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Medical aids warned to pay in full

By Londiwe Buthelezi

The Council for Medical Schemes (CMS) would discipline medical schemes that did not pay prescribed minimum benefits (PMBs) “in full” after the regulator won a court battle with the Board of Healthcare Funders of Southern Africa (BHF) over such payment, the council said.

CMS chief executive Monwabisi Gantsho said he would act against all self-administered schemes and administrators that did not comply with the PMB legislation.

The North Gauteng High Court ruled that the PMBs for nearly 300 conditions as defined in the Medical Schemes Act must be paid in full at a price charged by the health-care provider and not “in full” in terms of scheme rates as schemes contested.

According to the act, schemes are obliged to cover PMBs and must pay for all of them in full, from their risk pool and not from members’ savings.

They include 270 serious health conditions such as tuberculosis and cancer, any emergency condition, and 25 chronic conditions that include epilepsy, asthma and hypertension.

Although regulation 8 of the act stipulated that medical schemes must pay for the diagnosis, treatment and care of all prescribed conditions in full, schemes have been trying to limit their liabilities in PMB treatment by paying only up to the schemes’ tariffs.

In a legal process that took almost a year, the BHF challenged regulation 8 over the meaning of “pay in full”.

But the court dismissed the BHF’s application on grounds that the organisation had no locus standi, or right to apply, on the matter.

“The court felt the BHF is not directly affected by this issue and dismissed it on those grounds.
But we are studying the judgment and we will meet with our legal team,” said BHF spokeswoman Heidi Kruger.

Gantsho said this billing by medical schemes was effectively changing the meaning and purpose of the PMB provisions in the act. All affected schemes would be dealt with.

“The application, now a court order… for a declaratory order by the BHF… in the high court did not suspend the enforcement of regulation 8 by the CMS,” he said.

Gantsho said any instances of non-compliance identified by the CMS, whether in the form of an accreditation evaluation or the investigation of complaints, would result in punitive measures taken against the responsible scheme officials, including financial penalties and the pursuit of other legal remedies. Non-compliant administrators faced suspension or withdrawal of
accreditation.

Discovery Health said it had established direct payment arrangements with health professionals several years ago.

“Today… over 80 percent of all consultations by Discovery Health members with general practitioners and specialists take place within our contracted payment arrangements. For these reasons, the decision of the court will have no additional financial impact on the Discovery Health medical scheme, nor on other schemes managed by Discovery Health,” said the group’s chief
executive, Jonathan Broomberg.

But Broomberg expected the move to affect the material costs of many medical schemes that did not have contracted payment arrangements in place, and were paying for PMB treatments at scheme rates.

Bonitas’ chief operating officer, Gerhard van Emmenis, said the group would not be seriously affected as the scheme had recently started paying claims in full.

“Our actuaries conducted an analysis based on a number of scenarios which found that the financial impact on all medical schemes will be significant – particularly in the case of those where the solvency ratio is close to the legislated minimum of 25 percent. However, at 36.5 percent, Bonitas has one of the highest solvency ratios in the open-scheme market and our members therefore have no cause for concern,” he said.

Jean Pierre Verster, an analyst at 36 One Asset Management, said the ruling would not be good for medical schemes because they would have an open-ended liability.

“It could mean higher increase in premiums than they would have implemented, but then again most schemes have already announced their premium increases for next year. It is going to be very negative for the medical aid industry.”