculosis and cancer, and 25 chronic diseases, including epilepsy, asthma, diabetes and hypertension.
The PMBs stipulate the minimum level of diagnosis, treatment and care that your medical scheme is obliged by law to cover. PMB claims must be paid from your scheme's risk pool, not from your medical savings account.
Your medical scheme can appoint a designated service provider (DSP) - a doctor, pharmacist, hospital or other healthcare provider - that you must use to have your scheme cover in full claims that result from your being treated for a PMB condition.
There are limited exceptions, such as in an emergency or if the DSP is not available to you within a reasonable period of time. Under these circumstances, your medical scheme must pay in full for PMB services obtained from a healthcare provider other than your scheme's DSP.