How the proposed changes by government around medical schemes will affect you
In the wake of reports about Health Minister Aaron Motsoaledi’s proposals for ushering in a new set of rules for how medical schemes operate, how are these changes likely to affect you as a broker, and South African private healthcare consumers, and the industry as a whole?
Resolution Health Medical Scheme Principal Officer, Mark Arnold, breaks down how the concepts of the Medical Schemes Amendment Bill could work in practise for open schemes and what benefits they could hold for members of medical schemes.
“While we await the gazetting of the Bill, the Minister has so far hinted at a number of reforms that directly address challenges of sustainability that the industry is currently facing. We know that rising costs in healthcare are outstripping inflation, and legislated steps to address this are overdue,” says Arnold.
“While the details of how uniform tariffs for healthcare providers will be arrived at are not expected to be addressed in the Medical Schemes Amendment Bill, but rather will be informed by the outcome of the Competition Commission’s Health Market Inquiry, this is an important step towards protecting healthcare consumers.”
He explains that there are no regulations at present to limit what healthcare service providers can charge for their services. “A High Court ruling in 2008 scrapped the National Health Reference Price List [NHRPL], which aimed to institute associated provider pricing ceilings. The NHRPL and Prescribed Minimum Benefits [PMBs] were originally intended to work in tandem to protect medical schemes and their members.
“As it stands, with PMBs remaining in force without the moderating influence of the NHRPL, even the Council for Medical Schemes has noted with concern that healthcare providers tend to charge higher fees for PMB diagnosis and treatment. This is because medical schemes have no choice but to cover the costs of PMBs in full.
“The fact that medical schemes are left to individually negotiate rates with healthcare providers also means that a handful of large medical schemes have considerably more bargaining power than the rest of the industry. The consequence of this is that healthcare providers make up for the discounted rates they have acquiesced to with the large schemes by demanding higher fees of the smaller schemes.
“The proposed introduction of uniform tariffs for healthcare providers will go a long way towards levelling the playing field, however it is imperative that tariffs are applicable to both PMB and non-PMB claims and ICD-10 coding conventions must be clearly defined to avoid practises such as code farming,” he observes.
“At the moment there is no standard for acceptable ICD 10 codes associated with a particular treatment or procedure, and the risk is that if uniform tariffs are introduced without establishing coding conventions, then providers may simply bulk up on ICD codes to achieve higher claims. Medical scheme administrators will therefore need to ensure they have the infrastructure and necessary systems in place to manage this effectively and adjudicate claims based on coding.”
Arnold says that the proposal for a new set of PMBs, which will place greater emphasis on primary and preventative healthcare, could be a welcome development.
One of the proposals reportedly contained in the Medical Schemes Amendment Bill is a prohibition of members being charged co-payments. Arnold explains that under the status quo, co-payments are implemented on non-PMB claims and while schemes limit co-payments as far as possible, these are generally higher for elective surgical procedures.
“Limits on claims for elective procedures are in place particularly where more conservative means of treating the condition, such as physiotherapy, are available. Here the co-payments charged for such procedures are in place to protect the funds available for claims that are truly a medical necessity. Here, co-payment should, in theory, encourage members to consider alternatives to elective surgery.
“If co-payments on elective procedures were to be scrapped, this would open up an avenue of considerable risk for the majority of members in favour of the few. This is because if procedures are covered in full by law, then healthcare providers may be encouraged to prescribe more costly treatment rather than choosing more conservative options that are less profitable.
“The average medical scheme member may welcome the prospect of co-payments being eliminated, however the wider implications must be considered.
“We would, however, instead advocate the introduction of a defined list of treatments that co-payments can be charged for, in order to protect the funds available to cover the entire membership of any given medical scheme,” he adds.
“The reality is that co-payments are one of the few risk management tools left to medical schemes to counteract over-servicing from opportunistic healthcare providers and undesirable claiming practices from a minority of members who may otherwise abuse the system and reduce the value we can offer to all members,” Arnold concludes.