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PRESENTATION TO HPC 12 OCTOBER 2012 CAPE TOWN

This presentation provides an overview of the legislated mandate of the Council for Medical Schemes (CMS), highlights of the CMS in 2011-2012, and an overview of the financial results. It also covers the non-financial information and trends in the medical schemes industry.

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PRESENTATION TO HPC 12 OCTOBER 2012 CAPE TOWN

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  1. PRESENTATION TO HPC 12 OCTOBER 2012 CAPE TOWN

  2. Outline of presentation • Legislated mandate of the Council for Medical Schemes (CMS) • Highlights for the CMS in 2011- 2012 • Financial year 1 April 2011 to 31 March 2012 • Overview of the financial results of CMS 2011 -12 4. Overview of medical schemes industry 2011 • Financial year 1 January-31 December 2011 • Non financial information • Financial information

  3. DR MONWABISI GANTSHO CE & REGISTRAR OF MEDICAL SCHEMES

  4. 1. Council’s legislated mandate • Medical Schemes Act 131 of 1998 • Act governs Council & industry • Medical schemes • Administrators of medical schemes • Managed care organisations • Healthcare brokers & broker organisations • Heart of the Act: protecting beneficiaries & regulating medical schemes industry • Entire health system benefits

  5. How the Act protects you & me • Promote non-discriminatory access to privately funded healthcare through: • Open enrolment • Community rating • Guaranteed or prescribed minimum benefits (PMBs) • Promote financial stability & sustainability • Encourage your active participation in scheme affairs • Investigate & resolve complaints

  6. 2. Highlights of Council in 2011-2012 • National Health Insurance (NHI) system • Medical Schemes Amendment Bill • Demarcation between medical schemes & health insurance products • Prescribed minimum benefits (PMBs), a pillar of the Medical Schemes Act • Determination of prices in the private health sector

  7. 2. Highlights of Council in 2011-2012 cont. • Duty to speak openly (SCA judgement in Selfmed defamation case) • Inspections & investigations (Sizwe & Medshield) • How RETAP became ITAP • Medical scheme rule amendments for 2012 • Guidance on contribution increases • Observed trends in registered contribution increases

  8. 2. Highlights of Council in 2011-2012 cont. • Improved regulatory effectiveness • Routine inspections of medical schemes • Improved accreditation standards for managed care organisations (MCOs) • Real-Time Monitoring (RTM) of the industry • Composite Risk Index (CRI), or the “traffic light approach” to regulating

  9. 2. Highlights of Council in 2011-2012 cont. • Auditor-General: 12th unqualified audit in a row (since our establishment in 2000) • Our budget comes mainly from: • Levies charged to medical schemes (per member per year) • Accreditation fees (administrators, MCOs, brokers) • Registration fees (medical schemes & their rules) • Received R94 million in 2011-2012 to regulate an industry worth R107 billion in contributions received in 2011

  10. 2. Highlights of Council in 2011-2012 cont. • Nature & extent of litigation against the Registrar & Council remained unpredictable • Council’s expenditure on legal fees amounted to R10.4 million in the financial year under review • By comparison, medical schemes spent a total of R50.5 million on legal fees, including litigation, in their 2011 financial year • Six schemes who appealed against decisions of the Registrar & Council in 2011-2012 spent R27.0 million on legal fees, including litigation

  11. Comparative spend on legal fees

  12. 2. Highlights of Council in 2011-2012 cont. • One of Council’s key responsibilities is to resolve complaints relating to the medical schemes industry • Council receives thousands of complaints every financial year, and this number keeps growing • Received 6 138 complaints in 2011-2012 • Resolved 5 963 complaints in 2011-2012 • Most complaints relate to the non- or short-payment of prescribed minimum benefits (PMBs)

  13. 2. Highlights of Council in 2011-2012 cont.

  14. OVERVIEW OF CMS FINANCIAL RESULTS DAN LEHUTJO CFO

  15. Overview of the financial results of CMS 2011 -12 • Audit report • Statement of financial position • Statement of financial performance

  16. Audit Report • Report on the financial statement • Clean or Unqualified Opinion • Predetermined objectives • Compliance with laws & regulations • Internal control

  17. Statement of financial position

  18. Statement of financial position

  19. Statement of financial position

  20. Statement of financial position

  21. Statement of financial performance

  22. Revenue from exchange transactions

  23. Other income

  24. Statement of financial performance

  25. Statement of financial performance

  26. Statement of financial performance

  27. Statement of financial performance

  28. NON FINANCIAL INFORMATION MICHAEL WILLIE ACTING SENIOR MANAGER

  29. Strategic goal 1 • Access to good quality medical scheme cover maximized • Improve risk pools • Enhance community rating • Open enrollment • Prescribe minimum benefits

  30. Trends in schemes

  31. Strategic goal 2 • Medical schemes are properly governed, responsive to the environment and beneficiaries are informed and protected • Ageing profile of beneficiaries • Membership • Governance failures • Increasing healthcare costs

  32. Beneficiaries (Million)

  33. Beneficiaries cont. • Trend: from 6.7 million beneficiaries in 2000 (the introduction of the Medical Schemes Act 131 of 1998) to 8.5 million beneficiaries in 2011 – an increase of 26.9% • Open schemes trend: from 4.7 million in 2000 to 4.8 million in 2011 (2.1% growth) • Restricted schemes trend: from 2.1 million in 2000 to 3.7 million in 2011 (76.2% growth) • GEMS (Government Employees Medical Scheme) is responsible for growth in restricted schemes membership (since 2006)

  34. Age of beneficiaries • Average age of beneficiaries: 31.6 years (31.5 years in 2010) • Average age in open schemes: 33.3 years • Average age in restricted schemes: 29.5 years • Explained by GEMS (since 2006) • Open schemes have been growing older • Restricted schemes have been growing younger

  35. Age of beneficiaries cont.

  36. Utilisation of healthcare services • More beneficiaries used private hospitals in 2011, and they stayed longer than in 2010 • 167.7-178.81 per 1000 average beneficiaries • ALOS 3.0-3.2 days • Fewer beneficiaries used general practitioners (GPs), dentists & private nurses in 2011 • Beneficiaries in restricted schemes use healthcare services more often & for longer than beneficiaries in open schemes

  37. Utilisation of healthcare services Real increase or data quality ?

  38. Benefits paid (% of all) TH:36.6 % MS:22.8% Meds:16.3% GPs:7.3% Other: 17.3% R93.2 Billion

  39. Total healthcare benefits paid 2000-2011 2011 data PH: R330.7 MS: 208.1 Meds: 148.2 Dentists: R25.2 Dental S: R24.7 S&AP: R71.8

  40. Strategic goal 3 -4 • Council is responsive to the needs of the environment • Provide influential strategic advice and support to health policy

  41. FINANCIAL INFORMATION TEBOGO MAZIYA HEAD: FINANCIAL SUPERVISION

  42. Financial information • Claims as a function of contributions • Relationship between claims and non-healthcare expenditure • Components of non-healthcare expenditure • Net healthcare results • Solvency • Overall trends

  43. Contributions and claims

  44. Contributions and claims(pabpm) pabpm = per average beneficiary per month

  45. Risk claims ratio all schemes

  46. Claims and non-healthcare expenditure pabpa = per average beneficiary per annum

  47. Non-healthcare expenditure Consists mainly of: • Gross administration expenditure (biggest component) – 67.6% • Managed healthcare: management services – 20.1% (19.5%) • Brokers fees – 11.5% • Impaired receivables – 0.9% (1.5%) Figures in brackets depicts 2010 figures

  48. Non-healthcare expenditure • Increased by 4.8% to R12.1 billion • pabpm figures increased by 2.7% • Open: increased by 4.8% to R154.1 (R147.1) • Restricted: increased by 2.7% to R76.1 (R74.1) pabpm = per average beneficiary per month Figures in brackets depicts 2010 figures

  49. Non-healthcare expenditure

  50. Gross administration expenditure • Increased by 4.7% to R8.2 billion • Open schemes: increased 3.0% to R5.6 billion • Restricted schemes: increased 9.1% to R2.4 billion • GAE is main component of NHE: 67.6% • Adjusted for membership (pabpm): • Open: R101.4 (R96.6) • Restricted: R54.9 (R54.1) pabpm = per average beneficiary per month Figures in brackets depicts 2010 figures

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