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© Benguela Health (Pty) Ltd 20101
Regulatory Protection for Medical Scheme Beneficiaries
FPI
3 August 2010
Durban
By
Esmé Prins-van den Berg
Director
Benguela Health (Pty) Ltd
Agenda
• Medical scheme trends• PMBs• ICD10 coding• Waiting periods• Tariffs• Medicine pricing• Generic substitution• Dispensing fees• Issues to consider when advising clients
© Benguela Health (Pty) Ltd 20102
© Benguela Health (Pty) Ltd 20103
Medical Scheme Trends
Medical Scheme Coverage 2008
• Principal members: 3 388 582 (2009: 3 490 493)• Beneficiaries: 7 874 826 (2009: 8 072 180)• Population Coverage
– 2008: 48.7m…16% medical scheme coverage– Best estimate 2009: 49.32m…16.4% medical scheme coverage
4 © Benguela Health (Pty) Ltd 2010
2008 OPEN SCHEMES RESTRICTED SCHEMES TOTAL
Principal members 2 136 960 1 251 622 3 388 582
Dependants 2 751 946 1 734 298 4 486 244
Beneficiaries 4 888 906 2 985 920 7 874 826
Trends: Medical Schemes
• Consolidation trend…– 2008: 119 schemes– Jan 2009:110 schemes– Dec 2009: 112 schemes– Will be further reduced due to amalgamations and liquidations….
• Bestmed & Telemed; Momentum Health & Ingwe; Oxygen & Medshield; GEMS & Medcor; Liberty Health & Medicover; Discovery Health & Umed…
– Administrator consolidation: Medscheme & Old Mutual; Eternity Health & Sanlam; Momentum Health & Metropolitan
5 © Benguela Health (Pty) Ltd 2010
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Benefit Pay-out: 1999-2008
© Benguela Health (Pty) Ltd 2010
Increases in expenditure:• FFS (over-servicing)• Imbalance between schemes and providers (e.g. hospital
groups)
7
Non-Health Care Expenditure: 1999-2008 (2008: R9.7b)
• Increase: 8.1%• Under CPIX
© Benguela Health (Pty) Ltd 2010
Medical Schemes: Financial Health
• Gross contribution income– 2008: R74b (R800.80 pabpm)– 2009: R84.9b (R889.10 pabpm)
• Operating Results
• Average solvency– 2008: 36.6%– 2009: 32.6%
8 © Benguela Health (Pty) Ltd 2010
2008 2009
Deficit before investment & other income
R929.4m R2.8b
Surplus after investment & other income
R2.4b R655.4m
© Benguela Health (Pty) Ltd 20109
Prescribed Minimum Benefits (PMBs)
PMBs
• Annexure A: www.medicalschemes.com • 2000
– Diagnosis and Treatment Pairs – DTPs– 270 conditions
• 2003– Emergencies– Statutory definition
• 2004– Chronic Disease List – CDL– 26 conditions
10© Benguela Health (Pty) Ltd 2010
PMBs• 270 Diagnosis and Treatment Pairs (DTPs)
– Code 155E• Diagnosis: Myocarditis; cardiomyopathy; transposition of great vessels;
hypoplastic left heart syndrome• Treatment: Medical and surgical management; cardiac transplant
– Code 903D• Diagnosis: Bacterial, viral, fungal pneumonia• Treatment: Medical management, ventilation
11© Benguela Health (Pty) Ltd 2010
PMBs
– Code 168S• Diagnosis: HIV Infection• Treatment:
– HIV Voluntary counseling and testing – Co-trimoxazole as preventive therapy – Screening and preventive therapy for TB – Diagnosis and treatment of sexually transmitted infections – Pain management in palliative care – Treatment of opportunistic infections– Prevention of mother to child transmission of HIV – Post-exposure prophylaxis following occupational exposure or sexual assault – Medical management and medication, including the provision of anti-retroviral
therapy, and ongoing monitoring for medicine effectiveness and safety, to the extent provided for in the national guidelines applicable in the public sector
12© Benguela Health (Pty) Ltd 2010
Medical and Surgical Management
• Medical management or surgical management, describes standard of treatment required, namely prevailing hospital-based medical or surgical diagnostic and treatment practice for specified condition
• Significant differences between public and private sector practices → follow public sector practice (national/provincial protocols) →No public sector protocol → Consultation with provincial authorities to ascertain practice
• It does not restrict setting to a hospital where relevant care should be provided
• It does not prevent delivery of any PMB on outpatient basis or in another setting
• Treatment and care to be rendered where it is clinically most appropriate
13© Benguela Health (Pty) Ltd 2010
PMBs
• Emergencies– Sudden and at the time an unexpected onset of a health condition – Requiring immediate medical or surgical treatment,– Failure of which
• Will result in serious impairment to bodily functions or • Will result in serious dysfunction of bodily organ or part or • Would place the person’s life in serious jeopardy
• Conditions on Chronic Disease List (CDL) – Statutory algorithms/treatment paths
14© Benguela Health (Pty) Ltd 2010
Chronic Disease List (CDL)
• Addison’s disease• Asthma• Bipolar Mood Disorder• Bronchiectasis• Cardiac Failure• Cardiomyopathy Disease• Chronic Renal Disease• Coronary Artery Disease• Crohn’s Disease• Diabetes Insipidus• Diabetes Mellitus Type 1 & 2• Chronic Obstructive Pulmonary
Disorder
• Dysrhythmias• Epilepsy• Glaucoma• Haemophilia• Hyperlipidaemia• Hypertension• Hypothyroidism• Multiple Sclerosis• Parkinson’s Disease• Rheumatoid Arthritis• Systemic Lupus Erythromatosis • Schizophrenia• Ulcerative colitis
15© Benguela Health (Pty) Ltd 2010
PMBs• 2004:
– DSPs (Designated Service Providers)…preferred providers / preferred provider networks
• Funding– Full and unlimited funding of diagnosis, treatment and care costs– Diagnosis-based (ICD10 codes)
• What are ICD10 codes?– International Statistical Classification of Diseases and Related Health
Problems (ICD10)– Consists of +/- 12 000 diagnostic codes– Listed alpha-numerically– Used to index health care data– Confidentiality
• Why are they important?– Correct benefit pool– Full funding– Different rules for PMBs, co-pays, etc.
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© Benguela Health (Pty) Ltd 2010
PMBs– Co-pays for
• Voluntary use of non-DSPs• Clinically appropriate and effective drug on formulary – beneficiary
chooses alternative drug knowingly• Medicines: Reference price lists
– Full and unlimited funding for involuntary use of non-DSPs– Involuntary use
• Emergencies• No DSP within reasonable proximity of work or residence of beneficiary• Service unavailable or unreasonable delays
– Benefit limits?– Biological drugs / Biosimilars?– PET CT scans?
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© Benguela Health (Pty) Ltd 2010
PMBs
• Interpretation of “full costs”– CMS: Appeal Committee Decisions– Industry: Opposing Legal Opinions
• Many schemes and administrators pay benefits in accordance with scheme rules
• CMS: Must enforce compliance with own legislation• Industry Task Team
– CMS/DoH– Funders– Providers– Consumers
• Code of Conduct: 30 July 2010• Change in legislation?
19© Benguela Health (Pty) Ltd 2010
© Benguela Health (Pty) Ltd 2010
Managed Care
• PMBs may be subject to managed care interventions– Protocols– Disease management programmes– Formularies– Networks– Pre-authorisation
• Not for emergencies• Therefore
– Access to benefits may be subject to compliance with such interventions
– E.g. registration on medicine benefit programme could be conditional prior to being able to access benefit
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Formularies & Protocols
• Regulations 15H (Protocols) & I (Formularies)• Evidence-based medicine, cost-effectiveness and affordability
– Evidence-based medicine = • Conscientious, explicit and judicious use of current best evidence in
making decisions about care of beneficiaries whereby individual clinical experience is integrated with best available external clinical evidence from systematic research
• Provide to providers, beneficiaries, public on request• Appropriate substitution where ineffective or (would) cause
adverse reaction without penalty to beneficiary– Motivations by doctors– Cannot for example impose higher co-payment
21© Benguela Health (Pty) Ltd 2010
Waiting Periods S 29A, Regulation 12
• Condition-specific– Max period: 12 months no benefits in respect of condition– Condition for which medical advice, diagnosis, care or treatment
recommended/received in 12 months prior to application for membership of medical scheme
– Medical report may be required by scheme … must pay costs of any medical tests or examinations required by scheme for purposes of compilation of report
• General– Max period: 3 months no benefits
• Change benefit options: Only unexpired periods of waiting periods, no new periods
• Child dependant born during period of membership: No waiting periods
© Benguela Health (Pty) Ltd 2010
Waiting Periods
• Category 1– First time joiners– Applies for membership > 90 days after previous membership– Waiting periods
• General and• Condition-specific• Apply to PMBs
© Benguela Health (Pty) Ltd 2010
Waiting Periods
• Category 2– = 24 months continuous medical scheme benefits
• Previously beneficiary of medical scheme for continuous period of 24 months
• Termination < 90 days prior to application– Waiting periods
• Condition-specific– Not to PMBs
• Unexpired portion of general or condition-specific imposed by previous scheme
© Benguela Health (Pty) Ltd 2010
Waiting Periods
• Category 3– > 24 months continuous medical scheme benefits
• Previously beneficiary of medical scheme for continuous period of > 24 months
• Terminated < 90 days prior to application– Waiting periods
• General– Not to PMBs
• Unexpired portion of general or condition-specific ?
© Benguela Health (Pty) Ltd 2010
Waiting Periods
• Category 4– Changes for reasons of employment
• Previously beneficiary of medical scheme• Terminated < 90 days prior to application• Because of change in employment or• Employer changes/terminates medical scheme cover of employees:
Change at beginning of financial year or reasonable notice given for transfer at beginning of financial year
– Waiting periods• No waiting periods• Only unexpired portions or previously imposed waiting periods
– General– Condition-specific
© Benguela Health (Pty) Ltd 2010
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WAITING PERIODS
Category 3 Month General
12 Month Condition-Specific
Applicable to PMBs
New applicants/persons not members for preceding 90 days
Yes Yes Yes
Applicants who were members for 2 years
No Yes No
Applicants who were members for more than 2 years
Yes No No
Change of benefits No No N/A
Child dependant born during period of membership
No No N/A
Involuntary transfer - change in employment or employer change scheme
No No N/A
Source: CMS © Benguela Health (Pty) Ltd 2010
Beneficiaries’ Rights
• Entitled to full and unlimited funding for PMBs….exceptions (DSPs)….schemes apply differently….often providers charge more for PMBs
• Payment may not occur from savings accounts• No benefit limits• Must submit accurate ICD codes• Access to protocols and formularies• Challenge evidence basis of formulary and/or protocols• Ineffective/adverse reactions - protocols and formularies - need
support of treating practitioner to enforce change at scheme level
© Benguela Health (Pty) Ltd 2010
Disputes Medical/
Clinical Advisor
Medical/
Clinical Governance Committee
Principal Officer
Board of Trustees
Disputes Committee /
CMS
Courts
© Benguela Health (Pty) Ltd 2010
29
Ex Gratia
In the Pipeline: Review of PMB Package (2008)
RevisedPMB Package
In-Hospital Care
DTPs
CDL
Out-of-Hospital Care
DTPs/CDL
Primary and Preventative Care
Basic Dentistry
Basic Optometry
Medicine ListsNegative List (Exclusions)
Po
tentially A
bo
ve T
hresh
old
Ou
t-of-
Ho
spital B
enefits
30 © Benguela Health (Pty) Ltd 2010
© Benguela Health (Pty) Ltd 201031
Tariffs
Procedural Coding and Tariffs
• RAMS: Statutory tariff (Contracted in vs Contracted out) (Until 1993)
↓• BHF (scale of benefits) & SAMA (Private Tariffs)
↓• Competition Commission: 2004…anti-competitive
↓• CMS (NHRPL) → DoH (RPL) (2007)
– National Health Act (Regulations)• RPLs• Benchmark tariffs
– Doctors can determine own tariffs– Schemes have specified reimbursement rates
• Court Case February 2010– RPL and Regulations declared null and void retroactively until 2007
32© Benguela Health (Pty) Ltd 2010
Procedural Coding and Tariffs
• HPCSA (Ethical Price List)– Scrapped– RPL should be benchmark– Only charges above RPL with informed consent
• Central negotiations again in future?– Draft legislation– Independent Commission
• Where does this leave the beneficiary?• Over-charging?
– HPCSA
33© Benguela Health (Pty) Ltd 2010
© Benguela Health (Pty) Ltd 201034
Medicines
Medicine Pricing• Medicine pricing
– Single Exit Price (2004)– Formula– Annual increases authorised by DG of Health– International Benchmarking
35© Benguela Health (Pty) Ltd 2010
Generic Substitution• Obligation on pharmacists (and dispensing doctors)…Medicines Act• No substitution if
– Forbidden by patient– Prescriber wrote in own hand next to item ‘no substitution’– Retail price of generic is higher– MCC declares product not substitutable
• MCC Guidelines (April 2010)– Only biosomilars non-substitutable– Previously also
• With narrow therapeutic range• Shown erratic intra and inter patient responses• Dosage forms can result in clinically significant bio-availability problems• Intended for the critically ill, geriatric and paediatric patients
• Reasonable steps to inform of substitution• Generally no/lesser co-payment
36© Benguela Health (Pty) Ltd 2010
Licensed Dispensers: Dispensing Fees
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Dispensing Fees
SINGLE EXIT PRICE (PROPOSED NEW FEES)
DISPENSING FEE(MAX; EXCL VAT)
< R65 (≤ R75) 30% of SEP (30% of SEP)
≥ R65 (> R75) R20 (R22.50)
© Benguela Health (Pty) Ltd 2010
Pharmacists: Proposed Fees
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Dispensing Fees
SINGLE EXIT PRICE DISPENSING FEE(MAX; EXCL VAT)
< R75 R6 + 46% of SEP
≥ R75 < R200 R15 + 33% of SEP
≥ R200 < R700 R51 + 15% of SEP
≥ R700 R121 + 5% of SEP
© Benguela Health (Pty) Ltd 2010
• Retail pharmacists to annually disclose certain information to Director-General of Health
• Display dispensing fee structure in pharmacy• Provide detailed invoices
© Benguela Health (Pty) Ltd 201039
Issues to be Considered
Advice to Clients
• Complex environment• Expensive• Financially healthy medical scheme…will scheme be around in the
future?• Good governance• Benefits
– Benefits when in need– Costly treatments covered
• Hospitalisation• Cancer
• Good administration• Compliant with legislation• Business ethic• Impact of NHI• Affordability
40 © Benguela Health (Pty) Ltd 2010
© Benguela Health (Pty) Ltd 201041
Conclusion
© Benguela Health (Pty) Ltd 201042
Questions?
Thank You
esme@benguelahealth.com
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