Affordable medical cover hamstrung by PMBs
Prescribed Minimum Benefits remain a major obstacle in the private healthcare sector.
While the building blocks of a way forward in healthcare within South Africa are being laid, Prescribed Minimum Benefits (PMBs) remain a major obstacle in the private healthcare sector, preventing medical schemes from keeping healthcare costs down.
By law, medical schemes must cover the treatment of 270 medical conditions in hospital and 26 chronic diseases defined in the Chronic Disease List (CDL), as well as emergency conditions.
"Due to PMBs, the cheapest benefit package a medical scheme is able to provide ranges between R400 and R570," says principal officer of Resolution Health Medical Scheme, Mark Arnold. "This puts private healthcare insurance out of the reach for most South Africans before covering additional benefits."
Despite the setup of a task team by the Council of Medical Schemes (CMS) in 2006 to investigate how a Low Income Medical Scheme (LIMS) option could be established using a different set of PMBs for low-income members, this has not progressed much further.
The strategy proposed by the task team included various principles to curb costs and ensure more affordable healthcare funding models as part of the previously envisage Social Health Insurance model. Principles included the introduction of PMBs, cross subsidisation of PMB benefits via the Risk Equalisation Fund as well as mandatory cover for all formally employed citizens. Within such a scenario, medical scheme coverage would have increased to approximately 15 million lives, immediately releasing the burden on the State whilst ensuring more affordable coverage to formally employed citizens.
"PMBs were intended to be part of a broader risk pooling exercise which never materialised. As a result, we are now left with only one piece of a broader strategy, leading to escalating costs throughout the healthcare industry to the detriment of medical schemes and its members," says Neels Barendrecht, chairman of Agility Global Health Solutions.
Barendrecht says the situation is exacerbated due to the pricing of PMBs not being regulated. "Some providers are charging as much as 500% or more than the recommended tariff for PMBs because they know the schemes have to cover them at cost and these providers not willing to contract at lower tariffs due to shortage of skills," says Barendrecht.
Health Minister Dr Aaron Motsoaledi said that a hospital-centric structure and rampant commercialisation in the health sector were driving up costs during his address on 23 April 2012. According to the Council of Medical Schemes, hospitals accounted for R31.1 billion of the R84.7 billion paid to all healthcare providers in 2011, while specialists accounted for R18.8 billion or 22%.
"In the private sector there is a need to go back to a primary care-focused model, for example channelling members through GPs instead of them going straight to specialists," says Barendrecht. "However, the PMBs in their current form prevent this and instead drive more hospitalisation in an effort to retain affordable cover."
Barendrecht says that South Africa's private medical insurance, compared to most other countries, covers a very rich set of benefits. "Nowhere in the world are private insurers expected to cover such a wide range of benefits," he says.
The situation is exacerbated due to very few private patients using state sector hospitals as a treatment option as is the case in developed countries. "In addition, the competitive nature of the private healthcare environment further aggravates the situation and prevents schemes from driving down costs," says Arnold.
He says a regulatory model that places all medical schemes on an equal footing so that schemes can reward GPs for a quality outcome is needed. "This would not compromise the care that members receive and could actually improve it," says Arnold.
Barendrecht says by implementing a more patient-centred healthcare system where schemes' funds are freed up to cover more preventative care, such as regular diagnostic tests and health screenings, would ensure that members would require less hospitalisation. "Schemes can still provide continuous care to members with fewer PMBs, or at least having the tariffs regulated for PMBs and within specified limits," he says.
Barendrecht suggests that a two-tiered PMB structure, with a shorter, more primary care-orientated list of PMBs for lower income earners, could enable medical schemes to provide more affordable healthcare coverage.