Advice not in the consumer’s interest increases costs

IN many instances third party intermediaries advise on the medical scheme to be chosen and which benefit option to purchase but this is not always in the best interest of consumers in matters of their own health and particular budget.

This, according to Dr Elsabe Conradie, General Manager: Stakeholder Relations at the Council for Medical Schemes, is primarily because private interests prevail.

“Effectively, the information imbalance within the private healthcare market is impacting on effective consumer participation in the matters of their own health.

“The lack of sovereignty worsens with the severity and complexity of the condition or situation, while hospitals and other healthcare providers are in advantageous positions to have access to information.

“It is an asymmetry that causes increased prices for health services, because it gives market power to the holder of better information, resulting in consumers being powerless to negotiate prices.”

The CMS regulates medical schemes, administrators and managed care organisations, as stipulated in the Medical Schemes Act. Its role is to protect beneficiaries, maximise access to coverage and protect the public interest.

Dr Conradie explains, “Without regulation, only private interests would prevail, reducing access and accountability.

“It is also important to bear in mind that the South African healthcare system, with its strong private sector and a public sector with many challenges, differs from other countries.

“The latter have mostly only one healthcare system and various role players.

“Moreover, in this country of the current population of about 54 million only 8,8 million, (16 percent) are beneficiaries of medical schemes delivering private healthcare.”

There are currently 83 registered medical schemes, of which 23 are open. The remainder are restricted schemes.

“They all offer various benefit options tailored to particular needs and include hospital cover, optional day to day benefits and chronic benefits for prescribed minimum benefits (PMB) conditions.

In turn, PMB’s include 270 serious health conditions, any emergency condition, and 25 chronic diseases.

Designed to offer maximum protection to members of schemes irrespective of which option they choose; they aim to ensure that when members face catastrophic healthcare events they are not financially ruined.

PMBs are also geared to prevent individuals from losing their medical scheme cover in the event of serious illness.

This reduces the consequent risk of unfunded utilisation of public hospitals and encourages improved efficiency in the allocation of private and public healthcare resources.

According to Regulation 8 of the Act, medical schemes must pay PMBs in full, without co-payment or the use of deductibles, the diagnosis, treatment and care costs of the PMB conditions.

Although prescribed benefits must be funded in full, medical schemes are allowed to effectively manage the costs through the appointment of designated service providers who render services at a negotiated rate.

They also use drug formularies and other tools such as managed care interventions, protocols and pre-authorisation.

Members using designated networks are then protected against any additional costs, such as co-payments.

In emergencies members may not have a choice but to use providers out of network, but schemes may penalise members for voluntarily making use of non-designated service providers if it is not an emergency.