Medical schemes and healthcare providers have been brought to a crossroads by the proposed regulatory change to schemes covering minimum benefits in full and should seize the opportunity to negotiate an alternative, a former legal adviser to the Council for Medical Schemes told the Board of Healthcare Funders (BHF) conference in Cape Town this week.

Stephen Harrison, who left the medical scheme regulator in 2009 and is now a lecturer in emergency medicine at the Cape Peninsula University of Technology, says it is “tragic” that there has been no movement on the issue of tariffs for medical services since 2004, when the Competition Commission halted negotiations between schemes and healthcare providers about the tariffs your scheme pays.

But “imagine the game-changer if there was a joint response to the proposed amendments to regulation eight of the Medical Schemes Act by the BHF and other medical scheme stakeholders, including consumer watchdog bodies”, he says.

Harrison says medical schemes and healthcare providers have adopted intractable positions since 2004, but a possible solution could be mediation with a view to coming up with a negotiated alternative to the proposed amendments to regulation eight drafted by the Department of Health.

The Competition Commission is conducting an inquiry into the private healthcare sector, but Harrison says that schemes, healthcare providers and consumers have no control over who will win or lose if the commission recommends regulatory intervention.

There is, however, an opportunity for leaders representing medical schemes and the medical profession to come up with a solution – one that, unlike past regulation, is sustainable and addresses the heart of the problem, Harrison says.

He says he does not believe that the Competition Act, which the Competition Commission cited as the reason for stopping negotiations between schemes and providers, is an obstacle to a negotiated solution to the problems facing schemes.

Currently, healthcare providers are winning when it comes to the prescribed minimum benefits (PMBs), because they are unilaterally introducing new procedure codes and having schemes pay for these procedures, Harrison says. Schemes and consumers are losing.

He says if the amendment to regulation eight changes medical schemes’ liability for the PMBs and limits it to a particular tariff, it could be argued that the outcome will be good for you, as a medical scheme member, because the cost of contributions should decrease.

But limiting schemes’ liability would introduce greater disparity between what providers charge and what schemes pay and leave you struggling in the gap. As a result, consumers are likely to buy gap-cover insurance, which covers the difference between what providers charge and what schemes pay them. Some consumers will obtain health care from state facilities to avoid being liable for large medical bills.

Harrison says that if schemes’ liability for the PMBs is limited, it will be a win for them, but providers will lose out, because they will have to recover fees from members and they will lose some patients to state facilities.

However, negotiations over tariffs between schemes and providers could protect members and be a win for schemes and providers, he says.

Humphrey Zokufa, the managing director of the BHF, which represents medical schemes and administrators, told the conference that the proposed amendments to regulation eight were the result of the BHF’s engagements with Health Minister Aaron Motsoaledi.

Zokufa says that, with hindsight, the BHF was wrong to have allowed the Competition Commission to stop negotiations over medical tariffs in 2004. The BHF should have challenged the commission’s decision in court.

A court case in which Genesis Medical Scheme is challenging the minister of health’s right to have promulgated regulation eight, and the BHF’s warning to the minister that it was considering joining the case, had resulted in Motsoaledi agreeing to amend the regulation, Zokufa says.

Dr Rajesh Patel, the BHF’s head of risk, told the conference that it has approached an academic institution to help it draw up a standardised methodology for schemes to calculate the inflation-related increase on the 2006 guideline tariff list that the Department of Health is proposing be used as a minimum tariff for the PMBs.