The Health Professions Council of SA (HPCSA) is reviewing the rules governing the contracts between medical professionals, in the wake of criticism that its current stance stifles competition.
According to a Business Day report, the HPCS’s ethical rules govern how health-care practitioners, ranging from specialists to physiotherapists, may run their practices, and any relationships they may have with other health establishments. These rules prohibit subcontracting and fee-sharing, impose restrictions on the financial interests that professionals can hold in health-care businesses and prevent private hospitals from employing doctors.
The report says the HPCSA has previously been criticised by the Competition Commission’s Health Market Inquiry (HMI), which said it was insensitive to the benefits that increased competition could have in making health care more affordable. The inquiry is investigating the barriers to competition in the private health-care sector, and said in its interim report in 2018 that the legal restrictions created by the HPCSA’s interpretation of its ethical rules dampened potentially cost-saving innovation, particularly the rules prohibiting fee-sharing and subcontracting.
“We have come up with a proposal that we’ve discussed with the Competition Commission,” HPCSA registrar Raymond Billa told delegates to the Board of Healthcare Funders (BHF) annual conference. “The HMI says the ethical rules are stifling competition. We’ve looked at them and there is a way forward to change them and comply with the Competition (Act),” he is quoted in the report as saying. The proposed changes to the rules would be discussed with stakeholders before being finalised, he said.
The report says in response to questions from the floor, Billa said he hoped the process of revising the ethical rules would be completed by the end of the year.
In his address to the BHF delegates, Health Minister Zweli Mkhize said that medical schemes, their benefits and structure will have to change after the implementation of the National Health Insurance (NHI), but added that it is still unclear what their role would be. Die Burger reports that Mkhize said: “The environment will change. We will negotiate to see what you must do and who can perform which role best and which roles would not be available anymore.”
According to the report, he said if the current medical scheme regime remains unchanged, it would mean that the NHI is not efficient. Mkhize said it would be wrong to make definitive pronouncements on the role of private schemes as it is premature.
His department is still considering comments on the Medical Schemes Amendment Bill published last year.
It was earlier reported about an apparent spat between the Health Department – then headed by Aaron Motsoaledi – and the NHI ‘war room’ in the Presidency on the one hand and Treasury on the other about the role of medical schemes. Some role-players insisted on amendments to legislation that would effectively remove the role of medical schemes.
The details of the benefits that medical schemes will be permitted to provide under the NHI will be determined by the sector’s regulator, the Council for Medical Schemes (CMS), Business Day reports that this is according to the Health Department’s deputy director general for the NHI Anban Pillay who said: “What we have done is propose that the registrar at the CMS make clear which services are covered by NHI and which are not, so there is a clear sense of what medical schemes will be able to cover. And they will revise it on a regular basis as the NHI benefits expand or change.”
He told delegates at the BHF conference that medical schemes will remain voluntary and will be restricted to providing “complementary” cover, in line with the policy position set out in the NHI White Paper.
According to the report, when asked why medical schemes could not cover the same benefits as those offered under NHI, he said it would be inappropriate for the state to legitimise buying cover for services it covered. “If the state covers you going to a private GP, why would you pay again?” he asked.
He said the NHI Bill, which is expected to be tabled in parliament within the next few weeks, will not contain details about the benefits covered under the NHI, or those that medical schemes will be permitted to cover. Details such as these will be left to regulations, he said.
“You would not want to write the package in the Bill, as it would cause problems for medical schemes in the short and long term,” he said. The services offered under the NHI will evolve over time, he said.
He is quoted in the report as saying that the cabinet has asked Mkhize to provide a detailed implementation plan, which is currently being worked on. The National Treasury is finalising a financing paper, which is likely to be published at about the time the Bill is released for public comment by parliament.
Said Pillay, in the report, the Bill will be processed by both houses of Parliament, which each provide opportunities for the public to have their say.
The BHF has called for an overhaul of the medical schemes industry after finding that many of the challenges faced by members and schemes are due to inherent system challenges, and that late-joiner penalties are not effective to incentivise medical scheme membership, says a Sowetan report.
Linda van Rensburg, senior consultant at Alexander Forbes Health, says late-joiner penalties may be applied after the age of 35 but do not apply to members or dependants who belonged to a scheme prior to 1 April, 2001 and who have not had a break in cover of more than three months since this date.
The report says the late-joiner penalty is calculated on the basis of the applicant’s age, the number of years since the applicant was last a member of a medical scheme and the number of years that the applicant has had no cover at all. The penalties are then calculated according to a table based on the number of years the person was not on a medical scheme after the age of 35.
The report says if you were not a scheme member for between one and four years, a medical scheme may impose a 5% penalty on your contributions. For an absence from scheme membership of five to 14 years, you may be charged a 25% penalty; for 15 to 24 years, 50%; and for 25-plus years, 75%. For example, in the case of an applicant aged 65 who declared having been a member of a scheme for 20 years, the number of years that he was a scheme member is deducted from his age, leaving 45 years. Since penalties apply only after the age of 35, this person is deemed to have not been a member of a scheme for 10 years (45 – 35 = 10 years).
The corresponding penalty for an absence of membership of between five and 14 years is 25%, according to the published table.
According to the report, van Rensburg explains that the penalty applies only to the medical scheme risk premium of the late-joiner and it excludes any contributions you pay towards a medical savings account. The increased contribution may be applicable for the life of your membership of a scheme.
Medical schemes are, by law, required to maintain a reserve level of 25% of gross contributions, she is quoted in the report as saying. Members who join a scheme earlier in life end up contributing more towards scheme reserves for a longer period than those who join a scheme later in life or when they need to claim. It is for this reason that the Medical Schemes Act allows the application of late-joiner penalties, not only to encourage members to join earlier in life but also to protect existing members, she says.
The report says that it is, however, important to note that the Medical Schemes Act states that a medical scheme “may” apply late-joiner penalties and the medical scheme therefore reserves the right to waive this penalty.
Charlton Murove, head of research at the organisation representing medical schemes and their administrators, at the BHF said that the idea behind late-joiner penalties was to discourage members from delaying membership or to directly encourage joining early.
It was also to assist schemes to recover some costs as a result of delayed membership, he says. But, he is quoted in the report as saying, late-joiner penalties may go against social solidarity principles in that members are penalised after the fact, in most instances, when they need the care most. It would be better to levy a penalty on members who voluntarily choose not to join the scheme even when they are able to join a scheme.
The report says another issue he has with late-joiner penalties is that they create a barrier to care even when there are valid grounds for not joining a scheme, such as affordability or working overseas. Late-joiner penalties are a disincentive to membership (specifically for older beneficiaries where these penalties are applicable) and they may not change the behaviour of consumers, he says. Late-joiner penalties target beneficiaries who have not been members of a scheme but who want to join one, while those who are voluntarily opting out of schemes are not penalised.
Late-joiner penalties are meant to protect schemes and existing members, but the current tables whereby these penalties can be charged do not provide sufficient protection to schemes. Even when very high penalties are levied, a scheme’s membership may not grow, he says in the report.
He attributes the high rates of anti-selection against medical schemes to other structural inefficiencies in the health system. These inefficiencies include the prescribed minimum benefits that all schemes must provide, the limited access that individuals have to schemes because of affordability constraints, unregulated pricing in the medical sector, complex benefit designs and fragmented risk pools that mean members do not enjoy adequate subsidisation of the old and sick by the scheme’s young and healthy members.
The report says Murove has called for a holistic review and reform of the medical schemes industry involving all stakeholders, including the Health Department, National Treasury, the National Health Insurance policymakers and the South African Revenue Service.