Relating expenditure trends to strategic goals
THE problems of addressing access to healthcare and inequities in its quality and provision are Government priorities and the National Development Plan envisages stronger primary healthcare services. Outcome 2 of government’s 20142019 medium term strategic framework addresses a long and healthy life for all South Africans and seeks to address shortcomings in the sector through the introduction of National Health Insurance (NHI).
Council for Medical Schemes, Acting Chief Executive and Registrar Daniel Lehutjo says “To strengthen this objective we have prepared a preventative primary healthcare package for consideration by the National Department of Health and we will work closely with it to achieve this. We will also contribute meaningfully to the published White Paper on NHI.”
The CMS was given a directive by the Minister of Health to develop a transparent pricing system for the Pharmaceutical Economic Evaluation directorate that will enable the directorate to comply with provisions of the ‘substances’. It will ensure that the Pharmaceutical Directorate conducts its day to day activities electronically instead of manually.
The Medicine Price Registry or Single Exit Price System will ensure transparency in medicine prices and for the general public to have access t o authorised and up to date single exit prices in the pharmaceutical market.
The directorate will use the electronic system to conduct price manipulations that would inform future amendments to policies.
The project is due to be completed by the end of this year.
He adds, “Government recognises the importance and need for a central repository containing all medical scheme patients in South Africa. For this reason the Minister of Health has conferred the function of establishing and administering a Beneficiary Registry on the CMS. The data collected will be used for health resource planning and claim verification amongst other regulatory functions.”
Information to be collected by the CMS will include but not be limited to:
Basic demographic details of members, including their domicile.
The verification of membership of patients that have medical scheme cover, visiting state facilities.
The join date of a new beneficiary and the date on which he/she is eligible to receive benefits.
The relationship between principal members and dependents.
The movement of beneficiaries between different benefit options. The termination date of the beneficiary. The pricing and the Beneficiary Registry projects are funded by a NDoH grant.
According to Lehutjo the revision of prescribed minimum benefit definitions has proceeded slower than anticipated, “CMS is exploring alternative mechanisms, including collaborations with academic institutions as well experts in this field. The intention is to fast track the project but this will require extra funding. The completion of this project is very important in that it will assist in the reduction of complex clinical complaints which is currently a challenge in our operations.”
The Demarcation regulations promulgated by National Treasury will impact on CMS operations as the council will have to adjudicate on products that purport to be health insurance but do the business of medical schemes without being registered in terms of the Medical Schemes Act.
In order to support the efficient and effective functioning of CMS, the Information and Communication Technology unit is looking into virtualisation of the existing server environment. While a business continuity and disaster recovery solution is being developed to ensure full implementation by 2017/18.
Because the CMS is mainly a service organisation, spending on compensation of employees is a bigger portion of total, expenditure over the medium term, about 63.8 percent. As such it attracts highly specialised skills including actuaries, accountants, lawyers, doctors and clinicians.
The financial supervision unit is one of the largest spending programmes, with an allocation of R36.3 million over the medium term. It attracts a high number of Chartered Accountants who deal with complex financial information from medical schemes.
The Human Resource unit is looking into strategies that include succession planning and the number of employees is expected to increase slightly to 109 in 2016/17 this year and remain stable over the medium term. Total expenditure is expected to increase by 7.0 percent annually, reaching R162.411illion by 2018/19.
The CMS expects to derive 95.8 percent or R430.0 million of its revenue over the medium term from levies imposed on medical schemes according to the total number of members. It also receives an annual transfer from the NDoH which amounts to R12.9 million over the medium term.
Between 2012/13 and 2014/15, the significant increase of 9.3 percent a year in total revenue was mainly due to increased medical scheme membership, covering 8.8 million beneficiaries in 2014. To effect baseline reductions approved by Cabinet, transfers from the NDoH have been reduced by R2.4 million in 2015/16 and R3.6 million in 2016/17. However, it is estimated that total revenue will continue to grow annually by 6.4 per cent over the medium term.
Lehutjo concludes, “We continue to monitor development in the area of PFMA and Supply Chain Management guidelines in order to maintain an efficient an effective financial management environment. CMS also applies the National Treasury guidelines as they relate to budgeting.”