All healthcare funding eyes are on National Health Minister, Dr Joe Phaahla, to see whether he’ll approve cheaper medical aid plans based on “exhaustive’ work by the Council for Medical Schemes (CMS).
The Board of Healthcare Funders (BHF) — which monitors and addresses the cost spiral within private healthcare — and the CMS, which regulates medical schemes in ‘a fair and transparent manner, while protecting the public,’ are in a protracted High Court dispute over the matter.
CMS Registrar Dr Sipho Kabane revealed that an internal National Department of Health, (NDOH) team recently summoned his senior staff to ask for clarification on their recommendations. The CMS is a government-funded entity established by the Minister of Health.
“Our report on LCBOs and the Health Market Enquiry recommendations around setting provider tariff ceilings, and Prescribed Minimum Benefits, (PMBs), was given to the minister in November last year, so any allegations that we’re delaying matters or obstructing things are false,” he said.
Declining to reveal any part of his report, Kabane was responding to private sector claims that the lack of regulatory reforms is a deliberate CMS blocking of LCBOs (Low-Cost Benefit Options) to favour the National Health Insurance, (NHI), which stands to sideline medical aids within a decade or two. Offering LCBOs would lure a significant pool of middle-to-lower-income people away from the NHI, helping them avoid time-consuming and incoming-draining state health sector queues. The private sector argues that pragmatic LCBO regulatory reform will also reduce the burden on the hard-pressed state sector.
Funders have long sought to reduce ‘crippling’ PMB treatment definitions while demanding tariff ceilings for specialists who can charge several hundred percent above scheme rates. PMBs require medical schemes to cover in full a long list of conditions for all scheme members – a legislative attempt to ensure people get access to minimum health services. Instead, specialists often take advantage of regulatory loopholes or ‘up-code,’ contributing to medical inflation.
These ‘anomalies’ are nudging younger medical scheme members into cheaper CMS-unregulated gap cover and other insurance products, leaving schemes with increasingly ageing memberships and unsupported by younger, healthier members. These further drive medical inflation and hikes premiums. Medical schemes are seeking the exclusion of LCBOs from CMS strictures, levelling the playing field with insurance products.
“We cannot, after giving the minister our findings and recommendations begin another public debate around LCBOs and the like – until the minister makes his pronouncement. So, in terms of timing, the BHF comments are mischievous – they were party to earlier negotiations,’ Kabane added.
BHF executives Dr Rajesh Patel, Head of Health Systems Strengthening and Charlton Murove, Head of Research, say healthcare in SA is unnecessarily complex. They blame ‘dismal’ regulatory oversight in which patients – whom medical aids were set up to serve, suffer financial hardship while struggling to negotiate a healthcare funding ‘jungle.’
Medical Aid comparisons made easy
A recent unique web-based innovation, www.medicalaid.com, provides accurate medical aid comparisons via a sliding premium affordability button while listing benefits and has been welcomed by industry experts.
Says Patel; “Our PMBs are poorly defined in regulation, creating too many grey areas that can be taken advantage of SA’s version, passed in 2003, was based on research done in Oregon in the United States, except that there they’ve put in place defined procedures and coding while here we’ve dropped the technical specifications, blurring interpretation. So, service providers are incentivized to charge as much as possible. When you access a consultant, you don’t know the cost and you’re unable to negotiate.”
Murove says that while there are Health Care Professions of South Africa (HPCSA), ethical rules on informed consent, in practice they aren’t applied sufficiently.
“There’s often no discussion around price, irrespective of PMBs. Often a patient goes to a doctor and the receptionist asks, “Do you have gap cover?” If you say yes, they charge more.
Patel adds, “Even for us who work in this environment, it’s a minefield. There needs to be better stewardship and oversight. We’re currently sitting with a politicized healthcare system. There are more politics at play than efforts to solve the problem.”
He said allowing more affordable low-cost benefit options, (medical aid products, not insurance), would enable people who cannot afford higher-end medical plans to at least access primary healthcare products – thus taking a huge burden off the State.
“The Health Market Inquiry (HMI) said there should be some consultant tariff ceiling and made specific recommendations – but the health department hasn’t moved on implementing any of them. We applied for exemption from the Competition Commission so we could do collective bargaining while the government gets its act together, but politics came into play, and we’ve now been sitting with the Competition Commission for over two years,” he said.
Patel said a holistic review of PMBs and allowing LCBOs would ‘change the entire environment,’ but bemoaned the lack of ‘necessary skills’ and seeming lack of will within the NDOH and the CMS.
Paresh Prema, Head of Technical and Actuarial Consulting Solutions at Alexander Forbes Financial Services, said the reform needed around the ‘idealistic’ PMBs involving pricing and the structure of benefits never happened. This led to an increase in the cost of PMBs and “a lot of people falling out of the system.”
“They were meant as cover to help those who would otherwise have gone to the State manage their healthcare,” he said.
It was difficult to understand why the government would wait a decade or more for an NHI to kick in, “when we have an industry that’s well maintained and regulated and can provide benefits at low prices with a good primary healthcare basket.”
Such products could be allowed via an exemption that did not require the Minister of Health’s approval. However, the CMS, which should be independent and act without fear or favour, had a politically appointed board and CEO.
“They’re very sensitive to what the NCOH would like to see,” he said.
Approving LCBOs would make a difference to millions of lives, especially with the medical tax savings – and make medical schemes more sustainable. It would create a bigger pool of people who would not need an NHI because they’d be looked after by medical schemes.
One point of agreement between the private sector trio interviewed and Kabane is that contributions to insurance products like gap cover did not benefit members but company shareholders, while LCBO premiums benefitted an entire medical scheme’s membership.
“Ironically, what the CMS fails to realize is they could increase their levy and operating income by increasing scheme memberships through LCBOs,” Prema added.
Answering assertions that the CMS was part of the government’s political agenda around the NHI, Kabane said the NHI bill spoke of ‘complementary cover,’ by medical aids.
“That means that will only happen in the transition to full implementation – and my understanding is that the minister will unpack all the details and engage with all key affected parties to develop this transitional plan that will make NHI implementation a reality. This interpretation that Sect 33 will take medical schemes out of the equation is wrong. It will change the way they operate and the number of people they cover and the way they run their business, but they’ll still be there,” he averred.
Kabane said the CMS would this year review PMBs using the best scientific evidence, cost-effectiveness, protecting members and the financial health of schemes, especially probing rare high-cost diseases which threatened to collapse schemes.
“The direction we plan on taking also includes elements that reduce the need for curative and hospital services, making PMBs more cost-effective and improving health outcomes,” he added.
He was confident that the Minister’s eventual pronouncement would result in “an amicable solution,” to the current court battle.
A spokesperson for Dr Joe Phaahla did not respond in time for publication.
