Prescribed Minimum Benefits due for a review

01 November 2012 Heidi Kruger, Board of Healthcare Funders

The vexed issue of Prescribed Minimum Benefits (PMB’s) is one which has the potential of seriously threatening the private healthcare funding sector and therefore the entire private healthcare sector.

PMB legislation, introduced with the Medical Schemes Act (MSA) of 1998, was a commendable attempt by government to protect medical scheme members. But the current set of PMBs have had many unintended, negative consequences - ranging from a cost spiral due to the absence of a single tariff for PMB’s, to the lack of clarity on interpretation and guidelines pertaining to the PMBs.

Additional issues, such as designated service provider arrangements and those relating to the responsible implementation of new technology for PMBs have prompted the Board of Healthcare Funders (BHF) to call upon government to urgently review the package.

Finding a solution

In terms of the Medical Schemes Act, the PMBs must be reviewed every two years. But to date, this has not occurred, despite the fact that there have been significant changes to the private healthcare environment since 1998.

To assist government, BHF has proposed an Essential Healthcare Package (EHP) to replace the current PMB package. This proposal is complementary to National Health Policy, in that it emphasises primary and preventative care components, unlike the current PMB structure. It is believed that the primary care benefits help reduce healthcare costs, generate better user satisfaction and improve health outcomes.

Tackling disease

Primary healthcare embraces the philosophy of access, relevance to local needs, integrated services based on community participation and cost-effectiveness. BHF’s view is that it is important that the EHP should include a package of services to help meet the burden of disease.

The mechanics and structure of a country's healthcare system must be taken into consideration in developing an EHP. The EHP should contain a minimum compulsory set of benefits that all health insurers cover. These not only include primary healthcare but also include a hospital component.

An EHP could be designed to define either ‘services’ or ‘diseases’. The BHF proposal suggests that defining ‘services’ in the primary healthcare component will meet the essential requirements of primary care, promoting equity while reducing the administrative burden that accompanies disagreements over case definitions. Defining the package by ‘diseases’, as is the case with the current PMB’s, is inequitable at primary care level, especially when patients present with undefined illnesses.

The GP as gatekeeper

Ideally, the EHP services should be delivered through GP networks as the gatekeepers of the healthcare system. Referred care services, which address the burden of disease, should be included, determined by the cost and level of affordability. Affordability is currently hampered by the fact that health services benefits are regulated, but the price at which they are procured is not controlled.

The EHP proposal recommends that charges associated with it should be regulated. Reference pricing may be used for non-essential healthcare packages to allow for competition in the market. Addressing allocational inefficiencies would free up resources to improve services and benefits. The BHF proposal also addresses issues of affordability and quality measurement and makes recommendations relating to income and risk cross subsidisation.

Tariff guidelines needed

Charges relating to the current set of PMBs are also an enormous impediment to achieving complementarity with National Health Policy. Over the past seven years all tariff structures for health services have been scrapped. As a result there is no reference price or guideline on pricing for PMB’s and non-PMB’s, and therefore no cap on the quantum which suppliers are permitted to charge for their services.

Schemes are faced with an open-ended liability for PMB’s, which in turn forces them to increase premiums above inflation and threaten the sustainability of the funding sector. Due to the structure of the PMB’s, the extent of the services that specialists deliver is largely self-determined. Therefore the suppliers are able to determine demand. The resultant ‘supplier induced demand’ substantially increases utilisation and cost.

Preparing the way

It is essential that the structure and pricing of the PMB’s is reviewed. It is hoped that the proposed EHP will be implemented in the near future to ensure a seamless integration of the current system with the proposed National Health Insurance.

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