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Medical aid change to benefit funders

First appeared on BD live

by Tamar Kahn

Health Minister Aaron Motsoaledi has moved to end a long-running industry row over the extent to which medical schemes are liable for their members’ bills, flighting a set of proposals that appears to appease funders at the expense of patients.

Critics say the minister’s proposed amendments to Regulation 8 of the Medical Schemes Act, published for comment last Tuesday, effectively roll back consumers’ rights and leave them vulnerable to potentially catastrophic medical expenses.

“Patients will no longer have certainty that their emergency, chronic conditions or cancer will be paid in full,” said Umunyana Rugege, an attorney with lobby group Section 27, questioning why the minister’s far-reaching proposals had not been accompanied by any policy documents or analysis of the medical schemes industry.

Regulation 8 currently says medical schemes must cover the full cost of members’ bills for prescribed minimum benefits, regardless of what their healthcare providers charge.

Prescribed minimum benefits are a basket of healthcare services that all medical schemes must provide to their members, no matter which benefit package they buy. It has been a fiercely contested aspect of healthcare legislation for several years and is being challenged in the High Court in Cape Town by Cape-based medical scheme Genesis.

The proposed amendments, if accepted in their current form, will limit medical schemes’ liabilities to the rates set out in a 2006 tariff guide called the National Health Reference Price List, adjusted for consumer price inflation. The proposed amendments say medical schemes can negotiate higher tariffs with healthcare providers to protect members from co-payments if they wish, but they are not legally obliged to.

In effect, the draft regulations reduce some financial risk medical schemes face for prescribed minimum benefits and shift the burden onto consumers, who have virtually no power to negotiate with healthcare providers, said health economist Alex van den Heever, chair of social security system administration and management studies at the University of the Witwatersrand School of Governance.

Prof van den Heever said: “No country in the world expects consumers to fight at the point of service about a price (for healthcare). These regulations are a gift to vested interests. The people who are going to be most harmed are those who face exorbitant out-of-pocket bills that are beyond their assets and that situation can arise for anybody.”

Prof van den Heever said the amendments proposed a withdrawal of healthcare rights which was at odds with Section 27 of the Constitution, predicting they would be challenged in court if they were promulgated in their current form.

The Health Department’s head of regulation and compliance, Anban Pillay, said the aim of the draft regulations was to protect medical schemes from open-ended liability for prescribed minimum benefit conditions claims.

“There is an unequal balance between medical schemes and providers, who have a blank cheque to charge what they like.”

The cost of prescribed minimum benefits was pushing up the costs of private healthcare and making the medical scheme industry unsustainable, he said.

The Council for Medical Schemes would help protect consumers because it would not approve medical schemes’ benefit packages if they failed to make adequate provision for their members, said Dr Pillay. He conceded that patients might face co-payments and advised them to familiarise themselves with their medical schemes’ rules.

Dr Pillay said healthcare providers, such as doctors and hospitals, had not been consulted. “This is our attempt to solve the problem. We are open to alternatives,” he said. He said the draft regulations had been presented to the Council of Medical Schemes’s council and senior staff.

“They had some difficulties with it, and suggested amendments. They said would get legal opinion on it (but) never provided it (to us),” he said.

The Board of Healthcare Funders, an association of medical schemes and administrators, welcomed the proposals.

“It is a step in the right direction,” said managing director Humphrey Zokufa, insisting patients would not face co-payments. “We are encouraged by the leadership of the minister and the changes in the format of the regulations, which reflect his understanding of the difficulties we face in the industry.”

Genesis CEO Brian Watson said the scheme would continue with its court case, as it was contesting the minister’s legal capacity to make regulations regarding payment for prescribed minimum benefits.

Prof van den Heever took issue with the department’s claim that prescribed minimum benefits had made the private healthcare market unsustainable by pushing up costs, arguing that most medical schemes were not paying out the full costs of those conditions and were effectively cheating their members out of benefits due to them.

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