The Prescribed Minimum Benefits (PMBs) which schemes have to pay for at cost have recently come under fire from all sides. How does this affect you?
What are PMBs?
Prescribed Minimum Benefits (PMBs), according to the Council for Medical Schemes, is a set of defined benefits to ensure that all medical scheme members have access to certain minimum health services, regardless of the option they have chosen.
This means that there is a list of 270 medical conditions and 25 chronic conditions for which every scheme has to cover the diagnosis, treatment and care, whether someone is on a low-cost hospital plan, or a comprehensive high-cost medical scheme option.
Read: 25 chronic conditions your scheme must cover
The Act vs.the Regulation
Genesis Medical Scheme has taken the Minister of Health Dr Aaron Motsoaledi to court to try to have the regulation requiring the cover of prescribed minimum benefits – irrespective of cost – struck down. The case is still ongoing.
The issue at stake concerns regulation 8.1 of the Medical Schemes Act and whether it overrides or contravenes the stipulation in Section 29 (1) (p).
Section 29 (1) (p) states: “No limitation shall apply to the reimbursement of any relevant health service obtained by a member from a public hospital where this service complies with the general scope and level as contemplated in paragraph (o) and may not be different from the entitlement in terms of a service available to a public hospital patient.”
Regulation 8.1 states: “Subject to the provisions of this regulation, any benefit option that is offered by a medical scheme must pay in full, without co-payment or the use of deductibles, the diagnosis, treatment and care costs of the prescribed minimum benefits.”
The Act was amended in 2002 (and came into effect I January 2004) by the then Minister of Health, Manto Tshabalala-Msimang, and in the regulation, the reference to "services available to a public hospital patient" has been removed. The issue at stake is whether it was within her rights to have done this. Legally, a regulation in an Act cannot overrule the Act.
The result of this apparent contradiction has been that since 2004 schemes have to pay in full whatever a private doctor charges for the diagnosis, treatment and care costs for PMBs, putting great pressure on schemes and most probably driving up member contributions.
Read: How are medical scheme contributions determined?
Critics of the medical schemes have stated that in capping costs of PMBs, schemes are trying to reduce the cover members currently have. Scheme administrators have been critical of the legislation, which apparently gives private doctors a "blank cheque" when it comes to charging for the treatment of PMBs.
Spotlight on issues surrounding the payment of PMBs
- The Medical Schemes Act of 1998 (and in particular Regulation 8.1) requires schemes to pay in full the costs of PMBs obtained by a member from specified providers. While a scheme may appoint a designated service provider (DSP)in order to limit costs, full costs must be paid from any provider if it is an emergency. While the state hospitals can be named as DSP, the scheme has to show that a member has reasonable access to such facilities and such doctors. There is also confusion as to what constitutes an emergency in medical and in legal terms.
- Genesis Medical Scheme has taken the Minister of Health, Dr Aaron Motsoaledi, to court over whether PMBs should be paid ‘in full "irrespective of the cost". Should their case be successful, it could have a huge impact on medical schemes in South Africa and on medical scheme members, whose contribution increases may be curtailed in future.
- In court papers relating to the case Christoff Raath, joint CEO of Insight Actuaries is cited as saying that "some specialists charge significantly more for PMB procedures than for illnesses not covered by the minimum benefits".
- Low-cost schemes are financially constrained by legislation forcing them to pay in full for PMBs, having to accept all applicants and having to keep a 25% of their contributions in reserve. These legal requirements have contributed to driving up the costs of member contributions, putting medical scheme membership out of reach for many South Africans.
- The Board of Healthcare Funders (BHF), while supporting the principles underlying the PMBs, thinks that it has had unintended consequences, according to BHF CEO Dr Humphrey Zakufa. He stated that forcing schemes to pay in full irrespective of what providers charge would constitute wasteful and irresponsible and wasteful utilisation of member’s premiums. He went on to say that the result of this has been a vicious circle of escalating premiums and reduced benefits.
- Medical scheme administrators have been accused of interfering with patient care by restricting the range of medicines they will pay for, and also setting the prices doctors could charge. The South African Medical Association, in its submission to the Competition Commission claim that Mediclinic, Life and Netcare, and Discovery Health have colluded in deciding which treatments would be covered in hospitals.
- Currently, if a medical scheme does not fully cover a doctor’s costs, the member is responsible to make a co-payment.
- Changes would have to be made to the Medical Schemes Act if PMBs were no longer funded "at cost", if low-cost schemes were allowed to turn away applicants who were likely to be high claimers, and if funds were no longer required to hold 25% of their contribution in reserve. Schemes would have to apply for exemptions from these regulations. The Council for Medical Schemes is currently consulting the medical schemes industry on these issues.
Many low-income earners in South Africa have opted for hospital cash insurance plans rather than more expensive medical schemes. Currently, medical scheme legislation restricts registered medical schemes from competing in this market with low-cost options.
Read: Health insurance plan controversy
The question is also who really benefits from the "pay-in-full" regulation, and whether some doctors amend their charges based on the cover that a patient may have. While many doctors are reasonable when it comes to determining their tariffs, others may not be. This overcharging could have an effect on all scheme members, whether they claim regularly or not.
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Know your scheme's PMBs
Image: Medical aid card from Shutterstock