Improving the affordability of medical schemes

1. ANBAN PILLAY Improving the affordability of medical schemes

2. Ability to pay • Premiums are increasing at a rate higher than salary increases • Benefits are decreasing at the same time • Consequently members are buying lower options • Providers are increasing their fees resulting in patients paying higher co-payments.

3. What is driving the cost of care There are two main factors that drive costs: • price of healthcare services • Utilisation of services

4. What are the factors that can be used to address efficiency • Regulation of price • Referral system to access care • Primary care based model that is preventative in nature • Encourage a team approach to care at primary care level • Reform of the reimbursement model from the current fee for service model.

5. What are the factors that can be used to address efficiency • Standardisation of treatment guidelines • Pay for performance model • Partnerships with the public healthcare sector.

6. Regulation of price • Absence of a forum for funders and providers to negotiate tariffs in a manner that is based on transparency and reasonableness • Providers are free to charge whatever fee they choose. Difficult to determine whether these fees are reasonable. • Smaller schemes are unable to access lower tariffs

7. Referral system to access care • Currently direct access to high cost specialist services – inefficient • Access to care should be based on severity and complexity of disease not ability to pay • Primary care providers should be responsible for selecting patients for higher level care

8. Encourage a team approach to care at primary care level • Current model is based on individual providers delivering a service with reimbursement on a fee for service basis. • Team approach within a health centre will improve efficiency: • Primary care nurse manages minor ailments • GP manages more complex cases • Dentist/Therapist manage dental care similarly • Pharmacist • Physiotherapist • Optometrist

9. Reform of the reimbursement model • Currently using a fee for service model for reimbursement which encourages providers to over service patients. • No responsibility on provider to manage disease. • Alternate reimbursement models such as DRGs and capitation more efficient in producing outcomes.

10. Standardisation of treatment guidelines • Lack of standardisation across the industry in the management of disease. • Each scheme has adopted its own guidelines and formulary. • Lack of standardisation results in market fragmentation – higher prices. • Evidence of efficacy, safety and cost effectiveness does not differ by scheme.

11. Pay for performance model • Quality of healthcare outcomes is not the basis of funding decisions. • Little incentive to provide high quality care. • Introduce a pay for performance reimbursement model. • Identify complex high risk patients, set health indicator targets and pay based on their achievement.

12. What are the possible opportunities for partnerships • Utilisation of public hospitals for selected cases • Access to primary healthcare medicines • Harmonisation of treatment guidelines for disease management • Harmonisation of coding systems. • Improving revenue collection in public facilities

13. Alignment of PMBs to NHI • PMBs are intended to cover members against high cost diseases – catastrophic cover • Assumption is that members could fund primary care through savings since the cost is relatively low. • There is no incentive to provide primary care benefits given that hospital benefits have no limits.

14. Alignment of PMBs to NHI • Effective PHC could reduce the extent of hospital utilisation – improved efficiency • Introducing the PHC benefits may affect premiums. If PHC benefits are accessed as intended then the extent of hospital utilisation should reduce. This may be a zero sum game? • The alternative is that the schemes partner with government to deliver the PMBs.

15. Alignment of PMBs to NHI • The NHI framework is developed on an effective primary care model. Nevertheless the NHI will not exclude catastrophic diseases. • Care will be accessed based on need. • NHI financing is not be based on an insurance model ie benefits are not linked to an option chosen or the amount contributed.

16. Alignment of PMBs to NHI • The NHI will emphasise both primary and secondary prevention. • Primary prevention includes screening for prevalent conditions that are easily prevented with early intervention • Secondary prevention through lifestyle changes particularly to high risk individuals

17. Implication of Demarcation on medical scheme environment • Insurance products will most likely have to transform into medical scheme products • new members in the low income category hence affordable premiums will be a challenge • Council for medical schemes is considering various options to accommodate new members

18. Conclusions • There are a number of interventions that could be implemented that would help reduce the cost pressures of medical schemes. • Primary care benefits should be aligned to the national health insurance design. • The demarcation process is likely to result in new members entering the medical scheme environment in search of affordable benefits.

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