The best way to “stretch” your medical aid cover

01 November 2011 Adrian Hoffman, Health & Accident

South African medical schemes beneficiaries are at the mercy of spiralling healthcare costs. To make matters worse the amount your client’s medical scheme “pays” towards medical specialist fees during hospitalisation is wholly inadequate...

Medical schemes have come under extreme pressure in recent years. They’ve had to contend with inflation-plus increases in healthcare expenses as well as the cost of expanded care, due to government’s prescribed minimum benefits (PMBs).

Putting the “squeeze” on costs

In an attempt to tackle rising costs medical schemes have adopted a two-prong approach. They restrict professional fees by setting up preferred provider networks and further limit total costs by restricting the benefits offered to members. Nowadays, regardless of the medical scheme and option your client signs up for, a trip to hospital could leave them severely out of pocket.

South Africa’s Gap cover market is expanding rapidly in response to these funding shortfalls. Your client can now purchase cover for costs incurred in hospital for medical specialist fee shortfalls as well as other defined hospital co-payments imposed by their schemes.

These co-payments are typically the “first amounts payable” by the member if hospitalised for a “defined” event or procedure, but exclude co-payments for health conditions or procedures where the medical scheme has imposed restrictions.

The medical cover gap

There are typically three restrictions imposed by medical schemes where hospitalisation is concerned:
• Specialist fees are restricted to a multiple of the applicable “scheme rate”.
• Various restrictions apply to defined procedures such as internal prosthesis and major organ transplants.
• Co-payments apply for defined health events or conditions.

As a rule, Gap cover will follow the benefits of a medical scheme and will only cover costs where pre-authorisation has been granted by the scheme. For example, if the member ends up in a private ward (or private room) the excess cost is for his / her account. Neither the medical scheme nor the Gap cover will typically compensate such “upgrades” of service.

No co-payments for PMBs

There are two areas where Gap cover should be clarified. First: the Medical Schemes Act stipulates that the scheme is liable for 100% of costs related to hospitalisation for a PMB condition (subject to the rules of the scheme). There should never be any financial shortfalls when an insured is hospitalised for a PMB.

In practice this is not always the case – and both client and broker are challenging medical schemes in order to ensure they adhere to the terms of the existing Act. You need to be aware of the “legal” position, because many Gap products available now stipulate that they will not cover shortfalls as a result of treatment for a PMB!

The second problem relates to hospital cases that occur outside South Africa. Some medical schemes include a “medical travel extension” as part of their benefits, while others cover such costs as if they occurred in South Africa.

Beware offshore hospitalisation

Gap cover policies do not cover any costs incurred outside the borders of South Africa as there is no definable “tariff” applicable to a bill submitted by (for example) a specialist working outside South Africa… There is also no mechanism for the conversion of expenses in foreign currencies.

Gap cover is an important aspect of healthcare funding. Today’s Gap cover policies include benefits such as premium waiver, trauma counselling and even daily bed upgrades. This segment of the market is growing consistently and will have to include additional benefits as medical schemes continue the war on rising healthcare costs!

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