Setting the foundation for social health reform

01 June 2015 John Cranke, PSG

Prescribed Minimum Benefits (PMBs) are a feature of the Medical Schemes Act, in terms of which medical schemes have to cover the costs related to the diagnosis, treatment and care of any emergency medical condition, a further limited set of 270 medical conditions (defined in the Diagnosis Treatment Pairs), and 25 chronic conditions (as defined in the Chronic Disease List).

On the Council for Medical Schemes (CMS) website, PMBs are referred to as a set of defined benefits ensuring that all medical scheme members have access to certain minimum health services, regardless of the benefit option they have selected. The aim is to provide people with continuous care to improve their health and well-being and to make healthcare more affordable, thereby setting the foundation for social health reform.

Undeniable truths

Medical schemes, however, are faced with significant challenges such as the fact that they cannot deny membership to anyone applying to join (although they may impose late joiner penalties or certain waiting periods in specific circumstances).

Furthermore, they cannot differentiate the premiums required on any grounds other than the option selected by the member, family size and income, and they are enforced to meet the full cost of the PMBs. There is also no guideline tariff (even the previous ceiling “ethical” tariff has been dispensed with), opening up potential for exploitation by providers.

Additionally, medical schemes need to balance claims paid against the contributions made by members (ignoring investments, etc.), in a scenario where it is hard to control what is claimed. Thus, medical schemes really only have two options available to them; and that is to decrease benefits, or increase contributions.

So, what are the medical schemes doing to manage the PMB dilemma, if they are not able to decrease these benefits?

Managing the PMB dilemma

Firstly, in order to contain costs in respect of the PMBs, schemes have adopted the strategy of establishing Designated Service Provider (DSP) networks. Initially, this related mainly to hospital networks, but more recently many schemes are contracting with providers too, especially general practitioners, specialists and pharmacies.

Where medical schemes have DSP arrangements in place for the provision of PMBs, the onus is on members to ensure they use DSPs, failing which they will be liable for a portion of the account or a co-payment. Therefore, it is vital that members familiarise themselves with any DSP arrangements their schemes have in place, and to use them wherever possible. Only where the DSP is not accessible or unable to provide the service required, will members be able to use non-DSPs without the potential for co-payments.

Secondly, almost all medical scheme options now rely on a medication formulary in respect of chronic medication. The formulary may offer more choice on the high end options, but even there the emphasis is usually on generic medication. Members finding themselves with chronic medication co-payments should consult their doctors to establish if they could make use of the formulary medication or not.

Alternative options

Where the drug/s on the formulary are not effective, or potentially even harmful to the member, the scheme needs to provide an alternative free of charge. Members in this situation need to approach their medical schemes with an appeal to have the effective medication funded by the scheme.

As PMBs have to be funded in full with no tariff guidelines, the only strategies available either see the member ultimately faced with higher increases, and / or the introduction of DSP arrangements and (arguably) watered-down benefits.

The Competition Commission however, is in the process of conducting an inquiry into private healthcare costs, and the outcome of this is probably more critical, as it is being speculated that this may ultimately pave the way for provider groups and funders to negotiate tariffs.

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