Health Minister Aaron Motsoaledi’s plans for a uniform tariff for healthcare services may prompt doctors to quit the profession or seek jobs overseas, says South African Private Practitioners Forum CEO Chris Archer.
The Medical Schemes Amendment Bill, presented to a Cabinet committee last Tuesday, contains proposals that would introduce a uniform tariff for healthcare providers and put an end to co-payments. Business Day reports that according to Health Minister Aaron Motsoaledi, the intention was to provide greater certainty for consumers and medical schemes.
At present there are no regulations governing the rates that doctors, hospitals and other healthcare providers charge. The report says that this means that two patients who receive identical services may receive different bills and face different out-of-pocket expenses depending on the bargaining power of the medical scheme they belong to, and the rules of the option they choose. If they are presented with a bill for a consultation or procedure that is more than the scheme is willing to pay, they will be liable for the balance.
The South African Private Practitioners Forum, which represents doctors in private practice, is quoted in the report as saying it was not opposed to a tariff guideline provided it was based on the cost of running a practice. However, doctors should be permitted to charge higher rates if they had good reason to do so, said forum CEO Chris Archer.
“What are they going to use to inform the process (of determining tariffs)? If it is just a thumb-suck, it will cause untold damage to the private sector and a lot of young doctors will be forced into some other form of enterprise or to emigrate. You cannot provide a service below cost,” Archer said.
“If the minister is trying to reduce the cost of care, he needs to look at utilisation. That is pushing up the cost, not the unit cost of providers,” he said.
The report says the pricing free-for-all in the private healthcare sector is partly due to a decision by the Competition Commission in 2003 that banned collective bargaining between medical schemes and service providers. It stopped the representative body for medical schemes, the Board of Healthcare Funders (BHF), from negotiating prices with provider groups such as the Hospital Association of South Africa, which represents private hospitals, and the South African Medical Association (SAMA), which represents doctors.
The Health Department then tried to establish a national health reference price list to guide the industry, but the process foundered after the High Court in Pretoria found in 2010 its process for calculating the rates was flawed and bore no relationship to the costs of running a practice.
It was unfortunate that the reference price list was done away with, said SAMA chair Mzukisi Grootboom in the report. “It has led to some of the problems we are seeing where people charge what they like without reference to medical scheme affordability,” Grootboom said. A tariff guideline determined by an independent body would be welcome, but if it capped the rate a doctor could charge, “people will refuse to be part of the arrangement … and others may decide to leave and work somewhere else,” he said.
BHF head of risk and benefits Rajesh Patel said the organisation was encouraged to see that many of the issues it had raised were potentially being tackled in the bill. The minimum benefits contained in the Bill, which all medical schemes would be obliged to cover in full, should have a price ceiling to provide certainty to schemes, Patel said.
Otherwise schemes would face an open-ended liability for these benefits, he is quoted in the report as saying.
“The co-payment issue is quite a big problem. The medical schemes have co-payments so that they can manage the risk of the pool,” GTC’s head of healthcare Jill Larkan said in an eNCA report. “So medical schemes have calculated that so many people will have an event where we can ask them to make a co-payment towards. The minister is actually saying that we would like no co-payments for PMB payments… This will put strain on medical aid schemes who will need to make adjustments to their plans. It is going to cost us all who belong to medical schemes, if you’re privileged enough to have a medical scheme.”
Under the plan, uniform tariffs would be introduced. The report says currently, each medical scheme negotiates its own rates with service providers such as hospitals and doctors.
Larkan says uniform tariffs could push doctors and specialists to leave South Africa. “How do you tell a doctor or a specialist, who studied for seven to 10 years, that in this democratic society which we live in, you cannot charge a fee based on the service they giving or a demand that they seeing in the marketplace.”
Principal officer of Resolution Health Medical Scheme, Mark Arnold, has taken a closer look at how the concepts of the Bill could work in practise for open schemes and what benefits they could hold for members of medical schemes.
“While we await the gazetting of the Bill, the Minister has so far hinted at a number of reforms that directly address challenges of sustainability that the industry is currently facing. We know that rising costs in healthcare are outstripping inflation, and legislated steps to address this are overdue,” Arnold says.
“While the details of how uniform tariffs for healthcare providers will be arrived at are not expected to be addressed in the Medical Schemes Amendment Bill, but rather will be informed by the outcome of the Competition Commission’s Health Market Inquiry, this is an important step towards protecting healthcare consumers.”
He said that there are no regulations at present to limit what healthcare service providers can charge for their services. “A High Court ruling in 2008 scrapped the National Health Reference Price List (NHRPL), which aimed to institute associated provider pricing ceilings. The NHRPL and Prescribed Minimum Benefits (PMBs) were originally intended to work in tandem to protect medical schemes and their members.
“As it stands, with PMBs remaining in force without the moderating influence of the NHRPL, even the Council for Medical Schemes has noted with concern that healthcare providers tend to charge higher fees for PMB diagnosis and treatment. This is because medical schemes have no choice but to cover the costs of PMBs in full.
“The fact that medical schemes are left to individually negotiate rates with healthcare providers also means that a handful of large medical schemes have considerably more bargaining power than the rest of the industry. The consequence of this is that healthcare providers make up for the discounted rates they have acquiesced to with the large schemes by demanding higher fees of the smaller schemes.
“The proposed introduction of uniform tariffs for healthcare providers will go a long way towards levelling the playing field, however it is imperative that tariffs are applicable to both PMB and non-PMB claims and ICD-10 coding conventions must be clearly defined to avoid practises such as code farming,” he says.
“At the moment there is no standard for acceptable ICD 10 codes associated with a particular treatment or procedure, and the risk is that if uniform tariffs are introduced without establishing coding conventions, then providers may simply bulk up on ICD codes to achieve higher claims. Medical scheme administrators will therefore need to ensure they have the infrastructure and necessary systems in place to manage this effectively and adjudicate claims based on coding.”
Arnold says that the proposal for a new set of PMBs, which will place greater emphasis on primary and preventative healthcare, could be a welcome development.
“This development would directly benefit members’ health in the long term, as health concerns can be identified and treated before progressing to more serious conditions. For medical schemes, this would also help to avoid more costly treatment down the line.”
One of the proposals reportedly contained in the Bill is a prohibition of members being charged co-payments. Arnold explains that under the status quo, co-payments are implemented on non-PMB claims and while schemes limit co-payments as far as possible, these are generally higher for elective surgical procedures.
“Limits on claims for elective procedures are in place particularly where more conservative means of treating the condition, such as physiotherapy, are available. Here the co-payments charged for such procedures are in place to protect the funds available for claims that are truly a medical necessity. Here, co-payment should, in theory, encourage members to consider alternatives to elective surgery.
“If co-payments on elective procedures were to be scrapped, this would open up an avenue of considerable risk for the majority of members in favour of the few. This is because if procedures are covered in full by law, then healthcare providers may be encouraged to prescribe more costly treatment rather than choosing more conservative options that are less profitable.
“The average medical scheme member may welcome the prospect of co-payments being eliminated, however the wider implications must be considered.
“We would, however, instead advocate the introduction of a defined list of treatments that co-payments can be charged for, in order to protect the funds available to cover the entire membership of any given medical scheme,” he adds.
“The reality is that co-payments are one of the few risk management tools left to medical schemes to counteract over-servicing from opportunistic healthcare providers and undesirable claiming practices from a minority of members who may otherwise abuse the system and reduce the value we can offer to all members,” Arnold says.