Medical schemes go to war on prescribed minimum benefits

PMB is a set of defined benefits to ensure that all medical scheme members have access to the same minimum health services, regardless of which scheme or benefit option they belong to. In terms of the Medical Schemes Act schemes must "pay in full” the cost of diagnosis, treatment and care for any emergency condition, a limited set of 270 medical conditions and 26 chronic conditions.

Soon after the implementation it emerged that certain medical schemes were not making full payment against service provider invoices for PMBs. They chose instead to cap payments in line with the tariffs set out in the rules of the particular scheme. The CMS was not happy. And in an article published in The Star newspaper earlier this year the registrar threatened it would deregister an unnamed medical scheme for not complying.

Graham Anderson, principal officer of Profmed Medical Scheme responded to this article in writing: "The board of Profmed has had to take this threat into consideration and, therefore, despite its continuing belief, based upon legal advice received, that CMS is incorrect in this matter – and that Profmed is entitled to pay benefits in terms of its rules and not at full invoice – the board cannot take the risk that the schemes could be deregistered, or could even face deregistration proceedings.”

The first round of the legal battle – led by an industry body rather than a medical scheme – was soon underway. During 2011 the regulator and the Board of Healthcare Funders (BHF) squared up in the North Gauteng High Court. Although the registrar claimed victory in this matter the truth is the court threw out the application without ruling on the merits of the case.

It dismissed the case on the basis the BHF was not representative of the industry (a surprising decision given that the organisation represents some 95% of the country’s medical schemes). Further court action looms as the BHF challenges the court’s locus standi ruling. And both the BHF and medical schemes will undoubtedly initiate new court actions to clarify the "pay in full” requirement.

Until confusion around the "pay in full” requirement is cleared up medical schemes will have to pay no matter what price healthcare providers set for PMBs. But the "pay in full” requirement could sink the entire private healthcare sector. "If medical schemes are required to pay whatever the healthcare provider charges it opens up the system for abuse,” wrote Anderson. "With no pricing guidelines in place, this allows healthcare providers to charge whatever they want, confident that they will be paid.”

Medical schemes do not have a limitless source of funding. "And the notion that medical schemes are reluctant to pay these rates for their own financial interests couldn’t be further from the truth,” he continued. Medical schemes are not-for-profit organisations and must exercise prudent financial management to protect member interests. The medical scheme has to balance individual member needs against the financial health of the scheme, or face serious consequences.

The current situation is riddled with irony. In the first instance the CMS, which continually berates medical schemes for contributing to healthcare inflation, has denied the schemes the right to curtail such expenses. FAnews was not at all surprised to see the names of prominent private healthcare providers among the 12 co respondents who stood alongside the CMS against the BHF in the aforementioned court action.

In the second instance the CMS has embarked on a course of action that could impact negatively on the entire private healthcare sector. One way or another the medical scheme member will carry the financial burden of increased treatment costs.