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Medical schemes under fire, yet again…

07 June 2021 Gareth Stokes

Local medical schemes are increasingly in the firing line as the Council for Medical Schemes (CMS), Health Professions Council of South Africa (HPCSA) and other industry stakeholders clear the way for a fast-tracked National Health Insurance (NHI) implementation. Schemes face a never-ending barrage of criticism from the media, members and the regulators; and one might be excused for concluding they can do no right in the current healthcare environment.

New process to finalise guidelines for DSPs

In a recent development, the CMS hinted that it wants to stop the undesirable practice among medical schemes of charging excessive co-payments, specifically in the Designated Services Provider (DSP) context. CMS Circular 31 of 2021 reminds medical schemes that Regulator has yet to finalise the process set out in section 61 of the Medical Schemes Act, which pertains to “the selection process of DSPs and matters relating to the imposition of excessive co-payments”. 

The CMS is now tasked with developing “specific guidelines aimed at identifying instances of undesirable conduct in relation to the selection of DSPs; the method pertaining to selection of DSP practices; and the charging of penalty co-payments by medical schemes. It appears that the regulator is keen to have certain co-payment practices declared as undesirable. FAnews approached Bonitas Medical Fund (Bonitas) and Discovery Health Medical Scheme (DHMS) for some of their thoughts on the  proposals and the possible restrictions on the future of DSPs and co-payments. 

Gareth Stokes, for FAnews: Will the CMS proposal to limit co-payments to the difference between the DSP rate and the rate charged by the non-contracted provider have an impact on your scheme, specifically insofar the management of DSPs? 

Limiting of co-payment presents challenges

Prof Roseanne Harris, Head of Policy and Regulatory Affairs at Discovery Health: This will make it incredibly difficult for schemes to establish DSP networks. Very few, if any, providers would agree to contract with schemes at an agreed rate [with the additional condition] that they cannot bill members directly for additional costs. This is because they would not be assured of adequate volumes to support contracted rates. They would then be better served by not agreeing to a contracted rate and simply charging whatever additional fee they believe each patient is willing to pay. [The proposed approach] would destroy scheme DSPs, drive up the costs of schemes’ PMB obligations and consequently increase members’ contributions. 

Lee Callakoppen, Principal Officer of Bonitas Medical Fund: We are still awaiting further clarity from the CMS on their concerns in terms of the use of DSPs and will have a clearer understanding of how this impacts our current practices once this guidance is provided. As a general comment, our aim is to make quality healthcare more accessible and more affordable. In light of this, we strive to ensure the sustainability of the scheme while meeting the needs of our members. Our current practices are set out in our scheme rules, which are approved by the CMS. 

Gareth: It seems that the proposal could have serious unintended consequences if it goes ahead? 

Roseanne: The latest publication from the Registrar would ultimately benefit those providers who do not wish to contract with schemes at current DSP rates, and those few members who choose to use non-DSP providers. However, these benefits would come at great cost to schemes and to the majority of their members. The CMS view does not appear to recognise that there are considerations in addition to price which affect the value of DSP contracts. It seems to omit important considerations like quality scoring of providers; hospital efficiencies regarding mortality, morbidity and readmission rates; antibiotic and formulary utilisation by members etc. These factors, which impact on the quality of care, fall by the wayside if the only focus is on reducing the level of co-payments where members voluntarily access non-contracted providers. 

Gareth: Do you believe that your current DSP arrangements result in excessive co-payments being charged to your scheme members; are there practices that you feel could be improved? 

Ensuring affordable cost of cover for all members

Lee: One of our key successes has been our agile approach, whereby we strive to improve our processes and efficiencies to ensure we can continue to provide our members with care of the highest quality. Until we are aware of the concerns the CMS has specifically, we cannot prematurely evaluate this. 

Roseanne: The Discovery Health Medical Scheme (DHMS) has designed benefits for its members and built its networks to ensure that the cost of cover remains affordable and that we provide the best support to members so that they can access appropriate and quality care in full, when they need it. Furthermore, the contractual arrangements set up by Discovery Health with DSPs represents significant value to the members of the medical schemes we administer, especially in the lower cost options. 

Gareth: Could you comment on some of the challenges facing medical schemes in setting up DSPs? We have heard, for example, that there are challenges with availability of providers; geographic location; and utilisation by members, among others. 

Lee: Entering into an agreement with a DSP requires careful planning and consideration. One has to factor in the negotiation of rates; the quality and efficiency of members’ experiences; the competitive advantage, whereby members have access to a bespoke and convenient offering; and the geographic footprint, to ensure that members can be reached and serviced countrywide. The convenience and the quality of the service often makes the case for continued utilisation, which is why we manage our providers closely to ensure they are servicing our members at the highest standards. 

Ensuring countrywide DSP network coverage remains difficult

Roseanne: It is extremely challenging to set up a DSP network that has sufficient coverage for the entire membership base. As per regulation 8(3), the definition of ‘involuntary access’ needs to be accommodated within the DSP network design. The current regulations ensure that members are not exposed to any co-payments if they do not have reasonable access to network providers. It is also clear that services must be provided without unreasonable delay to the member, and within a location which does not reasonably preclude members from obtaining such treatments or within a reasonable proximity to the member’s ordinary place of business or personal residence. This means that there needs to be a large network of providers offering high quality services throughout the country for it to be considered an adequate DSP network. 

Gareth: Could you comment on the proposed requirement that a medical scheme must consider all applications to join a DSP network. Is this not already the case? 

Roseanne: We have developed a clear and transparent set of criteria for provider inclusion on the respective DSP network. These criteria are based on the unique features of each provider market and have been carefully crafted to ensure the widest possible network participation, on an any willing provider basis, while at the same time promoting competition amongst providers in terms of cost, quality and patient satisfaction. The scheme’s DSP rules allow for the participation of any willing service provider, subject to their adherence to stipulated participation criteria and the application of standard co-payments for non-DSPs. 

Guarding against anti-competitive behaviour

Lee: Yes, it is already the case. Our governance processes are structured to guard against anti-competitive behaviour and we ultimately look at the benefit to our members and the contribution to preserving the sustainability of the scheme as the overriding factors. 

Gareth: Do you currently charge members additional penalty fees over and above the cost of services if they choose to seek treatment from a non-DSP? 

Roseanne: If we are required to reimburse non-network usage at a higher rate and the proportion of services delivered by non-network providers increases, claim costs will rise and contributions will need to be increased for all members. We are concerned that this does not serve the interests of members since it is not associated with improvement in the quality or accessibility of care but rather to accommodate a small number of members who choose to access non-network providers. At present, 83.6% of all GP visits by members on the DHMS network plans occur within contracted DSP networks. In the case of specialists, the corresponding percentage is 87.5% while for pharmacies it is 94.3% and for hospitals, it is 94.9%. 

Gareth: Would you agree that the CMS proposal that you not charge a scheme member an additional penalty on non-DSP services is fair? 

Lee: Medical costs are to a large extent unregulated and medical schemes are required to pay for PMBs in full, therefore schemes need to put measures in place to protect the sustainability [of the scheme] and the benefits of members as a collective. We will, however, await the findings from the CMS to better understand their concerns before making proclamations or what is considered fair or unfair. 

Roseanne: We do not believe that this proposal serves the best interests of medical scheme members. The Health Market Inquiry noted the positive benefits of networks in terms of supporting access to quality care at an affordable cost. Members who use DSPs incur no co-payments and the contracting basis results in lower overall contributions for the entire membership base. The channelling of utilisation to providers results in providers charging less for their services whilst providing the same or better clinical care to the member at a lower cost. The regulations already ensure that there is reasonable access to DSP providers. We do not believe that it is reasonable to expect all members to pay more to accommodate those members who exercise choice by going outside of the DSP arrangements. Should members wish to have freedom of choice of providers they may purchase more comprehensive cover. 

Gareth: The new guidelines on DSPs and co-payments are expected in September 2021. Have you had input to these guidelines and what are you expecting? 

Another round of industry participation looms…

Roseanne: We made extensive submissions to the CMS in 2017 when the undesirable business practice provisions were first published. We expect that CMS will be consulting with the industry in compiling the guidelines referred to in the regulations to ensure a fair and reasonable approach to constructing networks and designated service providers and incorporating these in benefit design. We look forward to participating in the development of the guidelines referenced in the Gazette and by the CMS Circular. 

Lee: We are currently studying and evaluating the requirements of Government Gazette 44469 and CMS circular 31 of 2021. We will submit written comments to the Council for Medical Schemes (CMS) to request clarity on any concerns as soon as our evaluation is complete. 

Writer’s thoughts:
Two thoughts sprang to mind when reading CMS Circular 31. First: Why are DSP regulations still ‘up in the air’ given that schemes have implemented and operated such arrangements for many years. Second, Should the regulator be pressing ahead with amendments to the medical schemes’ environment given how close we are to NHI? Do you share the regulators concerns about bad practices in the DSP space… And do you believe it makes sense to press ahead with new guidelines in light of the pending NHI implementation? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].

Comments

Added by Wana, 07 Jun 2021
t is rational for everyone in the value chain to seek optimum savings or "profit" depending on the side of the service. Some is to genuinely sustain businesses - keeping contributions affordable and jobs going to ultimately feed the economy and taxes. Reality has shown that while the schemes are "looking out" for members and protecting a forced cost hike, the bulk of the members are under-serviced. Our research has shown that other than members on premier tier/s (comprehensive), the majority (75%, mostly non-management) either silently forgo treatment, risking or suffering chronic or untenable health (60%), enroll for treatment despite scheme rejection using long-term loans (5%), or seek help in public facilities (30%). This happens as a result of either having run out of funds (savings), or having what is considered essential care rejected.
Of course it's a hard balancing act to protect the scheme from member or supplier abuse, and honouring the needs of the members.
A suggestion was for schemes to have neutral peer case-adjudicators who don't stand to gain from the value chain, but that may only be practicable for elective or chronic high-potential cases.
What was unanimously (98% of all respondents) favoured was that accidents and emergency cases that impact or threaten work continuity) should be honoured - to the extent that the scheme continues to sustain or achieve acceptable profit level.

My personal sentiment? "Acceptable" is subjective, since shareholders and incentivised staff can always do with more!
A fair compromise might be to have a "lottery" case benefit equal to whatever bonus the scheme pays to their own shareholders/internal stakeholders for a particular year or rolling cycle.
No one wants to see schemes go under or bleed jobs. No one believes in NHI success in the short to midterm, given projected government income levels. No one appreciates the chasm built between low-earners and top earners. In which case, the percentage of one's income for each service tier should/could be a fair and equitable approach, but would the supply side sustain that demand? What is the national supply threshold, versus the schemes' income generated by members at salary percentage level? Would we be going back to the "untenable" NHI situation?
At People Dynamics, this topic has not been rested. No point in government intervention, but schemes need to find a solution that settles the current palpitations among the subscriber community.
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Added by Derek Smorenburg, 07 Jun 2021
The whole NHI concept and its implementation is my real concern in this debate (DSP etc.).
As a third world country with a very small tax base and a largely financially and literate population mostly unemployed the NHI will not work!
Taxing the small diminishing tax base even further to fund NHI cannot cover or provide even a rudimentary Health System.
Like every Marxist Communist driven former liberation party such as the ANC/EFF they are simply following their mantra of populist promises to remain in power!
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