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04 November 2015

New amendments to medical scheme act should keep medical inflation in check

The recent announcement by Health Minister Aaron Motsoaledi of proposed amendments to Regulation 8 of the Medical Schemes Act (MSA) suggests that patients may no longer be paid out in full for all prescribed minimum benefits (PMBs) if the amendments are adopted.

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However, Graham Anderson, Principal Officer and CEO of Profmed, says the amendments are intended to ensure that medical schemes remain sustainable and that, going forward, there will also be financial benefits for medical schemes members.

Anderson says that while the proposed amendments are likely to cause anxiety among many medical scheme members, schemes will still, in fact, pay for these conditions, albeit at reduced rates.

“We believe the amendments will actually make medical schemes more sustainable and we foresee that healthcare inflation in the future should drop more in line with general consumer inflation (CPI).

This is in contrast to recent years when annual healthcare inflation has typically been significantly higher than CPI.

The net result will be that future annual medical scheme contribution increases should be lower than they have been in recent years, making medical scheme cover more affordable for many.”

Health24 asked Graham Anderson about how PMBs and the amendments

1. Q: Clarifying the definition of Prescribed Minimum Benefits (PMBs) and what these include

A: Prescribed Minimum Benefit conditions set out a list of around 300 medical conditions including emergency, 26 chronic conditions and dread diseases such as cancer and renal failure.

2. Q: The actual amendment proposals and what they mean.

A: Regulation 8 of the Medical Schemes Act (MSA) suggests that patients may no longer be paid out in full for all prescribed minimum benefits (PMBs) if the amendments are adopted.

3 Q: How the proposed amendments will benefit medical schemes.

A: Currently, Regulation 8 says medical schemes must cover the full cost of members’ bills for PMBs, regardless of what their healthcare providers charge. However, the provision for payment in full has proved problematic for medical schemes, as the Act has not defined payment tariffs for PMBs. This has had negative effects on the sustainability of schemes, it also contributes to higher inflation.

4 Q: How the proposed amendments will benefit members in general.

A: As it stands, service providers in the health sector charge high rates because it is guaranteed that medical schemes will pay the full amount for any PMB treatment, as per the MSA. However if the law changes, consumers would not be able to afford these high rates and medical service providers would need to lower their treatments rates. The benefit here for members is lower and more competitive rates from service providers.

5 Q: The need for all stakeholders to be involved in discussions before the end of September to ensure the best possible outcome regarding the final amendments.

A: The intention behind the change in Regulation 8 is to give providers and funders equal power to negotiate and come up with a fair tariff that is affordable to members. It is important that stakeholders do not overcharge patients to ensure the viability of medical schemes. Medical schemes and healthcare brokers should take the necessary steps to inform and educate their members on what this means for them and the partnership with the scheme.

6 Q: How the amendments would benefit low-income individuals.

A: The net result will be that future annual medical scheme contribution increases should be smaller than they have been in recent years, making private medical cover more affordable for many.

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