Council for Medical Schemes Council for Medical Schemes 2008-9 Annual Report 2008-9 Annual Report

PresentationPresentation

KP MatshidzeKP MatshidzeActing CEO and RegistrarActing CEO and Registrar

Council for Medical SchemesCouncil for Medical Schemes18 November 200918 November 2009

OutlineOutline• Legislative Mandate• Functions of Council• Highlights of Operational Activities• Overview of trends in the medical schemes • Concluding remarks• Questions and comments

Legislative MandateLegislative Mandate• The Council for Medical Schemes was established in terms of the Medical

Schemes Act, 131 of 1998, key policy objective of which is to:• Protect the interests of members

– Promote non-discriminatory access to privately funded health care through:

– Open enrolment– Community rating– Guaranteed benefits

– Promote financial stability and sustainability– Encourage active participation of members in scheme affairs– Investigate and resolve complaints from members

Other Legislative ProvisionsOther Legislative Provisions• Constitution• National Health Act• Medicines and Related Substances Act• Health Professions Act• Pharmacy Act• Nursing Act• Competitions Act

Functions of CouncilFunctions of Council• Protect the interest of the beneficiaries at all times• Control and coordinate the functioning of medical schemes in a manner that is

complementary with national health policy• Make recommendations to the Minister on the criteria for the measurement of

quality and outcomes of the relevant health services provided for by medical schemes, and such other services as the Council may from time to time determine

• Investigate complaints and settle disputes in relation to the affairs of medical schemes provided for in this Act

• Collect and disseminate information about private healthcare• Makes rules, not inconsistent with provisions of this Act for the purpose of the

performance of its functions and the exercise of its powers• Advise the Minister on any matter concerning medical schemes and• Perform any other functions conferred on the Council by the Minister or by this Act

Our VisionOur Vision

To regulate fairly and effectively in order to protect the interests of beneficiaries, and to promote equity in access to medical schemes

Our 7 Strategic AimsOur 7 Strategic Aims Secure an appropriate level of protection for beneficiaries of medical schemes and

the public by authorizing the conduct of medical schemes business and monitoring the financial performance and soundness of schemes

Provide support and guidance to trustees and promote understanding of the medical schemes environment by trustees, beneficiaries and the public

Foster compliance with the Act by medical schemes, administrators and brokers and initiate enforcement action where required

Investigate and resolve complaints raised by beneficiaries and the public

Monitor the impact of the Act, research developments and recommend policy options to improve the regulatory environment

Foster the continued development of the CMS as an employer of choice

Develop strategic alliances nationally, regionally and internationally

CMS Accountability CMS Accountability StructuresStructures

MINISTER OF HEALTHDr Aaron Motsoaledi

COUNCIL

12 Members

ACTING CEO & REGISTRAR

Khathutshelo Patrick Matshidze

Composition of the CouncilComposition of the Council• Consists of Chairperson, Deputy Chairperson and 10 members,

appointed by the Minister of Health

• Chairperson – Prof William Pick• Deputy Chairperson – Ms Tracy Fortune

• The Council comprises a broad spectrum of highly skilled senior people which include the representative from the National Department of Health, actuaries, lawyers, medical specialists, consumer representatives and general practitioners

Committees of CouncilCommittees of Council

• Council comprises of the following committees:– EXCO– Council

• The following specialist sub-committees have been established to aid Council in the fulfillment of its complex mandate:

• Appeals• Human Resources• Audit

REF PROJECTREF PROJECTACCREDITATIONACCREDITATION

BENEFITS MANAGEMENTBENEFITS MANAGEMENT

IT & KMIT & KM

HUMAN RESOURCESHUMAN RESOURCES

RESEARCH AND MONITORINGRESEARCH AND MONITORING

COMPLIANCE AND EDUCATION & TRAININGCOMPLIANCE AND EDUCATION & TRAINING

FINANCIAL SUPERVISIONFINANCIAL SUPERVISION

LEGAL SERIVCES LEGAL SERIVCES

REGISTRAR’S OFFICEREGISTRAR’S OFFICE

ACTING CEO & REGISTRARACTING CEO & REGISTRAR

COMMUNICATIONCOMMUNICATIONPERSONAL ASSISTANTPERSONAL ASSISTANT

COMPLAINTS ADJUDICATION MANAGER COMPLAINTS ADJUDICATION MANAGER INTERNAL FINANCEINTERNAL FINANCE

HighlightsHighlights

Operational ActivitiesOperational Activities1. Ongoing support to DoH on Risk Equalisation Fund (REF)2. Support to DoH on Prescribed Minimum Benefits (PMB)

Review Process3. Medical Scheme Amendment Bill – Bill lapsed

– Technical amendments: minor corrections– Substantive amendments

• Risk Equalisation Fund (REF)• Benefits restructuring• Governance• Low Income Medical Scheme (LIMS)

4. Demarcation– Task team– Investigations

Operational Activities Operational Activities (continued)(continued)

5. Broker Consultation Documents6. Guidelines on Good Governance7. Guidelines on Fit and Proper Standards8. Complaints

• Total received: 3138• Appeal Committee• Appeal Board

Operational Activities Operational Activities (continued)(continued)Top 10 Complaints Top 10 Complaints

Type of complaint Period

  2007-08 % of total 2008-09 % of total

Unpaid accounts 1 066 36.9 1 166 37.2

Scheme refuses to issue authorisation 231 8.0 320 10.2Limitation of benefits / PMBs / formularies / DSPs 359 12.4 291 9.3

Reversal and short-payment of accounts 102 3.5 225 7.2

Non-payment of refund 138 4.8 193 6.2

Administrative inefficiencies 189 6.5 170 5.4

Termination of membership 161 5.6 163 5.2

Misunderstanding with scheme 204 7.1 132 4.2

Exclusion of a condition and/or benefits 131 4.5 98 3.1

Unauthorised deductions 72 2.5 67 2.1

Overview of trends in Overview of trends in medical schemesmedical schemes

Entities in the industryEntities in the industryMedical Schemes Entity Number

Open 37

Restricted 82

Consolidated 119

Commercial Intermediaries  

Administrators 23

Brokers 7755

Brokerages 2081

Managed Care 55

Trends in number of schemesTrends in number of schemes

Coverage of beneficiaries from 2000 Coverage of beneficiaries from 2000 to 2008to 2008

Demographic profile of Demographic profile of beneficiariesbeneficiaries

Average Pensioner Age (years) ratio (%)

Open 32.6 (31.9) 6.7 (6.3)Restricted 29.8 (30.4) 5.5 (6.0)All schemes 31.5 (31.4) 6.2 (6.2)

*Figures in brackets are for 2007

Contributions and claimsContributions and claimsTotal:

– Contributions increased by 13.2% to R74.0 billion– Relevant healthcare expenditure incurred increased by 13.6% to R64.9

billion

Risk:– Contributions increased by 13.5% to R67.2 billion– Relevant healthcare expenditure incurred increased by 14.0% to R58.4

billion

Savings:– MSA contributions increased by 9.7% to R6.9 billion– MSA claims increased by 10.6% to R6.5 billion

Contributions and claimsContributions and claims(pabpm)(pabpm)

Total:– Contributions increased by 9.2% to R800.8 (R733.0)– Gross relevant healthcare expenditure incurred increased by 9.7% to

R701.2 (R639.2)

Risk:– Contributions grew by 9.6% to R726.0 (R662.4)– Relevant healthcare expenditure incurred increased by 10.0% to

R630.7 (R573.3)

Savings:– MSA contributions increased by 6.9% to R100.9 (R94.3)– MSA claims increased by 7.9% to R95.0 (R88.1)

*Figures in brackets are for 2007

Risk claims ratio for all schemes: 2008 Risk claims ratio for all schemes: 2008 prices*prices*

Utilisation of services Utilisation of services (per 1 000 beneficiaries)

  2008 2007

Private providers Open RestrictedConsolidate

d Consolidated

GP visits at least once a year 706.6 746.2 721.5 731.8Dentist visits at least once a year 197.0 240.1 213.3 222.5

Private facilities

Admitted to hospitals 179.6 173.5 177.3 181.8

Number of admissions 250.9 204.5 233.4 295.4

Proportion of all benefits paid to Proportion of all benefits paid to providers providers

Total benefits paid per beneficiary Total benefits paid per beneficiary per month per month (2008 prices)(2008 prices)

Net healthcare resultsNet healthcare results

Industry solvency trends for all Industry solvency trends for all schemesschemes

Non-healthcare expenditureNon-healthcare expenditureConsists mainly of :• Administration • Managed healthcare: management services• Brokers fees• Impaired receivables

Non-healthcare expenditure (NHE)Non-healthcare expenditure (NHE)

• Increased by 8.1% to R9.7 billion• Increases lower than CPIX over past 3 years• Pabpm figures increased by 4.3%

– Open: Increased by 8.2% from R119.0 (R128.8)– Restricted: Increased by 0.7% from R64.8 (R65.2)

Administration expenditure Administration expenditure (GAE)(GAE)

• Increased by 6.5% to R6.8 billion– Open schemes: increased 5.1% to R5.1 billion– Restricted schemes: increased 10.8% to R1.7 billion– GAE main component of NHE: 69.4%

• Adjusted for membership (pabpm):– Open: R87.5 (R81.5)– Restricted: R48.6 (R50.3)

Managed healthcare: management Managed healthcare: management servicesservices

• Increased by 9.4% to R1.7 billion• Number of members covered: 7.8 million

(5.8% increase)• 98.6% of all beneficiaries

Broker feesBroker fees• Broker costs: increased by 11.6% to R1.2 billion• Broker commission: increased by 13.0% to R1.1

billion• On a pampm:

– Broker fees increased by 12.0% to R42.4 (R37.9)

Broker fees in open schemesBroker fees in open schemes

Gross non healthcare expenditure Gross non healthcare expenditure pabpapabpa

(2008 prices)(2008 prices)

Impaired receivablesImpaired receivables

Average gross claims covered by Average gross claims covered by cash and cash equivalentscash and cash equivalents

FindingsFindings

• There is an increase in the consolidation of medical schemes arising from amalgamations and liquidations – this is more pronounced in restricted schemes

• There has not been a net loss in membership as a result of consolidation but an improvement in risk pools

• The rate of increase in contributions and claims appears to have stabilised even though the rate of increase in claims is higher than that of contributions

• Schemes are subsidising contributions from reserves possibly to minimise the impact of contribution increases on members

FindingsFindings (continued)(continued)

• There has been a general decline in the utilization of services by members

• The demographic profile of medical schemes particularly open schemes is worsening

• Despite all these, schemes are still financially sound with solvency above prescribed level

• Non healthcare expenditure is coming down

Challenges and Possible Challenges and Possible SolutionsSolutions

Regulatory Aspect Challenge Possible Solution1. Demarcation Increase in health Insurance

products such as gap and primary care covers

Review of definition of business of medical schemes

Participation in the review of Long and Short term insurance legislation

2. Prices of Medical Services Unpredictable and opportunistic pricing structures

Formation of a Bargaining Council Structure

3. Prescribed Minimum Benefits Scheme are increasingly failing to pay for PMBs in full

Clarification of “payment in full” in the legislation

4. Governance practices Poor governance practicesInadequate punitive

measures

Review of governance provisions

Healthcare Reform ProcessHealthcare Reform Process– Support of the DoH 10 Point Plan– Participation in the NHI Advisory Committee– Ongoing interaction with the DoH to contribute

in Health Policy Development

Thank YouThank You