Council for Medical Schemes:
An overview
Prof Yosuf Veriava
Chairperson: Council for Medical Schemes
Contents
1. Developments of CMS
2. Role of CMS
3. Industry overview
Membership trends
Benefits paid
4. Competition Commission “Market Inquiry “
5. Complaints
6. Board of Trustees
7. CMS training
8. CMS indabas and forums
9. Future projects
10. RWOPS
11. Managed care programmes
12. Conclusion
Developments of CMS
Promulgation of the National Health Act
• Regulations amended; require minimum solvency level of
25%
• Prescribed Minimum Benefits expanded; include 25 chronic
conditions
Ruling by Competition Commission prohibits any form of tariff
setting between schemes and groups of health care providers
• Single Exit Price (SEP) introduced in an attempt to curb
medicine costs
The Government Employees Medical Scheme (GEMS) comes
into existence.
Developments of CMS
CMS publishes National Health Reference Price List (NHRPL)
• Deductibles and self-payment gaps introduced by industry
• REF pilot project and shadow return process initiated
High Court ruling renders NHRPL invalid
• High Court dismisses Board of Healthcare Funders (BHF) application
re PMB’s at scheme rate
• Code of conduct published surrounding PMB issues
Consumer Protection Act (CPA) is promulgated
• Green Paper on National Health Insurance (NHI) published and pilot
period of 14 years starts
Private healthcare pricing investigated by Competition Commission
• Medical deductions converted into medical tax credits
• Publication of draft regulations on the demarcation between Health
Insurance Policies and Medical Schemes
Roles of CMS
• Key Roles:
• Adherence of schemes to the Medical
Schemes Act (MSA)
• Improved management and governance of
schemes
• Advises the Minister of Health on regulatory
interventions
Membership trends
• Reduction of medical schemes is noted in both
sectors
• On average the industry is losing 5 schemes per
year
• This translate to a reduction of up to 32 schemes in
2025
30%
Membership by province –
Inequity
25%
South Africa: 17.6%
20%
15%
10%
5%
0%
Provinces
Gauteng
Western
Cape
Free
State
KwaZulu
Natal
North
West
26.5%
24.4%
16.8%
15.7%
14.7%
Mpmuma Northern
langa
Cape
14.6%
13.6%
Eastern
Cape
Limpopo
12.1%
8.6%
Benefits paid
Benefits paid for health services by, (%)
Medical scheme
Member**
Private Hospitals
36.3
5.5
Medical specialists
22.9
35.5
Medicines
Support and allied
professionals
16.3
30.4
7.9
10.1
General practitioners
7.3
6.8
Other
9.3
11.7
**Data to be interpreted with caution due to underreporting by schemes and members
… the healthcare market does not meet
the requirements for normal competition…
•
•
•
•
•
No barriers to enter or exit the market
Perfect information
Zero transaction costs
Homogenous products
Others:
• Non-increasing returns to scale; infinite buyers
and sellers; perfect factor mobility; profit
maximisation
…imperfect information in healthcare renders the
normal considerations in achieving a balance
ineffective…
• Consumer sovereignty is
challenged
• Ascertaining costs and benefits
of treatment is not simple
• Third party payer
The private hospital market in metropolitan areas
(50%+ of medical scheme population) was concentrated
by 1999…
Only 12.3% of private hospital beds were outside three main hospital groups by 2006…
Non-price competition results in a very high level of
high-tech equipment in private hospitals
United States
Iceland
Italy
Greece
Austria
Korea
Finland
SA Private sector
Luxembourg
Portugal
New Zealand
Ireland
Netherlands
Canada
Slovak Republic
United Kingdom
France
Turkey
Estonia
Australia
Czech Republic
Slovenia
Hungary
Poland
Israel
Mexico
0
5
10
15
20
Number of MRI scanners per million population
25
30
Terms of reference “Market inquiry”
• To explore in-depth factors causing escalation of
costs.
• To unpack contractual relationships and interactions
between and within the segments of the market
• To inquire into the nature of price determination
“Market inquiry” on healthcare costs in
the private sector
• Inquiry launch:
end September 2013; aim completion June 2015.
• Probe various segments of private healthcare
market
• This is “…a general investigation into the state,
nature and form of competition in a market,
rather than a narrow investigation of specific
conduct by any particular firm”.
Complaints
% of all complaints
70
62.364.4
60
50
40
30
20
10
0
8.8
0.9 0
1.0 1.2
2.5 2.4
3.0 3.4
2011
2012
12.9
9.0 8
12.4
7.6
Complaints categories
• Technical/clinical complaints: highest of all
categories
• Payment of PMB’s at scheme tariff: highest
number of complaints
• Doctors frequently charge higher rates when
providing PMB
Board of Trustees (BOT):
Governance issues
800
20
703
16
600
11
400
15
12
422
9
10
380
297
6
200
5
116
0
0
Scheme A
Scheme B
No. of trustees
Scheme C
Scheme D
Scheme E
Average Trustee Fee/ Trustee ( R'000)
No. of Trustees
Thousands
Average Fee/ Trustee
• Distribution of different types of trustees: Governance
structure consists of 50% members vs. 50% employer
groups
Major role of Trustees
•
•
•
•
•
•
•
•
•
•
•
Keep records of operations
Control systems
Communication
Payment of premiums
Professional Indemnity and Fidelity Guarantee cover
Expert Advice
Compliance with laws and rules
Confidentiality
Protect the interests of the members
Act with care, diligence, skill and good faith
Act impartially
Board of Trustees: compliance
• Voluntary compliance not yet attained.
• Schemes place too much reliance on
advice from consultants and services
providers.
• Attendance rate of BOT training
problematic.
CMS Training
•
•
•
•
•
Induction: Board of Trustees
In-depth: Board of Trustees
Broker training
Employer groups
Various consumer groups
CMS Indabas
• Indaba means "business" or "matter"
• Medical schemes industry challenges
• Various opinions and interpretations of the
Medical Schemes Act
• Engage with stakeholders
• Find common ground on pertinent issues
• Optimal benefit for medical scheme
members.
CMS Forums
• Exchange information
• 3 CMS stakeholder forums
- Trustees and Principal Officers
- Medical scheme administrators
- Regulatory bodies
CMS Indabas and Forums
• Next Indaba: Johannesburg
23 October 2013
• Next forums:
Cape Town & Johannesburg
end September
• Regulators Forum:
September
Future projects
• Remunerative Work Outside the
Public Sector (RWOPS)
• National Health Insurance (NHI)
• Health quality outcomes
RWOPS
PCNS: Data Inputs, Information Processing & Reports
Managed care
• As the medical schemes population
continues to grow older, the incidence of
chronic disease will likely increase
• The rising cost of private healthcare
necessitate a consideration of the “value”
of managed care programmes
Managed care
• Effective way of controlling health
care costs is to:
– Manage the scope of benefits provided
– The associated costs
– Appropriateness of utilisation
Managed care
• Within this regulatory obligation, CMS is
currently finalising the health quality
outcomes framework, which will include:
– A trend analysis of health quality outcomes
– Quantitative and qualitative data analysis of
the value of managed care programmes
Conclusion
• Industry encouraged to work together with CMS in making
private healthcare affordable and sustainable.
•
Membership growth is a critical area of concern.
• Member education about their rights and responsibilities is
important.
•
Complying with provisions of Medical Schemes Act is crucial.