Steep med­i­cal scheme in­creases com­ing

The coun­try’s largest med­i­cal schemes this week re­vealed why mem­bers can ex­pect their con­tri­bu­tions to in­crease far in ex­cess of in­fla­tion next year. Laura du Preez re­ports

Weekend Argus (Saturday Edition) - - LIFE -

Med­i­cal scheme mem­bers should brace them­selves for steeper-thanusual in­creases next year, be­cause the two largest med­i­cal schemes in the coun­try have re­ported an un­ex­pected in­crease in claims.

In sep­a­rate pre­sen­ta­tions at a con­fer­ence in Cape Town this week, the chief ex­ec­u­tive of the ad­min­is­tra­tor of the largest open med­i­cal scheme in South Africa and the prin­ci­pal of­fi­cer of the coun­try’s largest re­stricted scheme re­vealed that their schemes are fac­ing higher-than-usual claims, par­tic­u­larly hos­pi­tal claims.

They at­trib­uted this to in­creases in hos­pi­tal bed ca­pac­ity and high­erthan-nor­mal anti-se­lec­tion (peo­ple join­ing schemes only when they are fac­ing high med­i­cal costs), and fraud and abuse.

Dr Jonathan Broomberg, the chief ex­ec­u­tive of Dis­cov­ery Health, which ad­min­is­ters Dis­cov­ery Health Med­i­cal Scheme (DHMS), and Dr Guni Goolab, the prin­ci­pal of­fi­cer of the Gov­ern­ment Em­ploy­ees Med­i­cal Scheme ( Gems), ad­dressed del­e­gates from schemes, ad­min­is­tra­tors, man­aged-care en­ti­ties and pri­vate health­care providers at the Board of Health­care Fun­ders con­fer­ence.

Their pre­sen­ta­tions fo­cused on the in­crease in scheme mem­bers’ use of med­i­cal ser­vices and the in­crease in chronic dis­eases, both of which of­ten re­sult in above-in­fla­tion in­creases in con­tri­bu­tions each year (see “What are the driv­ers of pri­vate health­care costs?”, below).

Re­cently, both schemes have ex­pe­ri­enced an un­ex­pected in­crease in claims, and Broomberg said that, “as far as we are aware, most med­i­cal schemes in the coun­try are ex­pe­ri­enc­ing sim­i­lar trends”.

HOS­PI­TAL ADMISSION SPIKE

Broomberg and Goolab said DHMS and Gems have seen a spike in hos­pi­tal and hos­pi­tal- re­lated claims since the sec­ond half of last year. The in­crease seems due, in part, to the open­ing of sev­eral new pri­vate hos­pi­tals. Broomberg said 25 new hos­pi­tals with 2 653 beds have opened over the past eight years.

In 12 out of 18 re­gional case stud­ies con­ducted by Dis­cov­ery Health, it was found that new hos­pi­tals re­sulted in a sig­nif­i­cant in­crease in hos­pi­tal ad­mis­sions among scheme mem­bers, al­though the preva­lence of dis­ease had not in­creased. The in­crease in ad­mis­sions cost the scheme R1.1 bil­lion.

The ad­min­is­tra­tor’s anal­y­sis of costs in Dur­ban showed that the admission rate was 14 per­cent higher than the na­tional av­er­age in 2010. In 2011, after a new hos­pi­tal opened in Hill­crest, it was 19.8 per­cent higher, and in 2014, after a new hos­pi­tal opened in Umh­langa, it was 29.7 per­cent higher.

Goolab pre­sented ev­i­dence of an in­crease in hos­pi­tal ad­mis­sions among Gems mem­bers late last year and early this year. This showed how ad­mis­sions in Polokwane and Pi­eter­mar­itzburg had in­creased from less than three per­cent a year to more than 12 per­cent after hos­pi­tals opened in those areas.

Goolab said the in­crease in ad­mis­sions was of par­tic­u­lar con­cern, be­cause hos­pi­tal and re­lated costs – for ex­am­ple, pathol­ogy and ra­di­ol­ogy – ac­count for 62 per­cent of all the scheme’s claims.

He said that, over the past five years, there had been an al­most 20per­cent in­crease in hos­pi­tal bed ca­pac­ity, while med­i­cal scheme ben­e­fi­cia­ries had in­creased by only six per­cent, yet pri­vate hos­pi­tals con­tinue to re­port high oc­cu­pan­cies.

FRAUD ON THE RISE

Broomberg and Goolab high­lighted how a fair pro­por­tion of mem­bers’ con­tri­bu­tions was wasted on fraud and unco-or­di­nated and un­nec­es­sary health care.

Goolab said the tough eco­nomic cli­mate and the record level of un­em­ploy­ment had led to an in­crease in fraud and abuse, which re­sults in all mem­bers pay­ing more than they need to in con­tri­bu­tions.

Since 2010, Gems had in­ves­ti­gated 5 000 cases of fraud, he said.

The na­tional av­er­age for psy­chol­o­gist con­sul­ta­tions for pa­tients ad­mit­ted to hos­pi­tal is eight per­cent, but at one hos­pi­tal the util­i­sa­tion of psy­chol­o­gists was found to be nearly five times the na­tional av­er­age, in­di­cat­ing that fraud­u­lent claims were be­ing sub­mit­ted, Goolab said.

The scheme’s data also un­cov­ered a fam­ily prac­ti­tioner who claimed to have treated 311 Gems mem­bers or ben­e­fi­cia­ries in a day, which means that if the doc­tor had worked for 24 hours, he would had to have seen one pa­tient ev­ery four min­utes.

The scheme has been able to de­tect am­bu­lance claims that do not cor­re­spond with hos­pi­tal ad­mis­sions in areas where fraud syn­di­cates are known to be op­er­at­ing.

Another trend is the abuse of hos­pi­tal cash-back plans of­fered by life as­sur­ers and short-term in­sur­ers. Med­i­cal scheme mem­bers are ad­mit­ted to hos­pi­tal, but no pathol­ogy tests are con­ducted dur­ing the mem­bers’ stay in hos­pi­tal, which is highly un­usual, Goolab said.

It is sus­pected that mem­bers are ad­mit­ted un­der false pre­tences, of­ten after be­ing ap­proached by a fraud syn­di­cate. The scheme pays the hos­pi­tal bill, and the mem­ber col­lects the cash pay­out from the in­sur­ance pol­icy, which is shared with the syn­di­cate.

Broomberg said Dis­cov­ery had re­cov­ered R1.04 bil­lion in fraud­u­lent claims be­tween 2013 and 2015. In 2013, the scheme re­cov­ered R288 mil­lion, and by 2015 this had in­creased 21 per­cent to R394 mil­lion.

Broomberg said in­ter­na­tional stud­ies es­ti­mate that fraud ac­counts for be­tween three and 15 per­cent of health­care fun­ders’ costs.

ANTI-SE­LEC­TION

Goolab and Broomberg pre­sented ev­i­dence of anti-se­lec­tion, which is ac­cel­er­at­ing the cost of claims.

Anti-se­lec­tion is when some­one joins a scheme only when he or she is ill and needs to claim. It is pos­si­ble to do this, be­cause open med­i­cal schemes must ad­mit any­one who ap­plies to join and may im­pose only lim­ited wait­ing pe­ri­ods, dur­ing which new mem­bers can­not claim cer­tain ben­e­fits. Re­stricted schemes are obliged to ad­mit any­one who is el­i­gi­ble for mem­ber­ship and typ­i­cally do not ap­ply any wait­ing pe­ri­ods. Broomberg said DHMS sta­tis­tics show that, over the eight years to the end of 2015, the av­er­age age of its mem­bers in­creased by 6.9 per­cent, from 31.51 years to 33.68 years. This in­di­cates that young peo­ple are wait­ing un­til they are older and sicker be­fore join­ing a med­i­cal scheme. Over the same pe­riod, the scheme had a 59-per­cent in­crease in the preva­lence of chronic ill­nesses. In 2008, 13.9 per­cent of ben­e­fi­cia­ries had chronic ill­nesses; by 2015, this had in­creased to 22.1 per­cent.

Broomberg said that, on av­er­age, a mem­ber with a chronic ill­ness claims four times more than a mem­ber who does not have one.

In ad­di­tion, the scheme re­lies on mem­bers who do not claim any­thing in a year to fund a sur­plus that car­ries the costs of those who do claim.

Broomberg said, that over the eight years to 2015, the per­cent­age of DHMS mem­bers who did not claim any­thing in a year de­creased from 60 per­cent to 50 per­cent.

Another in­di­ca­tion of anti-se­lec­tion is the in­crease in the num­ber of mem­bers claim­ing for rare dis­eases, such as mul­ti­ple scle­ro­sis and rheuma­toid arthri­tis. Broomberg said the in­ci­dence of peo­ple who claim for these ill­nesses should be ran­dom, but the scheme has no­ticed a large in­crease in the num­ber of peo­ple who claim for these ill­nesses in the first year of mem­ber­ship. This in­di­cates that they were ad­vised to join a scheme at any cost, be­cause their claims were likely to be high.

On av­er­age, the claims of a mem­ber with mul­ti­ple scle­ro­sis ex­ceed his or her an­nual con­tri­bu­tions by four to five times. In other words, a scheme needs five healthy fam­i­lies to cover the costs of that one per­son, he said.

Goolab said anti-se­lec­tion was not con­fined to open med­i­cal schemes. Re­stricted schemes, such as Gems, had found that prin­ci­pal mem­bers en­rolled fam­ily mem­bers as ben­e­fi­cia­ries only when they needed to claim.

Gems’s sta­tis­tics show that in the first year – in par­tic­u­lar, within the first three months – of mem­bers join­ing the scheme, hos­pi­tal ad­mis­sions are 53.4 per­cent higher than in sub­se­quent pe­ri­ods.

Broomberg says these sta­tis­tics pro­vide an in­di­ca­tion of the up­hill bat­tle that med­i­cal schemes are wag­ing in try­ing to keep con­tri­bu­tion in­creases in line with in­creases in salar­ies and wages.

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