Tempers flare up as PMB causes more worries

The medical scheme industry in South Africa has been under significant pressure for over a decade now because of the absence of defined tariffs. This has opened the door for medical practitioners to participate in what can sometimes be described as Wild West Style pricing, and medical schemes are often faced with the unfair situation of having to live with paying the piper.

The problem is that there are no clear guidelines when it comes to Prescribed Minimum Benefits (PMB); and one wonders how long the industry can survive living with this impasse. A recent court ruling at the Supreme Court of Appeal in Bloemfontein highlighted the severity of this.

The case

According to a release by the Council of Medical Schemes (CMS), the matter concerned the liability of a medical scheme to pay for PMBs obtained from a private hospital as prescribed by the Medical Schemes Act 131 of 1998 (the Act).

The contention of the scheme was that in terms of its rules, only services obtained from the state had to be funded under the PMB legislation.

Genesis Medical Scheme disputed its liability to pay for a dependant after she was involved in an accident. The dependant had been fitted with three external prostheses to provide stability to assist in the healing process of a severe comminuted compound fracture of her leg, without which her leg would likely have been amputated. The scheme initially paid the medical bills only to reverse them at a later stage.

The dispute

The dispute was adjudicated by the Registrar of the CMS who ruled in favour of the member. This was followed by the scheme’s appeal to the Appeals Committee of the Council and finally to the Appeal Board.

The release pointed out that Genesis was still not satisfied with the outcome and lodged a review application in the Western Cape High Court against the decision of the Appeal Board.

At this stage, the scheme paid all three prostheses and asked the court to make a finding on its liability regarding the funding in terms of the Act and the scheme rules. The High Court agreed with the scheme’s view that the registered rules of a medical scheme are binding and form the basis of the contract between the scheme and its member.

The release added that the Court further held that as the Registrar registers the rules of a scheme, he could not force the scheme to pay PMBs in full in terms of the Act in the absence of him having first issued a directive to the scheme to amend its rules and found in favour of Genesis. 

Going to a higher court

The release went on to point out that the CMS and the Registrar then appealed to the Supreme Court of Appeal against the finding by the Western Cape High Court.

The CMS based its case on the fact that the Act always supersedes the rules of a medical scheme. In addition, the scheme refused to appoint Designated Service Providers (DSP) to service its members at an acceptable rate. The Court agreed with the CMS and stated that the scheme’s failure to appoint a DSP meant that it could not rely on Regulation 8(2) which allows for co-payments when a member voluntarily elects not to use a DSP. The Court also found that the previous rules of the scheme misled its members into believing that it indeed had a DSP.

The appeal of the CMS was upheld and the court confirmed that PMBs are required to be funded in both the private and the public sector as provided for in Annexure A to the Regulations.

Genesis felt that it needed to address this issue and published an open letter to all of its members discussing its side of the issue.

Editor’s Thoughts:
How long is the Competition Commission’s investigation into unfair pricing in the industry going to take? Schemes are expected to treat customers fairly on a daily basis while they face an uphill battle when it comes to costs. Do you feel that this is fair?  Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].

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