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Explore the latest developments, roles, and challenges in the medical schemes industry, from membership trends to managed care programs. Get insights on governance, competition, complaints, and future projects.
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Council for Medical Schemes: An overview Prof Yosuf Veriava Chairperson: Council for Medical Schemes
Contents 1. Developments of CMS 2. Role of CMS 3. Industry overview Membership trends Benefits paid 4. Competition Commission “Market Inquiry “ 5. Complaints 6. Board of Trustees 7. CMS training 8. CMS indabas and forums 9. Future projects 10. RWOPS 11. Managed care programmes 12. Conclusion
Roles of CMS • Key Roles: • Adherence of schemes to the Medical Schemes Act (MSA) • Improved management and governance of schemes • Advises the Minister of Health on regulatory interventions
Reduction of medical schemes is noted in both sectors • On average the industry is losing 5 schemes per year • This translate to a reduction of up to 32 schemes in 2025 Membership trends
Benefits paid **Data to be interpreted with caution due to underreporting by schemes and members
… the healthcare market does not meet the requirements for normal competition… • No barriers to enter or exit the market • Perfect information • Zero transaction costs • Homogenous products • Others: • Non-increasing returns to scale; infinite buyers and sellers; perfect factor mobility; profit maximisation
…imperfect information in healthcare renders the normal considerations in achieving a balance ineffective… • Consumer sovereignty is challenged • Ascertaining costs and benefits of treatment is not simple • Third party payer
The private hospital market in metropolitan areas (50%+ of medical scheme population) was concentrated by 1999… Only 12.3% of private hospital beds were outside three main hospital groups by 2006…
Non-price competition results in a very high level of high-tech equipment in private hospitals
Terms of reference “Market inquiry” • To explore in-depth factors causing escalation of costs. • To unpack contractual relationships and interactions between and within the segments of the market • To inquire into the nature of price determination
“Market inquiry” on healthcare costs in the private sector • Inquiry launch: end September 2013; aim completion June 2015. • Probe various segments of private healthcare market • This is “…a general investigation into the state, nature and form of competition in a market, rather than a narrow investigation of specific conduct by any particular firm”.
Complaints categories • Technical/clinical complaints: highest of all categories • Payment of PMB’s at scheme tariff: highest number of complaints • Doctors frequently charge higher rates when providing PMB
Board of Trustees (BOT): Governance issues • Distribution of different types of trustees: Governance structure consists of 50% members vs. 50% employer groups
Major role of Trustees • Keep records of operations • Control systems • Communication • Payment of premiums • Professional Indemnity and Fidelity Guarantee cover • Expert Advice • Compliance with laws and rules • Confidentiality • Protect the interests of the members • Act with care, diligence, skill and good faith • Act impartially
Board of Trustees: compliance • Voluntary compliance not yet attained. • Schemes place too much reliance on advice from consultants and services providers. • Attendance rate of BOT training problematic.
CMS Training • Induction: Board of Trustees • In-depth: Board of Trustees • Broker training • Employer groups • Various consumer groups
CMS Indabas • Indaba means "business" or "matter" • Medical schemes industry challenges • Various opinions and interpretations of the Medical Schemes Act • Engage with stakeholders • Find common ground on pertinent issues • Optimal benefit for medical scheme members.
CMS Forums • Exchange information • 3 CMS stakeholder forums - Trustees and Principal Officers - Medical scheme administrators - Regulatory bodies
CMS Indabas and Forums • Next Indaba: Johannesburg 23 October 2013 • Next forums: Cape Town & Johannesburg end September • Regulators Forum: September
Future projects • Remunerative Work Outside the Public Sector (RWOPS) • National Health Insurance (NHI) • Health quality outcomes
Managed care • As the medical schemes population continues to grow older, the incidence of chronic disease will likely increase • The rising cost of private healthcare necessitate a consideration of the “value” of managed care programmes
Managed care • Effective way of controlling health care costs is to: • Manage the scope of benefits provided • The associated costs • Appropriateness of utilisation
Managed care • Within this regulatory obligation, CMS is currently finalising the health quality outcomes framework, which will include: • A trend analysis of health quality outcomes • Quantitative and qualitative data analysis of the value of managed care programmes
Conclusion Industry encouraged to work together with CMS in making private healthcare affordable and sustainable. Membership growth is a critical area of concern. Member education about their rights and responsibilities is important. Complying with provisions of Medical Schemes Act is crucial.