Will the medical schemes broker survive?
The Council for Medical Schemes (CMS) recently published a document titled: “Remuneration of Health Brokers: Revising the Regulatory Framework”. It’s the latest in a series of attacks on service providers in the healthcare industry.
The CMS has set their sights on broker commissions, saying that the billion rand spent by medical schemes on brokers in 2007 must be reduced.The proposed changes will only affect commissions and not place any additional behavioural restrictions on brokers. The CMS envisages two categories of medical scheme representatives: brokers who act as agents of a particular medical scheme (called marketing agents) and brokers who act as independent agents for consumers (called independent advisors).
The marketing agent will be a single-product specialist who will provide facts on the medical scheme to which he is affiliated only. The independent broker will negotiate a contract with the consumer, based upon an agreed tariff. The consumer would then pay for ‘advice’ on an ongoing basis and would be free to cancel the contract at any point.
A real kick in the pants!
The CMS suggests that independent advisors have no “contract with any medical scheme or administrator and would not be able to receive any form of remuneration or incentives for broker service or any other type of service directly or indirectly from a medical scheme or administrator.”
After our initial coverage we asked FAnews readers to comment on the proposal. “If ever we needed proof that the CMS is a destructive force, we have it now,” was one of the first comments we received.
Many believe the CMS is on a mission to crush the intermediary. “Medical aid options have become increasingly complex with intermediaries being paid less and less for our services,” Robbie writes. “The public’s poor view of medical aids and the insurance broking industry in general will not encourage a market that is already sceptical of the industry to pay enough to the independent advisor to sustain his or her business.”
Readers believe consumers will be out of pocket as a result of the changes. JEC says that tied agents would end up with more than the amount currently paid to brokers. The result: “More will be spent by schemes (not less) – and there will be no advice only factual information about the scheme.”
They must be joking
John says that to claim “the measly amount that the broker gets paid is the actual drain on the resources of the medical aid funds, administrators or whoever pays the commission.” If authorities want to know where the wasteful expenditure is, he urges them to “look at where some of the executives of the medical aid societies and administrators live and what they drive!”
And Elna says the proposed changes “will not enhance the medical care for any of our clients but rather worsen it!” A parting shot from Jamie sums it ip: “If this is implemented it will drive more brokers from dealing with medical aids. I cannot see any improvement for clients – and they will almost certainly be worse off.”
Brokers speak up
The deadline for submissions regarding the “Remuneration of Health Brokers: Revising the Regulatory Framework” document to CMS is 6 February 2009. A number of organisations such as the FIA, FPI and Moonstone are planning to make representation on behalf of the brokers to CMS. Now is the time for brokers to speak up!
