Centre for
Actuarial
Research
The Costing of the
Chronic Disease
List
January 2003
CDL Study Data







Data from Medscheme Data Warehouse
Data covers 2001 calendar year, extracted in August 2002
Data fully run-off, no adjustment for IBNR
46 options
27 schemes
16.103 million beneficiary months of data
Average exposure of 1,341,892 beneficiaries
Centre for
Actuarial
Research
Cluster Analysis
and Applicability
Centre for
Actuarial
Research
Cluster Analysis

Distinct clusters:
 High contains options with older, 'whiter' members with
high utilisation;
 Medium-older contains options with medium utilisation
and older members;
 Medium-younger contains options with medium
utilisation and younger members; and
 Low contains options with younger, 'blacker' members
with low utilisation.
 Additional not present in PMB study. Single large
scheme where the ethnicity is predominantly so-called
“Coloured”
Centre for
Actuarial
Research
Cluster Analysis




Different clusters experience different benefit utilisation,
costs and disease profiles. Provider behaviour differs by
cluster, even within the same hospital facility.
Study contains more Low cluster beneficiaries than the
industry.
For industry comparisons, use Weighted industry price.
 This uses 50% of the costs of the Low cluster and
100% of the other clusters.
Low cluster is more relevant to the emerging low-cost
option environment.
Centre for
Actuarial
Research
Beneficiaries by Cluster
5.6%
7.0%
High
5.0%
Medium-older
Medium-younger
9.5%
Additional
Low
72.9%
Centre for
Actuarial
Research
Age Profile by Cluster
14%
10%
8%
6%
4%
2%
Total
High
Additional
Low
Medium-older
Medium-younger
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0%
0
Proportion of beneficiaries
12%
Centre for
Actuarial
Research
Proportion of
Options Covering
the CDL
Centre for
Actuarial
Research
Industry Benefit Study 2001
9.5%
4.7%
18.3%
No Chronic Medicine
Benefits
Primary Care Clinic
Formulary
6.5%
Two-tiered Benefit
Design
Monetary Limits
"Unlimited" Chronic
Benefits
60.9%
Source : CARE Monograph
Centre for
Actuarial
Research
Proportion of
Beneficiaries
Covered for CDL
Centre for
Actuarial
Research
Proportion of Beneficiaries
Chronic Registrations by Cluster
30%
29.7%
25%
High
20%
16.9%
Medium-older
15%
9.3%
10%
11.4%
13.2%
Medium-younger
Low
Total
5%
0%
High
Medium- Mediumolder
younger
Low
Total
Cluster
Q1 2002 data
Centre for
Actuarial
Research
Chronic Registrations
High Cluster
Option identifier
Cluster Average 29.7%
15.8%
A1
A2
A3
B1
C1
D1
D2
E1
E2
F1
G1
G2
G3
G4
H1
H2
I1
J1
J2
0%
43.2%
28.2%
31.1%
18.5%
28.3%
33.6%
40.2%
20.7%
29.5%
61.2%
25.4%
30.0%
10%
20%
30%
65.1%
36.2%
41.7%
41.4%
40%
51.9%
50%
60%
70%
Proportion of Beneficiaries
Q1 2002 data
Centre for
Actuarial
Research
Chronic Registrations
Medium-older Cluster
Option Identifier
Cluster Average 16.9%
A4
E3
E4
G5
G6
G7
H3
H4
H5
H6
H7
J3
J4
J5
K1
L1
M1
N1
O1
P1
Q1
R1
35.2%
13.8%
0.2%
0.4%
1.0%
0%
10.3%
17.5%
19.2%
18.7%
28.4%
16.9%
22.8%
21.7%
23.8%
19.2%
10%
20%
30%
41.9%
40%
50%
60%
70%
Proportion of Beneficiaries
Q1 2002 data
Centre for
Actuarial
Research
Chronic Registrations
Medium-Younger Cluster
Option Identifier
Cluster Average 9.3%
A5
AA
AB1
D3
E5
E6
E7
H8
H9
L2
S1
T1
U1
V1
W1
W2
X1
Y1
Z1
17.4%
16.5%
20.9%
0.1%
0%
12.9%
2.8%
2.5%
18.7%
16.1%
12.8%
19.1%
19.7%
17.6%
15.8%
10%
20%
30%
40%
50%
60%
70%
Proportion of Beneficiaries
Q1 2002 data
Centre for
Actuarial
Research
Chronic Registrations
Low Cluster
Option Identifier
Cluster Average 11.4%
A6
AC1
AD1
AE1
AF1
AF2
AF3
AG1
AH1
D4
D5
D6
E8
E9
G7
H10
H11
H9
Y3
0.0%
9.0%
6.2%
6.4%
11.1%
1.8%
3.6%
5.8%
2.1%
5.0%
0.4%
0%
10%
15.0%
19.2%
16.7%
12.5%
20%
30%
40%
50%
60%
70%
Proportion of Beneficiaries
Q1 2002 data
Centre for
Actuarial
Research
Chronic Registrations Scheme H
Proportion of Beneficiaries
45%
41.7%
40%
35%
30%
28.4%
25.4%
25%
17.5%
20%
15%
19.2%
18.7%
10.3%
10%
12.5%
5.0%
2.8% 2.5%
5%
0.4%
0%
H1 H2 H3 H4 H5 H6 H7 H8 H9 H11 H12 H10
Options in Scheme H
Q1 2002 data
Centre for
Actuarial
Research
Prevalence of CDL
Conditions from
Registrations
Centre for
Actuarial
Research
Registration of Beneficiaries
for Chronic Medicine
Other Chronic
Conditions
22.9%
CDL Conditions
77.1%
Centre for
Actuarial
Research
Prevalence of CDL Registrations
Other 18 conditions
7.6%
Osteoarthritis
3.4%
Anti-Coagulating
Therapy
4.9%
Asthma
12.2%
Hypothyroidism
5.1%
Coronary Artery
Disease
3.8%
Diabetes Mellitus Type
1&2
10.6%
Hypertension
37.3%
Epilepsy
2.6%
Hyperlipidaemia
12.5%
Centre for
Actuarial
Research
Co-morbidity in Registrations
Single Disease
40.6%
As Co-morbidity
59.4%
Centre for
Actuarial
Research
Co-morbidity in Registrations
Addison's Disease
Anti-Coagulating
Asthma
Bipolar Mood Disorder
Bronchiectasis
Cardiac Failure
Cardiomyopathy
Chronic Obs. Pulmon.
Chronic Renal Disease
Coronary Artery
Crohn's Disease
Cushing's Disease
Diabetes Insipidus
Diabetes Mellitus T1&2
Dysrhythmias
Epilepsy
Glaucoma
Hyperlipidaemia
Hypertension
Hypothyroidism
Multiple Sclerosis
Osteoarthritis
Parkinson's Disease
Rheumatoid Arthritis
Schizophrenia
Systemic Lupus
Ulcerative colitis
0%
Single Disease
5%
10%
As Co-morbidity
15%
20%
25%
30%
35%
40%
Proportion of CDL registrations
Centre for
Actuarial
Research
Co-morbidity in Registrations
Addison's Disease
Anti-Coagulating
Asthma
Bipolar Mood Disorder
Bronchiectasis
Cardiac Failure
Cardiomyopathy
Chronic Obs. Pulmon.
Chronic Renal Disease
Coronary Artery
Crohn's Disease
Cushing's Disease
Diabetes Insipidus
Diabetes Mellitus T1&2
Dysrhythmias
Epilepsy
Glaucoma
Hyperlipidaemia
Hypertension
Hypothyroidism
Multiple Sclerosis
Osteoarthritis
Parkinson's Disease
Rheumatoid Arthritis
Schizophrenia
Systemic Lupus
Ulcerative colitis
0%
Single Disease
20%
As Co-morbidity
40%
60%
80%
Proportion
100%
Centre for
Actuarial
Research
Beneficiaries Registered for
CDL Conditions
3 diseases
9.2%
4 or more
diseases
3.3%
2 diseases
25.0%
1 disease
62.5%
Centre for
Actuarial
Research
Single Disease
Analysis
Centre for
Actuarial
Research
Registered Beneficiaries
Claiming
Addison's Disease
Anti-Coagulating
Asthma
Bipolar Mood Disorder
Bronchiectasis
Cardiac Failure
Cardiomyopathy
Chronic Obs. Pulmon.
Chronic Renal Disease
Coronary Artery
Crohn's Disease
Cushing's Disease
Diabetes Insipidus
Diabetes Mellitus T1&2
Dysrhythmias
Epilepsy
Glaucoma
Hyperlipidaemia
Hypertension
Hypothyroidism
Multiple Sclerosis
Osteoarthritis
Parkinson's Disease
Rheumatoid Arthritis
Schizophrenia
Systemic Lupus
Ulcerative colitis
Total excl. Hemophilia
no cases
0%
10%
20%
30%
Any Drugs Claimed
Single diseases only
40%
50%
60% 70% 80% 90% 100%
Proportion of Registrations
Centre for
Actuarial
Research
Proportion of Total Drug Claims
Addison's Disease
Anti-Coagulating
Asthma
Bipolar Mood Disorder
Bronchiectasis
Cardiac Failure
Cardiomyopathy
Chronic Obs. Pulmon.
Chronic Renal Disease
Coronary Artery
Crohn's Disease
Cushing's Disease
Diabetes Insipidus
Diabetes Mellitus T1&2
Dysrhythmias
Epilepsy
Glaucoma
Hyperlipidaemia
Hypertension
Hypothyroidism
Multiple Sclerosis
Osteoarthritis
Parkinson's Disease
Rheumatoid Arthritis
Schizophrenia
Systemic Lupus
Ulcerative colitis
Total excl. Hemophilia
no cases
0%
Primary Drugs
10%
20%
30%
40%
Secondary Chronic Drugs
Single diseases only
50% 60% 70% 80% 90% 100%
Proportion of Claiming Beneficiaries
Other Acute
Centre for
Actuarial
Research
Proportion of Total Drug Cost
Addison's Disease
Anti-Coagulating
Asthma
Bipolar Mood Disorder
Bronchiectasis
Cardiac Failure
Cardiomyopathy
Chronic Obs. Pulmon.
Chronic Renal Disease
Coronary Artery
Crohn's Disease
Cushing's Disease
Diabetes Insipidus
Diabetes Mellitus T1&2
Dysrhythmias
Epilepsy
Glaucoma
Hyperlipidaemia
Hypertension
Hypothyroidism
Multiple Sclerosis
Osteoarthritis
Parkinson's Disease
Rheumatoid Arthritis
Schizophrenia
Systemic Lupus
Ulcerative colitis
Total excl. Hemophilia
no cases
0%
Primary Drugs
10%
20%
30%
40%
Secondary Chronic Drugs
Single diseases only
50%
60% 70% 80% 90% 100%
Proportion of Total Cost
Other Acute
Centre for
Actuarial
Research
Average Cost per Case
Addison's Disease
Anti-Coagulating
Asthma
Bipolar Mood Disorder
Bronchiectasis
Cardiac Failure
Cardiomyopathy
Chronic Obs. Pulmon.
Chronic Renal Disease
Coronary Artery
Crohn's Disease
Cushing's Disease
Diabetes Insipidus
Diabetes Mellitus T1&2
Dysrhythmias
Epilepsy
Glaucoma
Hyperlipidaemia
Hypertension
Hypothyroidism
Multiple Sclerosis
Osteoarthritis
Parkinson's Disease
Rheumatoid Arthritis
Schizophrenia
Systemic Lupus
Ulcerative colitis
Total excl. Hemophilia
no cases
0
2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000
Average Cost per case
Primary Drugs
Secondary Chronic Drugs
Single diseases only
Other Acute
Centre for
Actuarial
Research
Average Cost per Case
Addison's Disease
Anti-Coagulating
Asthma
Bipolar Mood Disorder
Bronchiectasis
Cardiac Failure
Cardiomyopathy
Chronic Obs. Pulmon.
Chronic Renal Disease
Coronary Artery
Crohn's Disease
Cushing's Disease
Diabetes Insipidus
Diabetes Mellitus T1&2
Dysrhythmias
Epilepsy
Glaucoma
Hyperlipidaemia
Hypertension
Hypothyroidism
Multiple Sclerosis
Osteoarthritis
Parkinson's Disease
Rheumatoid Arthritis
Schizophrenia
Systemic Lupus
Ulcerative colitis
Total excl. Hemophilia
no cases
R21 013
0
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000
Average Cost per case
Primary Drugs
Secondary Chronic Drugs
Single diseases only
Other Acute
Centre for
Actuarial
Research
Multiple Disease
Analysis
Centre for
Actuarial
Research
Registered Beneficiaries
Other 1,998
Multiple
Diseases
18.3%
Top 9 Multiple
Diseases
19.2%
Single
Diseases
62.5%
Centre for
Actuarial
Research
Registered Beneficiaries
Claiming
85.0%
Diabetes, Hypertension
69.1%
Hyperlipid., Hypertension
87.5%
Hypertension, Osteoarthritis
65.4%
Hypertension, Hypothyroid.
79.4%
Asthma; Hypertension
71.5%
Anti-Coag, Hypertension
67.7%
Anti-Coag., Hyperlipid., Hyperten.
77.2%
Diabetes, Hyperlipid., Hyperten.
74.6%
Coronary Artery, Hyperlipid.
76.5%
Top 9 Multiple Diseases
71.9%
Other Multiple Diseases
79.1%
All Single Diseases
77.2%
All CDL Diseases
0%
20%
40%
60%
80%
100%
Proportion of Registrations
Any Drugs Claimed
Multiple diseases
Centre for
Actuarial
Research
Proportion of Total Drug Claims
Diabetes, Hypertension
Hyperlipid., Hypertension
Hypertension, Osteoarthritis
Hypertension, Hypothyroid.
Asthma; Hypertension
Anti-Coag, Hypertension
Anti-Coag., Hyperlipid., Hyperten.
Diabetes, Hyperlipid., Hyperten.
Coronary Artery, Hyperlipid.
Top 9 Multiple Diseases
Other Multiple Diseases
All Single Diseases
All CDL Diseases
0%
20%
40%
60%
80%
100%
Proportion of Claiming Beneficiaries
Primary Drugs
Secondary Chronic Drugs
Multiple diseases
Other Acute
Centre for
Actuarial
Research
Proportion of Total Drug Cost
Diabetes, Hypertension
Hyperlipid., Hypertension
Hypertension, Osteoarthritis
Hypertension, Hypothyroid.
Asthma; Hypertension
Anti-Coag, Hypertension
Anti-Coag., Hyperlipid., Hyperten.
Diabetes, Hyperlipid., Hyperten.
Coronary Artery, Hyperlipid.
Top 9 Multiple Diseases
Other Multiple Diseases
All Single Diseases
All CDL Diseases
0%
Primary Drugs
20%
40%
Secondary Chronic Drugs
Multiple diseases
60%
80%
100%
Proportion of Total Cost
Other Acute
Centre for
Actuarial
Research
Average Cost per Case
Diabetes, Hypertension
Hyperlipid., Hypertension
Hypertension, Osteoarthritis
Hypertension, Hypothyroid.
Asthma; Hypertension
Anti-Coag, Hypertension
Anti-Coag., Hyperlipid., Hyperten.
Diabetes, Hyperlipid., Hyperten.
Coronary Artery, Hyperlipid.
Top 9 Multiple Diseases
Other Multiple Diseases
All Single Diseases
All CDL Diseases
0
Primary Drugs
1,000
2,000 3,000 4,000
Secondary Chronic Drugs
Multiple diseases
5,000 6,000 7,000 8,000
9,000 10,000
Average Cost per case
Other Acute
Centre for
Actuarial
Research
Average Cost per Case vs.
Sum of Single Diseases
Diabetes, Hypertension
-10.4%
7.4%
Hyperlipid., Hypertension
Hypertension, Osteoarthritis
-6.8%
3.4%
Hypertension, Hypothyroid.
6.5%
Asthma; Hypertension
12.8%
Anti-Coag, Hypertension
7.5%
Anti-Coag., Hyperlipid., Hyperten.
4.0%
Diabetes, Hyperlipid., Hyperten.
Coronary Artery, Hyperlipid. 1.9%
Top 9 Multiple Diseases
-15%
-10%
-5%
-0.5%
0%
5%
10%
15%
Average Cost Increase Over Sum of Single Diseases
Primary Drugs
Multiple diseases
Centre for
Actuarial
Research
0.00
0.31
Addison's Disease
Anti-Coagulating Therapy
Asthma
Bipolar Mood Disorder
Bronchiectasis
Cardiac Failure
Cardiomyopathy
Chronic Obs. Pulmon. Disease
Chronic Renal Disease
Coronary Artery Disease
Crohn's Disease
Diabetes Insipidus
Diabetes Mellitus T1&2
Dysrhythmias
Epilepsy
Glaucoma
Hyperlipidaemia
Hypertension
Hypothyroidism
Multiple Sclerosis
Osteoarthritis
Parkinson's Disease
Rheumatoid Arthritis
Schizophrenia
Systemic Lupus Erythromatosis
Ulcerative colitis
Diabetes, Hypertension
Hyperlipid., Hypertension
Hypertension, Osteoarthritis
Hypertension, Hypothyroid.
Asthma; Hypertension
Anti-Coag, Hypertension
Anti-Coag., Hyperlipid., Hyperten.
Diabetes, Hyperlipid., Hyperten.
Coronary Artery, Hyperlipid.
Prevalence
All
Diseases
16.94
0.32
0.02
0.26
0.10
0.49
0.03
0.60
0.07
0.01
4.98
0.43
2.57
0.44
3.81
29.88
2.46
0.02
1.63
0.11
0.86
0.15
0.09
0.19
6.57
4.43
2.19
1.49
1.84
1.28
1.07
1.16
0.83
0
5
10
15
20
25
Incidence per 1000 beneficiaries
30
Centre for
Actuarial
Research
CDL Package by
Age
Centre for
Actuarial
Research
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
Proportion of beneficiaries
Age of Exposed Beneficiaries
14%
12%
10%
8%
6%
4%
2%
0%
Centre for
Actuarial
Research
14%
12%
10%
8%
6%
4%
2%
All Single Diseases
Top 9 Multiple Diseases
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0%
0-1
Proportion of Claiming Beneficiaries
Age of Claiming Beneficiaries
Other Multiple Diseases
Centre for
Actuarial
Research
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0-1
Proportion of Claiming Beneficiaries
Age of Claiming Beneficiaries
14%
12%
10%
8%
6%
4%
2%
0%
Centre for
Actuarial
Research
Age of Claiming Beneficiaries
for Selected Diseases
12%
10%
8%
6%
4%
2%
Asthma
Hypertension
Diabetes, Hypertension
Other CDL diseases
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0%
0-1
Proportion of Claiming Beneficiaries
14%
Diabetes Mellitus T1&2
Centre for
Actuarial
Research
Age of Claiming Beneficiaries
for Selected Diseases
80%
60%
40%
20%
Asthma
Hypertension
Diabetes, Hypertension
Other CDL diseases
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0%
0-1
Proportion of Claiming Beneficiaries
100%
Diabetes Mellitus T1&2
Centre for
Actuarial
Research
CDL Prevalence by Age
200
150
100
All Single Diseases
Top 9 Multiple Diseases
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
85+
50
0-1
Prevalence per 1000 beneficiaries
250
Other Multiple Diseases
Centre for
Actuarial
Research
CDL Prevalence by Age
500
400
300
200
All Single Diseases
Top 9 Multiple Diseases
All ages
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0
1-4
100
0-1
Prevalence per 1000 beneficiaries
600
Other Multiple Diseases
Centre for
Actuarial
Research
All ages
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0-1
Prevalence per 1000 beneficiaries
CDL Prevalence by Age
600
500
400
300
200
100
0
Centre for
Actuarial
Research
Average Cost by Age
7,000
5,000
4,000
3,000
2,000
1,000
All CDL Conditions
All Single Diseases
Top 9 Multiple Diseases
Other Multiple Diseases
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
0
Average Cost per case pa
6,000
Centre for
Actuarial
Research
All Ages
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
Average Cost per case pa
Average Cost of CDL by Age
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Centre for
Actuarial
Research
Raw Price of CDL by Age
2,500
Price per beneficiary pa
2,250
2,000
1,750
1,500
1,250
1,000
750
500
250
All Single Diseases
Top 9 Multiple Diseases
All Ages
85+
75-79
80-84
70-74
65-69
55-59
60-64
50-54
45-49
40-44
30-34
35-39
25-29
20-24
15-19
10-14
5-9
1-4
0
0
Other Multiple Diseases
Centre for
Actuarial
Research
All Ages
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
Price per beneficiary pa
Raw Price of CDL by Age
2,500
2,250
2,000
1,750
1,500
1,250
1,000
750
500
250
0
Centre for
Actuarial
Research
Proportion of Price by Age
100%
90%
Proportion of price
80%
70%
60%
50%
40%
30%
20%
10%
All Single Diseases
Top 9 Multiple Diseases
All Ages
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
0%
Other Multiple Diseases
Centre for
Actuarial
Research
Raw Price of CDL by Wider Age
Bands
1784.08
1800
Price per beneficiary pa
1600
1400
1200
1000
800
537.68
600
334.39
400
200
333.40
53.98
0
Under 20
All Single Diseases
20-54
Over 55
Top 9 Multiple Diseases
Adult
All Ages
Other Multiple Diseases
Centre for
Actuarial
Research
CDL Package by
Cluster
Centre for
Actuarial
Research
Age of Exposed Beneficiaries
12%
10%
8%
6%
4%
2%
High and Medium
High
Medium-older
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0%
0
Proportion of beneficiaries
14%
Medium-younger
Centre for
Actuarial
Research
Total
High and Medium
Additional
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
Proportion of beneficiaries
Age of Exposed Beneficiaries
14%
12%
10%
8%
6%
4%
2%
0%
Low
Centre for
Actuarial
Research
Prevalence All CDL Diseases
Incidence per 1000 beneficiaries
200
180
160
140
120
100
80
60
40
20
0
High
Medium- Medium- High and Additional
older
younger Medium
All Single Diseases
Top 9 Multiple Diseases
Low
Total
Other Multiple Diseases
Centre for
Actuarial
Research
High and Medium
High
Medium-older
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
Prevalence per 1000 beneficiaries
Prevalence by Cluster
700
600
500
400
300
200
100
0
Medium-younger
Centre for
Actuarial
Research
Total
High and Medium
Additional
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
Prevalence per 1000 beneficiaries
Prevalence by Cluster
700
600
500
400
300
200
100
0
Low
Centre for
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Average Cost by Cluster
5,000
4,000
3,000
2,000
1,000
Total
High
Medium-older
Medium-younger
Additional
Low
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
0
Average Cost per case pa
6,000
Centre for
Actuarial
Research
Raw Price by Cluster
1000
Price per beneficiary pa
900
800
700
600
500
400
300
200
100
0
High
Mediumolder
All Single Diseases
Mediumyounger
High and
Medium
Top 9 Multiple Diseases
Additional
Low
Total
Other Multiple Diseases
Centre for
Actuarial
Research
Raw Price by Age and Cluster
2,500
2,000
1,500
1,000
500
Total
High
Medium-older
Medium-younger
Additional
Low
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
0
Price per beneficiary pa
3,000
Centre for
Actuarial
Research
Total
High
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
Price per beneficiary pa
Raw Price High vs. Low Cluster
3,000
2,500
2,000
1,500
1,000
500
0
Low
Centre for
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Research
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
Price per beneficiary per annum
High Price Relative to Low
Price by Age
200%
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
Centre for
Actuarial
Research
Average Cost of Hypertension
High vs. Low Cluster
3,000
2,500
2,000
Low
1,500
High
1,000
500
85 - 89
80 - 84
75 - 79
70 - 74
65 - 69
60 - 64
55 - 59
50 - 54
45 - 49
40 - 44
35 - 39
0
30 - 34
Average cost per case pa
3,500
Centre for
Actuarial
Research
Differences Between Clusters


Age profile differences explain roughly two-thirds of
difference in raw cluster prices.
Other differences are probably due to a combination of
“the four P’s”:
 variation in Prevalence rates of important conditions;
 Presentation or manifestation of conditions;
 Provider choice (GP vs. specialist and the
management or prescribing habits of each); and
 benefits available within the health care Plan.
Centre for
Actuarial
Research
Adjustments to the
Raw Price of the
CDL Package
Centre for
Actuarial
Research
Adjustments to Raw Price









Haemophilia
Removal of three diseases from final Regulations
Cost of diagnosis and medical management
Adjustment for compliance
Adjustment for limits
Adjustment for co-payments
Costs of chronic medicine management programme
Costs of administration
Reduction for cost of delivery in the public sector
Centre for
Actuarial
Research
Haemophilia






Patients do not register for chronic medicine. Covered by
‘Blood and related products’ benefit, not Medicines.
Haemophilia Society estimates 2000 patients in SA, which
suggests prevalence of 1/20 000.
220 people claiming ‘Blood and related products’ benefit;
estimate 67 are haemophiliacs.
Average case cost of R2 500 per month (R30 000 p.a.) for
‘Blood and related products’ benefit.
But majority are renal failure patients, erythropoietin for
treatment of chronic anaemia.
Recommendation: use estimate of R0.50 pbpa
Centre for
Actuarial
Research
Removal of Diseases from
Final Regulations



Anti-coagulating Therapy: 0.7% of total cost
Cushing’s Disease: 0.0% of total cost
Osteoarthritis: 3.1% of total cost

In total, 1.8% of people excluded from any CDL benefit
12.7% now excluded from partial CDL benefits

Recommendation: reduce raw CDL price by 3.7%.

Centre for
Actuarial
Research
Cost of Diagnosis and Medical
Management




Prescribed Minimum Benefit:
 “diagnosis, medical management and medication, to
the extent that this is provided for by way of a
therapeutic algorithm for the specified condition,
published by the Minister by notice in the Gazette”.
Need to determine and finalise therapeutic algorithms.
Process requires full study of cost implications.
Recommendation: use initial rough estimate of R130.00
per beneficiary per annum.
Centre for
Actuarial
Research
Cost of Diagnosis and Medical
Management
Chronic Disease (CDL Category)
GP visits
Addison's Disease
Specialist
visits
Other
visits
Devices
Tests
ER visits
Estimated
Annual Cost
Per Case
R 800
R 400
R 1,200
R 200
R 1,400
Anti-Coagulating Therapy
R 400
R 800
Asthma
R 400
R 800
Bipolar Mood Disorder
R 800
Bronchiectasis
R 800
R 300
R 400
R 200
R 400
R 2,100
R 75
R 875
R 250
R 1,450
Cardiac Failure
R 400
R 800
R 200
R 1,400
Cardiomyopathy
R 400
R 800
R 200
R 1,400
R 250
R 1,450
Chronic Obstructive Pulmonary Disease
R 800
Chronic Renal Disease
R 800
R 250
R 1,050
R 800
R 200
R 1,400
Crohn's disease
R 800
R 100
R 900
Cushing's Disease
R 800
R 300
R 1,100
Diabetes Insipidus
R 800
R 250
R 1,050
Coronary Artery Disease
Diabetes Mellitus Type 1 & 2
R 400
R 400
R 800
R 400
R 400
R 500
R 200
R 200
R 2,500
Centre for
Actuarial
Research
Adjustment for Compliance




Longitudinal study of new applications with follow-up for
one year. 27% of beneficiaries classified as non-compliant
used only 28% of the value of the medicines authorised.
Scheme only experienced 71% of the potential cost of the
medicines authorised.
Recommend stress-testing price through adjusting margin
for compliance.
Recommendation: add margin of 20% of raw price of
CDL package for possible increase in compliance in a
mandatory environment.
Centre for
Actuarial
Research
Adjustments for Limits



Design of project to attempt to obtain full cost of the CDL
conditions without constraints:
 Relatively generous chronic medicine limits in schemes.
 All members can select option with chronic medicine.
 Extracted both chronic and acute usage.
 Full tariff amount of item prescribed, not amount paid.
But need small margin where beneficiaries stop claiming
during the year because limits have been reached.
Recommendation: add margin of 5% to raw price of CDL
package for effect of removing all limits in a mandatory
environment.
Centre for
Actuarial
Research
Adjustments for Co-payments




Design of project:
 Full tariff amount of item prescribed, not amount paid.
Could be small increase in usage of Primary CDL-NAPPIs
relative to Secondary CDL-NAPPIs in mandatory
environment, with member co-paying difference in price.
Potentially an increase in usage because full benefit will
be paid without constraints from pooled benefits.
Recommendation: add margin of 5% to raw price of CDL
package for effect of removing co-payments in a
mandatory environment.
Centre for
Actuarial
Research
Medicine Management Costs
Total Chronic Medicine
Management
Cluster
High
Medium-older
Medium-younger
High and Medium
Additional
Low
Total
Price per
benficiary per
month
R 5.67
R 4.34
R 3.42
R 4.50
R 5.05
R 2.46
R 3.07
Price per
benficiary per
annum
R 68.00
R 52.11
R 41.03
R 54.02
R 60.59
R 29.53
R 36.80
CDL Medicine Management
Price per
benficiary per
month
R 4.37
R 3.35
R 2.64
R 3.47
R 3.89
R 1.90
R 2.36
Price per
benficiary per
annum
R 52.43
R 40.18
R 31.64
R 41.65
R 46.72
R 22.77
R 28.38
Centre for
Actuarial
Research
CDL Administration Costs
Total Chronic Medicine Claims
Administration
Cluster
High
Medium-older
Medium-younger
High and Medium
Additional
Low
Total
Price per
benficiary per
month
R 3.06
R 2.34
R 1.85
R 2.43
R 2.73
R 1.33
R 1.66
Price per
benficiary per
annum
R 36.72
R 28.14
R 22.15
R 29.17
R 32.72
R 15.95
R 19.87
CDL Medicine Claims
Administration
Price per
benficiary per
month
R 2.36
R 1.81
R 1.42
R 1.87
R 2.10
R 1.02
R 1.28
Price per
benficiary per
annum
R 28.31
R 21.69
R 17.08
R 22.49
R 25.22
R 12.29
R 15.32
Centre for
Actuarial
Research
EDL State Tender Price Compared
to Private Sector Price
Category
Anti-inflammatories
Antibiotics
Cardiovascular
Central Nervous System
Respiratory
Number of
Products
Compared
State Tender Price as a Percentage
of Private Sector Price
Lowest-priced
Product
5
6
6
7
6
16.9%
24.4%
20.0%
15.4%
21.3%
Highest-priced
Product
9.8%
4.6%
5.0%
14.5%
16.9%
Source: Rothberg and Walters (SAMJ 1996)
Centre for
Actuarial
Research
Savings for Switch to EDL Medicines
at State Tender Prices
Proportion of all
prescriptions
Proportion of
total value
Potential savings of
total GP medicine
expenditure (%)
EDL items
Other forms of EDL items
Out-of-formulary items
Residual
22.4
19.6
10.0
48.0
19.1
21.5
15.0
44.4
18.3
15.7
38.0
Total
100.0
100.0
72.0
Items Prescribed
Source: Rothberg and Walters (SAMJ 1996)
Centre for
Actuarial
Research
CDL Cost in the Public Sector



1995 Committee of Inquiry’s estimate of a 50% reduction
in private sector costs is achievable for primary health
care medicines.
Access to Essential Drugs List medicine at State tender
prices is a potential policy option.
Recommendation: use estimate of 50% saving in cost of
CDL package when delivered in public sector. As policy
unfolds, so this estimate can be further refined.
Centre for
Actuarial
Research
Full Price of the CDL
Package
Centre for
Actuarial
Research
Full Price of CDL Package

Four components:
 Medicine component, based on full data in study (high
degree of certainty)
 Portion of price for which uncertainty exists until
package is fully defined and allowance for impact of
package being mandatory
 Amount added for medical management costs
 Non-healthcare costs.

Note: Prices should not be used blindly in pricing work.
Contact a professional for assistance.
Centre for
Actuarial
Research
Full Price CDL Package
R 1,500
Non-healthcare costs
Per Beneficiary Per Annum
Medical management est.
Uncertainty in CDL
R 1,250
CDL Medicine Package
R 1,000
R 750
R 500
R 250
R0
High
Medium- Medium- High and
older Younger Medium
Low
Additional
Total
Study
Weighted
Total
Centre for
Actuarial
Research
Full Price PMB Package
Price per beneficiary per
annum (in 2001 Rand
terms)
High
Mediumolder
R 911.83
MediumYounger
R 711.75
High and
Medium
R 999.48
Low
R 451.39
Total
Study
R 595.28
Weighted
Total
Total CDL package
R 1,365.09
R 677.74
PMB Package excl. CDL
R 2,432.41 R 2,010.90 R 1,489.49 R 1,956.01 R 1,100.08 R 1,343.43 R 1,479.04
Total PMB package
Private Sector
R 3,797.50 R 2,922.73 R 2,201.25 R 2,955.48 R 1,551.47 R 1,938.71 R 2,156.78
Total PMB package
Public Sector
R 2,425.48 R 1,895.39 R 1,425.10 R 1,901.87 R 1,015.61 R 1,261.73 R 1,400.07
Centre for
Actuarial
Research
Non-Healthcare Expenditure
Non-healthcare
Expenditure as a
Proportion of …
High
Mediumolder
MediumYounger
High and
Medium
Low
Total
Study
Weighted
Total
CDL Package
5.9%
6.8%
6.8%
6.4%
7.8%
7.3%
7.2%
Total PMB package
(excluding CDL)
3.7%
3.8%
4.6%
4.0%
5.0%
4.6%
4.4%
Total PMB package
including CDL)
4.5%
4.7%
5.4%
4.8%
5.8%
5.4%
5.3%
Well below Registrar’s benchmark of
10% of total expenditure
Centre for
Actuarial
Research
CDL Package Relative to
Medicine Expenditure
R 1,800
Per Beneficiary per Annum
R 1,600
R 1,400
CDL Package
CDL Package if mandatory
Schemes in PMB Study
Open non-study schemes
Restricted non-study schemes
1,349
1,222
R 1,200
1,067
R 1,000
R 800
R 600
R 400
499
381
R 200
R0
Total Medicine
Centre for
Actuarial
Research
PMB Package Relative to
Benefits and Contributions
R 6,000
Per Beneficiary per Annum
R 5,000
5,760
PMB package (including CDL)
Schemes in PMB Study
Open non-study schemes
Restricted non-study schemes
4,772
4,668
5,613
5,013
4,285
R 4,000
R 3,000
2,157
2,043
R 2,000
R 1,000
R0
Total Benefits
Contributions
Centre for
Actuarial
Research
Conclusions
Centre for
Actuarial
Research
Preliminary Conclusions on
Affordability


CDL package, both in basic form and with added margins
for change in claiming behaviour when mandatory,
appears to be affordable compared to medicine benefits.
PMB package (including CDL) appears to be well covered
when compared to total benefits and contributions in the
industry.
Centre for
Actuarial
Research
Price in Mandatory Environment




Expect change in member and provider behaviour from
existing environment.
Uncertainty exists in price until package is fully defined.
Have included an effective 30% margin on medicine
component of CDL package.
Consortium opinion that collective margin of 30% on
medicine component is sufficiently conservative to cover
this uncertainty in the pricing.
Centre for
Actuarial
Research
Need for Mandatory Package
2,500
2,000
1,750
1,500
1,250
1,000
750
500
Community rated price
250
All Ages
85+
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
1-4
0
0
Price per beneficiary pa
2,250
Centre for
Actuarial
Research
Need for Mandatory Package



Real danger that open schemes will pursue more
aggressive self-seeking behaviour and limit chronic
medicine benefits to discourage older members and
improve their community rate relative to their competitors.
Substantial broker activity and churning of members
worsens this incentive.
A mandatory minimum package of chronic medicine and
management benefits is essential for reducing
opportunistic behaviour by some schemes.
Centre for
Actuarial
Research
Further Policy Issues

Membership of medical schemes needs to be compulsory,
rather than voluntary, for medium to higher income groups
to stabilise the system.

A risk equalisation system between medical schemes,
based on the Prescribed Minimum Benefit package will
reduce the opportunistic profiting from risk selection still
further.
Centre for
Actuarial
Research
Composition of the CDL List


Brief did not extend to consider diseases outside of the
draft list and whether any should have been included.
Need for a process of chronic disease prioritisation in
medical schemes in order to inform the rationing process
in future.
Centre for
Actuarial
Research
Definition of CDL Package





Draft of Treatment Guidelines for Chronic Disease List
Conditions
Based on Standard Treatment Guidelines and Essential
Drugs List published by DoH in 1998.
Appoint task team for documenting and maintaining
treatment algorithms for CDL conditions.
Actuarial and pricing expertise to estimate the price of the
algorithms. Iterative process of refining algorithms.
Project manager to ensure process completed in time for
pricing in August 2003 if implementation is 1 January
2004.
Centre for
Actuarial
Research
Complementary and Traditional
Medicine






Serious concerns about the implications of legislating the
algorithms for CDL conditions.
Only one approach to treatment will receive funding from
medical schemes: entrenchment of an allopathic approach
to treatment, largely based on drug interventions.
Hard won legal freedoms to operate must not be negated by
preventing funding of complementary medicine and African
traditional medicine for CDL conditions.
Allied Health Professions Council with 11 modalities.
Consumers will increasingly question health plans.
Inclusion unlikely to be simple and debate will be vigorous.
Centre for
Actuarial
Research
Chronic Medicine Management
Programmes


Medicines management is essentially divided into rulesbased formulary management and clinically-based
member management.
Experience with a large membership base shows that
there is no question that a combination of the two yields
the best results.
Centre for
Actuarial
Research
Further Research





Combine with PMB study to obtain total expenditure on
CDL conditions. Aid in setting industry priorities.
Range of costs for each condition, rather than average
costs.
Understand price difference between High and Low
clusters.
Current prices of EDL medicines at State tender prices
compared to medicines used by beneficiaries in this study.
Costs of treating CDL conditions in the public sector.
Centre for
Actuarial
Research
Centre for Actuarial Research
(CARE)
A Research Unit of the University of Cape Town
A Research Report Prepared
Under Contract for the
Council for Medical Schemes
Centre for
Actuarial
Research