ConCourt ruling could ‘collapse’ medical schemes

2016-03-23 09:04
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A recent court ruling that forced a medical scheme to cough up for benefits not in its plan offering has far reaching ramifications for schemes and their members, but some in the industry and consumer groups are worried that what may be seen as a short-term victory could result in spiralling medical scheme premiums and the collapse of cheaper scheme options.

In the case in question, the Constitutional Court dismissed Genesis Medical Scheme’s application for leave to appeal a November 25 judgment of the Supreme Court of Appeal which ruled that it had to pay in full for the treatment of a Prescribed Minimum Benefit (PMB) for a child dependent, who had sustained a leg fracture in an accident and had three external prostheses fitted. In the scheme’s benefit option there was no benefit for external prostheses and the scheme had not nominated a designated service provider (DSP) for the treatment of PMBs, which medical schemes may do in terms of the Medical Schemes Act 131 of 1998 (MSA) to negotiate better rates with doctors and specialists. In such cases, except for emergencies, members must use the DSP to avoid co-payments.

What was important about the ruling was that although the medical scheme’s option did not offer a benefit for the prostheses it upheld Regulation 8 of the Medical Schemes Act of 1998, which forces schemes to pay for the full cost of the diagnosis and treatment of a list of 270 prescribed minimum benefits (PMBs) and 25 chronic conditions, regardless of what a service provider charges if it has not appointed a DSP. Some medical schemes do not limit members to using DSPs and the cheaper options of others designate state hospitals as service providers for the treatment of some conditions such as cancer. A full list of the PMBs can be found on the Council for Medical Scheme’s (CMS) website and it is certainly worth knowing your rights since 2 305, almost 42% of a total of 5 492 member complaints to the council in 2014/15, were about medical schemes not paying or short paying PMBs, according to its latest annual report. Schemes may also not use a member’s medical savings to pay for PMBs.

According to the CMS, an analysis of the total cost of PMBs for medical schemes amounted to R53,7 billion, constituting 52,5% of the total risk benefits paid in 2014/5. CMS spokesperson Dr Elsabé Conradie said the council was grateful for the court ruling as it confirmed that PMBs must be funded in full in the public and private sector. “It also confirms that rules of medical schemes, which are inconsistent with the Medical Schemes Act, are unlawful and will be superseded. In this matter the PMB legislation did exactly what it was created for — to protect a member from catastrophic out-of-pocket expenditure,” Conradie said.

She added that medical schemes could use tools such as DSPs and the use of treatment protocols and formularies to manage costs.

“Members must familiarise themselves with the rules of a medical scheme so that they know whether a DSP has been appointed in order to obtain services from the DSP and avoid co-payments,” Conradie said.

However, Genesis Medical Scheme spokesperson Elmarie Jensen said the judgment had created confusion because it was contrary to the recent Sechaba judgment in which the very same court ruled that medical scheme rules were binding in terms of the MSA.

Jensen said the ruling meant every medical scheme should have no more than one benefit option and every person in the country should join that option. “The entire system will then just collapse. Failing that, contributions must increase to an even greater height,” she said.

“If a PMB benefit must be paid in full, why would any member select to be on an expensive medical scheme benefit option, if he or she could get the exact same benefit on the cheapest benefit option? If every PMB must be paid in full in any setting costs must rise,” Jensen said, adding that profit-driven health care service providers would exploit the situation where costs were already out of control.

“Medical schemes do not set prices, they take prices. So, when a provider charges what he likes, the scheme must pay and we know that the scheme is the members. Contributions must inevitably rise,” she said.

Jensen said there had to be a limit to what schemes were forced to pay.

“Imagine going grocery shopping and there are no prices on the shelves. When you get to the till you are told that you must pay in full, you may not return any items and you will go to jail if you do not pay in full. Seriously, that is what schemes are facing,” she said.

Genesis has taken action and has lodged an application in the Western Cape High Court to have regulation eight struck down and for sections 29 (1) (o) (p) and (q) of the MSA, which allows for no limitations of funding for PMBs if a member uses state facilities and for schemes to use scale of benefit tariffs to set funding limits for the private sector.

SA National Consumer Union spokesperson Clif Johnston said the current legislation provided a short-term “bonanza” as the cheapest medical scheme options would have to become much more expensive, be scrapped, or schemes would fold. “In effect it means that service providers can charge whatever they like, and medical schemes must pay in full. That may be nice for consumers in the short term, but in order to recover costs the medical schemes will have to increase their tariffs substantially, particularly those of the cheapest options. And there will be no limit to this price/cost spiral, which will make private health care even less affordable to the average consumer,” he said.

Discovery Health Medical Scheme (DHMS) principal officer Milton Streak said the ruling had no impact on the scheme’s members, as it complied fully with PMB legislation. “DHMS has entered into payment arrangements with GPs and specialists, which reimburse them at higher rates than the prevailing medical scheme rate.

“Currently, over 86% of all DHMS GP and specialist consultations take place within these payment arrangements. This protects members against co-payments. As a result, the DHMS in-hospital coverage ratio — the ratio of claims paid to claims submitted — is in excess of 95%,” he said.

Streak advised members to consider their individual healthcare needs when selecting a plan as needs might extend to conditions and procedures beyond PMBs such as access to the latest medicine and technology and cover for day-to-day expenses.

Read more on:    pietermaritzburg  |  consumer

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