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The Medical Schemes Amendment Bill 2002

The Medical Schemes Amendment Bill 2002. Submission by Old Mutual Healthcare 20 September 2002. Discussion Points. The current situation What should brokers be compensated for? Who should compensate brokers? Compensation for quality of lives. The Current Situation.

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The Medical Schemes Amendment Bill 2002

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  1. The Medical Schemes Amendment Bill 2002 Submission by Old Mutual Healthcare 20 September 2002

  2. Discussion Points • The current situation • What should brokers be compensated for? • Who should compensate brokers? • Compensation for quality of lives

  3. The Current Situation • The Act only regulates fees for introduction of members • Compensation is limited to a twelve-month period • This contributes to member-churn • No restrictions on fees for ongoing services

  4. What Should Brokers be Compensated for? • The Bill identifies the following services: • Introduction • Transfer • Ongoing services • Whether to pay left to discretion of Minister • The Bill should state whether payable or not

  5. Ongoing services? • Not administration services • Aimed at maintaining client relations • Does it add value? Yes! • If not payable churning will continue • Avoid perverse incentive to explore other avenues of compensation

  6. Who Should Compensate a Broker? • Reasons for and against who should pay • Traditionally paid by product provider • Not feasible for member to pay • Payment should be restricted to one entity, i.e. medical scheme

  7. Compensation for Quality of Lives • Notice on Undesirable Practices • Differentiating on health issues • Differentiating on group status • Payment other than for introduction • The Bill should address

  8. Recommendations • Mandate the payment of ongoing compensation • Only allow schemes to compensate for broker services • Prohibit payment of compensation for the introduction of members other than for broker services

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