Medical schemes can’t get out of paying for prescribed minimum benefits (PMBs) simply by stating in their rules that members must use state medical facilities for PMB treatment, the Supreme Court of Appeal ruled this week.
The regulator of medical schemes is hailing the ruling as a victory for members, but Genesis, the scheme that lost the case, says it will challenge the ruling, because it will ultimately result in members’ contributions increasing and their non-PMB benefits being eroded.
Genesis will also not abandon its other legal challenge to the regulation under the Medical Schemes Act that obliges schemes to pay for PMBs in full regardless of what a healthcare provider charges.
Medical schemes are arguing that doctors are increasing their tariffs for PMBs, because they know that schemes must pay whatever they charge.
Genesis has lodged an application in the High Court against the Minister of Health, Dr Aaron Motsoaledi, seeking to have the promulgation of regulation eight of the Medical Schemes Act struck down as ultra vires (beyond the law).
If the promulgation of regulation eight is found to be ultra vires, schemes will not be obliged to pay for the diagnosis, treatment and care of PMB conditions in full. This could result in you being liable for that part of the bill that exceeds the scheme’s normal rate.
In August, the High Court ruled that a number of parties to the case – including the Hospital Association of South Africa, the South African Private Practitioners’ Forum, the Council for Medical Schemes and the Registrar of Medical Schemes – could intervene in the application, despite objections from Genesis. Genesis’s trustees have been denied leave to appeal this ruling and plan to petition the Supreme Court. This is delaying the hearing of the merits of the case.
The Department of Health has responded to schemes’ concerns that regulation eight is resulting in healthcare providers charging more than they would normally and is exposing schemes to rising claims, which, ultimately, will result in contribution increases for members. In August, the health department published a proposed amendment to regulation eight for comment.
Dr Anban Pillay, the deputy director-general for health regulation and compliance management at the department, says the department has received a large number of comments. Both healthcare providers and schemes have expressed a willingness to agree on an acceptable amendment to the regulation, he says.
Once the department has reviewed the comments, it will hold a meeting of stakeholders with a view to reaching consensus on the amendment, Pillay says.
Motsoaledi will then have to decide whether to amend the regulation or await the outcome of Genesis’s case.
In the meantime, your scheme is obliged to pay in full for the bills that arise from treating a PMB condition. The exception is if it has contracted with a healthcare provider and has stated in its rules that you must use that provider and you voluntarily use a different provider.
This week’s Supreme Court of Appeal ruling against Genesis confirms that the scheme must have a contract with healthcare provider that it appoints as a designated service provider (DSP) if it wants to contain the costs of treating a PMB. If a scheme does not have a contract with the state, it cannot insist that you use state healthcare facilities to be covered in full for the cost of treating a PMB.
The Medical Schemes Act provides that schemes can appoint and contract with DSPs in order to contain their costs when you receive medical services for PMBs.
If you use a provider other than the one your scheme has named, your scheme can impose a co-payment, which can be a percentage of the cost, or the difference between the scheme’s rate and the actual cost, or a fixed amount. The co-payment must be specified in the rules of the scheme. There are exceptions for emergencies and if the DSP is not available.
Legal challenges
The Supreme Court case was the result of a complaint by Nicola Joubert that Genesis had failed to pay all of the medical bills that arose from the treatment of her then 17-year-old daughter, Roxanne, who was injured in a motocross accident in Durban in 2008.
Joubert complained to the Council for Medical Schemes, the regulator of schemes, which ruled that Genesis must pay the bills.
The scheme paid the hospital and doctors’ bills, but declined to settle the accounts for external prostheses that were used to stabilise the teenager’s leg. Genesis said that, at the time, its benefits did not provide for external prostheses.
Genesis took the matter on appeal to the Council for Medical Schemes’s Appeal Committee and to the council’s Appeal Board, but without success.
It paid the outstanding bills, but then turned to the Cape High Court, which ruled in the scheme’s favour.
The court said that, because the Registrar of Medical Schemes had registered Genesis’s rules, he could not force the scheme to comply with the Medical Schemes Act without first issuing a directive to the scheme to amend its rules.
The Council for Medical Schemes took the ruling on appeal, which resulted in this week’s judgment against Genesis.
The council’s argument is that the Medical Schemes Act always supersedes the rules of a scheme, and a scheme cannot limit payments for PMBs if it fails to appoint a DSP.
In his judgment, Judge LE Leach notes that Genesis and the Council for Medical Schemes have been at loggerheads over the appointment of a DSP since late 2006 and this had resulted in the scheme amending its rules to provide for full payment for PMBs only where treatment was obtained from the state or a DSP.
However, Judge Leach notes that, “cynically”, Genesis never appointed DSPs and has remained steadfast in its view that it is not obliged to do so.
He says when the Medical Schemes Act was passed with a provision obliging schemes to pay your accounts for PMB conditions and regulation eight was promulgated, it was clear that the legislation envisaged that PMBs would be treated by private-sector providers.
The judge says that, when the then minister of health specified the PMBs and the treatment for these conditions, his intention was that members would be covered whether they were treated in private or public hospitals. This objective would be defeated if a medical scheme provided cover only if the treatment was obtained from the public sector, thereby effectively shifting the cost of treating PMBs from medical schemes to the state, Judge Leach says. “That is precisely what Genesis has attempted to do by not appointing DSPs,” he says.
He says Genesis argued that, by accepting the rules of the scheme, members contracted out of the obligations imposed by the Medical Schemes Act. But a scheme cannot evade the obligations imposed on it by legislation by contracting with its members in terms of rules that have a contrary effect, Judge Leach says.
Genesis could have avoided paying the full cost of the PMBs by concluding agreements with the public sector. Its failure to appoint DSPs resulted in it being obliged to pay Joubert’s medical bills, he says.
Genesis intends to appeal
In an open letter to members this week, Genesis indicated that it intends to appeal the case. The appeal will have to be made to the Constitutional Court.
The scheme says the judgment essentially prohibits medical schemes from imposing any limits on their liability for PMBs, thereby handing a “blank cheque” to healthcare providers.
“There can be little doubt that this will result in the cost of health care rising even further. It is a concern that this judgment comes at a time when the minister of health has called for a commission of inquiry into the high cost of healthcare services. We view this judgment as contradictory to the constitution, which provides for the progressive realisation of affordable and accessible health care. We also believe that, while there may be short-term gains for members, in the longer term the judgment will result in non-PMB benefits being restricted or discarded altogether and premiums being increased to unaffordable levels,” Genesis says.
GENESIS DOES PAY FOR PMBs IN PRIVATE HOSPITALS
Genesis medical scheme does pay for prescribed minimum benefits (PMBs) in private hospitals, the scheme says in an open letter to members.
The scheme assured members that their private hospital and related costs, whether or not for a PMB, will usually be settled in full.
It says there are no legislated tariffs to which healthcare providers in the private sector must adhere. This means schemes face an unlimited and unpredictable expense that ultimately results in above-average contribution increases, year after year, for most medical scheme members.
Genesis says the rationale for the legal battles it is fighting on behalf of both its members and the medical scheme industry is evident in a recent claim against the scheme.
The claim arose from a member who had his appendix removed (a PMB) at a private hospital. The scheme paid the hospital account in full. The surgeon charged R8 032, and his claim was paid in full, because this amount was within the limit of 200 percent of the scheme’s rates for the member’s benefit option.
The anaesthetist charged R16 200, which is 400 percent of the Genesis tariff and double the charge of the surgeon. Genesis paid only half the claim, but the anaesthetist has lodged a claim for the balance, pointing out that it is a PMB account and should be paid in full.
The scheme said it will not raise contributions to pay for its court battles.