PMBs ‘are not driving up health care costs’

Londiwe Buthelezi

Contrary to claims by medical schemes that prescribed minimum benefits (PMBs) drive up the cost of health care, research by the Council for Medical Schemes (CMS) shows that the industry “has never looked better”.

The acting chairman of the CMS, Trevor Bailey, and CMS chief executive and registrar of medical schemes Monwabisi Gantsho agreed yesterday that a tight grip on schemes was the reason for the rosy outlook.

They said the schemes had failed to honour invitations to prove their claims that the PMBs were exorbitant cost drivers but that instead, in 2011 as in previous years, the higher cost of health care was driven by increases for private hospitals and medical specialists.

“[The] council believes that a real need exists for a platform where medical schemes and health-care providers can meet and negotiate prices.

“Private health-care providers should also be regulated, specifically the hospitals and specialists,” Bailey said.

The council, which regulates medical schemes, unveiled its 2011/12 annual report yesterday, in which it rubbished what it called “unfounded” attacks on paying for PMBs in full.

Gantsho said the CMS’s research showed that since PMBs were introduced in 1998, the industry had improved its performance and had reached a new level of financial stability.

The CMS and the medical schemes have had lengthy litigation over the onus of payment for 295 PMBs. Since the North Gauteng High Court ruled in favour of the council in November last year, to the effect that schemes had to pay the full amount charged by service providers, schemes have claimed to be unable to contain the costs.

Ashleigh Theophanides, the health care and life assurance leader at Deloitte, said that, in her interpretation, PMBs were among the factors driving the costs of health care up.

“I’m not saying PMBs are bad. They give an equal playing ground for all medical schemes and that is good. But the way in which the market has reacted to them may be negative,” Theophanides said.

Although the registrar praised PMB regulations for stabilising the industry, he said the CMS had made recommendations that would pave the way to the reviewing of PMBs and last year it made further adjustments to its 2010 recommendations. The Department of Health will be leading the review of the PMB regulations.

In 2011 medical schemes spent R93.2 billion on health-care benefits, 10 percent more than in 2010. They collected R107.4bn in contributions.

Expenditure on private hospitals increased by 9.7 percent to R33.8bn. In real terms, medical schemes’ expenditure on private hospitals increased by 129 percent between 2000 and 2011. Last year, the number of medical scheme beneficiaries admitted to private hospitals was 5.3 percent higher than in 2010. Their average hospital stay was 3.2 days, compared with 3 days in 2010.

Benefits paid to medical specialists totalled R21.3bn, a 13.5 percent increase. Hospitals and medical specialists made up 59.4 percent of schemes’ health-care costs.

The next largest health-care spend was on medicines, at R15.2bn. General practitioners accounted for R6.8bn and dentists for R2.6bn. The benefits paid to dentists have, in fact, decreased by 19.8 percent between 2000 and 2011.