Medical schemes can do more to save you money
Survey data suggest that medical schemes can do more to contain costs for you, the member, a healthcare actuary says. However, when schemes do take steps to contain costs, it generally results in greater inconvenience to you.
Old Mutual Actuaries & Consultants (Omac) recently surveyed employers, medical schemes, scheme members and scheme brokers to determine trends in the funding of health care. The survey found that members complain about rising costs and decreasing benefits, while schemes face rising costs and deteriorating risk pools, Margaret Hulme, the head of healthcare consulting at Omac, says.
The results of the survey indicate that schemes can do more to contain costs that are passed on to you in the form of higher contributions, she says.
The survey also found that members do not make use of some of the measures implemented by schemes to contain costs and that members view some of these measures negatively, Hulme says.
Schemes, employers, members and brokers interviewed for the survey all cited containing the rising costs of health care as a key consideration in healthcare funding.
The survey found that traditional managed care measures used by schemes to control costs – such as requiring hospital pre-authorisation and hospital case management – need to be maintained, but they no longer bring about additional savings from one year to the next.
In particular, the schemes interviewed for the survey reported that disease management programmes, such as those that seek to ensure members who have an illness such as diabetes are aware that they must have certain tests and treatment, and wellness programmes, that seek to test for health problems and detect illnesses at an early stage, do not add significant value.
Despite this, there has been a huge increase in the number of schemes that use disease management programmes. These programmes are used by 91 percent of the closed schemes and 88 percent of the open schemes surveyed, as opposed to only 26 percent of the schemes surveyed by Old Mutual in 2005.
Only about half of the schemes surveyed buy chronic medicines for their members in bulk from a single provider (centralised buying) to control costs. Half of the open schemes and hardly any closed schemes use centralised buying for other healthcare services, such as medical appliances and optometry benefits.
In addition, only half of the open schemes, and far fewer closed schemes, use risk-sharing arrangements with hospitals. These arrangements involve setting a fee per member to cover all members for certain procedures or agreeing on a set fee per member for all hospitalisation.
Risk sharing arrangements with specialists – where specialists agree to treat a scheme’s members for a set fee – have proved difficult to implement and are therefore not widely used as a managed care technique.
The degree of risk a scheme faces, and hence the claims it faces, is directly correlated to the level of chronic illness among its members, the survey says.
Data submitted in 2006 to test the proposed Risk Equalisation Fund for medical schemes found huge differences in the average cost to schemes between beneficiaries (members and their dependants) who have chronic illnesses and those who do not, Hulme says.
Data from four different administrators showed that the claims of a beneficiary with no chronic illness cost these schemes on average R318 a month, whereas a beneficiary with just one chronic illness (as listed as a prescribed minimum benefit, or PMB) costs schemes on average nearly four times as much: R1 245 a month. The cost rises with each additional PMB chronic illness, to R2 618 a month for members with four chronic illnesses. This is eight times the cost of a beneficiary without any chronic illnesses, Hulme says.
In interviews with 10 medical schemes, Omac found that their biggest problem with managing chronically sick members is the members’ failure to take their chronic medicines consistently as prescribed and the lack of co-ordination of care. Schemes need to ensure that doctors manage members with chronic illnesses in a synchronised way in conjunction with other parties, such as a screening clinic at a retail pharmacy or a nurse at a managed care company, Hulme says.
Most disease management programmes have limited impact because of the way they communicate with members. Communication is generally paper-based, requiring the completion of forms, or involves telephone calls from a nurse or other managed care company employee, she says.
Very few disease management programmes make use of healthcare providers to ensure that you have the necessary check-ups or tests or the treatment your check-ups or tests suggest you need, and this is why they fail, Hulme says.
Omac consulting actuary Jan Howell says that members are more likely to listen to their doctors than to a call centre agent from a managed care company.
HIV/Aids management programmes implemented by medical schemes, in contrast to other disease management programmes, have been highly successful, because they have involved the total care of the patient and have included all providers, the survey says.
Hulme says schemes surveyed also reported that wellness programmes, which are widely used by open medical schemes, add little value because of low uptake and use of the benefits by members.
Over a recent six-month period only 57 beneficiaries out of 14 000 people covered by a particular scheme made use of screening tests at a pharmacy. These tests were for blood pressure, glucose levels, cholesterol and body mass index and were paid for by the scheme.
Again, very few wellness programmes involve healthcare providers, and this is the reason for their low uptake, Hulme says.
In addition, she says, none of the schemes surveyed makes use of the biometric data from screening tests that members are required to have as part of their treatment plans for managing their conditions.
If this data were recorded on a database of members with chronic illnesses and there was permission to share it with parties such as the treating specialist and the managed care company, the information could be used to ensure that members are given the required treatment, including changes in their medication. Healthcare problems would be detected through the screening tests.
Hulme says a stitch in time saves nine, and the early detection of health problems in this way could save the costs of more expensive treatment that would be required if the problems were left to become more severe.
The survey also suggests that schemes need to attract younger and healthier members to improve their risk pools and increase cross-subsidies to older, sicker members.
To do this, Hulme says, schemes should try to educate all their members, preferably with effective face-to-face communication, to appreciate the value of their PMB entitlements – even for the currently healthy member, who could have an accident or be diagnosed with a life-threatening disease the next day.
Schemes should also use the tools mentioned – such as appropriate treatment protocols, designated service providers (DSPs), and formularies – to have better control over PMB costs. Schemes that manage to achieve both these goals should be able to attract and retain younger members and be better able to control the increases in members’ contributions.
‘Better control of PMB costs is needed’
The survey shows that closed medical schemes in particular can do more to control the costs of providing the prescribed minimum benefits (PMBs), Hulme says.
By law, medical schemes are allowed to try to control the costs of providing you with the PMBs by insisting you use designated service providers (DSPs) to enjoy cover or face a co-payment and restricting medication for PMBs to a formulary of cost-effective medication.
The survey found that many schemes use DSPs. DSPs for general practitioner services are used by 80 percent of the open schemes surveyed and 40 percent of the closed schemes. Eighty percent of the closed schemes use pharmacy groups as DSPs, whereas only 40 percent of the open schemes do so. Forty percent of both open and closed schemes use specialist networks as DSPs. While 40 percent of open schemes use hospital groups as DSPs, only 10 percent of closed schemes do so.
However, the members surveyed view these measures to contain costs negatively. They regard the appointment of DSPs as a restriction of their choice (31 percent), prefer to see their own doctor (13 percent) or find that DSPs are inconvenient (nine percent).
Hulme says that members often do not understand that using the healthcare provider of their choice results in higher costs. Members who view DSPs positively cited the affordability of the benefits, because there are no co-payments.
Hulme says if there are enough providers in the areas where the members are, most members will use these DSPs anyway, and it will not be necessary for schemes to force members to use them, Hulme says. However, schemes will still be able to work with those providers to find ways to contain costs to your benefit, she says.