The impact of Gap cover on PMB compliance and schemes design

01 April 2014 Adrian Hofman, Health & Accident Underwriting Managers

When prescribed minimum benefits (PMB) were introduced as law into the medical scheme environment, they introduced a new methodology as to how costs were to be managed. Schemes set about setting up preferred provider networks known as Designated Service Providers (DSP) as well as the processes required by members in order for defined PMBs to be covered.

The result of this was that in order for a member to have unlimited, comprehensive cover for a defined PMB, they would be required to undergo treatment at a DSP, as defined by the member’s scheme.

An issue of practicality

These steps were necessary to put in place by schemes, however, were they practical to the member? The practical case generally follows the following path:

- The member is undergoing treatment via their regular general practitioner.
- A referral is made to a specialist.
- The condition requires hospitalisation.

In the above case, the specialist may not be a contracted provider to the member’s scheme and the hospital, to which the specialist is attached, is not a defined DSP of the members scheme. Only at this stage do all parties realise that the condition is a defined PMB and that the medical service provider, specialist and hospital, do not qualify as DSPs
When the required pre-authorisation for hospital admission is made, the scheme should inform the member that although the condition (PMB) is covered, the pre-authorisation requested does not comply with the scheme’s DSP protocols and therefore may not afford comprehensive cover.

At this point, does the member reverse the process and source a contracted specialist as well as a designated DSP hospital or proceed within a familiar specialists as well as the specialist selected hospital, knowing they are going to have potential shortfalls in cover offered by their scheme?

Offering the fatal alternative

It is at this point that the scheme offers the member the fatal alternative. The scheme will consider paying for the PMB at scheme rates, one or two times the scheme rate for the specialists fees, or penalise the member according to the scheme rules for not utilizing the defined DSP.

The member generally goes with the scheme rates; however, the member then generally reverts to the Gap cover for appropriate shortfalls.

This leaves the Gap cover provider with a dilemma, as strictly speaking there should be no shortfall as the condition was a defined PMB. Although the member should have utilized the designated specialists as well as a DSP, one can see how impractical this process is. The member is generally going to submit the claim for the shortfall to the Gap cover provider, leaving themwith the problem.

Consider the member’s perspective

The member will believe that between the money they are paying to the medical scheme, and the Gap provider, they should not be required to pay any possible shortfall.

The process implemented by medical schemes for PMB’s has been responsible for limiting the initial open ended cost of treating PMB conditions. This is because most members are unaware of what a PMB or DSP is defined as. Gap cover providers initially rejected claims which qualified as PMB’s, and in some cases were successful in having all short fall costs fully paid by various schemes. However since schemes have implemented the above protocols, Gap cover providers have ended up covering any defined PMB’s short falls.

Brokers play an important role in this regard as generally the member does not have the knowledge to challenge or query many of the scheme’s rulings or decisions as regards the handling of PMBs.

Although medical schemes have no knowledge of which members have Gap cover or not, it appears the larger financial services groups - those which consists of life, short-term and medical - are developing their own Gap cover in order to dovetail with their own medical scheme options.

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