Regulatory Protection for Medical
Scheme Beneficiaries
FPI
3 August 2010
Durban
By
Esmé Prins-van den Berg
Director
Benguela Health (Pty) Ltd
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© Benguela Health (Pty) Ltd 2010
Agenda
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Medical scheme trends
PMBs
ICD10 coding
Waiting periods
Tariffs
Medicine pricing
Generic substitution
Dispensing fees
Issues to consider when advising clients
© Benguela Health (Pty) Ltd 2010
Medical Scheme Trends
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Medical Scheme Coverage 2008
• Principal members: 3 388 582 (2009: 3 490 493)
• Beneficiaries: 7 874 826 (2009: 8 072 180)
• Population Coverage
– 2008: 48.7m…16% medical scheme coverage
– Best estimate 2009: 49.32m…16.4% medical scheme coverage
2008
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OPEN SCHEMES
RESTRICTED SCHEMES
TOTAL
Principal members
2 136 960
1 251 622
3 388 582
Dependants
2 751 946
1 734 298
4 486 244
Beneficiaries
4 888 906
2 985 920
7 874 826
© Benguela Health (Pty) Ltd 2010
Trends: Medical Schemes
• Consolidation trend…
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2008: 119 schemes
Jan 2009:110 schemes
Dec 2009: 112 schemes
Will be further reduced due to amalgamations and liquidations….
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Bestmed & Telemed; Momentum Health & Ingwe; Oxygen & Medshield;
GEMS & Medcor; Liberty Health & Medicover; Discovery Health & Umed…
– Administrator consolidation: Medscheme & Old Mutual; Eternity Health
& Sanlam; Momentum Health & Metropolitan
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Benefit Pay-out: 1999-2008
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Increases in expenditure:
•FFS (over-servicing)
•Imbalance between schemes and providers (e.g. hospital groups)
Non-Health Care Expenditure: 1999-2008 (2008: R9.7b)
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•Increase: 8.1%
•Under CPIX
Medical Schemes: Financial Health
• Gross contribution income
– 2008: R74b (R800.80 pabpm)
– 2009: R84.9b (R889.10 pabpm)
• Operating Results
2008
Deficit before
investment & other
income
R929.4m
Surplus after investment R2.4b
& other income
• Average solvency
– 2008: 36.6%
– 2009: 32.6%
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© Benguela Health (Pty) Ltd 2010
2009
R2.8b
R655.4m
Prescribed Minimum Benefits (PMBs)
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PMBs
• Annexure A: www.medicalschemes.com
• 2000
– Diagnosis and Treatment Pairs – DTPs
– 270 conditions
• 2003
– Emergencies
– Statutory definition
• 2004
– Chronic Disease List – CDL
– 26 conditions
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© Benguela Health (Pty) Ltd 2010
PMBs
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270 Diagnosis and Treatment Pairs (DTPs)
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Code 155E
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Code 903D
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Diagnosis: Myocarditis; cardiomyopathy; transposition of great vessels;
hypoplastic left heart syndrome
Treatment: Medical and surgical management; cardiac transplant
Diagnosis: Bacterial, viral, fungal pneumonia
Treatment: Medical management, ventilation
© Benguela Health (Pty) Ltd 2010
PMBs
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Code 168S
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Diagnosis: HIV Infection
Treatment:
– HIV Voluntary counseling and testing
– Co-trimoxazole as preventive therapy
– Screening and preventive therapy for TB
– Diagnosis and treatment of sexually transmitted infections
– Pain management in palliative care
– Treatment of opportunistic infections
– Prevention of mother to child transmission of HIV
– Post-exposure prophylaxis following occupational exposure or sexual assault
– Medical management and medication, including the provision of anti-retroviral
therapy, and ongoing monitoring for medicine effectiveness and safety, to the
extent provided for in the national guidelines applicable in the public sector
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Medical and Surgical Management
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Medical management or surgical management, describes
standard of treatment required, namely prevailing hospitalbased medical or surgical diagnostic and treatment practice for
specified condition
Significant differences between public and private sector
practices → follow public sector practice (national/provincial
protocols) →No public sector protocol → Consultation with
provincial authorities to ascertain practice
It does not restrict setting to a hospital where relevant care
should be provided
It does not prevent delivery of any PMB on outpatient basis or in
another setting
Treatment and care to be rendered where it is clinically most
appropriate
© Benguela Health (Pty) Ltd 2010
PMBs
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Emergencies
– Sudden and at the time an unexpected onset of a health condition
– Requiring immediate medical or surgical treatment,
– Failure of which
• Will result in serious impairment to bodily functions or
• Will result in serious dysfunction of bodily organ or part or
• Would place the person’s life in serious jeopardy
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Conditions on Chronic Disease List (CDL)
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Statutory algorithms/treatment paths
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Chronic Disease List (CDL)
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Addison’s disease
Asthma
Bipolar Mood Disorder
Bronchiectasis
Cardiac Failure
Cardiomyopathy Disease
Chronic Renal Disease
Coronary Artery Disease
Crohn’s Disease
Diabetes Insipidus
Diabetes Mellitus Type 1 & 2
Chronic Obstructive Pulmonary
Disorder
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Dysrhythmias
Epilepsy
Glaucoma
Haemophilia
Hyperlipidaemia
Hypertension
Hypothyroidism
Multiple Sclerosis
Parkinson’s Disease
Rheumatoid Arthritis
Systemic Lupus Erythromatosis
Schizophrenia
Ulcerative colitis
© Benguela Health (Pty) Ltd 2010
PMBs
• 2004:
– DSPs (Designated Service Providers)…preferred providers /
preferred provider networks
• Funding
– Full and unlimited funding of diagnosis, treatment and care costs
– Diagnosis-based (ICD10 codes)
• What are ICD10 codes?
– International Statistical Classification of Diseases and Related Health
Problems (ICD10)
– Consists of +/- 12 000 diagnostic codes
– Listed alpha-numerically
– Used to index health care data
– Confidentiality
• Why are they important?
– Correct benefit pool
– Full funding
– Different rules for PMBs, co-pays, etc.
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PMBs
– Co-pays for
• Voluntary use of non-DSPs
• Clinically appropriate and effective drug on formulary – beneficiary
chooses alternative drug knowingly
• Medicines: Reference price lists
– Full and unlimited funding for involuntary use of non-DSPs
– Involuntary use
• Emergencies
• No DSP within reasonable proximity of work or residence of beneficiary
• Service unavailable or unreasonable delays
– Benefit limits?
– Biological drugs / Biosimilars?
– PET CT scans?
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© Benguela Health (Pty) Ltd 2010
PMBs
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Interpretation of “full costs”
– CMS: Appeal Committee Decisions
– Industry: Opposing Legal Opinions
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Many schemes and administrators pay benefits in accordance with
scheme rules
CMS: Must enforce compliance with own legislation
Industry Task Team
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CMS/DoH
Funders
Providers
Consumers
Code of Conduct: 30 July 2010
Change in legislation?
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Managed Care
• PMBs may be subject to managed care interventions
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Protocols
Disease management programmes
Formularies
Networks
Pre-authorisation
• Not for emergencies
• Therefore
– Access to benefits may be subject to compliance with such
interventions
– E.g. registration on medicine benefit programme could be conditional
prior to being able to access benefit
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Formularies & Protocols
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Regulations 15H (Protocols) & I (Formularies)
Evidence-based medicine, cost-effectiveness and affordability
– Evidence-based medicine =
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Conscientious, explicit and judicious use of current best evidence in
making decisions about care of beneficiaries whereby individual clinical
experience is integrated with best available external clinical evidence
from systematic research
Provide to providers, beneficiaries, public on request
Appropriate substitution where ineffective or (would) cause
adverse reaction without penalty to beneficiary
– Motivations by doctors
– Cannot for example impose higher co-payment
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Waiting Periods S 29A, Regulation 12
• Condition-specific
– Max period: 12 months no benefits in respect of condition
– Condition for which medical advice, diagnosis, care or treatment
recommended/received in 12 months prior to application for
membership of medical scheme
– Medical report may be required by scheme … must pay costs of
any medical tests or examinations required by scheme for
purposes of compilation of report
• General
– Max period: 3 months no benefits
• Change benefit options: Only unexpired periods of waiting
periods, no new periods
• Child dependant born during period of membership: No waiting
periods
© Benguela Health (Pty) Ltd 2010
Waiting Periods
• Category 1
– First time joiners
– Applies for membership > 90 days after previous membership
– Waiting periods
• General and
• Condition-specific
• Apply to PMBs
© Benguela Health (Pty) Ltd 2010
Waiting Periods
• Category 2
– = 24 months continuous medical scheme benefits
• Previously beneficiary of medical scheme for continuous period of 24
months
• Termination < 90 days prior to application
– Waiting periods
• Condition-specific
– Not to PMBs
• Unexpired portion of general or condition-specific imposed by previous
scheme
© Benguela Health (Pty) Ltd 2010
Waiting Periods
• Category 3
– > 24 months continuous medical scheme benefits
• Previously beneficiary of medical scheme for continuous period of > 24
months
• Terminated < 90 days prior to application
– Waiting periods
• General
– Not to PMBs
• Unexpired portion of general or condition-specific ?
© Benguela Health (Pty) Ltd 2010
Waiting Periods
• Category 4
– Changes for reasons of employment
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Previously beneficiary of medical scheme
Terminated < 90 days prior to application
Because of change in employment or
Employer changes/terminates medical scheme cover of employees:
Change at beginning of financial year or reasonable notice given for
transfer at beginning of financial year
– Waiting periods
• No waiting periods
• Only unexpired portions or previously imposed waiting periods
– General
– Condition-specific
© Benguela Health (Pty) Ltd 2010
WAITING PERIODS
Category
3 Month
General
12 Month
Condition-Specific
Applicable
to PMBs
New applicants/persons
not members for preceding
90 days
Yes
Yes
Yes
Applicants who were
members for 2 years
No
Yes
No
Applicants who were
members for more than 2
years
Yes
No
No
Change of benefits
No
No
N/A
Child dependant born
during period of
membership
No
No
N/A
Involuntary transfer change in employment or
employer change
scheme
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No
No
N/A
Source: CMS
© Benguela Health (Pty) Ltd 2010
Beneficiaries’ Rights
• Entitled to full and unlimited funding for PMBs….exceptions
(DSPs)….schemes apply differently….often providers charge more
for PMBs
• Payment may not occur from savings accounts
• No benefit limits
• Must submit accurate ICD codes
• Access to protocols and formularies
• Challenge evidence basis of formulary and/or protocols
• Ineffective/adverse reactions - protocols and formularies - need
support of treating practitioner to enforce change at scheme level
© Benguela Health (Pty) Ltd 2010
Disputes
Medical/
Clinical
Advisor
Ex Gratia
Courts
Medical/
Clinical
Governance
Committee
Disputes
Committee /
CMS
Principal
Officer
Board of
Trustees
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In the Pipeline: Review of PMB Package (2008)
In-Hospital
Care
DTPs
CDL
DTPs/CDL
Out-ofHospital Care
Primary and
Preventative Care
Basic
Dentistry
Basic
Optometry
Negative List
(Exclusions)
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Medicine
Lists
Potentially Above
Threshold Out-ofHospital Benefits
Revised
PMB Package
Tariffs
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Procedural Coding and Tariffs
• RAMS: Statutory tariff (Contracted in vs Contracted out) (Until 1993)
↓
• BHF (scale of benefits) & SAMA (Private Tariffs)
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• Competition Commission: 2004…anti-competitive
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• CMS (NHRPL) → DoH (RPL) (2007)
– National Health Act (Regulations)
• RPLs
• Benchmark tariffs
– Doctors can determine own tariffs
– Schemes have specified reimbursement rates
• Court Case February 2010
– RPL and Regulations declared null and void retroactively until 2007
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© Benguela Health (Pty) Ltd 2010
Procedural Coding and Tariffs
• HPCSA (Ethical Price List)
– Scrapped
– RPL should be benchmark
– Only charges above RPL with informed consent
• Central negotiations again in future?
– Draft legislation
– Independent Commission
• Where does this leave the beneficiary?
• Over-charging?
– HPCSA
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Medicines
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Medicine Pricing
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Medicine pricing
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Single Exit Price (2004)
Formula
Annual increases authorised by DG of Health
International Benchmarking
© Benguela Health (Pty) Ltd 2010
Generic Substitution
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Obligation on pharmacists (and dispensing doctors)…Medicines Act
No substitution if
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Forbidden by patient
Prescriber wrote in own hand next to item ‘no substitution’
Retail price of generic is higher
MCC declares product not substitutable
MCC Guidelines (April 2010)
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Only biosomilars non-substitutable
Previously also
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With narrow therapeutic range
Shown erratic intra and inter patient responses
Dosage forms can result in clinically significant bio-availability problems
Intended for the critically ill, geriatric and paediatric patients
Reasonable steps to inform of substitution
Generally no/lesser co-payment
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Licensed Dispensers: Dispensing Fees
Dispensing Fees
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SINGLE EXIT PRICE
(PROPOSED NEW FEES)
DISPENSING FEE
(MAX; EXCL VAT)
< R65 (≤ R75)
30% of SEP (30% of SEP)
≥ R65 (> R75)
R20 (R22.50)
© Benguela Health (Pty) Ltd 2010
Pharmacists: Proposed Fees
Dispensing Fees
SINGLE EXIT PRICE
DISPENSING FEE
(MAX; EXCL VAT)
< R75
R6 + 46% of SEP
≥ R75 < R200
R15 + 33% of SEP
≥ R200 < R700
R51 + 15% of SEP
≥ R700
R121 + 5% of SEP
• Retail pharmacists to annually disclose certain information to
Director-General of Health
• Display dispensing fee structure in pharmacy
• Provide detailed invoices
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© Benguela Health (Pty) Ltd 2010
Issues to be Considered
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Advice to Clients
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Complex environment
Expensive
Financially healthy medical scheme…will scheme be around in the
future?
Good governance
Benefits
– Benefits when in need
– Costly treatments covered
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Hospitalisation
Cancer
Good administration
Compliant with legislation
Business ethic
Impact of NHI
Affordability
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Conclusion
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Questions?
Thank You
esme@benguelahealth.com
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