Centre for
Actuarial
Research
The Costing of
Prescribed Minimum
Benefits
January 2003
Söderlund & Peprah (1998)




Minimum package defined in terms of diagnosis-treatment
pairs. ICD-10 codes for diagnosis element and CPT-4
codes for treatment element.
The “core inpatient package” would cost R 502 pbpa in
1998 prices.
Data on outpatient services could not be broken down into
diagnosis-treatment pairs. Assumption that experience of
mine hospital users would apply. Expected outpatient
costs of R 183 pbpa.
Estimated that total inpatient and outpatient package
would cost R 685 pbpa, for those currently without medical
scheme cover.
Centre for
Actuarial
Research
Definition of the PMB Package





Söderlund & Peprah (1998)
Minimum package defined in terms of diagnosis-treatment
pairs. ICD-10 codes for diagnosis element and CPT-4
codes for treatment element.
1999 Regulations under the Medical Schemes Act
No codes in Regulation.
Subjective interpretation of PMBs by each scheme.
Centre for
Actuarial
Research
Comprehensive Crosswalk

Included (IN) as a benefit in the PMB package

Excluded (OUT) as a benefit in the PMB package

NC (not classifiable) with respect to the PMB package
Centre for
Actuarial
Research
PMB Study Data







Data from Medscheme Data Warehouse
Data covers 2001 calendar year, extracted in July 2002
Data fully run-off, no adjustment for IBNR
90 options
31 schemes
18.071 million beneficiary months of data
Average exposure of 1,505,917 beneficiaries
Centre for
Actuarial
Research
Data Sets
hospital costs
related costs
Total Costs
Average cost per
admission
hospital costs
related costs
Total Costs
Average cost per
admission
B
Complete data
270,616
R 1,534,270,653
R 614,289,970
R 2,148,560,623
R 7,940
A
Total admissions
311,783
R 1,752,659,876
R 684,503,015
R 2,437,162,891
Chapter
Analysis
Pricing
R 7,817
hospital costs
related costs
Total Costs
Average cost per
admission
C
Incomplete data
41,167
R 218,389,223
R 70,213,045
R 288,602,268
R 7,011
Centre for
Actuarial
Research
Cluster Analysis
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.
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.
Centre for
Actuarial
Research
Beneficiaries in Study
8.8%
High
9.6%
Medium-older
Medium-younger
Low
10.1%
71.6%
Centre for
Actuarial
Research
Contributions and Benefits
2500
2010
Rands pmpm
2000
1787
1593
1500
1121
1188
Contributions
1074
902
1000
732
Benefits
500
0
High
Medium
Older
Medium
Younger
Low
Cluster
Q1 2002 Data
Centre for
Actuarial
Research
Proportion of Beneficiaries Over
Age 55
30%
26.3%
High
18.4%
20%
Medium-older
15%
Medium-younger
9.7%
10%
8.5%
Low
Total
5.0%
5%
Total
Low
Mediumyounger
Mediumolder
0%
High
Proportion
25%
Cluster
Centre for
Actuarial
Research
Proportion of African/Black
Beneficiaries
77.1%
80%
70%
61.0%
High
50%
Medium-older
40%
Medium-younger
30%
15.8%
16.3%
Mediumolder
20%
Low
22.2%
High
Total
10%
Cluster
Total
Low
0%
Mediumyounger
Proportion
60%
Centre for
Actuarial
Research
Applicability to the
Industry
Centre for
Actuarial
Research
Simplified Age Profiles of the
Study and Industry
100%
90%
80%
70%
55 +
60%
20 - 54
50%
0 - 19
40%
30%
20%
10%
SHI+PS
Industry
High and
Medium
Study Total
Low
Mediumyounger
Medium-older
High
0%
Centre for
Actuarial
Research
Detailed Age Profile of the
Industry and Study
13%
12%
8%
7%
6%
5%
4%
3%
Registrar's Returns 2000 Adjusted
OHS99 Unadjusted
75 +
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
2%
1%
0%
0-4
Proportion
11%
10%
9%
CARE PMB Study
Centre for
Actuarial
Research
Ethnicity Summary
100%
90%
80%
W h ite
70%
O th e r
60%
C o lo u re d
50%
Afric a n /B la c k
40%
In d ia n /As ia n
30%
20%
10%
SHI+PS
Indus try
High and
Medium
Total
Low
Medium younger
Medium older
High
0%
Centre for
Actuarial
Research
Weighted Industry Total


Study contains more Low cluster beneficiaries than the
industry.
Re-weighted total to give closer demographic fit to industry
data:
100% High cluster
 100% Medium-older cluster
 100% Medium-younger cluster
 50% Low cluster



Weighted industry total gives exact matching of
beneficiaries over age 55; closer to ethnicity
Low cluster is more relevant to the emerging low-cost
option environment.
Centre for
Actuarial
Research
Cost of PMBs by
Cluster
Centre for
Actuarial
Research
Admission Count by Status
Included
Not Classifiable
38.6%
Out
47.2%
14.2%
Centre for
Actuarial
Research
Claim Value by Status
Included
32.1%
Not Classifiable
Out
55.1%
12.8%
Centre for
Actuarial
Research
Average Cost by Status
R 10,000
R 9,127
R 7,817
R 8,000
R 7,041
R 6,502
R 6,000
R 4,000
R 2,000
R0
Included
Not Classifiable
Out
Total Claim s
Paid
Centre for
Actuarial
Research
Proportion of Status by Cluster
100%
90%
Proportion
80%
70%
Out
60%
Not Classifiable
50%
Included
40%
30%
20%
10%
0%
High
Medium - Medium older
younger
Low
Total
Centre for
Actuarial
Research
Incidence of PMB Admissions
by Cluster
150
141.92
118.84
Incidence per 1000
108.57
97.69
87.90
100
50
0
High
Medium older
Medium younger
Low
Total
Centre for
Actuarial
Research
Average Cost of PMBs by
Cluster
R 14,000
R 11,478
R 11,372
R 12,000
R 9,043
Average Cost
R 10,000
R 9,127
R 8,270
R 8,000
R 6,000
R 4,000
R 2,000
R0
High
Medium older
Medium younger
Low
Total
Centre for
Actuarial
Research
Cost of PMBs by
Disease Chapter
Centre for
Actuarial
Research
0%
Gynaecology
Genitourinary
Endocrine
Skin/Breast
MS/Trauma
HSP
GIT
Cardiac
Mental Illness
Haem-Infect
Obstetrics-Neonate
OUT
INCLUDED
Respiratory
ENT
Eye
CNS
Proportion of Admissions by
Disease Chapter
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Centre for
Actuarial
Research
0%
Gynaecology
Genitourinary
Endocrine
Skin/Breast
MS/Trauma
HSP
GIT
Cardiac
Mental Illness
Haem-Infect
Obstetrics-Neonate
OUT
INCLUDED
Respiratory
ENT
Eye
CNS
Proportion of Claim Value by
Disease Chapter
100%
80%
60%
40%
20%
Centre for
Actuarial
Research
Proportion of Total Cost of
PMBs by Disease Chapter
Mental Illness Other
2.6%
Haem-Infect 3.2%
CNS
9.5%
3.9%
Eye
3.9%
ENT
1.6%
Obstetrics Neonate
17.3%
Respiratory
10.5%
Gynaecology
4.5%
Genitourinary
2.7%
Endocrine
2.2%
Skin/Breast
3.4%
MS/Trauma
6.3%
Cardiac
12.8%
HSP
3.2%
GIT
12.2%
Centre for
Actuarial
Research
Total
Other
Mental Illness
Haem-Infect
Obstetrics - Neonate
Gynaecology
Genitourinary
Endocrine
Skin/Breast
MS/Trauma
HSP
GIT
Cardiac
Respiratory
ENT
Eye
CNS
Average Cost
Average Cost of PMBs by
Disease Chapter
R 20,000
R 18,000
R 16,000
R 14,000
R 12,000
R 10,000
R 8,000
R 6,000
R 4,000
R 2,000
R0
Centre for
Actuarial
Research
R0
High
Gynaecology
Genitourinary
Endocrine
Skin/breast
MS/Trauma
HSP
GIT
Cardiac
Respiratory
Other
Mental illness
Haem-Infect
Obstetrics-Neonate
Low
ENT
EYE
CNS
Average Cost
Average Cost by Chapter
High vs. Low Clusters
R 25,000
R 20,000
R 15,000
R 10,000
R 5,000
Centre for
Actuarial
Research
Differences in Cluster Costs





Not simply different costs charged by providers for the
same diagnoses. Issue is much more complex.
Very different age and demographic profiles.
Age difference would account for significant differences in
diagnoses, e.g. mainly meningitis in Low cluster and
stroke in High cluster in CNS chapter.
Condition perhaps not diagnosed as frequently in Low
cluster due to differences in access to doctors: Low cluster
biased towards GPs , High cluster prefer specialists.
Also benefit design, severity of disease and provider and
patient demand.
Centre for
Actuarial
Research
Top Five Disease Chapters
High vs. Low Cluster
HIGH
Chapter
Cardiac
GIT
CNS
Respiratory
EYE
Chapter
Obstetrics-Neonatal
Respiratory
GIT
Cardiac
CNS
PMB Claims
Paid
R 38,300,784
R 21,487,290
R 21,895,197
R 16,430,848
R 11,939,964
Count of PMB
Admissions
1,665
2,331
1,247
1,571
1,409
LOW
PMB Claims
Paid
Count of PMB
Admissions
R 150,089,803
R 83,372,298
R 82,341,347
R 63,010,421
R 59,661,085
15,351
11,645
11,225
3,952
5,191
Average PMB Proportion of
Cost per
Total
Admission
PMBClaims
R 23,003
R 9,218
R 17,558
R 10,459
R 8,474
22.0%
12.3%
12.6%
9.4%
6.9%
Average PMB Proportion of
Cost per
Total
Admission
PMBClaims
R 9,777
R 7,159
R 7,336
R 15,944
R 11,493
21.1%
11.7%
11.6%
8.9%
8.4%
Centre for
Actuarial
Research
Diagnoses by Disease Chapter



Top 10 diagnoses (ICD-10 codes) in the PMB schedule,
ranked by claim value (i.e. total cost), usually account for
more than 70% of total cost in each chapter.
Surprising since most chapters contain approximately 100
diagnoses (ICD-10 codes).
Probably a reflection of the state of coding in SA, rather
than a true concentration of diagnoses.
Centre for
Actuarial
Research
Pregnancy and Childbirth
ICD-10
CODE
O82
O80
O82.9
O80.9
P22.9
O82.0
O80.0
P22
P07.3
O82.1
ICD10 CODE LABEL
Single delivery by caesarean section
Single spontaneous delivery
Delivery by caesarean section, unspecified
Single spontaneous delivery, unspecified
Respiratory distress of newborn, unspecified
Delivery by elective caesarean section
Spontaneous vertex delivery
Respiratory distress of newborn
Other preterm infants
Delivery by emergency caesarean section
Total claim value of top ten conditions
Remaining 257 disease classifications
Total claim value
Total Costs
R 43,222,469
R 22,698,932
R 22,437,961
R 19,409,924
R 14,744,032
R 13,678,782
R 10,233,464
R 8,460,302
R 8,323,304
R 7,830,086
R 171,039,257
R 34,522,317
R 205,561,574
Proportion of
Count of
Total claim
Admissions
value
21.03%
3,920
11.04%
3,237
10.92%
1,993
9.44%
2,623
7.17%
461
6.65%
1,192
4.98%
1,389
4.12%
289
4.05%
225
3.81%
667
83.21%
15,996
16.79%
4,574
100.00%
20,570
Average
Cost per
Admission
R 11,026
R 7,012
R 11,258
R 7,400
R 31,983
R 11,475
R 7,368
R 29,274
R 36,992
R 11,739
R 10,693
R 7,548
R 9,994
Centre for
Actuarial
Research
Cost of PMBs
by Age
Centre for
Actuarial
Research
Age Profile of Study
15.00%
Total
High
Medium-older
Medium-younger
Low
10.00%
5.00%
75+
70-75
65-70
60-65
55-60
50-55
45-50
40-45
35-40
30-35
25-30
20-25
15-20
10-15
5-10
1-5
0-1
0.00%
Centre for
Actuarial
Research
Age Profile Beneficiaries
Admitted for PMBs
Total
High
Medium-older
Medium-younger
Low
20.00%
15.00%
10.00%
5.00%
75+
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
0.00%
Centre for
Actuarial
Research
Incidence of PMB Admissions
by Age
450
Total
High
Medium-older
Medium-younger
Low
400
350
250
200
150
100
50
75+
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
Incidence
300
Centre for
Actuarial
Research
Average Cost of PMBs by Age
1 8 ,0 0 0
1 6 ,0 0 0
1 4 ,0 0 0
1 0 ,0 0 0
R9 127
8 ,0 0 0
6 ,0 0 0
4 ,0 0 0
Average
Cost for All
Ages
2 ,0 0 0
A ll ages
75+
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
Ave r age Cos t
1 2 ,0 0 0
Centre for
Actuarial
Research
Average Cost of PMBs by Age
Total
High
Medium-older
Medium-younger
Low
R 18,000
R 16,000
R 12,000
R 10,000
R 8,000
R 6,000
R 4,000
R 2,000
75+
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
R0
0-1
Aerage Cost in Rands
R 14,000
Centre for
Actuarial
Research
Raw Price of PMBs
Centre for
Actuarial
Research
Annual PMB Price by Cluster
(pbpa)
R 2,000
R 1629.03
R 1,500
R 310.33
R 1351.49
R 137.02
R 981.79
R 891.56
R 1,000
R 158.61
R 1,318.70
R 104.76
R 67.65
R 1,214.46
R 500
R 726.92
R 823.17
R 659.27
R 786.80
R0
High
SET C PMB
SET B PMB
Medium older
Medium younger
Low
Total
Centre for
Actuarial
Research
Raw PMB Price by Age (pbpa)
R 5 ,0 0 0
R 4 ,5 0 0
R 4 ,0 0 0
R 3 ,5 0 0
Average
Price for All
Ages
R 3 ,0 0 0
R 2 ,5 0 0
R 2 ,0 0 0
R 1 ,5 0 0
R 1 ,0 0 0
R 891.56
pbpa
R 500
75+
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
A ll ages
S ET C PM B
1-4
0-1
R 0
S ET B PM B
Centre for
Actuarial
Research
Raw PMB Price by Age and
Cluster (pbpa)
R 6,000
Total
High
Medium-older
Medium-younger
Low
R 5,000
R 4,000
R 3,000
R 2,000
R 1,000
75+
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
R0
Centre for
Actuarial
Research
Raw PMB Price by
Wider Age Bands (pbpa)
R 3,000
R2710.94
R 2,500
SET C PMB
SET B PMB
R 2,000
R 1,500
R1264.53
R1 017.71
R 891.56
R 1,000
R 500
R 368.69
R0
< 20
20-54
>55
Total Adults
All ages
Centre for
Actuarial
Research
Adjustments to the
Raw Price of the
PMB Package
Centre for
Actuarial
Research
Adjustments to Raw Price








Uncertainty in Definition of the PMB Package
 Recoding the OUT Group
 Recoding the NC Group
Costs of hospital management programme
Costs of hospital and related claims administration
Costs of chemotherapy and dialysis
Costs related to HIV/AIDS
Estimate of the cost of ambulatory care
Costs of ambulatory administration
Reduction for cost of delivery in the public sector
Centre for
Actuarial
Research
Recoding of Out Group







Coding originally done by Söderlund was open to debate
among healthcare professionals.
No clear definitions in Act so ICD-10 codes placed into IN,
OUT or NC on a subjective basis.
Reviewed all 1 614 ICD-10 codes classified as OUT.
New coding moved 19.8% of admissions of OUT group to
IN group.
Claim value was 27.0% of the original OUT category.
Raw price for PMBs for all clusters increases from R 786.80
pbpa to R 910.14 pbpa, an increase of 13.5%.
Recommendation: allow for 27.0% of the OUT category
by value to be included in the final price.
Centre for
Actuarial
Research
Recoding of NC Group



NC group is more complicated to recode, as many
conditions need to be linked to CPT-4 codes.
Recommendation: stress-test final price using various
estimates of proportion of NC that might be included in a
better-defined PMB package.
Recommended estimate is to include 20% of the NC
group by value in the final price.
Centre for
Actuarial
Research
Hospital Management Costs
Total Hospital Management
Cluster
High
Medium-older
Medium-younger
High and Medium
Low
Total
Price per
benficiary per
month
R 5.43
R 4.55
R 4.16
R 4.69
R 3.17
R 3.60
Price per
benficiary per
annum
R 65.18
R 54.65
R 49.98
R 56.24
R 38.05
R 43.22
PMB Hospital Management
Price per
benficiary per
month
R 2.47
R 2.07
R 1.89
R 2.13
R 1.53
R 1.70
Price per
benficiary per
annum
R 29.63
R 24.81
R 22.66
R 25.53
R 18.35
R 20.39
Centre for
Actuarial
Research
Hospital and Related Claims
Administration
Total Hospital and Related Claims
Administration
Cluster
High
Medium-older
Medium-younger
High and Medium
Low
Total
Price per
benficiary per
month
R 6.12
R 5.13
R 4.69
R 5.28
R 3.57
R 4.06
Price per
benficiary per
annum
R 73.46
R 61.59
R 56.33
R 63.39
R 42.88
R 48.71
PMB Hospital and Related
Claims Administration
Price per
benficiary per
month
R 2.78
R 2.33
R 2.13
R 2.40
R 1.72
R 1.92
Price per
benficiary per
annum
R 33.39
R 27.96
R 25.54
R 28.78
R 20.68
R 22.98
Centre for
Actuarial
Research
Chemotherapy and Dialysis




Treatable malignancies and chronic renal failure most
frequently managed in outpatient setting.
Clarity in Regulation November 2002 that these are
included in PMBs.
Figures described as “very preliminary”. Need further
work.
Recommendation: use R12 pbpa for chronic renal failure
and R36 pbpa for chemotherapy.
Centre for
Actuarial
Research
Regulations November 2002

Note: (2A) In respect of treatments denoted as “medical
management”, note (2) above describes the standard of
treatment required, namely “prevailing hospital-based
medical or surgical diagnostic and treatment practice for
the specified condition”. Note (2) does not restrict the
setting in which the relevant care should be provided, and
should not be construed as preventing the delivery of any
prescribed minimum benefit on an outpatient basis or in a
setting other than a hospital, where this is clinically most
appropriate.
Centre for
Actuarial
Research
Costs related to HIV/AIDS





Only 9 admissions coded 168S (Diagnosis: # HIVAssociated Disease).
Confidential data from Aid-for-AIDS programme will not be
obvious.
Costs of related conditions and complications are
identified in categories such as pneumonia, encephalitis,
TB etc. Available for further analysis.
Study almost certainly incorporates the cost and pricing of
hospitalisation of symptomatic AIDS, as at 2001.
Recommendation: Allow for impact of increased
hospitalisation for HIV/AIDS in later stages of epidemic.
Obtain advice from Actuarial Society of South Africa’s
AIDS Subcommittee.
Centre for
Actuarial
Research
Estimate of Additional Cost of
Ambulatory Care
Condition
Non-hospital, Non-drug Requirements
Estimate of
Additional Costs
Pregnancy
Antenatal visits and care including office- and
laboratory-based investigations such as VDRL
and ultrasound
R 2,500 per patient
per episode
Asthma
Costs of GP, Specialist, Casualty Dept visits,
nebulisers, asthma pumps, lung function tests
R 1,900 per patient
per year
Diabetes
Costs of GP, Specialist, Dietician and other
provider visits, glucometers, test strips,
laboratory investigations such as HbA1c
R 2,100 per patient
per year
Hyperlipidaemia
Costs of GP and Specialist visits plus blood tests
and related clinical tests such as ECGs
R 1,200 per patient
per year
Epilepsy
Costs of GP and Specialist visits, EEGs and drug R 1,100 per patient
levels
per year
Centre for
Actuarial
Research
Ratio of Ambulatory to
Inpatient Expenditure
Söderlund (1998) used 36.5%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
Source: Van den Heever using OECD database
United States
Turkey
Switzerland
Spain
Norway
New Zealand
Netherlands
Luxembourg
Korea
Japan
Italy
Iceland
Germany
France
Finland
Denmark
Czech Republic
Canada
Belgium
Austria
Australia
0.00%
Centre for
Actuarial
Research
Estimate of Ambulatory Care



Amount paid to hospital groups, less admissions, was
R314 million. Includes out-patient visits, on-going tests
performed in a hospital setting, dispensing from the
hospital pharmacy, emergency room visits for conditions
such as asthma and diabetes, and costs for certain
dialysis centres.
Chemotherapy and dialysis separately estimated. Caution
overlap with CDL package.
Recommendation: use 15% as estimate for ratio of other
ambulatory expenditure to in-patient expenditure for the
PMB package, excluding the CDL package.
Centre for
Actuarial
Research
Ambulatory Administration

Scanty information. Level of pre-authorisation and
management will be much lower and will apply only to
certain tests. Administration of claims will require much
less intensive activity.

Recommendation: If the other ambulatory expenditure
estimate is held at the recommended level of 15%, then
use 10% of the non-health care costs of the in-patient
PMB package, as the estimate for the costs of ambulatory
administration.
Centre for
Actuarial
Research
Delivery of PMBs in
the Public Sector
Centre for
Actuarial
Research
Public Sector vs. Private Sector Costs:
PAWC Study of Selected Conditions
PAWC
Procedure / Diagnosis
UPFS Total
(2002 tariffs)
Comparisons
PMB Study
Low - LOS
BHF Total
comparative with
(2002 tariffs)
BHF
UPFS (2002)
Relative to BHF
(2002)
PMB Study (2001)
Relative to BHF
(2002)
Appendectomy
R 3,115
R 5,421
R 3,836
57.5%
70.8%
Unstable angina; coronary angiogram; PTCA
R 9,284
R 76,866
R 24,735
12.1%
32.2%
Cataract and IOL
R 1,605
R 32,609
4.9%
R 31,439
R 111,296
28.2%
Confinement - C/section
R 6,494
R 10,015
Confinement - NVD
R 5,571
R 6,211
Congestive Cardiac Failure
R 2,720
R 4,657
Gastroscopy - epigastric pain
R 1,178
R 798
Pneumonia
R 2,583
R 3,366
Colonoscopy - Lower GI bleed
R 1,178
R 571
Tonsillectomy
R 2,584
R 1,962
R 3,301
131.7%
168.3%
Myocardial Infarction
R 7,962
R 47,137
R 6,986
16.9%
14.8%
Hysterectomy -mennorhagia
R 7,950
R 17,067
46.6%
R 12,723
R 16,938
75.1%
CABG x3, harvesting saphenous veins
Laparotomy - large bowel obstruction (partial
colectomy)
R 11,436
64.8%
114.2%
89.7%
R 8,036
58.4%
172.6%
147.6%
R 3,854
76.7%
114.5%
206.3%
Centre for
Actuarial
Research
Public vs. Private sector Costs
for Appendicectomy
Setting and Population
Claims Paid
Count of
Admissions
Public sector District Hospital
(estimate)
Public sector Academic
Hospital (estimate)
Average Cost
per
Admission
R 3,820
R 4,752
Private sector High Cluster
(Actual cost all admissions)
R 2,363,000
292
R 8,092
Private sector Low Cluster
(Actual cost all admissions)
R 12,498,159
1,639
R 7,625
Private sector High Cluster
(Actual cost for 4 days or less)
R 1,790,051
258
R 6,938
Private sector Low Cluster
(Actual cost for 4 days or less)
R 9,187,697
1,413
R 6,502
34.08% higher than
public sector
Centre for
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Length of Stay for
Appendicectomy for Low Cluster
900
800
763
650
Count of Admissions
700
600
500
Complications
400
300
161
200
47
100
8
9
1
6
8
10
Length of Stay in Days
12
0
2
4
86.2% hospitalised for 4 days or less.
Maximum stay was 43.5 days.
12+
Centre for
Actuarial
Research
PMB Cost in the Public Sector




Studies available use theoretical cases.
Attempts to compare actual costs of public and private
sector admissions uncovered unexpected finding that not
all provinces were billing using UPFS system in 2001.
Need to definitively determine the relationship between
UPFS costs in the public sector and costs in the private
sector. DoH study now underway.
Recommendation: use 70% of PMB price for delivery of
PMB Inpatient package and PMB Outpatient package in
public sector. Adjust in negotiations with provincial
authorities.
Centre for
Actuarial
Research
Full Price of
Existing PMB
Package
Centre for
Actuarial
Research
Full Price of PMB Package

Four components :
 In-patient PMB package price based on full data in
study (high degree of certainty)
 Portion of price for which uncertainty exists in PMB
definition (proportion to include of NC and OUT)
 Margin added for ambulatory 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 of PMBs (excl CDL)
R 2,500.00
Non-healthcare costs
Ambulatory package
Uncertainty in PMB definition
In-patient PMB package
R2 432.41
R2 010.90
R1 956.01
Per Beneficiary Per Annum
R 2,000.00
R1 479.04
R1 489.49
R 1,500.00
R1 343.43
R1 100.08
R 1,000.00
R 500.00
R 0.00
High
Medium- Medium- High and
older
Younger Medium
Low
Total
Study
Weighted
Total
Centre for
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Research
Full Price PMB Package
(excluding CDL)
Price per beneficiary per
annum (in 2001 Rand
terms)
Total Inpatient package
Total Outpatient package
High
Mediumolder
MediumYounger
High and
Medium
R 2,076.97 R 1,709.86 R 1,256.20 R 1,662.21
R 355.44
R 301.04
R 233.29
R 293.79
Low
Total
Study
Weighted
Total
R 917.01 R 1,128.88 R 1,246.95
R 183.07
R 214.55
R 232.10
PMB package (excl. CDL)
Private Sector
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
PMB package (excl. CDL)
Public Sector
R 1,716.72 R 1,419.39 R 1,053.40 R 1,381.31
R 778.53
R 949.91 R 1,045.41
Centre for
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Non-healthcare Expenditure
Non-healthcare
Expenditure as a
Proportion of …
High
Mediumolder
MediumYounger
High and
Medium
Low
Total
Study
Weighted
Total
Total Inpatient package
3.9%
4.0%
5.0%
4.3%
5.4%
4.9%
4.7%
Total Outpatient package
2.3%
2.3%
2.7%
2.4%
2.7%
2.6%
2.5%
Total PMB package
(excluding CDL)
3.7%
3.8%
4.6%
4.0%
5.0%
4.6%
4.4%
Well below Registrar’s benchmark of
10% of total expenditure
Centre for
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PMB Package Relative to
Industry Hospital Expenditure
Per Beneficiary per Annum
R 2,500
PMB package (excluding CDL)
Schemes in PMB Study
Open non-study schemes
Restricted non-study schemes
2,034
R 2,000
1,762
1,449
R 1,500
1,741
1,414
1,296
1,181
R 1,000
854
R 500
R0
Hospital only
Hospital plus related
Centre for
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Research
PMB Package Relative to
Benefits and Contributions
R 6,000
Per Beneficiary per Annum
R 5,000
5,760
PMB package (excluding CDL)
Schemes in PMB Study
Open non-study schemes
Restricted non-study schemes
4,668
4,772
4,285
5,613
5,013
R 4,000
R 3,000
R 2,000
1,479
1,414
R 1,000
R0
Total Benefits
Contributions
Centre for
Actuarial
Research
Conclusions
Centre for
Actuarial
Research
Preliminary Conclusions on
Affordability


The PMB package (excluding CDL) appears to be
affordable compared to hospital benefits and the proxy for
hospital and related benefits.
The package also appears to be well covered when
compared to the level of total benefits and contributions at
an industry level.
Centre for
Actuarial
Research
Improvements to PMB Definition




All stakeholders need an unambiguous definition of the
PMB package.
The Council for Medical Schemes is requested to
reconsider the definition of PMBs in the Regulations and
to include clear diagnosis and procedure codes in an
amendment as soon as possible.
Tighter definition of PMBs would ensure more focussed
attention on accurate coding from providers and
administrators.
Attention should be given to the nature of the chapters and
to bringing them in line with clinical practice or a particular
coding standard.
Centre for
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Public Sector vs. Private Sector
Approaches to Treatment



As yet, no coherent approach to defining the basic
essential minimum services between the public and
private sectors.
Far more agreement and convergence are required in
terms of public vs. private sector approaches to common
conditions. Admission to hospital is the norm in the private
sector but not in the public sector where some events are
regarded as being non-acute in terms of PMBs.
Agreement is needed on the roles of new generation
prostheses, devices, immune modulators, gene therapy,
procedures and drugs.
Centre for
Actuarial
Research
Comprehensive Crosswalk



Provides a powerful tool for rapid application of PMB
status to hospital admissions based on ICD-10 coding
Strongly recommend that this should be made freely
available to other medical schemes and administrators, in
order to improve their understanding and management of
PMBs.
Recommend utilising this tool, or one developed from this
work, to define and manage the PMB package in future.
Centre for
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Research
Further Research



It is now possible (within a few minutes), to extract data for
a specific ICD-coded diagnosis with its accompanying
costs, related length of stay, age data and cluster data.
These can also be expanded to include ethnicity, scheme
options and provider information. This information can be
grouped into clusters, age bands, and disease patterns
depending on the requirements of the user.
This opens the possibility of doing much valuable and
detailed analysis of specific problem areas in the PMB
definitions in order to refine the PMB package.
Several projects planned for 2003 at UCT using this data.
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