PORTFOLIO COMMITTEE ON PUBLIC SERVICE AND ADMINISTRATION GEMS and its performance

1. PORTFOLIO COMMITTEE ON PUBLIC SERVICE AND ADMINISTRATIONGEMS and its performance 5 May 2010

2. Purpose • The purpose of this presentation is to provide the Portfolio Committee on Public Service and Administration with an update on GEMS and its performance in the previous year by focusing on: • A brief appraisal of the Scheme’s background; • An overview of the performance in 2009; and • An update on the performance in 2010.

3. Founding Policy Objective • The overarching mandate issued by Cabinet in 2004 • “The state as an employer seeks to ensure that there is adequate provisioning of healthcare coverage to public service employees that is efficient, cost-effective and equitable; and to provide further options for those who wish to purchase more extensive cover” • Mandate was informed by entrenched inequity, high costs, absent employer control/influence and limited access to scheme benefits by all employees

4. Policy Steps • PSCBC Res 7/2000 provided for restructuring of medical assistance • Feasibility of establishing a Scheme was tested in 2004 • Cabinet approved the registration of GEMS in 2004 • The Scheme was registered in 2005 and commenced enrolment in 2006 • The new Medical Subsidy Policy, after agreement in the PSCBC, was introduced in July 2006 • President’s Coordinating Council resolved that Executive Authorities and HoD’s are to promote employee awareness of the subsidy policy

5. Legal Form and Eligibility • Restricted membership medical scheme • Full registration under the Medical Schemes Act • Reports to the Registrar of Medical Schemes • Subscribes to Medical Schemes Act 131 of 1998 • Establishment provided for in PSCBC Resolution 1/2006 • Member eligibility is limited to • National Departments and Provincial Departments & Administrations listed in Schedule 1 and 2 of the Public Service Act • Organisational Components listed in Schedule 3 of the PSAct • Approved employer groups (or related government structures) • NB: SANDF, NIA and SASS have conditions of service which do not allow enrolment on GEMS

6. Corporate Structure • Corporate structure consists of: • Board of Trustees (50% elected by members; 50% appointed by the MPSA) that governs the affairs of the Scheme; • PO implements directives of the Board and manages the business; and • Scheme Executive (5) supports PO in monitoring and managing the service levels and contractual obligations of appointed service providers • Efficient scheme ‘head office’ of 28 team members • Strategic and risk management are owned and managed internally • Operational activities outsourced (over 8 operational contracts) • Resources dedicated to ensuring effective member services • Performance of the scheme is constantly monitored • ‘Locus of control’ always rests within the Scheme

7. Strategic Thrust • Mission Statement – • To provide all public service employees with equitable access to affordable and comprehensive healthcare benefits • Vision Statement - • An excellent, sustainable and effective medical scheme for all public service employees • Value Statement - • Excellence Simplicity Clear communication • Member orientation Consistent application • Flexibility Innovative Responsiveness • Value for money Prudence Integrity

8. Member Services

9. Purpose • The purpose of this presentation is to provide the Portfolio Committee on Public Service and Administration with an update on GEMS and its performance in the previous year by focusing on: • A brief appraisal of the Scheme’s background; • An overview of the performance in 2009; and • An update on the performance in 2010.

10. 2009 Business Indicators

11. 2009 Business Indicators

12. 2009 Business Indicators

13. 2009 Business Indicators

14. Achievements in 2009 • Rapid growth continued to over 429,000 members • Innovative services were introduced • SMS benefit check and Maternity programme • Over 10,000 healthcare providers registered on Friends of GEMS • Independent member satisfaction survey revealed that over 75% of members have a positive perception of GEMS • 2nd GEMS Symposium was held successfully in KZN • Complaints remained low despite the continued growth • Annual Board Effectiveness Appraisal found the Board to be ‘Good’ • Successful AGM, with record attendance, held in Nelspruit • Record of posting surpluses continued • Audit environment well maintained • 4th Annual unqualified audit opinion received • SLA’s were maintained and confirmed by way of an audit • Transfer of the business of MEDCOR to GEMS conducted • Fraud Prevention Plan was implemented with the support of the SIU

15. Challenges in 2009 • Claims were higher than anticipated • Numerous epidemics • Statutory tariffs increased in 2009 for 2009 • Onyx option posted a loss • Reserves at 11,08% • Cost of living increases, numerous OSD’s and an adjustment to salary levels were introduced effective 1 July 2009 • 2009 contribution income bands were proactively adjusted • Over 11% of members were affected and dissatisfaction increased • Income bands will be assessed in 2010 to ensure an even spread • Assisting the Dept. of International Relations and Cooperation with the development of an international benefit option for employees stationed abroad • Council for Medical Schemes instructed GEMS to amend its member eligibility rules to remove the application of discretion by the Board

16. In Summary • Significant progress was made • The strategic shift in healthcare management took place • 2009 Strategic Plan Progress Report • 96% of Indicators met • 2009 Three Year Strategic Plan Progress Report • All indicators met • A further level of achievement was evident when reviewing the progress made • GEMS did not receive a qualified audit • GEMS did not experience a cash crisis • GEMS did not experience a service catastrophe • GEMS was not brought into disrepute

17. Purpose • The purpose of this presentation is to provide the Portfolio Committee on Public Service and Administration with an update on GEMS and its performance in the previous year by focusing on: • A brief appraisal of the Scheme’s background; • An overview of the performance in 2009; and • An update on the performance in 2010.

18. 2010 Strategic Plan • The 2010 Strategic Plan is informed by: • Performance in 2009; • Consideration of strategic matters that require attention in 2010; and • Appreciation of the capacity and resources to do the approved work. • “Sustaining excellence by reviewing the effectiveness of GEMS’ business, incorporating efficiencies and providing an enabling environment for future success” • Initiated strategies must be implemented and practically applied • There is a need to take stock and appraise ‘where GEMS is’ so as to effectively plan the next three year strategy • This prudent approach will sustain the excellence of GEMS business in an environment that is characterized by extensive change

19. Business Indicators 469,000 members 1,310,000 beneficiaries

20. Business Indicators

21. Business Indicators • 151,908 employees are on salary level 17 • 20,505 employees are covered as dependants on GEMS • 821,178 employees (69.37% of the December 2009 total) are “employed all the while” • 371,168 not covered as members on any scheme reduced to 287,668 (reduction of 22.49%) •  172,222 employees terminated their service • 12.61% were members of GEMS •  362,464 new employees appointed since February 2006 • 107,153 (29.57%) are covered by GEMS, whilst 2,519 (0.69%) are covered by other schemes • Coverage of employees on salary levels 1 to 5 are tabulated below:

22. Business Indicators

23. Work Underway • Implementing Q2 deliverables in the strategic plan • Implementing approach to member consumerism • Confirming GEMS’ member eligibility rules • Monitoring the implementation of NHI • Attending to potential changes to the Board • The term of 3 employer appointed and 3 member elected trustees ends in July • Confirming the status of employer appointed Trustees • Implementing the Trustee Election Plan • Managing the Scheme’s financial performance (and Onyx) • Monitoring the 2010 claims experience against projections • Q1 of 2010 better than Q1 of 2009 • Preparing for 2010 audits • Participating in CMS task teams • Participating in MPSA activities

24. Conclusion • Business is operating well • Growth is significant • Work is centered on executing the Strategic Plan • Risks have been identified and are being mitigated • Controls are established and well implemented • In a press release issued by the CMS as it turns 10 years old, the CMS states that it smiles at its achievements, such as: • The “registration of the Government Employees Medical Scheme (GEMS), contributing to significant growth in the number of medical scheme beneficiaries”. • It is proposed that the Portfolio Committee on Public Service and Administration note this update on GEMS and its performance in the previous year