All medical claims affect Health Integrator premiums, paybacks
Discovery Life says it made a mistake when it agreed to recalculate a policyholder’s Health Integrator payback using only the medical scheme claims settled by Discovery Health. Mark Bechard reports.
Discovery Life policyholders whose policies include a Health Integrator should think twice before submitting claims to Discovery Health that will not be paid by the medical scheme. When calculating the benefits of the Health Integrator, Discovery Life takes all claims into account, not only those paid by the scheme.
Discovery Life says its Health Integrator is designed to assess the long-term underlying health of its clients by using their submitted Discovery Health claims, together with their Vitality status, as a proxy of their underlying level of health.
If your Discovery Life policy includes a Health Integrator, your premiums will increase annually as a result of:
The automatic premium increase that applies to your policy; and
The increase, or decrease, that is determined by your Discovery Health claims and Vitality status, according to Discovery’s “personal health matrix”. There is a cap on the premium increase that can result from the application of the health matrix (3.75 percent in the case of the Core option), and there is a different health matrix for each Discovery Health option.
For example, if you are on the Coastal Core option, your Vitality status is Silver and you submitted claims of between R3 486 and R6 961, your premium increase will be one percent. But if your Vitality status is, say, Diamond and you submitted claims to the same value, you would qualify for a premium decrease of 0.5 percent in the following year.
The personal health matrix is also used to determine the percentage of your premiums that will be refunded to you. The calculations are done annually, and the amount is paid out every fifth year. For example, if you are on the Core option, your Vitality status is Gold and you submitted claims of between R11 980 and R17 436, you are entitled to a refund of 22.2 percent of your annual life policy premiums. If your Vitality status was gold and you submitted claims to the same value, you refund would be 25 percent. A Diamond member who submits claims of less than R1 670 a year qualifies for a premium payback of 50 percent.
The personal health matrix does not take into account certain types of claim: dentistry, optometry, child births without complications and various screenings, including blood glucose tests, blood pressure tests and mammograms.
Discovery Life says it will continue to use all submitted medical scheme claims when assessing clients’ risk even though it recalculated the premium payback due to one of its client after he complained to the Ombudsman for Long-ter m Insurance. Discovery Life says it made “an incorrect concession” in this case. As a result of the complaint, Discovery agreed, without demur, to increase the member’s premium payback from R64 832 to R103 415.
Some healthcare service providers automatically submit patients’ accounts to medical schemes, without being instructed by members. Some medical scheme members who know that their schemes will not settle a claim nevertheless submit such claims to their schemes, because being sent a consolidated total of all unpaid claims at the end of the tax year makes it easier for them to claim this amount from the South African Revenue Service.
COMPLAINT TO OMBUDSMAN
The Classic Life policyholder (“AL”) who complained to the long-term insurance ombudsman earlier this year was on the Coastal Core option and had a Diamond Vitality status. The Core option covers hospitalisation and chronic medication, and excludes all day-to-day benefits, such as visits to a general practitioner and acute medication.
AL said that, when he received his Health Integrator statement at the end of 2014, he was “surprised” to find that Discovery Life had “penalised” him for claims even though none of his family had been hospitalised or was taking chronic medication.
For example, the statement shows that AL submitted Discovery Health claims to the value of R2 574 in the fourth year of his policy (February 1, 2013 to January 31, 2014). As a Diamond member, he was entitled to a premium payback of 40 percent of his Classic Life premiums of R43 371, according to the personal health matrix. In the year before that, AL submitted claims of R3 487, and was therefore entitled to a payback of 35 percent of his premiums of R42 153.
AL said in this complaint that he discovered that some healthcare providers’ systems automatically submit day-to-day claims to Discovery, although such claims would not be covered by the Coastal Core option.
“These claims were rightly rejected, but then Discovery went further and used this data to penalise me by reducing my payback percentage and increasing my monthly premiums.”
The Health Integrator statement does not reflect how taking the unpaid claims into account affected AL’s Classic Life premiums. However, according to the health matrix for the Core option, a Diamond status member who submits claims up to R2 574 would see a 0.65 percent reduction in his or her premium, while a Diamond member who submits claims of R3 487 would see a 0.5 percent reduction.
Diamond status members on the Core option have to submit claims of more than R17 436 a year for their premiums to increase as a result of the application of the health matrix.
AL queried the use of data for unpaid claims to determine his payback and premium increase. Discovery Life responded that, because the Health Integrator is used to assess the underlying risk of a client, it will consider all health claims submitted regardless of whether or not Discovery Health pays them.
AL wrote in his complaint to the ombudsman: “Discovery’s interpretation is hugely frustrating. I changed to the Coastal Core option so that my life assurance premium and payback percentage could be adversely affected only if I made claims for hospitalisation and/or chronic medication. To now be told that I am still going to be penalised for minor claims that paid out of my own pocket is incredibly arrogant and patently unjust.
“Furthermore, it seems that I can do nothing to stop these providers from forwarding these claims to Discovery.”
AL submitted his complaint in March. On April 9, the head of the legal department at Discovery Life sent an email to the ombudsman’s office stating: “We report that we are currently recalculating the complainant’s health fund by excluding those health claims for which the Discovery Health Medical Scheme did not pay. Once our calculations have been completed, we will provide the complainant with a revised payback benefit statement.”
On April 20, the head of the legal department informed the ombudsman’s office that it sent a revised payback statement to AL.
The revised statement, which is from May 1, 2010 to January 31, 2015, reflects AL’s Discovery Health claims for only the first year of his policy; the medical scheme claims for the subsequent years are shown as nil. As a result, AL’s total payback benefit increased from R64 832 (December 2014 statement) to R103 415 (revised statement in April 2015). But Discovery says the “incorrect concession” in AL’s case “does not set a precedent, and we will continue to apply the provisions of our contract as currently worded and as it has been applied for all our policyholders to date. This means that, in respect of future health claims for [AL], we will apply our policy wording.
“Unless the ombudsman or a court of law rules that our wording is unenforceable (which we have no reason to believe will happen), these contractual terms will continue to be applied, as we do not believe they are prejudicing our clients in any way.”
Discovery says the concession was made before the ombudsman had ruled on the case, “resulting in one of our admin staff settling this case without consulting our management and product development team”.
When it was pointed out that the “admin staff ” member who settled the case was the head of the legal department, Discovery responded that this department is responsible for receiving and dealing with policyholders’ complaints to the ombudsman.
“Cases are first referred to the relevant or affected department for their input and explanation. If the response from the affected department is to settle a matter, then the legal department would convey this to the ombudsman. In the case of [AL], the case should have been referred to senior management or our product development team before the relevant business area made the concession.”
Regarding the application of the Health Integrator, Discovery says: “Because we are looking to assess a client’s long-term risk, we consider all qualifying health claims submitted to Discovery Health, regardless of who pays for the claim (the member or Discovery Health), since who pays for a claim is irrelevant in the context of assessing risk.
“The health claims that we consider, as well as the fact that we utilise submitted and not paid claims, is well understood and is clearly and unambiguously explained in our policy document.”