Genesis loses first of two cases on liability for prescribed minimum benefits

The Constitutional Court has dismissed, without a hearing, Genesis Medical Scheme’s application for leave to appeal against a Supreme Court of Appeal judgment that obliges the scheme to pay in full for prescribed minimum benefit (PMB) services its members obtain in the private healthcare sector.

The application was dismissed for lack of prospects of success, and costs were awarded against the scheme.

The PMBs are benefits that schemes are obliged by law to provide. They cover medical emergencies, 25 chronic conditions and 270 serious conditions.

The case revolved around the scheme’s refusal to pay for a prosthesis fitted to a beneficiary. Genesis claimed the prosthesis was not covered in its rules. The Council for Medical Schemes, however, argued that the scheme had to pay for it because the Medical Schemes Act provides that PMB benefits be at least at the same level as benefits provided by the state, and the state did cover the same type of prosthesis. The council argued, and the Supreme Court agreed, that the Act trumps any scheme rules.

Daniel Lehutjo, the acting chief executive of the council, says “this marks the end of the debate on the extent to which medical schemes may in their rules seek to limit payment for treatment of PMBs”.

Lehutjo says the Constitutional Court’s decision means the council is correct when it says that the only way medical schemes can limit their liability for PMB claims is to appoint designated service providers. Members must use these to be covered in full for the PMBs, unless it is an emergency or they do not have reasonable access to a provider.

But it is not the end of the legal challenges to the PMB regulation under the Medical Schemes Act.

Genesis says that, if schemes must pay for PMBs in full, it will result in members’ contributions increasing and their non-PMB benefits being eroded.

Genesis has a second legal challenge to the regulation in the Cape High Court. In this case it is seeking to have the promulgation of the regulation struck down as ultra vires (beyond the law).

While the case confirmed by the Consitutional court deals with how the regulation relates to schemes’ rules, the High Court case seeks to have the regulation struck down, which would have the effect of schemes being obliged to pay in terms of their rules only, leaving you liable for that part of the bill that exceeds the scheme’s normal rate for reimbursing doctors.

A number of parties are seeking leave to intervene in the High Court case, and Genesis is opposing this. This is delaying the hearing of the merits of the case.

In August last year, the Department of Health responded to schemes’ concerns that the PMB regulation is resulting in healthcare providers charging more than they normally would and is exposing schemes to rising claims, by publishing a proposed amendment to the regulation for comment.

The department has promised to hold a meeting on the amendment for all stakeholders, but this has yet to be called.

At this week’s public hearings by the Competition Commission, medical scheme representatives also raised the problem of the rising cost of PMBs.