IN THE wake of the recent High Court ruling against the Reference Price List, the Department of Health is looking at alternative ways of drawing up guideline tariffs that medical schemes can use to set the rates at which they will pay healthcare providers. The Council for Medical Schemes plans to publish a list showing the average cost of medical services paid for by schemes in order to help schemes set benefits for next year, the Registrar of Medical Schemes said. The measure will assist schemes in the absence of the Reference Price List (RPL), Dr Monwabisi Gantsho, the registrar, told the Board of Healthcare Funders conference. He said his office would not rule out applying an inflation-linked increase or a formula to calculate an increase in the costs on its interim list. The RPL, the guideline tariffs that schemes use to set the rates at which they reimburse healthcare providers, was struck down by a High Court ruling last month. Gantsho said the interim cost list the council publishes would be withdrawn when the Department of Health came up with a new pricing system. Dr Anban Pillay, the chief director for the financial planning and health economic cluster at the Department of Health, told the conference that the department was considering two possible options as a medium-term solution to the RPL, and had not yet decided which option was better. The quickest option, Pillay said, would be to amend the regulations under the National Health Act in terms of which the RPL was drawn up in order to deal with the issues raised by the recent judgment. Acting Judge Piet Ebersohn set aside the RPL as null and void after the publication of the RPL by the Department of Health was challenged by the South African Private Practitioners' Forum, 20 other associations that represent medical professionals, the Hospital Association of South Africa, and emergency services providers ER24 and Netcare 911. They argued that the Health Department had not followed the correct processes in publishing the RPL, and that the department had been unfair when it rejected practice cost studies submitted by various doctor and other provider groups or associations. Pillay said stakeholders were likely to continue to challenge the guideline tariffs the Health Department publishes if the prices did not suit them, so the department needed to find a solution that would suit all parties. An alternative to the current RPL process - one in which tariffs are negotiated within a framework set down in law - appears to be successful in other countries, he said, but would require changes to existing laws. Pillay said bargaining chambers for medical tariffs were used in countries - such as Belgium, the Netherlands, Switzerland and Portugal - where multiple entities paid for healthcare services. Medical service tariffs have not been negotiated since 2003, when the Competition Commission put a stop to annual negotiations between medical schemes and organisations that represent hospitals and doctors, claiming that such negotiations were anti-competitive. The Council for Medical Schemes then produced a guideline tariff list, but this was later taken over by the Department of Health. The department called on practitioners and other healthcare providers to supply information about the costs of their services, but it was unhappy with the information it received. Pillay said the RPL process faces a number of challenges:
• The voluntary responses to the Department of Health's request for cost information that came via independent consultants were biased towards higher costs, were not statistically significant and were not general to the industry.
• Healthcare providers paid consultants "huge amounts of money" to produce practice cost studies, to collate the information and summarise the data. However, the information submitted differed from that which the department's auditors found when they attempted to verify the information.
• The outcome of the process was a single price, whereas a range would have been more appropriate. When the guideline tariff was a single price, providers tended to charge that price only.
• There were problems with the codes used for services.
• The Department of Health did not have the resources to process the information and produce the RPL in time for medical schemes to use it for their benefit schedules.
• The value of the RPL was questionable, because the RPL tariff tended to become a multiple in the market price.
Pillay said that if tariffs were negotiated, a pricing authority would oversee the negotiations between medical schemes and providers, and would assess the affordability and sustainability of the tariffs. The negotiated price would become the maximum price a healthcare provider could charge. Individual providers could opt out of the system, but then they ran the risk of not being paid directly by medical schemes. All providers would have to supply the negotiating authority with confidential and transparent information about the cost and utilisation of the services they offered. This could be achieved by making supply of the information mandatory, and this would eliminate the bias in the information supplied on costs. Pillay said the long-term solution to setting tariffs for healthcare services would be found in the reimbursement arrangements that formed part of the national health insurance system.
Laura du Preez: Personal Finance, 28 August 2010
