Handling Prescibed Minimum Benefits claims

01 April 2007 Gareth Stokes, FAnews

The Medical Schemes Act of 1998 introduced a raft of medical procedures and chronic illnesses that had to be covered by medical schemes as part of a comprehensive Prescribed Minimum Benefits (PMB) package. In response, medical schemes put in place administrative procedures to handle chronic illness claims.

Regulation 8 of the Act requires that "any benefit option that is offered by a medical scheme must pay in full, without co-payment or the use of deductibles, the diagnosis, treatment and care costs of the prescribed minimum benefit conditions." At present, the legislation covers 271 emergency hospital conditions and 27 chronic illnesses.

The legislation allows medical schemes to implement appropriate interventions to improve the efficiency of healthcare services. To this end, medical schemes may use techniques such as pre-authorisation and treatment protocols to limit costs.

Prescribed minimum benefits in action

Discovery Health Medical Scheme (DHMS) is the largest medical scheme in South Africa at present and provides medical cover to more than two million members.

A quick look at Discovery's 2007 PMB Treatment Guidelines reveals the administrative procedures typically put in place by medical schemes to handle chronic illness claims. Members have to register for and be approved by Discovery's Chronic Illness Benefits (CIB) before claims for chronic illnesses under PMB will be considered. Failing such registration, members will be liable for all expenses incurred.

Systems encouraged

We questioned Discovery about the fairness of this condition in terms of the Act. In their view, the intention of the Act is to ensure adequate treatment for chronic illnesses. The process of implementing systems within a medical scheme to monitor and implement benefits to chronic illness sufferers is encouraged.

Part of the reason for insisting that members register for CIB is to ensure proper management, necessitated by the complex nature of some of the illnesses. Initial requirements regarding designated service providers are in line with the Act – provided members are not forced to make involuntary use of a more expensive provider.

The cost of PMB to the industry

The impact of PMBs varies from scheme to scheme. Discovery believes that the cost impact is felt more by low income medical schemes. Most high-end plans offered by Discovery Health already covered the prescribed minimum benefits.Discovery estimates that the total cost of providing a basic medical plan to exclusively cover PMBs would be in the region of R250 per life.

The role of intermediaries

Turning to the role of the healthcare intermediary, Discovery conceded that PMBs are complex and difficult to explain to members. This means that healthcare intermediaries responsible for advising clients on chronic illnesses and emergency hospital conditions remain under significant pressure.

The risk of providing advice on healthcare solutions would increase when current proposals for low-cost medical schemes are considered. Commissions paid to healthcare intermediaries could be limited to R18 per month per member. This amount is likely to be wholly inadequate for healthcare intermediaries to provide the level of communication required by the law, and expected by the Council for Medical Schemes.

Fewer and simpler PMBs in future

It comes as no surprise that only 5% of attendees at the 2006 Healthcare Fund's Conference felt that PMBs were unproblematic in their current form. Care must be taken to ensure that the chronic illnesses and hospital benefits are easier to understand in future. In the interim, the industry waits further progress on enabling legislation to allow a trimming of the number of PMBs.

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