Presentation on Tariff Guidelines

1. Presentation on Tariff Guidelines 22 August 2012 Parliamentary Portfolio Committee on Health

2. Who is SAMA? • SAMA is a Doctor’s organisation • Originally founded in 1927 • Transformed in 1998 by amalgamation of all major doctor groupings • Section 21 company and a registered Trade Union • Not for profit organisation • Represents >17 000 Doctors in public service and private practice

3. History of coding and tariffs

4. SAMA’s Coding history • First coding booklet published in 1944 • Annually updated ever since –> called the Doctors Billing Manual (DBM) • >60 years of intellectual property in DBM • SAMA is the steward of doctor’s codes • Custodian for future generations of Doctors

5. The SAMA DBM • The DBM represents the scope of practice of the medical profession • Current format first created in 1975 • Why does SAMA do coding? • SAMA is a neutral referee • Inter disciplinary relativity is maintained • The DBM is the recognised industry standard • Today used by HPCSA & Discovery, GEMS and BHF, representing over 80% of medical schemes

6. Tariffs past and present • Until 1978 SAMA Rate and RAMS Scale of Benefits were equal • Scale of Benefits then became lower than SAMA rate • RAMS replaced by the BHF • Subsequently SAMA and BHF negotiated tariffs annually • 2003 = last year SAMA calculated a rate on behalf of doctors • 2004 – Competitions Commission ruled the above activity “anti-competitive” • NRPL (National Reference Price List) • 2004 – 2005, CMS produced guideline NRPL • Codes based on SAMA DBM • NHRPL (National Health Reference Price List) • 2006 NHRPL produced by NDoH • Codes based on SAMA DBM

7. Tariffs past and present • HPCSA • Produced an “Ethical Tariff” in 2006 • Used NHRPL (multiplied by 3) • 2008 the Ethical Tariff was scrapped • RPL • basis of the RPL was challenged • RPL declared invalid by High Court of South Africa

8. SAMA/HPCSA Guideline Tariff process • 15 July 2011 • HPCSA Ombudsman invited SAMA to discuss tariff guidelines • 22 July 2011 • SAMA submits written Tariff Guideline Proposal to HPCSA • 17 January 2012 • SAMA meets with acting HPCSA registrar and enquires when guideline will be published – stresses importance of using updated DBM for process • 11 June 2012 • SAMA meeting with the new Registrar – above again emphasized

9. SAMA/HPCSA 2012 Guideline Discussion Background • SAMA offered 2012 DBM to HPCSA • Contains 150 altered codes since 2010 • Contains 445 altered codes since 2009 • Contains 1202 altered codes since 2005 • SAMA offered services of coding department • SAMA delayed publishing of 2012 DBM • SAMA requested a single RCF across all specialities • RVU gives interdisciplinary relativity

10. What are the cost drivers in private healthcare?

11. Healthcare Inflation • 1990 - Average CPI Inflation = 14.2% - Average Medical Scheme inflation =27.3% - Average contribution PBP/m = R74.45 • 2000 -Average CPI Inflation =5.4% - Average Medical Scheme inflation =7.5% - Average contribution PBP/m = R343.45 • 2010 -Average CPI Inflation =4.3% - Average Medical Scheme inflation =11.3% - Average contribution PBP/m =R975.82

12. 2010 R975.82 PBPm 2010 R168.08 PBPm 1981 R11.73 PBPm

13. Scheme Expenditure per beneficiary per month 2010 Contributions R975.82 PBpm

14. Healthcare Costs? • Administrator cost • Managed Care cost • Broker fees • Actual cost of healthcare

15. 2010 R11,564,770,000

17. NonHealthcare Expenditure: Administration & Managed Healthcare

18. “Administrators and businesses associated with administrators often provide managed healthcare services. In many instances, these services are merely additional layers of administration costs with questionable benefits for the schemes themselves.” Council for Medical Schemes 2009/2010 Annual report p214

21. 75% -42% 23% 7% -40%

22. NonHealthcare Expenditure: Brokers

23. Medical Scheme Membership as % of Population

24. Broker Summary • 2000 - 2010 • 16% population growth • 19% MS membership growth • 9.4% MS membership growth excluding GEMS • 1 326 587 new MS members • 665 377 new MS members excluding GEMS • Cost of R8.85 Billion • R6 670.13 per new MS member • R13 298.50 per new MS member excluding GEMS

25. Conclusion • Brokers are being paid large sums of money but have effectively attracted few new members • MHC has not succeeded bringing down healthcare costs only GP visits • Administrators are charging medical schemes significantly • Hospitals are a significant cost

26. Determining a doctor’s worth?

27. How to determine an RCF?

28. Annualised 2012 Overheads

29. SAMA 2012 RCF = R28.93 *Excludes risk compensation factor

31. 2012 HPCSA Tariff Guideline

32. 62% increase in doctors’ input costs since 2003 • Malpractice insurance costs are increasing exponentially • Massive administrative burden • 98 Medical schemes with on average 5 options each • 490 different tariff guides • 490 different protocols and formularies • Exhaustive authorisation and motivation procedures • 5 -10% of income to claims bureaus

33. Conclusion & Way Forward?

34. Conclusion • Benchmark tariff is essential • Provide much needed stability and framework • NHI process will require an appropriate tariff guideline

35. Suggested Way Forward • SAMA suggests a benchmark tariff • Must be based on actual practice cost studies • Must include Tiered Tariffs • SAMA 2012 DBM used as the standard • Tariff codes are the scope of practice of the medical profession • Access = affordable healthcare + available doctors

36. Suggested Way Forward • SAMA willing to work with the HPCSA • Use the 2012 DBM as basis for tariff guideline • Must use actual cost studies on which to base tariffs • Competition Commission • Medical Industry must be exempted • Allow SAMA to suggest guideline to members • Allow doctors and funders to negotiate tariffs • Pricing Commission • The composition of Pricing Commission to be equitable