Laura du Preez: Personal Finance,
MEDICAL schemes are supporting the Department of Health's proposals for a proposed bargaining forum in which the tariffs your scheme will pay on your behalf for medical services could, in future, be set.
The Board of Healthcare Funders (BHF), which represents medical schemes, says that if the bargaining forum is executed appropriately, it will bring about transparency in the pricing of private healthcare.
The BHF says it hopes the proposed amendment to the National Health Act will be fine-tuned during the parliamentary process to achieve what is intended, namely fair and reasonable prices for relevant healthcare services, which will have a knock-on effect on your medical scheme contributions.
No perfect competition
Dr Humphrey Zokufa, the managing director of the BHF, says free-market principles cannot apply to private healthcare because there isn't perfect competition between healthcare providers.
He says as a healthcare consumer, you do not have a choice of where to obtain healthcare services, cannot assess the quality of the service, and do not have the power to buy or not buy the service.
Zokufa says over the past few years the industry has been dogged by lack of transparency in prices for ward fees, theatre fees, prosthetics, and technology, all of which has contributed to making private healthcare unaffordable.
The Department of Health says the starting point of the proposed tariff-bargaining process will be the National Health Reference Price List (NHRPL). This list of guideline tariffs is intended to show the cost of providing different health services.
The tariff negotiations between medical schemes and providers are expected to be around what would be a reasonable profit for healthcare providers, a senior spokesperson for the department says.
If providers want to earn higher rates of return on the capital they have invested in their practices or healthcare businesses, they will have to motivate for these higher rates and negotiate them with schemes, the spokesperson says.
Likewise, if practitioners want remuneration rates greater than those provided for in the NHRPL tariffs (which will be based on the highest public sector rates), they will have to motivate this.
The spokesperson says that where schemes and providers fail to reach agreement in the bargaining forum, the negotiations will be referred for arbitration.
The Hospital Association of South Africa (Hasa) has criticised the National Health Amendment Bill for failing to outline how this arbitration process will work.
Arbitration provisions
But the department's spokesperson says the bill refers to the Arbitration Act, which provides for notice of proceedings, summoning of witnesses, the recording of evidence and awards, among other details.
Hasa and the South African Medical Association (which represents medical practitioners) have criticised the arbitration provisions in the bill as amounting to price setting.
But the Health Department's spokesperson says the arbitrator will gather additional information and call experts if necessary, before making a determination about the dispute. Parties can then still challenge the determination of the arbitrator in court.
The proposed bargaining forum will set maximum tariffs for the prescribed minimum benefits (PMBs) - benefits that all schemes must provide.
This has long been a source of discontent for medical schemes, which have accused medical practitioners of charging higher rates for PMBs, knowing that schemes must pay.
The department's spokesperson says medical schemes will come together, probably through their administrators, to negotiate the maximum tariffs for the PMBs.
If they can't agree on a maximum rate, the matter will also go to arbitration, and in such cases the NHRPL rates will be used as the maximum rate for PMBs, he says.
The bargaining forum proposals have upset private hospitals and medical practitioners, with Hasa warning of an "Eskom scenario" if the proposed process sets tariffs too low to fund investment in new and existing hospitals.
Hasa has denied accusations that private hospital costs are driving up medical scheme contributions, saying that increased utilisation of hospital services, rather than increases in price, is the cost-driver.
Hasa says between 1999 and 2006, the weighted average total hospital price increases have been on average 7.9 percent, while inflation as measured by CPIX has been 6.2 percent and medical inflation has been 9.5 percent.
Medical scheme contributions have increased by 158 percent since 2000, while private hospital costs have increased by 74 percent, or less than half of this rate, Hasa says.
Sama has warned that fixing the tariffs paid to doctors could drive more of them, especially specialists who are already in short supply, out of practice or out of the country.
