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HEALTH MARKET INQUIRY · the concept of mutuality Product Design & Benefits that support the...
Transcript of HEALTH MARKET INQUIRY · the concept of mutuality Product Design & Benefits that support the...
HEALTH MARKET
INQUIRY
• Introduce Cape Medical Plan
• Regulatory Environment
• Not-for-Profit Insurance model vs the For-Profit model
• Third Party Administration
• Tariff Negotiations
• Member Choice on Scheme Selection
• Third Party Payer
• Strength of Anti-selection
• Billing Rules
• Prescribed Minimum Benefits and Co-ordination
of Care
INTRODUCTION
Purpose of Inquiry
to determine if competition in the sector is working
and how it can be improved
CMP
• A small self-administered not-for-profit scheme
• Not administered as a typical short-term insurer
• Scheme is run as a mutual society
INTRODUCTION continued
• The framework exists and management
structures are designed to allow positive
member input and involvement
• This gives life to the concepts of Social
Solidarity and Mutuality
MUTUAL SOCIETY REFERENCE MODEL
Use relevant Technology to
improve personal contact with
all stakeholders
Skilled, Knowledgeable
staff who support & identify with
the concept of mutuality
Product Design & Benefits that support the Collective in
terms of long term
sustainability
Communications to meet & support
Transparency compliance & governance
requirements
Fully integrated system & processes
which drive rationalised Admin
& improved service delivery
Increased CMP Mgt visibility
(to membership at large)
Increased Board visibility (to membership
at large)
Genuine Empathy
that can be supported & afforded by
the collective
Peace of Mind & confidence in CMP’s decision
making
Experience a sense of
pride in belonging to this mutual society
Promoting Mutuality to create the balance between entitlement & responsibility
Providing Means to defray legitimate Healthcare costs
Long Term sustainability
Promoting social solidarity
INTRODUCTION continued
• At CMP the members are the Scheme and
the Scheme is the members
• 100% of the monthly contribution paid by
the members goes to funding benefits
CAPE MEDICAL PLAN
THE
MEMBERS
OF CAPE
MEDICAL PLAN
THE SCHEME ADMINISTRATION SUPPORTING THE MEMBERS
BROKERS
HEALTH CARE PROVIDERS
MANAGED CARE PROVIDERS
OUTSOURCED ADMINISTRATION
OTHER SERVICE
PROVIDERS
ADMINISTERED SCHEMES
THE
SCHEME
BROKERS
HEALTH CARE PROVIDERS
MANAGED CARE
PROVIDERS
OUTSOURCED
ADMINISTRATION
OTHER SERVICE
PROVIDERS
THE
MEMBERS
PROVIDERS OF OTHER
PRODUCTS
REGULATORY ENVIRONMENT
Regulations related to: • Open Enrolment
• Community Rating
• Inclusion of PMBs
Missing regulations: • Mandatory cover
• Some form of equalisation of Risk
• Payment tariffs for PMBs
THE MUTUAL SOCIETY HAS NO PROTECTION
REGULATORY ENVIRONMENT continued
DEMARCATION
• Not subject to the same regulations
• Consumer is not protected
• Medical schemes losing younger, healthier members
• Losing cross-subsidy
• Gap cover - and how they deal with PMBs
• Hospital Cash Plans and the hidden incentive to over utilise hospitals
NOT-FOR-PROFIT vs FOR-PROFIT MODEL
• South Africa is a developmental state
• Massive inequalities and large numbers of poor
citizens
• For-profit healthcare financing is not the most
desired model
• Is healthcare provision and access a public
good or a market to be exploited?
• Medical scheme contributions are beyond
many individuals
NOT-FOR-PROFIT vs FOR-PROFIT MODEL continued
• This undermines the constitutional imperative of access
to healthcare
• Unregulated insurance market exaggerates the
problem
• Recognise that it is improbable that all For-profit health
service provision from practitioners or healthcare
providers can be removed from the equation
• Greater scrutiny of fees and profits are in the public
interest
• Consumers cannot exercise the same level of control
over demand for healthcare as they can for other
necessities
NOT-FOR-PROFIT vs FOR-PROFIT MODEL continued
• CMP recognises there are advantages to the economies
of scale of large administration organisations
• Is there a place for Not-For-profit administrators and
managed care organisations
• They would be fully owned by the scheme members in
the same way that they own their scheme
• Current environment does not enable this type of
arrangement and undermines the provision of
healthcare in a developmental state as a public good
THIRD PARTY ADMINISTRATION
• Advantages of a large administrator
• Controlled by Insurance companies
• Trustees completely reliant on information given to them
• Economies of scale not evident
• CMP administration cost R108 pbpm
• Entirely funded out of investment income
• No extra cost layers
THIRD PARTY ADMINISTRATION continued
• CMP members have an extra R1 296 per annum
• A family of 3 will have an extra R3 888 per annum
• Never use BROKERS
• Often locked into commercial arrangements with large
insurers
• Our product information is materially misstated – example
GTC Medical Aid Survey report
TARIFF NEGOTIATIONS
• Hospital groupings listed on JSE and vulnerable to
investor sentiment
• Consistently high ratios of operating earnings before interest, tax and depreciation
• Small scheme a PRICE TAKER
• Collective bargaining for medical schemes outlawed in
2004
• Still happens through third parties
• Fee for service not ideal, but other models often lack
transparency
MEMBER CHOICE ON SCHEME SELECTION
• CMP does not pay brokers in any form
• A member chooses to join, wanting to be part of a scheme
with the philosophy of a member-centric mutual society
• To have a say in determining their particular level of funding
• We do this by member involvement and a reciprocal sense of belonging amongst the collective membership
• Benefit set is simple and easy to understand
• Management, Principal Officer and Trustees are visible
MEMBER CHOICE ON SCHEME SELECTION continued
• Members are not enticed through sophisticated marketing techniques which make it difficult for people to identify their
true needs
• Members join through referrals
• Staff are knowledgeable and support and identify with the
concept of social solidarity and mutuality
• Benefits support the collective membership
• Use the IT system we have developed and own
MEMBER CHOICE ON SCHEME SELECTION continued
• Member-centric mutual society
• Communicate with our members in plain language, consistently and openly
• Use electronic and paper-based communication
• Hold open days, benefit information sessions
• Personal visits with members
MEMBER CHOICE ON SCHEME SELECTION continued
• As a society we need to change the attitude of citizens
and organisations
• We do not just exist for ourselves, but also the good of society
• Without a well informed society our own rights will be
compromised
• Few schemes have a member-centric approach
• Often make it difficult for members to exercise their rights and do not pay PMBs as they ought to
THIRD PARTY PAYER
• Consumers are not able to compare or evaluate prices
• Lack of understandable information to make a decision on
treatment
• Difficult to assess quality and efficiency of healthcare
delivery
• The payment mechanism distorts the incentives of both the
consumer and the provider of healthcare
• Opportunity for supplier-induced demand
THIRD PARTY PAYER continued
• Excessive and unnecessary consumption with no
improvement in outcomes
• Vertical relationships - shares held in the hospital
• Hospital depends on specialist to generate
utilisation of the facility
STRENGTH OF ANTI-SELECTION
• Providers assist consumers to access the system in order to
ensure continued payment
• Differential rates are charged by suppliers
• Examples with Renal dialysis
• 2014 - R1 118 private
R1 880.79 medical aid
• 2016 – R1 642 private
R2 172.20 medical aid • Supplier referral
BILLING RULES
• Tariff coding system
• Controlled by the various societies and
professional groups
• Make unilateral changes
• Used to maximise income
• Unbundling of codes to support this
PRESCRIBED MINIMUM BENEFITS
• As we use 100% of contributions to fund benefits, if benefit
spend increases, so does the amount of money required
to fund this
• Why does it matter if PMBs and particularly those linked to
end-of-life care rise much faster than non-PMB benefits
and general inflation?
• Compulsory inclusion of PMBs was good for social
solidarity reasons
• The “pay in full at invoice cost” has had the negative effect of extending high cost treatments with little
likelihood of a positive outcome
PRESCRIBED MINIMUM BENEFITS continued
• Should we be incentivising clinicians to limit expensive
treatment?
• If we do not, is the bill simply maximised as it has to be paid?
• In the current environment unnecessary costs are being
added
• Necessity to have co-ordination of care for what is at the
moment a very fragmented delivery system
• We require clear, ethical and realistic protocols that are
nationally supported and drawn up by an independent
clinical body, with no link to hidden financial gains
PRESCRIBED MINIMUM BENEFITS continued
• CASE STUDY 1
• Baby born at 25 weeks, weighing 510 grams, respiratory difficulties
• Born with brain damage incompatible with life – missing temporal
and occipital lobes
• Suffered a stage 4 intraventricular brain haemorrhage
• Stopped breathing after a few weeks and was resuscitated
• Suffered and struggled for months and passed away at 7 months
• Cost to the collective of R3.2 million
PRESCRIBED MINIMUM BENEFITS continued
• CASE STUDY 2
• Patient underwent an uncomplicated right carotid
endarterectomy
• Developed a cardiac arrest and remained in a depressed
conscious state
• Showed no signs of recovery, no reaction to pain, verbal
commands, no spontaneous eye movement
• The neurologist at a point confirmed that the patient had suffered a “hypoxic brain injury” and was in a vegetative
state
PRESCRIBED MINIMUM BENEFITS continued
• Not responding to external stimuli and showed slow
frequency activity
• The patient remained in ICU fully ventilated for a further 3 weeks
• At this point palliative end-of-life care should have
been instituted
• Case cost R2 million of which R600 000 was incurred
after the neurologist confirmed the patient was in a
vegetative state
• Excessive treatment costs did not change the final
outcome
CONCLUSION
• Is the self-administered mutual society a better option
than private healthcare run by companies listed on the
Johannesburg Stock Exchange?
• We believe it is a more cost effective and fairer model
• It supports the intentions of moving healthcare into the
domain of a social good
• It will create a transparent environment where competition
in the sector will work for the people it is meant to serve
• Lowering of costs will support the constitutional imperative
of universal coverage and can run concurrently and
support NHI