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Brokers add value to the healthcare environment

30 June 2008 Gareth Stokes

Last week Friday the Institute of Health Management (IHRM) held a breakfast seminar in Johannesburg to further the debate on the way forward for medical scheme brokers. In today’s newsletter we focus on some of the points raised by Andre Jacobs, National Operations Manager for Aon Consulting. At the outset he noted that the regulator and medical scheme brokers shared one common goal – to serve the healthcare consumer. This represents a vision that all stakeholders (brokers, medical schemes, scheme administrators and the Council for Medical Schemes) should strive for.

While Jacobs accepted the regulator’s assertions that there were still issues around co-payments, additional ‘illegal’ remuneration and poor advice he questioned whether it was necessary to address these problems through additional legislation. It is clear that most ‘contraventions’ can be dealt with under the existing laws. Both the Medical Schemes Act and FAIS Act are quite clear on the role of the medical scheme, broker and administrator in this regard.

Shattering the medical scheme broker myths

Before investigating the value added by the medical schemes broker it is necessary to dispel a number of myths doing the rounds in the private healthcare sector. Many people believe that medical scheme brokers represent medical schemes, represent administrators, are responsible for moving uncovered individuals onto medical aid schemes and that brokers are responsible for churn. Jacobs dispelled these myths as rubbish. He admitted that some confusion could creep in due to the relationship between employer and employee due to co-funding arrangements.

The fact is that all the players in the medical scheme environment benefit from broker inputs. Those who pay (employees and employers) and those who don’t pay (medical schemes, administrators, the Council for Medical Schemes and national health policy) all benefit. And this proves beyond a doubt that medical scheme brokers add value.

What makes a service valuable?

Jacobs identified five criteria for value. He said that services must be observable, comparable, trialable, must have a culture fit and must be simple and standardised. One of the best ways brokers could add value in the medical schemes environment was through consumer education. Brokers could also assist in areas identified as ‘unfair’. Of the 52 areas in the medical schemes environment identified as ‘unfair’ brokers could assist in 29. It was quite possible that medical scheme brokers add more value to scheme members than the medical schemes themselves.

There is certainly enough evidence to support that medical schemes would be under severe pressure if brokers were removed from the equation – and costs to scheme members would probably escalate.

Another interesting point raised during the presentation was who should bear the cost of administering the scheme. 79% of members believe that broker administrations should be paid by the medical scheme – only 6% thought members should pay. And 60% of employers agreed. Of course this probably becomes a bit of a moot point; because regardless of who is charged the administration fee the medical scheme member is going to bear the cost. For the sake of transparency FAnews Online believes it would be in the scheme members’ best interest to ‘pay’ these cost themselves.

Editor’s thoughts:
Medical scheme brokers play a vital role in assisting scheme members with queries that would otherwise have had to be dealt with by medical schemes. Yet recent legislation has placed a severe cap on the commissions that can be earned by brokers for this valuable service. Do you think commissions and payments in the medical schemes environment should be regulated further? Add your comments below, or send them to gareth@fanews.co.za

Comments

Added by Daleen Fourie, 08 Jul 2008
Commissions should definately not be capped. A medical scheme broker has far more contact with their clients and give information and advice on a regular basis. Medical scheme rules , options and benefits change on a yearly basis ! Medical scheme brokers really desrve more commission.
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Added by Mimmie Human, 01 Jul 2008
Commissions should not be capped.
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Added by Old Wallet, 30 Jun 2008
Commissions should not be capped. The survey has shown that schemes should pay commissions. Schemes should be allowed to pay intermediaries an administration fee and or an education/ consultation fee. Intermediaries are the members’ 1st port of call, unless of course, the sod fobs of his/her clients! To suggest that intermediaries are pawn of schemes is the height of naivety. There is adequate legislation in place to sort out the bad apples. One of the biggest challenges in the industry is the distribution and sharing of knowledge. Schemes must make medical literature readily accessible off the net.
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