Since the introduction of Prescribed Medical Benefits (PMBs) in 2004, definitions, inclusions, cost and reviews, have raised concerns. PMBs were well intentioned – make sure members have cover for emergencies and big events. But schemes were left with an open ended liability as regulation requires PMBs to be ‘paid in full.’ Last week proposed changes were announced that saw the wording ‘paid in full’ being replaced by ‘in accordance with.’
PMBs are…
Prescribed Minimum Benefits – 270 medical conditions and 27 chronic conditions. Schemes can enter into pricing agreements with designated service providers, but where care for PMBs is given in an emergency; costs have to be covered in full.
Is paid in full a problem?
It is effectively a blank cheque. It presented “an unpredictable obligation for schemes as there was no limit to what a provider could charge,” says Jonathan Broomberg, CEO of Discovery Health.
Dissenting views: PMBs are cost drivers
No: The Council for Medical Schemes (CMS) has consistently and persistently denied that PMBs have been driving up costs. In their 2014 annual report, chairperson Professor Yosuf Veriava states that the claims that PMBs have placed onerous financial burdens on schemes “are not borne out by the data…”
Yes: Fedhealth chairman Jeremy Yatt says they have “encountered many instances where certain providers have charged significantly more for a PMB consultation than for a non-PMB consultation.”
The proposed change to Regulation 8 is on www.gov.za
The key phrase: medical schemes are liable for payment for services in accordance with the billing rules and the tariff codes of the 2006 National Health Reference Price List (NHRPL) tariffs.
Schemes may also negotiate alternative tariffs with providers.
What does this change mean?
The change is probably long overdue, says Gregory Setzkorn, chairperson of the FIA’s Healthcare Executive Committee. “Schemes had no flexibility to negotiate rates.” Schemes belong to members, so it was the members who were bearing the brunt of the high costs.”
But: Members could now face co-payments. The proposal changes what medical schemes pay, not what health care providers charge. Low or no co-payments may rest with schemes’ ability to negotiate prices.
“The suggestion that this proposed amendment will pose huge PMB co-payments to members is incorrect,” says Bestmed CEO, Dries La Grange. “Medical schemes are, and have always been willing to negotiate reasonable tariffs for PMB services.”
The price list problem
The draft proposes one option of using the 2006 NHRPL and inflating it, using CPI. The NHRPL was put out to pasture in 2010 after a court case. The prices were found to have no relation to cost and to be unreasonably low. In 2013, Casper Venter, CEO of HealthMan, noted that the NHRPL of 2006 “no longer represents the full scope of specialist practices in South Africa,” nor does it include the latest technologies. One example: malpractice insurance for obstetricians increased 884% in 13 years.
Is this a well intentioned change that faces legal challenges? “It is very likely that they will be challenged by various parties,” says Broomberg.
And then there is Gap cover and demarcation regulations. If a scheme does not have to pay in full, surely there should be scope for gap cover, and certainly a lot less restrictive than the last proposed R50 000 cap?
Concluding thoughts
Outlawing “paid in full” seems reasonable, negotiated rates has potential, the NHRPL is questionable. If, unintentionally, benefits have been skewed towards PMBs because of price issues, more comprehensive cover could be possible in future.
Comment on the proposal is due 14 October, the time when plans for 2016 have to be chosen. Given the timeframe and potential delays, 2016 options may not need to factor in potential changes, but Setzkorn notes that a lot of advisory work will need to be done to ensure clients and members are adequately covered for the coming year.
