Illustration: Colin Daniel
Illustration: Colin Daniel

Shape up for NHI, health industry told

By Laura du Preez Time of article published Jul 11, 2011

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Health Minister Dr Aaron Motsoaledi wants both the private and the public healthcare sectors to be part of the country’s future National Health Insurance (NHI) system. But before the private sector can be included, it will have to swallow the bitter medicine of price regulation, shed some baggage and get into better shape, he says.

The minister addressed the medical scheme industry at this week’s Board of Healthcare Funders (BHF) conference at Sun City.

The conference heard about numerous issues facing medical schemes, including:

* A threat to close administrators of schemes that have failed to pay prescribed minimum benefits in full (see “Three administrators under fire for PMB contraventions”, below);

* The rising cost of claims and schemes’ inability to collect enough contributions to pay them;

* The increasing burden of diseases, such as cancer;

* The need to comply with consumer protection legislation;

* The need to introduce more preventative healthcare measures;

* The decline in employer subsidies of the cost of scheme membership; and

* The need for good governance in schemes and for schemes not to discriminate against anyone wanting to join (see “Schemes can’t turn you away”, below).

The BHF, which represents schemes, managed care entities and administrators, was, however, encouraged by indications from the Department of Health that the medical schemes industry will have a role to play in NHI.

BHF managing director Humphrey Zokufa told the conference that the director-general of the Department of Health, Precious Matsoso, who attended the conference, had asked him to announce that the department will engage with the BHF more seriously in the next few months on NHI and other issues the BHF wants to discuss.

Zokufa said the BHF is also encouraged by the fact that Motsoaledi had spent several hours at the conference outlining his views on how he plans to heal South Africa’s healthcare sector, which is “divided into public and private by the depth of people’s pockets”.

One of Motsoaledi’s main messages was that healthcare costs cannot continue to rise at rates far above the consumer price index and that costs will have to be regulated. The minister said the cost of private health care is out of control, and that medical schemes are a victim. He told journalists that the Council for Medical Schemes’s 2010 annual report will show that schemes again paid out more for your claims – R2.5 billion – than they collected from you in contributions.

Dr Monwabisi Gantsho, the Registrar of Medical Schemes, earlier told the conference there is an indication that schemes are finding it difficult to keep up with the increasing cost of claims, but said the trends will be revealed only in September in the Council for Medical Schemes’s annual report after the minister has seen the data.

Dr Anban Pillay, the cluster manager for financial planning and health economics at the Department of Health, told the conference that the department is looking at a “legislated process” to control the prices of healthcare services, because its proposal for a voluntary process to negotiate healthcare tariffs appears to be doomed to failure.

The department published a discussion document in November last year that proposed a voluntary negotiating forum in which healthcare service costs would be revealed and healthcare tariffs would be set.

However, most provider groups, particularly private hospitals and specialists, had been opposed to the proposals and had threatened legal action if the voluntary process continued, Pillay said.

The department had therefore decided to abandon the voluntary process, because it believed that if it had set it up, the providers would not have taken part and the process would be doomed to failure, he said.

At the conference, Pillay was later told by Casper Venter, a director of Healthman, which consults to a number of specialists’ groups, that specialists were not opposed to the voluntary tariff-setting process.

Motsoaledi said the Competition Commission’s finding in 2003 that the tariff negotiations between medical schemes and healthcare providers were anti-competitive, and which put a stop to the negotiations, had made things worse for medical schemes.

He said he is engaged in discussions with the competition authorities on the legalities of setting healthcare tariffs.

In addition to unsustainably high costs, Motsoaledi said both the private and the public healthcare systems are running “destructive, unsustainable curative healthcare systems”.

Medical scheme benefit packages should promote good health and include preventative care and not focus only on high-cost curative care, he said.

The minister cited the example of schemes paying for abortions but not for contraception.

Some other key messages the minister had for schemes were:

* Schemes should support the government’s national HIV Counselling and Testing campaign and ensure that all medical scheme members are tested for HIV;

* Schemes should reduce their non-healthcare costs to below 10 percent of their contribution income;

* Schemes should strengthen their governance and that of their administrators;

* Schemes should simplify their benefit packages so that medical scheme members clearly understand their benefits; and

* Schemes should introduce alternative reimbursement systems such as capitation (capped fees for providers who agree to treat all scheme members needing their services), which reduce costs and over-servicing.

The minister told journalists the NHI policy document has been cleared by a cabinet committee and now has to be approved by the cabinet itself. He said he could not say when the document would finally be approved and released for public consultation, because this will depend on how much further work the cabinet requires.

However, he said the document will be released before the end of the year and that enabling legislation will be promulgated next year. Relevant existing legislation will also be comprehensively reviewed.

NHI will then be phased in over 14 years.

Dr Clarence Mini, the chairman of the BHF, said the BHF’s understanding is that the envisaged NHI system will be based on a single statutory authority that will decide which healthcare services you need and “purchase” these.

He said the BHF, however, believes that a single-purchaser NHI model does not preclude the use of a multi-payer system – that is, one in which multiple entities will receive claims for NHI services and pay for them from NHI funds.

Mini said such a system would, among other things, encourage competition, which could control healthcare service costs, improve the quality of the services, monitor fraud and abuse, and improve accountability and overall governance of NHI.

Three administrators under fire for PMB contraventions

The Council for Medical Schemes has asked at least three medical scheme administrators, including two large ones, to tell it why they should be allowed to continue administering schemes that were found to be contravening the law relating to the prescribed minimum benefits (PMBs).

Humphrey Zokufa, the managing director of the Board of Healthcare Funders (BHF), told the organisation’s conference this week that the Council for Medical Schemes had written to the administrators, which he did not name, saying it is reconsidering their fitness and propriety to be accredited as administrators, as they had failed to comply with the Medical Schemes Act regulation that states that PMB claims must be paid in full.

Administrators cannot administer schemes unless they have been found to be fit and proper and have been accredited by the council.

The council’s letters have angered the BHF, which represents medical schemes, their administrators and managed care entities.

Zokufa said it is “disingenuous” of the council, as the regulator of schemes and related entities, to enforce its view when a court hearing on the matter is pending.

Earlier this year, the BHF applied to the North Gauteng High Court for a declaratory order to clarify the meaning of the disputed regulation eight under the Medical Schemes Act.

Schemes are of the view that PMB claims should be paid only at the rate at which your medical scheme option reimburses healthcare providers.

But the council – after an appeal to its board of appeal – has taken the view that PMB claims must be paid in full, regardless of the rate charged by the provider.

Schemes argue that this interpretation of regulation eight gives healthcare providers a blank cheque to charge what they like for PMB claims and encourages providers to charge more for services they know are PMB ones than for non-PMB services.

Schemes say the council’s interpretation of the regulation will make the PMBs unaffordable.

Zokufa told the conference that the court will hear the BHF’s application on September 23 and 24.

He called on administrators that had received the letters not to respond individually and to allow the BHF to respond on their behalf. To challenge the council’s attack effectively, the industry needs to “hunt as a pack” rather than alone, he said.

Earlier, Dr Monwabisi Gantsho, the Registrar of Medical Schemes and the chief executive of the council, told the conference that the law on the payment of PMB claims has not changed.

The law will therefore be enforced by the council as it stands, he said, and PMB claims must be paid in full regardless of what the provider charged, Gantsho said.

There is no evidence to suggest that PMBs are “unaffordable” as alleged by medical schemes, and the council is still waiting for proof that healthcare providers abuse the PMBs as a “blank cheque”, as alleged by schemes, Gantsho said. The council has been asking for this information for many years but has yet to receive it, he said.

Gantsho also told the conference that he has taken note of schemes and administrators that have approached his office to confirm that they are not compliant with the law, and he promised to “address their challenges in a fair manner that ensures that medical schemes are regulated fairly and that they also treat their beneficiaries and the public fairly”.

Dr Aaron Motsoaledi, the Minister of Health, told the conference that it does not matter which side wins the PMB case in court because the issue of the cost of healthcare services needs to be tackled front on.

The Department of Health completed a review of the PMBs in 2010 and new PMB regulations will be published for comment shortly, Motsoaledi said.

The PMBs also need to provide preventative healthcare services rather than provide only for catastrophic healthcare events, as is currently the case, he said.

Schemes can’t turn you away

The Council for Medical Schemes will not allow open schemes to contravene the Medical Schemes Act’s provisions that state that they must admit anyone who applies to join.

Dr Monwabisi Gantsho, the chief executive of the council and the Registrar of Medical Schemes, made this clear at the Board of Healthcare Funders (BHF) conference this week, adding that restricted schemes are obliged to admit anyone who belongs to the group for which the scheme was established.

Gantsho also told the conference that the Medical Schemes Act and its regulations will be revised to improve the governance of schemes. Amendments will be tabled in parliament this year or next year.

Some medical schemes “craft eligibility criteria to try to exclude vulnerable and potentially high-risk groups and individuals from joining”, but this is tantamount to a contravention of the Act, Gantsho said. “Battles on open enrolment go to the council’s appeals committee and the independent appeal board.”

Good governance of medical schemes is a priority for his office, and the council will not hesitate to act against schemes that are not well governed, the registrar said.

Good governance means well-managed schemes, which means well-protected members of medical schemes and a stronger health system, he said.

“We have noted with extreme concern the continuously high non-health expenditure, especially with regards to legal fees, marketing, advertising costs, etc.”

He said the council can monitor schemes’ annual general meetings and the associated costs.

If governance is problematic, the council can take action to have a compliance officer appointed to the scheme, hold an investigation into the scheme’s affairs, conduct an inspection of the scheme, have a curator appointed, liquidate the scheme, deregister an entity providing services to the scheme, or place a scheme under judicial management, the registrar said.

Gantsho said amendments to the Medical Schemes Act and its regulations will seek to improve the governance of schemes by:

* Preventing schemes from making decisions by way of round-robin emails, rather than a physical meeting or teleconference;

* Revising the relationship between medical scheme members and their brokers to ensure that members pay for broker services only if they want them and enabling members to obtain independent advice about medical schemes; and

* Improving the value of managed care services offered to schemes.

The registrar said changes to the Act and its regulations would be in line with the implementation of National Health Insurance.

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