Bonitas to pioneer innovative reimbursement model for cataract surgery

The incidence of cataract surgery is escalating at an unprecedented rate due to an ageing population and cataract surgery being performed on patients at an earlier age.

However, despite the increasing number of procedures being carried out there are no apparent economies of scale being achieved by the private healthcare industry.

“The cost of these procedures appears to be highest at facilities that are performing the highest volumes of cataract procedures,” says Dr. Bobby Ramasia, Principal Executive Officer for Bonitas Medical Fund, the second largest medical scheme in South Africa.

“One would expect that high volume specialised facilities would have adopted business processes to be efficient and reduce the cost of surgery,” he adds.

Procedures for cataracts are the fourth most frequent reason for hospital admission amongst Bonitas members. The scheme’s costs for cataract procedures has climbed by 13%, 6.8% in excess of consumer inflation over the past year

“Costs are driven in part by the costs of surgical consumables and lenses. By international standards the acquisition price and mark-ups on lenses charged by ophthalmologists in South Africa are high and increase costs significantly,” he explains.

Suppliers have developed cross merchandising and product bundling strategies to ensure that when ophthalmologists invest in equipment they are locked into using the more expensive consumables as well. Improved procurement of surgical consumable supplies would promote cost efficiencies.

“The cost of this practice is not incurred by the specialists or the hospitals and is transferred to medical scheme members in the form of increased medical scheme contributions,” he says.

There are also opportunities to reduce costs through different provider reimbursement models.

“A good example is the reimbursement model adopted by Medicare and Medicaid in the US where individual States contract with organisations to deliver care through networks and pay providers.

“Approximately 70% of patients are served through managed care delivery systems, where providers are paid a monthly capitation payment rate which transfers a portion of the risk to providers,” he says.

Another approach is to adopt a value-based reimbursement model, which Ramasia explains turns the traditional fee-for service model of healthcare reimbursement on its head.

“Instead of healthcare professionals being paid according to services rendered, consultations and tests they order, they are paid based on the value of care they deliver. The model transfers appropriate risk to the healthcare providers while taking quality, access and cost into account. “Providers of care are incentivised to deliver efficient service and reduce costs, and in so doing share in the cost savings. This is a win-win model and promotes sustainability in healthcare.

Ramasia reveals that Bonitas is pursuing innovative reimbursement models and will pilot a virtual global fee model for cataract surgery in 2015.

“The model will be piloted in collaboration with selected hospitals and specialists early next year and we are confident that the strategy will have the desired impact on the costs of cataract procedures,” he concludes.