Rul­ing clar­i­fies schemes’ li­a­bil­ity for PMBs

A Supreme Court rul­ing deal­ing with your med­i­cal scheme’s li­a­bil­ity for pre­scribed min­i­mum ben­e­fits pro­vides you, the mem­ber, with more cer­tainty on what you can ex­pect your scheme to pay. The reg­u­la­tor of schemes has hailed the judg­ment as an im­por­tant v

Weekend Argus (Saturday Edition) - - GOODPOSTER -

Med­i­cal schemes can’t get out of pay­ing for pre­scribed min­i­mum ben­e­fits (PMBs) sim­ply by stat­ing in their rules that mem­bers must use state med­i­cal fa­cil­i­ties for PMB treat­ment, the Supreme Court of Ap­peal ruled this week.

The reg­u­la­tor of med­i­cal schemes is hail­ing the rul­ing as a vic­tory for mem­bers, but Gen­e­sis, the scheme that lost the case, says it will chal­lenge the rul­ing, be­cause it will ul­ti­mately re­sult in mem­bers’ con­tri­bu­tions in­creas­ing and their non-PMB ben­e­fits be­ing eroded.

Gen­e­sis will also not aban­don its other le­gal chal­lenge to the reg­u­la­tion un­der the Med­i­cal Schemes Act that obliges schemes to pay for PMBs in full re­gard­less of what a health­care provider charges.

Med­i­cal schemes are ar­gu­ing that doc­tors are in­creas­ing their tar­iffs for PMBs, be­cause they know that schemes must pay what­ever they charge.

Gen­e­sis has lodged an ap­pli­ca­tion in the High Court against the Min­is­ter of Health, Dr Aaron Mot­soaledi, seek­ing to have the pro­mul­ga­tion of reg­u­la­tion eight of the Med­i­cal Schemes Act struck down as ul­tra vires (be­yond the law).

If the pro­mul­ga­tion of reg­u­la­tion eight is found to be ul­tra vires, schemes will not be obliged to pay for the di­ag­no­sis, treat­ment and care of PMB con­di­tions in full. This could re­sult in you be­ing li­able for that part of the bill that ex­ceeds the scheme’s nor­mal rate.

In Au­gust, the High Court ruled that a num­ber of par­ties to the case – in­clud­ing the Hos­pi­tal As­so­ci­a­tion of South Africa, the South African Pri­vate Prac­ti­tion­ers’ Fo­rum, the Coun­cil for Med­i­cal Schemes and the Reg­is­trar of Med­i­cal Schemes – could in­ter­vene in the ap­pli­ca­tion, de­spite ob­jec­tions from Gen­e­sis. Gen­e­sis’s trus­tees have been de­nied leave to ap­peal this rul­ing and plan to pe­ti­tion the Supreme Court. This is de­lay­ing the hear­ing of the mer­its of the case.

The De­part­ment of Health has re­sponded to schemes’ con­cerns that reg­u­la­tion eight is re­sult­ing in health­care providers charg­ing more than they would nor­mally and is ex­pos­ing schemes to ris­ing claims, which, ul­ti­mately, will re­sult in con­tri­bu­tion in­creases for mem­bers. In Au­gust, the health de­part­ment pub­lished a pro­posed amend­ment to reg­u­la­tion eight for com­ment.

Dr An­ban Pil­lay, the deputy di­rec­tor­gen­eral for health reg­u­la­tion and com­pli­ance man­age­ment at the de­part­ment, says the de­part­ment has re­ceived a large num­ber of com­ments. Both health­care providers and schemes have ex­pressed a will­ing­ness to agree on an ac­cept­able amend­ment to the reg­u­la­tion, he says.

Once the de­part­ment has re­viewed the com­ments, it will hold a meet­ing of stake­hold­ers with a view to reach­ing con­sen­sus on the amend­ment, Pil­lay says.

Mot­soaledi will then have to de­cide whether to amend the reg­u­la­tion or await the out­come of Gen­e­sis’s case.

In the mean­time, your scheme is obliged to pay in full for the bills that arise from treat­ing a PMB con­di­tion. The ex­cep­tion is if it has con­tracted with a health­care provider and has stated in its rules that you must use that provider and you vol­un­tar­ily use a dif­fer­ent provider.

This week’s Supreme Court of Ap­peal rul­ing against Gen­e­sis con­firms that the scheme must have a con­tract with health­care provider that it ap­points as a des­ig­nated ser­vice provider (DSP) if it wants to con­tain the costs of treat­ing a PMB. If a scheme does not have a con­tract with the state, it can­not in­sist that you use state health­care fa­cil­i­ties to be cov­ered in full for the cost of treat­ing a PMB.

The Med­i­cal Schemes Act pro­vides that schemes can ap­point and con­tract with DSPs in or­der to con­tain their costs when you re­ceive med­i­cal ser­vices for PMBs.

If you use a provider other than the one your scheme has named, your scheme can im­pose a co-pay­ment, which can be a per­cent­age of the cost, or the dif­fer­ence be­tween the scheme’s rate and the ac­tual cost, or a fixed amount. The co­pay­ment must be spec­i­fied in the rules of the scheme. There are ex­cep­tions for emer­gen­cies and if the DSP is not avail­able (see


The Supreme Court case was the re­sult of a com­plaint by Ni­cola Jou­bert that Gen­e­sis had failed to pay all of the med­i­cal bills that arose from the treat­ment of her then 17-year-old daugh­ter, Rox­anne, who was in­jured in a mo­tocross ac­ci­dent in Dur­ban in 2008.

Jou­bert com­plained to the Coun­cil for Med­i­cal Schemes, the reg­u­la­tor of schemes, which ruled that Gen­e­sis must pay the bills.

The scheme paid the hos­pi­tal and doc­tors’ bills, but de­clined to set­tle the ac­counts for ex­ter­nal pros­the­ses that were used to sta­bilise the teenager’s leg. Gen­e­sis said that, at the time, its ben­e­fits did not pro­vide for ex­ter­nal pros­the­ses.

Gen­e­sis took the mat­ter on ap­peal to the Coun­cil for Med­i­cal Schemes’s Ap­peal Com­mit­tee and to the coun­cil’s Ap­peal Board, but with­out suc­cess.

It paid the out­stand­ing bills, but then turned to the Cape High Court, which ruled in the scheme’s favour.

The court said that, be­cause the Reg­is­trar of Med­i­cal Schemes had regis­tered Gen­e­sis’s rules, he could not force the scheme to com­ply with the Med­i­cal Schemes Act with­out first is­su­ing a di­rec­tive to the scheme to amend its rules.

The Coun­cil for Med­i­cal Schemes took the rul­ing on ap­peal, which re­sulted in this week’s judg­ment against Gen­e­sis.

The coun­cil’s ar­gu­ment is that the Med­i­cal Schemes Act al­ways su­per­sedes the rules of a scheme, and a scheme can­not limit pay­ments for PMBs if it fails to ap­point a DSP.

In his judg­ment, Judge LE Leach notes that Gen­e­sis and the Coun­cil for Med­i­cal Schemes have been at log­ger­heads over the ap­point­ment of a DSP since late 2006 and this had re­sulted in the scheme amend­ing its rules to pro­vide for full pay­ment for PMBs only where treat­ment was ob­tained from the state or a DSP.

How­ever, Judge Leach notes that, “cyn­i­cally”, Gen­e­sis never ap­pointed DSPs and has re­mained stead­fast in its view that it is not obliged to do so.

He says when the Med­i­cal Schemes Act was passed with a pro­vi­sion oblig­ing schemes to pay your ac­counts for PMB con­di­tions and reg­u­la­tion eight was pro­mul­gated, it was clear that the leg­is­la­tion en­vis­aged that PMBs would be treated by pri­vate-sec­tor providers.

The judge says that, when the then min­is­ter of health spec­i­fied the PMBs and the treat­ment for these con­di­tions, his in­ten­tion was that mem­bers would be cov­ered whether they were treated in pri­vate or pub­lic hos­pi­tals. This ob­jec­tive would be de­feated if a med­i­cal scheme pro­vided cover only if the treat­ment was ob­tained from the pub­lic sec­tor, thereby ef­fec­tively shift­ing the cost of treat­ing PMBs from med­i­cal schemes to the state, Judge Leach says. “That is pre­cisely what Gen­e­sis has at­tempted to do by not ap­point­ing DSPs,” he says.

He says Gen­e­sis ar­gued that, by ac­cept­ing the rules of the scheme, mem­bers con­tracted out of the obli­ga­tions im­posed by the Med­i­cal Schemes Act. But a scheme can­not evade the obli­ga­tions im­posed on it by leg­is­la­tion by con­tract­ing with its mem­bers in terms of rules that have a con­trary ef­fect, Judge Leach says.

Gen­e­sis could have avoided pay­ing the full cost of the PMBs by con­clud­ing agree­ments with the pub­lic sec­tor. Its fail­ure to ap­point DSPs re­sulted in it be­ing obliged to pay Jou­bert’s med­i­cal bills, he says.


In an open let­ter to mem­bers this week, Gen­e­sis in­di­cated that it in­tends to ap­peal the case. The ap­peal will have to be made to the Con­sti­tu­tional Court.

The scheme says the judg­ment es­sen­tially pro­hibits med­i­cal schemes from im­pos­ing any lim­its on their li­a­bil­ity for PMBs, thereby hand­ing a “blank cheque” to health­care providers.

“There can be lit­tle doubt that this will re­sult in the cost of health care ris­ing even fur­ther. It is a con­cern that this judg­ment Gen­e­sis med­i­cal scheme does pay for pre­scribed min­i­mum ben­e­fits (PMBs) in pri­vate hos­pi­tals, the scheme says in an open let­ter to mem­bers.

The scheme as­sured mem­bers that their pri­vate hos­pi­tal and re­lated costs, whether or not for a PMB, will usu­ally be set­tled in full.

It says there are no leg­is­lated tar­iffs to which health­care providers in the pri­vate sec­tor must ad­here. This means schemes face an un­lim­ited and un­pre­dictable ex­pense that ul­ti­mately re­sults in aboveav­er­age con­tri­bu­tion in­creases, year af­ter year, for most med­i­cal scheme mem­bers.

Gen­e­sis says the ra­tio­nale for the le­gal bat­tles it is fight­ing on be­half of both its mem­bers and the med­i­cal scheme in­dus­try is ev­i­dent in a re­cent claim against the scheme.

The claim arose from a mem­ber who had his ap­pen­dix re­moved (a PMB) at a pri­vate hos­pi­tal. The scheme paid the hos­pi­tal ac­count in full. The sur­geon charged R8 032, and his claim was paid in full, be­cause this amount was within the limit of 200 per­cent of the scheme’s rates for the mem­ber’s ben­e­fit op­tion.

The anaes­thetist charged R16 200, which is 400 per­cent of the Gen­e­sis tar­iff and dou­ble the charge of the sur­geon. Gen­e­sis paid only half the claim, but the anaes­thetist has lodged a claim for the bal­ance, point­ing out that it is a PMB ac­count and should be paid in full.

The scheme said it will not raise con­tri­bu­tions to pay for its court bat­tles. comes at a time when the min­is­ter of health has called for a com­mis­sion of in­quiry into the high cost of health­care ser­vices. We view this judg­ment as con­tra­dic­tory to the con­sti­tu­tion, which pro­vides for the pro­gres­sive re­al­i­sa­tion of af­ford­able and ac­ces­si­ble health care. We also be­lieve that, while there may be short-term gains for mem­bers, in the longer term the judg­ment will re­sult in non-PMB ben­e­fits be­ing re­stricted or dis­carded al­to­gether and pre­mi­ums be­ing in­creased to un­af­ford­able lev­els,” Gen­e­sis says.

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