Updated 10 February 2016

Exclusions and limitations

Private health insurance allows people to protect themselves from the potentially extreme costs of medical care if they become ill and also gives access to healthcare when needed.


Private health insurance allows people to protect themselves from the potentially extreme costs of medical care if they become ill. It also gives people access to healthcare when they need it.

Health insurance should guarantee access to essential healthcare. It is a noble idea, but there are threats to the sustainability of private health coverage – one of these is affordability.

Hikes in healthcare and non-health costs, sometimes at rates substantially higher than general inflation, require member subscription rates to increase each year. Schemes try to reduce their expenditure and although they target non-essential healthcare first, this often leads to misunderstandings and hardship. What is considered unnecessary by one person is seen as essential by another.

Funds have sought to limit their liability by financial limitations and/or limitations or even exclusions on cover for certain conditions or treatments. The exclusion list of scheme options (Annexure C of scheme rules) deals with limitations of entitlements.

Schemes must ensure that there is good reason for these exclusions and limitations, and that they are not too broadly worded. Otherwise, they may lead to arbitrary or unreasonable denial of care.

Financing available for healthcare is not infinite. Debates on fair and equitable rationing in healthcare abound worldwide. A fair, transparent and scientifically justified system is necessary also in South Africa.

But why exclusions and limitations?
Entitlements in any option are discretionary (optional) or non-discretionary (compulsory). The latter are covered by the prescribed minimum benefits (PMBs).

The Regulations in the Medical Schemes Act 131 of 1998 deal with the entitlement to PMBs: they must be paid in full under certain circumstances, such as when the member obtained the service from a designated service provider.

The standard of care (and entitlement to it) is determined by protocols based on the principles of evidence-based medicine or, where these do not exist, the protocols of the public sec-tor. Non-PMB conditions and entitlements are dealt with in scheme rules, and limitations and exclusions are applicable to them.

The following principles should be considered when deciding whether exclusion is justified or not:

  • Best practice
  • Evidence-based healthcare
  • Clinical protocol
  • Cost-effectiveness (affordability)
  • Laws of the country

Conditions or circumstances that should definitely not be excluded are those that are medically necessary, with little discretion from the member and/or service provider.

Put differently; consider whether urgent treatment is needed to prevent death or permanent disability, and whether the attending doctor has some discretion as to the timing of treatment, and whether the treatment should be given at all.

It would, for example, be entirely inappropriate to include exclusion for the treatment of acute appendicitis, whereas an exclusion for cosmetic surgery in the absence of clinical indications would be appropriate.

Not forgetting affordability, clinical protocols based on evidence-based medicine should be the bottom line when deciding whether funding is justified or not.

Limitations on cover are appropriate where they permit a degree of financial risk management. But they are inappropriate where their application allows for the selective targeting of specific people or vulnerable risk groups.

Thus, reasonable financial management should be permitted, but not to the extent that it allows risk-selection and unfair discrimination.

Limitations should be permitted where they achieve the following:

  • reasonable cost-sharing with members for healthcare services where the demand for these services is subject to high member discretion; and
  • reasonable cost-sharing with members for healthcare services that are routine and consequently do not require insurance. This refers to discretionary services that are used so routinely that contributions tend to equal what the member would have paid from his/her own pocket.

Limitations are inappropriate where they achieve the following:

  • cost-sharing with members for healthcare services that are non-discretionary and determined by the healthcare provider; and
  • cost-sharing with members for healthcare services that are costly and infrequent.

Fair exclusion? You decide
Most schemes exclude obesity management from their cover. Is this fair? Obesity can be seen as a lifestyle condition that the patient can deal with on his/her own even though the medium- to long-term outcomes of managing this condition are often disappointing.

But if a patient suffers from morbid obesity, evidence shows that (s)he is likely to suffer from substantial morbidity and may eventually die from this. Gastric bypass procedures are sometimes the only solution.

Many provisos are applicable, which must be accommodated in a protocol, but it seems unfair to allow morbid obesity to be excluded. What do you think?

(Jan van der Merwe, Council For Medical Schemes News, September 2008)

Source: Council For Medical Schemes


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