Medical scheme rip-off?

In 2008, the Board of Healthcare Funders (BHF) let it be known it had applied to be exempt from the provisions of the Competitions Act. What's happening here? Why do they feel they want to collude? Is this an attempt to rip off the consumer even further?

News24 user Robert Beney seems to think so: he calls the BHF "a bunch of colluding lobbyists" in an open letter to News24, which elicited much comment from other users.

On its own website, however, the BHF describes itself in a somewhat more flattering fashion: "BHF is the representative organisation for 95% of medical schemes throughout South Africa, Namibia, Zimbabwe, Botswana as well as Lesotho. As the industry representative body, the organisation relies on the membership of all medical schemes to ensure that it is able to lobby government and other organisations effectively and to influence policy where necessary on behalf of the entire industry."

The basics
What is actually going on, and why should we take note?

There are four basic players in the world of medical schemes:

  • The medical scheme members (represented by the regulating body, the Council for Medical Schemes – CMS)
  • Medical schemes themselves (represented by the Board of Healthcare Funders - BHF)
  • Private healthcare providers (represented by, among others, the South African Medical Association – SAMA – and the Hospital Association of South Africa - HASA)
  • The government (represented by the health department)

In the last decade, the government has become increasingly concerned about the high prices of private medical care and medication in South Africa.

"Efforts to regulate the industry, make medical scheme membership more affordable and to enforce regulations regarding minimum prescribed benefits, reserves, and membership applications have led to a huge shake-up in the whole industry," says Johan van Tonder, an independent medical scheme researcher.

The right to publish
But back to the BHF application. Should we read something sinister in that?

"Not necessarily," says Janine Louw, principal medical officer for the Naspers Medical Fund. "THE BHF merely wants to clear its name and indicate that there was no wrongdoing on its part in the past."

The issue at stake, it seems, is the right to issue official medical scheme rates tables. The BHF used to publish a tariff system, but was taken to court in 2003 by Bestmed medical scheme for using its tariff and code-numbering system. That court found that the behaviour of the BHF, HASA and SAMA contravened the Competitions Act.

The result was that the government then issued what it called the National Health Reference Price List (NHRPL), providing a guideline for the fees at which providers of medical services should be reimbursed. These guidelines were in place for several years, and were published jointly by the CMS, but were not issued in 2007, causing a general flutter in the medical scheme industry. Most medical schemes simply used the old rates, and added a set percentage onto them. The rates were issued again in 2008.

The different role players are at loggerheads (in courts and outside of them) about who actually owns the right to publish these rates tables.

SAMA has always issued rates tables of its own, in many cases 300 – 400% above the tariffs recommended by the NHRPL. Until now, market forces have determined what doctors in private practice could charge for their services. Medical schemes are, however, not obliged to pay these charges in full. Hence the co-payments many medical scheme members have to make when they visit specialists in private practice.

Those in private practice say that the government and the CMS do not have adequate insight into the real costs of running private medical care – and the government is of the opinion that private medical care is often a rip-off for the consumer, and that it needs to be regulated more strictly.

The battle continues – for the individual survival of the medical funds, for the protection of the consumer, for the 40 million South Africans who do not have medical cover, and for the right to publish medical scheme tariff tables.

(Susan Erasmus, Health24, updated February 2011)

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