Buy downs a concern for LIMS

Preventing buy downs will be a major challenge for medical schemes once the Low Income Medical Scheme (LIMS) has passed through the legislative process and is made available to low income earners.

This is the view of Dr Lenny Modisane, principal officer of Johannesburg-based Resolution health Medical Scheme.

Although LIMS will be based on an income band of between R2,000 and R6,500 a month, medical schemes will have to ensure that people are actually earning amounts within that bracket and not buying down to save on premiums, he said.

While it is not known exactly when LIMS will be introduced, (probably in 2008) current thinking is that it will cover certain out-of-hospital expenses, with hospitalisation being provided by state hospitals.

It is expected that medical schemes will offer LIMS coverage separately from their other benefit options, with the LIMS option having its own reserves.

For LIMS to be affordable for medical schemes to fund and offer, it is also likely that the number of prescribed minimum benefit conditions will be sharply reduced, says Modisane who oversees a scheme with more than 46,000 principal members and over 110,000 beneficiaries.

Modisane says a disincentive for people to buy down is likely to be that LIMS will not offer hospitalisation in private hospitals.

Distribution of LIMS will be another major challenge for medical schemes, he says, with schemes having to piggy back distribution on the back of their current infrastructure to make it efficient and cost-effective.

It will also be important for medical schemes to access a preferred network of service providers that can offer a wide geographic spread of facilities and a relatively low negotiated fee structure.

A lot of legislative activity has to take place before LIMS is introduced, but once it is up and running it will be crucial for schemes such as ours to seamlessly absorb this new option and extend the same level of service to LIMS members that we already offer to higher income earners, adds Modisane.

Resolution Health is well positioned to absorb the pressures of LIMS, as its current most affordable plan, the Fundamental Plan, is one of the most competitive offered in the market. Its monthly contribution structure of R339 per primary member, R276 per adult dependant and R117 per child dependant is significantly more affordable than most of its competitors.

The scheme would therefore be able to utilise the basic structure of its Fundamental Plan with a few adjustments to offer a LIMS compliant product once legislation is passed.