Outrage over council instruction

By Laura du Preez Time of article published Apr 10, 2011

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The Council for Medical Schemes this week instructed all medical scheme administrators and self-administered medical schemes to declare to the council whether or not they are complying with its interpretation of the law and paying prescribed minimum benefit (PMB) claims at full invoice cost.

The move angered medical schemes represented by the Board of Healthcare Funders (BHF), which has launched a court application that seeks clarification of the meaning of the regulation under the Medical Schemes Act that states that medical schemes must pay PMB claims in full.

The BHF has lodged an appeal against the council’s instruction. Humphrey Zokufa, the BHF’s managing director, says in a letter to the council that the BHF expected the council to await the outcome of the BHF’s application to the Pretoria High Court.

The dispute over the meaning of the regulation that says that PMB claims must be paid in full escalated in late 2008, when the Council for Medical Schemes’ Appeal Board stated in two cases that the regulation means that schemes must pay whatever doctors charge for PMBs. The council has since been enforcing this interpretation of the regulation.

The BHF says the council’s interpretation gives healthcare providers a blank cheque to charge as much as they like for PMBs, because they know that your scheme is obliged to pay.

The BHF says that if the council’s interpretation prevails, providers will no longer contract with schemes and will charge more than they do now for PMBs, with significant negative financial implications for schemes.

In its court application, the BHF cites an analysis by one administrator of what could happen. This analysis shows that if all healthcare providers charged the current top-end rate (300 percent of the rates based on the former guideline tariffs), the administrator’s schemes would need to increase their contributions by 18 percent.

The BHF expects its court application to be heard in May or June. Papers filed recently reveal some of its key arguments.

The BHF argues that the Medical Schemes Act states that schemes may not pay anything other than the benefits payable in terms of the rules of the scheme. If there is no provision in the rules to pay a healthcare provider in full, the Minister of Health cannot by way of regulation compel schemes to pay in contravention of the Act, the BHF says in its court papers.

The Act also states, the BHF argues, that the rules of a medical scheme are binding on the scheme, its officers and on any person who claims any benefit under the rules. The BHF says this means that service providers are also bound by a scheme’s rules.

In its replying papers, the Council for Medical Schemes says that if schemes contend that their rules are required to conform only to the Act and not the regulations, the Minister of Health’s power to make regulations will become redundant.

It says if schemes curtail the rights of members to require full payment of the PMBs, this will effectively nullify members’ rights to receive basic private healthcare benefits, because members would be required to carry some or all of the costs of the PMBs, making them prohibitively more expensive.

The council also says that the BHF does not have locus standi to bring the case, because it is not itself a medical scheme.

In their papers, the Hospital Association of South Africa, ER24 and National Renal Care argue that if schemes are expected to pay PMBs only at scheme tariffs, schemes would be able to determine healthcare providers’ tariffs for them.

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