15 August 2012

High medical scheme rates: the latest

Quite a few things have happened in the world of medical schemes over the last two months. Here's a summary of the stuff you need to know if you're a medical scheme member.


From new tariff guidelines to queries on Discovery's admin costs. Quite a few things have happened in the world of medical schemes over the last two months.

Here's a quick summary of the stuff you need to know if you're a member of a medical scheme.

Tariff guidelines for doctors

The HPCSA (Health Professions Council of SA) issued tariff guidelines for medical practitioners in the first week of August. While medical professionals are not bound to charge these rates, this step does give the public an indication of what procedures should cost. Medical practitioners charging more than these rates are obliged to get patients to sign a consent form, so that they do not get an unpleasant surprise if they receive a high bill, much of which may not be covered by their medical schemes. The SA Dental Association has expressed its concern at these guidelines, saying the current tariff structure was 'inappropriate' as costs for dental practices had increased greatly. The HPCSA has defended their tariff guidelines and say the process was 'transparent'.

South Africans 'ripped off'

The average SA member of a medical scheme is being ripped off, according to Dr Anban Pillay, Deputy Director of the Department of Health. He alleged that South Africans are paying up to five times more for medical care than other nations who are members of the Organisation for Economic Cooperation and Development. The Purchasing Power Parity  (PPP) was used as a basis, not just the exchange rate. The PPP takes personal income into account and the proportion of that which particular services cost. More recently, The Board of Healthcare Funders of Southern Africa (BHF) has welcomed the health department's finding that hospitals and specialists are driving up medical costs. Read more about that here.

Discovery's admin fees

Discovery Health has defended its administration fees that cost R102 per member per month on average. That came to a total of R2,8bn in the last financial year. Two members raised the issue at the Annual general Meeting in Johannesburg in June. The board of trustees decided to conduct an independent review. While Discovery's administration fees are the second-highest in the industry,, the principal officer, Milton Streak, said that their fees were in line with the market. According to the laws that govern medical schemes, schemes may not be run for profit, but profit may be made on administration of schemes.

Healthcare costs 'unacceptable'

Schemes should be allowed to negotiate prices with medical service providers, says Health Minister Aaron Motsoaledi. He has always been critical of high private healthcare costs, calling them 'abnormal and unacceptable'. He cited a 2004 ruling of the Competition Commission that 'prevented medical schemes from negotiating and setting prices with service providers'. He mentioned that this led to a situation where there was a huge price difference between what medical schemes would pay for a procedure, and what private healthcare providers charge.

Solvency ratios

The solvency ratio of medical schemes - currently determined at 25% of their annual member contributions - should be halved, said Christo Raath, the CEO of the Health Monitor Company at a conference of the Board of Healthcare Funders of SA. This ruling was originally intended to protect members by providing a buffer. Raath criticised this system, saying that it penalised schemes that were not running at a loss. The two biggest schemes in SA are forced to hold R1,1bn in reserve. Seventy-eight percent of the schemes in SA recorded surpluses over the last 10 years.

(Sources: Fin24, Sapa, HPCSA, press releases)

(Susan Erasmus, Health24, August 2012)

Read more:

20 ways to cut medical costs


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