Healthcare pricing forum may be set up only after inquiry

By Laura du Preez Time of article published Sep 2, 2012

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The Department of Health is unlikely to establish a healthcare pricing authority until the Competition Commission has held its inquiry into the private healthcare market – a project the commission hopes to complete in less than two years.

There have been urgent calls – repeated at a recent parliamentary hearing – for a forum that can set fair prices for medical services.

If fair prices – that most healthcare providers agree to charge and most medical schemes agree to pay – can be set, you will have greater certainty that your scheme will cover your medical bills and that you will not have to pay high bills out of your own pocket.

A spokesperson for Health Minister Dr Aaron Motsoaledi said this week the minister welcomed the Competition Commission inquiry, and its findings would be central to the department’s efforts to establish a pricing authority.

The inquiry will consider what is driving healthcare costs, how the market has evolved since negotiations between schemes and providers over healthcare tariffs were stopped and the policies that could be adopted to address problems in the market.

The department expects policies flowing from the inquiry’s findings will be less susceptible to legal challenges from healthcare providers.

The inquiry is expected to be similar to the one that investigated the banking industry in 2006, which had some impact on bank charges, but while participation in that inquiry was voluntary, if amendments to the Competition Act are promulgated in time, healthcare stakeholders could be subpoenaed to appear.

Joe Maila, the health minister’s spokesperson, says the Department of Health will in the meantime continue doing whatever needs to be done to set up the pricing authority.

The authority will have to be established by law.

Maila says Motsoaledi will also continue to negotiate with all private healthcare stakeholders to ensure that health care is affordable and accessible in the interim.

A pricing authority was first proposed by the Department of Health in 2010 after the guideline tariffs it published, the Reference Price List (RPL), were challenged and struck down by a court.

Since then, calls to reverse the Competition Commission’s rulings, which put a stop to negotiations over healthcare tariffs, have become louder and were repeated at a recent parliamentary hearing.

Parliament’s portfolio committee on health earlier this month held a hearing into the delay in the publication of a list of guideline tariffs by the Health Professions Council of South Africa (HPCSA).

The HPCSA delayed publishing its guideline tariffs for doctors and dentists after groups representing these practitioners threatened legal action, saying the HPCSA’s rates are too low, took no account of practitioners’ costs, and omitted numerous new procedures and practices.

At the parliamentary hearings, medical practitioners and medical schemes said they supported the concept of a forum that can set fair prices for medical services.

Representing medical schemes, Dr Humphrey Zokufa, managing director of the Board of Healthcare Funders (BHF), said pressure should be put on the Competition Commission to reverse its rulings, and an opportunity for tariff negotiations should be reintroduced.

However, the Competition Commission’s divisional manager for advocacy and stakeholder relations, Trudi Makhaya, says the competition authorities’ rulings on collective price-setting “do not pose any obstacle to the ability of policymakers and regulators, acting on behalf of the public and independent of commercial influence, to explore solutions to pricing”.

Competition Commission investigations that began in 2003 and led to settlements that were confirmed as rulings in 2005, stopped negotiations between the BHF, the Hospital Association of South Africa and the South African Medical Association.

After this, differences between what healthcare providers charge and what medical schemes pay widened, with schemes citing an inability to keep paying higher amounts to providers and providers claiming that escalating costs were forcing them to charge more.

Makhaya says the key issue in the tribunal’s rulings was that medical schemes and healthcare providers set prices collectively without any regulatory or government oversight, and this contravened the Competition Act.

The Competition Commission is now of the view that the regulatory vacuum that arose after the RPL was struck down in 2010 needs to be addressed, Makhaya says.

However, she says, policymakers can introduce new or enhanced policies or institutional arrangements to address problems in the healthcare market without revisiting the 2005 rulings of the competition authorities.

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