Knock-on costs are among the biggest drivers of expenses in the healthcare-funding sector, and the more services a healthcare professional performs, the higher the bill, says Patrick Masobe, the chief executive of medical scheme administrator and clinical risk manager Agility Health.

Masobe says secondary healthcare expenditure is eating away at South Africans’ medical scheme benefits, largely because specialists invoice patients and schemes in an unregulated fee-for-service environment in which every service they perform has a code and a price tag.

“Among the biggest cost-drivers in the healthcare-funding sector are knock-on costs resulting from the way that the practice of medicine has evolved, given costly new technologies and developments, which have rendered the cost of healthcare service provision prohibitively high. The more services the healthcare professional performs, the higher the bill will ultimately be.”

A further cost-driver is over-servicing, which is a result of clinicians practising a very defensive form of medicine, which is often a response to the highly litigious environment in which they work, he says.

“Doctors argue that they must test for all possible conditions in order to protect themselves from legal liability in the event that they could possibly have missed something. Unfortunately, this tends to drive overly cautious behaviour, which in turn increases healthcare expenditure.”

According to Dr Jacques Snyman, the director of product development at Agility Health, this means that doctors in an emergency setting may perform a range of tests to guard against the possibility that they could miss something significant.

“However, quite a number of the tests performed may, in fact, be quite unnecessary,” he says.

Unnecessary tests

Snyman cites the case of a patient who presented with chest pain and breathing difficulties. The patient lodged a complaint after receiving a R4 000 pathology account from a Pretoria emergency room.

“As a known cardiac patient, she was rushed to the emergency room for fear of a heart attack, and received a physical examination, electrocardiogram (ECG), which is a test measuring the electrical activity of the heart, as well as blood tests checking heart enzymes. Given her history, these tests were all necessary and were appropriately performed.”

However, Snyman says, thyroid function, cholesterol, full liver, renal function and electrolyte tests were also performed, all of which were unnecessary.

“A host of other markers was also requested, again with no real relevance to this case. The patient was eventually diagnosed with inflammatory costochondritis, which is an inflammation of the cartilage in the rib cage. This condition can present as mild to severe chest pain, which in this case responded well to pain medication.”

Snyman says it is of particular concern that the patient was never asked to consent to the tests performed or informed of the costs.

“This constitutes a serious breach of the ethical codes and rules of the Health Professions Council of South Africa, which require the doctor or healthcare facility to obtain informed consent from a patient prior to performing tests, and that they explain billing practices upfront.”

Acute conditions

Masobe says, in terms of the prescribed minimum benefit (PMB) regulations, all relevant tests that are done to exclude acute a PMB condition, such as a myocardial infarction, must be covered in full by a medical scheme.

“It is important to note, however, that the scheme is only liable to fund this as a PMB condition until such time as a PMB condition has been excluded. In this case, it meant that the clinical examination, ECG and heart enzyme tests were funded as a PMB, but not the additional, extraneous and medically unnecessary tests,” Masobe says.

The patient is liable for paying these fairly expensive additional costs from her medical savings account, or, worse still, out-of-pocket, he says.

Snyman says that medical schemes’ benefits, which dictate that certain services will be funded only in-hospital, can also drive opportunistic behaviour by patients and providers.

“In such instances, emergency consultations typically involve admitting the patient to ensure that costs are covered by the medical scheme. This is also highly convenient in terms of access for both patients and doctors, whose consulting rooms are located at the hospital.”

Specialist consultations

Snyman says another driver of costs is that consultations with specialists often facilitated take place without a referral from a general practitioner (GP). In light of the shortage of specialists, this type of behaviour is not only costly and unnecessary, but also places a considerable burden on scarce healthcare resources.

“There is an urgent need to return to a more primary-care-focused healthcare model in the private sector. Medical scheme members should be channelled through GPs instead of going straight to specialists. However, the PMBs in their current form discourage such behaviour and instead tend to encourage hospitalisation.”

Snyman says failure to adhere to treatment regimes accounts for as many as 30% of hospital admissions among patients who suffer from chronic conditions. Some schemes have overly simplistic formularies (lists of medicines) that do not provide the flexibility for patients to be treated out of hospital.

Creative billing

He says some doctors invent creative billing practices to increase their earnings and, in some instances, encourage patients to make full use of their gap-cover policies to cover additional healthcare costs.

“The implementation of the PMBs and subsequent scrapping of the National Health Reference Price List by the High Court exacerbated this problem. 

“The establishment of a framework within which funders, as an industry, could negotiate and agree on tariff structures with health-service providers will assist in controlling the rising costs associated with PMBs.

“If medical schemes need to pay for all PMB treatments and medications, it is important for schemes to be able to influence the costs of this by agreeing to an upfront reference price list with hospital groups and healthcare specialists,” Snyman says.

The problem has been exacerbated by the absence of PMB-pricing regulations, he says. Some healthcare providers are charging as much as 500% more than the recommended tariffs for PMBs, because they know that schemes are compelled by law to cover them.

Consequently, Snyman says, providers are not willing to contract at lower tariffs, and are in position to charge high fees because of the shortage of, and great demand for, their highly specialised skills.

Masobe says the PMBs were intended to be part of a broader risk-pooling exercise, which never materialised.

“As a result, we are now left with only one piece of a broader strategy, leading to escalating costs throughout the healthcare industry, to the detriment of medical schemes and their members. What is needed is a regulatory model that places all medical schemes on an equal footing so that schemes can, for example, reward GPs for quality outcomes. This would ensure that care is not compromised and significantly improved.”

He says that implementing a patient-centred healthcare system, where schemes’ funds are freed up to cover more preventative care, such as regular diagnostic tests and health screenings, would ensure that members required less hospitalisation.

“Schemes could still provide ongoing care to members with fewer PMBs, or at least have the tariffs regulated for PMBs within specified limits.”

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