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Category Healthcare
SUB CATEGORIES General  |  HIV |  Medical Schemes | 

And then...

18 October 2004 Angelo Coppola

Health care advisors, who play an important role in the health care industry, were severely penalised recently, especially in terms of the way the latest regulations adjusted their remuneration downwards.

Further work is, however, necessary on the role and remuneration of health care consultants, says Louis Botha, chairman of the fpi special interest group on health and MD of Absa Health Care Consultants (AHCC).

Botha said that the Council for Medical Schemes is not in favour of the presence of health care advisers as part of the spending part of medical schemes.

The Council is against members of medical schemes who use health care advisers, and those who deal directly with the scheme, having to pay the same price and subsequently there is no savings benefit for the member who manages his own affairs.

Botha says that despite the adoption of the new regulations several practices of which the fairness, from a consumer’s point of view, is still questioned, are still being followed by health care advisers.

Certain “advisers” act as a delivery channel of primarily one medical scheme, and therefore act as an agent for the scheme. Other “advisers” offer the consumer a selection of medical schemes and act as broker.

Some “advisers” act independently and only offer advice on the selection of a medical scheme and do not get involved with the implementing and management of a selected scheme.

They only receive a fee from the client, as opposed to the other two instances mentioned above who both, whether agent or broker, are paid by the medical scheme.

“These practices still raise key questions regarding the true meaning of independence, fees as opposed to commission as medium of payment and whether it is viable to have the same set of regulations serving the variety of “advisors,” says Botha.

The Council agrees that true advisers should bill the consumer for fees, even when it is in addition to the commission paid by the scheme, as agreed and according to merit.

Health care requires a high degree of aftercare and a designation as a “service fee” would be more appropriate than commission.

Botha says the health care adviser has a duty to inform the consumer beforehand of the type of practice being followed and how remuneration in this regard will be paid. 

Therefore the client has to know whether he is dealing with an agent, a broker or an independent consultant.  The client also needs to know what aftercare services can be depended upon and how often the original recommendations will be reviewed. 

Botha says: “The client has to know how payment for services rendered will be made.  The client also has to be assured of the adviser’s status in terms of accreditation with the Council, licensing at the FSB and membership of the fpi.”

The regulations to the Medical Schemes Act have to continue making provision for a service fee to health care advisors, as basic payment for placement of members and aftercare services. 

The fpi will continue to develop a framework within which health care advisors can require added payment from the consumer, and mechanisms to collect and report on it in a controlled environment. It will continue to promote the value of the health care adviser in the eye of the consumer and others in the financial services industry.

“Health care is an indispensable part of any household’s financial planning and therefore consumers should always be able to count on expert advice and support from the fpi health care advisor,” says Botha. 

Being guided by the basic belief that irrespective of how many legislative or industry changes still might occur, consumers will always have a need to access affordable quality health care benefits and services.

Quick Polls

QUESTION

As National Treasury mulls a two-bucket retirement system, mandatory contributions and preservation, regulation 28 is being amended to allow up to 40% of retirement fund assets to be invested in SA-based infrastructure… Which of the following retirement fund ‘tweaks’ would you consider most beneficial to your clients?

ANSWER

Give fund members emergency access to retirement savings
Let fund members invest 40% in infrastructure
Let fund members invest 40% offshore
Mandatory preservation when resigning from a fund
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