BHF

Primary benefits under review - 17 April 2008

Lynne Carlisle: Business Day,

WIDESPREAD changes to SA's present range of prescribed medical benefits (PMBs), formally under review, have been proposed to the government by the medical schemes sector to make private healthcare affordable to more South Africans and extend cover to members.

Heidi Kruger, head of corporate communications at the Board of Healthcare Funders (BHF), says the concept of a standard, basic set of health services provided by every medical scheme for the protection of its members is laudable.

However, she says the current set of PMBs set out in the Medical Schemes Act of 1998, which consist of 271 referred-based conditions and 25 chronic conditions, have had many unintended consequences, including:

Most private hospitals to lower tariff hikes - 26 January 2008

SAPA

MOST private hospital groups will maintain their tariff increases at the consumer inflation rate, according to Health Minister Dr Manto Tshabalala-Msimang. Speaking after a meeting with the Board of Healthcare Funders last week, Tshabalala-Msimang said the department had met several private hospital groups in the past week. They had agreed to review their tariff increases. The Minister said that some agreements had been made, but the exercise would continue as there were still more groups to meet. She said two private hospital groups had already lowered their tariffs, but would not be drawn into naming them. The breakthrough in the past week followed a meeting Tshabalala-Msimang had with the chief executives of private hospital groups on January 11. After that meeting they undertook to reconsider their tariff increases. At the BHF meeting, principal officers of various medical schemes expressed concern that most schemes had increased their contribution above inflation. The increases range between 9 percent and 15 percent. Tshabalala-Msimang said that the medical schemes had also committed to an in-principle decision to review their tariff increases and align them with the consumer price index (CPIX) for those schemes whose 2008 increases were higher. Another meeting would be held soon for the schemes to give a progress report on these reviews.

New medical aid battle looms - 19 April 2007

Shoks Mzolo: The Financial Mail

PATRICK Masobe remembers the scepticism that greeted the Medical Schemes Act nine years ago. The act was intended to bring meaningful regulation to the R55bn industry for the first time, but the schemes felt it was too ambitious and impractical.

Since then, however, medical schemes registrar Masobe has impressed many with the ability of his Council for Medical Schemes (CMS) to regulate this difficult sector. But some industry players still accuse the CMS of being heavy-handed and counterproductive.

Fedhealth principal officer Jeremy Yatt says the CMS is ideology-driven, with a "knee-jerk and reactionary approach". It keeps presenting unworkable solutions and "convoluted answers". Instead of dealing with problematic schemes, the CMS legislates to everyone's disadvantage, Yatt argues. The state and the regulator are not paying attention to such concerns.

The Health Department has now opened debate for the Medical Schemes Amendment Bill, which is likely to be passed into law later this year. It sets the stage for a new round in the struggle between the state and private industry for ascendancy over medical insurance.

The draft legislation will deal with such issues as mismanagement of members' funds, "perverse management" of schemes, muzzling of principal officers (equivalent to scheme CEs), irregular election of trustees (some with shares or board seats in service providers such as hospital groups) and the way in which a Risk Equalisation Fund (REF) can be established.

Unfortunately, the bill ignores two important issues: affordability (how many people can afford cover) and escalating non-healthcare costs.

The REF would distribute funds according to each scheme's risk profile. This aims to curb discrimination against pensioners and sickly people.

Notwithstanding a lack of details on certain technical aspects of the REF and the fact that its establishment means a rise in non-healthcare costs, schemes support it "in principle", claims
Masobe.

Administration firm Medscheme favours the formation of a public register of scheme officials, such as applies to members of parliament. This, it says, would bolster checks and balances and reduce cases of conflict of interest. It wants the powers vested in schemes' chairmen curtailed because, it says, these powers impede governance.

Humphrey Zokufa, previously with the Health Department and now CE of the Board of Healthcare Funders (BHF), an umbrella body, says trustees and principal officers should declare interests, and should be prohibited from holding positions with conflicting interests. (Overlap of officials and service providers invariably leads to inflated costs, Zokufa argues.)

In line with this and in a bid to stem corruption, the bill aims to protect whistle-blowers. This is a progressive shift from the current legislation, where some CEs and staff may turn a blind eye to bad practice for fear of reprisals or job losses, says Masobe.

"With this bill we want to devise a mechanism to protect these people," he adds. "We can't jeopardise the good guys. If trustees want to terminate the services of a CE before the end of the contract, for instance, we want to know about it and if we feel that he or she is incorrectly removed, we'll intervene."

The BHF disagrees. Trustees should be able to wield the axe without the registrar's intervention, because principal officers are first and foremost scheme employees. Since the labour laws govern the employer-employee relationship, says the BHF, the registrar should not be allowed to interfere.

Though this argument makes sense on legal grounds, the BHF is quiet on alternatives to protect whistle-blowers. It's also mute on imposing disciplinary measures in cases where trustees breach corporate governance regulations.

To its credit, though, the body argues that administrative financial penalties on schemes will prejudice membership.

But, judging from Masobe's comments, the bill is unlikely to side with the BHF on this.

"We can't draw penalties from members' funds," says Zokufa.

"We already spend a lot on non-healthcare and things like these penalties will push non-healthcare expenditure even higher. Instead, we should effectively use the funds for healthcare needs. That's why it makes more sense to consolidate."

The BHF wants incompetent trustees and CEs to be held personally responsible for transgressions and to settle penalties themselves. While this will placate insured South Africans struggling to keep up with high non-healthcare costs, it's going to be interesting to see how medical insurance bosses react.

Non-healthcare expenditure has doubled (to R7,8bn) since 2000 on the back of administration and broker fees. Both of these have steamed ahead unabated - inflating earnings by dominant players such as Alexander Forbes, Discovery and Medscheme - to the CMS's dismay.

It's against this background that BHF has urged the Health Department and the CMS not to consider using members' contributions to settle penalties.

For corporate governance to prevail and non-healthcare costs to fall, medical aid societies need strong leaders. The schemes' over-reliance on administrators to drive the industry works against the public interest: schemes are supposed to be not-for-profit organisations; administrators are supposed to turn profits, yet they also set the agenda.

The lines are drawn, but the roles are not clearly defined and the bill is unlikely to change this.

Healthcare prices guide to be finalised next year

Neesa Moodley: Business Report, 11 October 2006

THE national health reference price list, which provides a guide for annual increases by health professionals, will be finalised early next year. Spokesperson for the health department, Sibani Mngadi, said the price list would be finalised after draft regulations around the formulation of the reference prices had been published. But medical schemes usually use the reference price list rates to negotiate fees with service providers and to design benefit schedules for the year ahead. The health department advised healthcare funders and provider groups to use the 2006 reference price list as an interim measure and "factor an appropriate inflation index in determining tariffs for 2007". The department urged the industry to act in a manner that would not jeopardise consumers. Rajesh Patel, the head of benefits and risk at the Board of Healthcare Funders, said a delay might result in healthcare professionals leaning their fee structures towards the Health Professions Council price list, which was about three times higher than the national reference price list rates. The draft national reference price list included a 4.6 percent rise for a consultation with a general practitioner and a 4.9 percent rise for specialists. The SA Medical Association (Sama) said it had requested a consultative process to discuss the technical components of its submissions. Aquina Thulare, the general secretary of Sama, said his organisation was still waiting for proper feedback on how the Health Department took doctors' comprehensive practice cost study submissions into account when determining the proposed increase. Practice cost studies had been done according to prescribed methodology by the Council for Medical Schemes.

The Board of Healthcare Funders welcomes its new CEO

The Board of Healthcare Funders (BHF) is delighted to announce that Dr Humphrey Zokufa will be assuming the position of Chief Executive Officer from 15 November 2005.

The Healthcare Charter Process - the Way Forward

The Board of Healthcare Funders (BHF) welcomes the publication of the draft Healthcare Charter and is fully supportive of the fundamental principles espoused in chapter one of the document


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