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CMS NewsIssue 1 • April 2017

The Council for Medical Schemes’

NATIONAL HEALTH INSURANCE:Pursuing Universal Health Coverage

remembering the lateDr Humphrey Zokufa

THE WAY FORWARD :• For the CMS• The PMB review process• Demarcation Regulations

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The news of the passing on of the late Dr Humphrey Zokufa, Chief Executive and Registrar of the Council for Medical Schemes (CMS) came as a shock to the medical schemes indus-try. For CMS employees it was hard to believe that the vibrant, outspo-ken leader was no more.

Though short-lived, Dr Zokufa’s ten-ure at the CMS had generated a lot of excitement and positive energy among the staff regarding the role that the organisation could play in contributing towards the admin-istration of an improved, accessi-ble healthcare system for all South Africans.

Dr Zokufa’s leadership style gener-ated a great level of anticipation among staff, from various vantage points. He convinced us all that change was coming.

In recognition of his dedication towards the revamping of the coun-try’s healthcare system, the editorial team agreed to dedicate this edition of the CMS News to the memory of Dr Zokufa. Individuals were given an opportunity to pay their tributes to this leader, colleague and comrade whose presence, like a breeze of fresh air, momentarily swept through the corridors of the CMS.

Equitable access to the country’s healthcare system by all citizens was one of the issues that the late Registrar was passionate about; and unapologetically lobbied hard for, to rally stakeholders around this cause. He displayed a visionary kind of lead-ership style with a forward looking

approach to matters over which he had a stewardship responsibility. It is therefore fitting that this edition assumes a forward looking posture, focusing broadly on the protection of the risk pools.

Effective risk pooling is one of the key principles entrenched in the National Health Insurance (NHI) – a health financing system earmarked for implementation in the country. An article by the CMS’ NHI commit-tee members spells out the position adopted by the CMS on the matter.

The publication of the Demarcation Regulations is a welcome develop-ment towards ensuring that the social security provided by medical schemes in line with the Medical Schemes Act’s provisions for open enrolment, community rating, and the prescribed minimum benefits (PMBs); is not undermined by com-mercially driven insurance products. We take a closer look at the matter in this edition.

The CMS is driving the prescribed minimum benefits (PMBs) review process aimed at addressing gaps and inconsistencies identified in the current PMB package. The ultimate goal with this exercise is to strength-en the provision of PMB level of benefits for members, in a cost effec-tive manner that is sustainable. The article ‘Prescribed minimum benefits (PMBs): the way forward’ provides insight on the key focus areas for the review exercise, including how the initiative is unfolding. - Editor

EDITORIAL


05 Tribute to a brave leader Obituary of the late Dr Humphrey Zokufa

07 CMS Staff remember the late Dr Zokufa

11 The way forward for the CMS An interview with the Acting Chief Executive and Registrar, Dr Sipho Kabane

15 Universal coverage through the NHI CMS’ contribution to the national health policy 18 Prescribed Minimum Benefits (PMB) Review Process Addressing the issues and flaws of the current regulations

21 Perspectives on the PMB review Section27’s views on the process

24 Demarcation Regulations Redefining the business of a medical scheme

27 CMS training plan 2017 Offering a variety of programmes for medical scheme professionals

CONTENTS

CMS AddressBlock A Eco Glades 2 Office Park420 Witch-Hazel AvenueEco ParkCenturion 0157

CopyrightCMS News is published by the Council for Medical Schemes (CMS). All material is copyrighted and cannot be used without the written permission from the publisher. The views expressed by external stake-holders do not necessarily reflect the views of the CMS. All material is correct at the time of going to print.

Editorial CommitteeDr Elsabé ConradieDr Sipho KabaneDr Anton de VilliersParesh PremaThembekile PhaswaneNondumiso KhumaloHannelie CorneliusPulane MolefeSilindubuhle Mnqeta

EditorPulane Molefe

ContributorsDr Sipho KabaneDr Clarence MiniStephen MmatliEvelyn ThsehlaSilindubuhle MnqetaCMS NHI Committee members

for Medical SchemesCouncil


BY DR CLARENCE MINI

ACTING MANAGING DIRECTOR

BOARD OF HEALTHCARE FUNDERS

Dr Humphrey Zokufa was born in Somerset East in the Eastern Cape, on 25 October 1952. He attended Primary School in a village called kwaNo-joli. He completed high school at Healdtown Comprehensive School, a Methodist school located near Fort Beaufort.

He obtained his Bachelor of Pharmacy degree from the University of the North in Limpopo and went on to earn a Doctor of Pharmacy degree and a Post-doctoral Fellowship from the University of Minnesota, St Paul Ramsey Medical Center in Minneapolis, USA. He proceeded to complete a Diploma in Health Management from the University of Cape Town. Dr Zokufa was registered with the South African Pharmacy Council as a Pharmacist and as a specialist in Clinical Pharmacokinetics.

A high-calibre leader whose hearty laugh and smile was contagious, Dr Zokufa had an effervescent

personality. His amiable and engaging disposition had procured him many friends. He was recently appointed as the Chief Executive & Registrar of the Council for Medical Schemes after serving as the Managing Director for the Board of Healthcare Funders of Southern Africa (BHF) for 11 years. Even though he was at the helm of a body that repre-sents the private medical industry, he was a pas-sionate proponent of the National Health Insurance (NHI) process with the goal of achieving universal coverage. His vision was much bigger than industry politics, he believed in equitable, quality health-care for all. He was passionate about promoting access to healthcare for all South Africans and that is why he supported the NHI. He worked tirelessly to explore the role that the private health sector needs to play in the NHI process in order to achieve its shared aims. It therefore came as no surprise when the Minister of Health appointed him to be a member of the National Health Insurance

TRIBUTE TO A BRAVE LEADER

1952 - 2017


This article also appeared in the City Press.

Ministerial Advisory Committee in 2009. He also served on Work Stream 4, which was established to explore the role that medical schemes will play in a NHI environment.

Dr Zokufa was a determined leader, in 2010/11, he challenged, on behalf of BHF members, the inter-pretation of regulation 8 of the Medical Schemes Act. This played out in a highly publicised court case in which BHF asked the Gauteng High Court to issue a declaratory order to clarify the interpreta-tion. Unfortunately various healthcare providers opposed this initiative.

Undeterred by his critics and the Gauteng High Court judge’s rejection to provide the declaration, Dr Zokufa continued to engage in various meetings with the Minister of Health, Dr Aaron Motsoaledi, on this matter, asking him to intervene appro-priately. The amendments to Regulation 8 of the Medical Schemes Act were ultimately issued by the Department of Health in 2015. This he saw as the step towards balancing the scales that will make private healthcare more affordable and accessible.

Dr Zokufa will be remembered for his willingness to talk regardless of the politics. He spoke out against escalating private healthcare costs, he was concerned about the lack of growth in the num-ber of people that join medical aid schemes - and was committed to finding ways to reverse this trend, which has on a yearly basis led to medical scheme contribution increases higher than the CPI. He dedicated the time he served at BHF to work with industry leaders and various stakeholders to explore means and ways to bring some relief to the South African consumer.

Dr Zokufa possessed a great amount of energy, which he intelligently directed towards transform-ing the healthcare sector. He successfully imple-mented the dispensing licensing process by the Department of Health, to license non-pharmaceu-tical health professionals to dispense medicine. In 2003, he played a crucial role in the initiation of the provision in the Pharmacy Act 88 of 1997, of allow-ing any person who is not a pharmacist to own a pharmacy.

With nearly four decades of experience in the health sector, Dr Zokufa has served in numer-ous key positions including that of Chief Director: Health Management Services in the Eastern Cape Provincial Health Department in Bisho, and Cluster Manager: Pharmaceutical Policy and Planning in the National Department of Health.

In January 2005, he was appointed as the Registrar for the Medicines Control Council (MCC). During this period he established the National Essential Drugs List Committee (NEDLC), and also took over the responsibility of licensing pharmacies, which was previously conducted by the South African Pharmacy Council. He was appointed by the Minister of Health to be a member of the Ministerial Task Team that looked at the restructur-ing of the MCC in 2006.

The industry has lost a strong and brave soldier, one who was not afraid to take the bullet for what he believed in. His death has robbed the industry of his vast knowledge and experience in the health sector.

At home Dr Zokufa was a loving husband to his wife, Thandiwe Zokufa and a doting father of 4, three daughters and a son as well as a grandad to his 2 grandchildren.

May his soul rest in peace

The amendments to Regulation 8 of the

Medical Schemes Act were ultimately

issued by the Department of Health in

2015. This he saw as the step towards

balancing the scales that will make pri-

vate healthcare more affordable

and accessible.

Dr Clarence MiniActing Managing Director

Board of Healthcare Funders


Dr Humphrey Zokufa,I knew him for a very short while.Yet in him I observed a very strong individual.

What do I mean? You ask.This was someone who presided from on high, dispensing wisdom, reward and disci-pline.

Someone in command and control who took a strong role in issuing directives and enforcing their execution while remaining at a distance from the daily work routine.

Dr Zokufa was focused on identifying and developing talent while labouring to create a healthy environment that allows individuals to apply their talents and skills in pursuit of key objectives.

He understood the importance of developing and gaining support for team-wide vision. To him, the vision was an idealised state of a future destination that provides context for organisational, departmental and individual goals and activities.

He felt as his responsibility to working with employees, customers, partners, suppliers and stakeholders to define, implement and execute a strategy that would help the CMS succeed in the marketplace.

Above all, he always challenged yet motivated the team members through goal estab-lishment, coaching, feedback and by providing ongoing developmental support. That is the CE & Registrar, immediate boss that was introduced to us but decided to vanish before the journey started.

In his absence I would like to say these words:It is one thing to be a boss, another thing to be a mentor but a completely different thing to be a leader. I am proud to have been led by a boss, mentor and manager like him. I thank him for the experience, for everything.

To his family I would like to say:The loss of someone dear to us is never easy, but may you take comfort in the fact that you are surrounded by people who love and care for you. May the angels keep you com-pany, and may his soul find rest and peace.

Babalwa Zwelibanzi (Executive Personal Assistant of the late Dr Zokufa)

REMEMBERING DR HUMPHREY ZOKUFA

Tributes by CMS staffTributes by CMS staff


TRIBUTE TO AN INSPIRATIONAL LEADER NEHAWU CMS branch is saddened by the passing on of Dr Humphrey Zokufa, the CE and Registrar of the Council for Medical Schemes. Dr Zokufa was loved and revered by members of NEHAWU at the CMS and his death is a great loss to the South African health sector. As CMS NEHAWU, we pledge our support in maintaining healthy labour relations at the CMS and also commit ourselves to support the Department of Health in all its initia-tives on health sector reforms. We intend to continue advancing the legacy of the late Dr Zokufa and the vision of a universal health coverage system in South Africa. The time he spent with us at the CMS, though short, gave us hope. He believed that being in a leader-ship position, does not mean one has a right to demean or mistreat others.

When we think of his leadership attributes, they are described well in the following quota-tions by one of the African writers, Chinua Achebe who said: “We cannot trample upon the humanity of others without devaluing our own.”“He who will hold another down in the mud must stay in the mud to keep him down.”

He will be greatly missed. NEHAWU Branch Executive Committee

HE WAS BORN A LEADER Whilst Behavioural Theories believe that people can become leaders through the process of teaching, learning and observation, Dr Zukufa’s management style challenged that per-ception. He was 100% natural and motivated staff to exceed in their performance.

He was not only a visionary leader who fought for social justice and fairness, he also inspired some of us to believe in our capabilities and to always maintain a professional demeanour in whatever we do. It was therefore not surprising to hear from his memorial service and his funeral that selfless leadership was one of his natural attributes from an early age in his school life.

His passion to serve and support national health policy reforms was inspiring. I was grate-ful to have worked under such leadership even though it was for a short while.

May his soul rest in peace Nondumiso Khumalo

Dr Zokufa’s laughter and passion for healthcare was contagious. His dream of achieving universal healthcare for South Africans was inspiring.Evelyn Thsehla


Tributes by CMS staff


My encounter with you as our CEO took me back to the biblical principle of ‘breaking bread’ together. By inviting us to share a meal you affirmed that we could approach you with trust, confidence, and comfort as our new leader. Your friendliness and informality assured us that you were the man who was to be something to everyone, irrespective of one’s position. Particularly in me, your unique way of colourfully painting the horizons with possibilities awakened the long lying desire to pursue and achieve again.

I remember how you set the office abuzz when you interestingly put categorisation of staff levels into alphabetic bands. In the famous words of our late father Nelson Mandela “Death is something inevitable. When a man has done what he considers to be his duty to his people and his country, he can rest in peace”.

Do rest in peace Mntungwa!Phumla Khanyile

Although our contact was for a brief time, he was a leader I deeply admired. To describe him, I take liberties from Antony’s soliloquy in Julius Caesar when he said: “His life was gentle, and the elements so mixed in him that nature might stand up and say to all the world ‘This was a man”.Silindubuhle Mnqeta

The real meaning of motivation and inspiration, commitment and dedication can’t be taught by books but can be learnt from leaders like you. Although you only came to greet us, we felt safe and secured, we felt wanted and needed, we felt confident and sure, we felt listened to and attended to. Your sudden departure dealt us a huge blow. Nonetheless, we are grateful that our paths crossed in some way. Rest in Peace Doc. Nokhanyiso Molomo

Dr Zokufa. What a great leader! I would always be wondering and challenging my mind on the potential strategic topics he might want to engage in whenever I visited his office.The positive impact he made on staff morale within a short space of time is still unbeliev-able. He will always be missed. Lerato Disemelo

You were with us for a short period of time at the CMS, but you left a positive mark. Your understanding & interpretation of health and related issues including NHI, was a sign of hope for all South Africans, but you left us so soon - Rest in Peace, Dr Zokufa, you will always be remembered.Samson Thosago


Tributes by CMS staff


Will we scatter with the windsNow that the Lord has called you homeWill the flicker of hope in our hearts die

Now that your time has come?

Perhaps, it was for a while you cameyou were never really meant to stay

But why do I feel winds of fear in our heartswith all these tears in our eyes?

For a little while you cameIn our hearts you’ll now stay

With your ink you wrote hope in ustruly you infected us with great visions of your mind

Oh so good it was to wake up from slumberto be lifted up on the wings of an eagle

to see beyond our own huddlesto hope in the midst of all troubles

Yet you are gone, farewell Sir!The great baobab tree has indeed fallen

Let not its leaves be scatteredTo God let there be a reason!

A reason to forge ahead despite these trying timesin all might to hold on against the rising tides

with the baton that now lies in our handsto run our race until the end of our own miles

You oh death, oh death, oh death you have dealt us a huge blow

Yet to you we will not bow

Kufa ndini okungafiyoMaz’endala engena nimba

Mndlandlathekisi wamathembaMtshabalalisi wamaphupha

Mbhangisi wamacebo amahleMophisi wentliziyo

Ungade uzigombe isifuba

Be not proud, be not proud, be not proud

We may have known you for just a little while, yet you impacted us all greatly!

You became our beacon of hope, our compass, and the lighthouse on the hillside.

May the flicker of hope you have awakened in us, continue to burn in our minds,

Haunt us in our hearts,May we not rest until your legacy, becomes a legend in its own right.

Like a phoenix rising up from the ashesMay you take your eternal rest in the Lord

Tata uyihambile eyakho indlelaUyidlalile eyakho indimaNdlela ntle Mntungwa!

Ndlovu Zidl’ ekhaya ngenxa yokuswela Umalusi

Farewell Sir!

FAREWELL SIRPoem by Phumla Xuza-Khanyile


The Minister of Health Dr Aaron Motsoaledi has appointed Dr Sipho Kabane as the acting Chief Executive & Registrar of the Council for Medical Schemes (CMS) following the passing away of the late Chief Executive & Registrar of the CMS, Dr Humphrey Zokufa. A seasoned Senior Healthcare manager in his own right, Dr Kabane joined the CMS as a Senior Strategist in the second semester of 2016.

THE WAY FORWARD FOR THE COUNCIL FOR MEDICAL SCHEMES


The father of four had only just settled in when he was called upon to assume additional respon-sibilities as acting Chief Executive & Registrar for the CMS. In his usual quiet, modest pose, the good Doctor stepped up to the plate to ensure that the CMS’ business agenda continues.

CMS News had an opportunity to engage with Dr Kabane on the way forward for the CMS, with him in the driving seat. The acting Chief Executive & Registrar shared some insights on what staff and stakeholders can expect in the next few months going forward.

He also took a moment to reflect on the late Chief Executive & Registrar, Dr Humphrey Zokufa’s short stay at the CMS.

Q: The passing away of the late Chief Executive & Registrar Dr Zokufa has undoubtedly left a vacuum in the leadership of the CMS. Many people are asking themselves the question “what next?” What exactly can employees and other stakeholders expect going forward?

A: The Council for Medical Schemes is in good hands and will continue to be an effective and efficient regulator of the medical schemes indus-try on behalf of its beneficiaries. If anything, all stakeholders should expect that the CMS will improve on its regulatory role and support the National Ministry in the transition towards the full and successful implementation of Universal Health Coverage through the National Health Insurance (NHI).

Q: After only seven months with the CMS, you were assigned to the driver’s seat of this organisation which regulates a well-established multi-billion industry, albeit in an acting capac-ity. What message of assurance can you give to the CMS employees and the industry at large?

A: The employees and industry stakeholders can be assured that in the past seven months I have accumulated sufficient knowledge about how the medical schemes industry operates at a strategic level to be able to make sound and well informed decisions. I am also supported by an experienced and highly talented team that provides the nec-essary support. My vast experience in success-fully managing complex and large public health organisations in the country has also enabled me to approach this mammoth task with a great deal of circumspect and maturity. This challenge of managing and driving the CMS in its regulatory

role, even in an acting capacity does not faze me at all.

Q: The late Dr Zokufa was very expressive about his views regarding the direction in which the CMS in its regulatory capacity, should be steer-ing the medical scheme industry. Realistically, taking everything into consideration, can CMS employees and the industry expect any initia-tives in this regard, at the moment? Does the CMS currently have the requisite capacity to drive any change in the industry?

A: The CMS has a clear regulatory direction that it crafted for itself which is articulated in the current Strategic Plan, the Annual Performance Plan and the unit operational plans. These key documents were developed long before the late Dr Zokufa joined the CMS, and his own views on the regulatory role of the CMS echoes the sentiments captured in these documents. The road map for the organisation is in a sense a fait accompli that will be achieved by the collective efforts of the CMS team.

The industry can therefore expect that initia-tives such as the PMB definitions, PMB reviews, PMB code of conduct, development of the low cost benefit option, supporting the NHI and the Health Market Inquiry, will proceed as expected.

I have no doubt in my mind that the highly quali-fied, and experienced personnel of the CMS have got the capacity to effectively and efficiently reg-

Dr Sipho KabaneActing CE & Registrar: CMS


ulate the industry during the current and future dispensation of the NHI.

Q: A significant part of your career life was actively spent in the public health sector. Taking into consideration your exposure in the public health sector, and your observations during your tenure with the regulator in a private healthcare environment, what insights would you like to share with the different CMS stake-holder groups?

A: Even though I have spent a considerable amount of my working life in the public health sector arena as a senior manager, I have a good sense of how the private sector operates hav-ing served as a general medical practitioner in the Free State for the first ten years of my career post-internship. I have also been a medi-cal scheme member for the greater part of my adult life.

I am therefore acutely aware of the struggles by the beneficiaries of schemes to derive optimal benefits from their schemes in exchange of their contributions. I am also a healthcare quality activist, who believes that the good health out-comes that we all aspire for, need to be driven by deliberately embedding clinical governance in our day-to-day contact with patients, irrespective of the sector we operate in.

Q: The Demarcation Regulations came into effect on 1 April 2017, what assurance can you give stakeholders that action is being taken by the regulator to enforce the provisions of the Demarcation Regulations?

A: The Council for Medical Schemes with the support of the Financial Services Board, has already developed an exemption framework that will be utilized to regulate these primary health-care products for the next two years starting 1st April 2017. The framework clearly articulates the various steps that should be implemented by all key players in ensuring that the Demarcation Regulations are effectively implemented.

There will be a concerted effort aimed at publicis-ing this framework, so that all the key stakehold-ers fully understand their role in the next two years and beyond.

In addition to this, the PMB Review process that the CMS is planning to undertake will also include the development and costing of the Low Cost

Benefit Option (LCBO) that will after the two year exemption period, act as a guideline in the regulation of these primary healthcare products.

Q: In a nutshell, what are the initiatives that the CMS is currently dealing with at the moment, and what can employees and other stakehold-ers expect? What is occupying the CMS’ execu-tive management’s diary for the next three to six months?

A: Apart from its routine regulatory activities, the CMS is involved in the following key initia-tives that will be our areas of focus for the next six months: Accelerated PMB definitions, Review of the PMBs, and updating the PMB code of conduct. Support for the development of the Low Cost Benefit Option; implementation of the Demarcation Regulations; and completing the Beneficiary Registry List. Work on the Risk based Solvency Ratio continues, as well as support-ing the work towards the NHI; and the Health Market Inquiry. Other initiatives include contin-ued Stakeholder training and development, as well as industry based research initiatives.

Q: Even though it was for a short period, you are one of the people who had an opportu-nity to serve under the leadership of the late Dr Humphrey Zokufa during his stint as Registrar for the CMS. How would you describe his lead-ership, and in particular, what positive qualities would you say you observed in his style of doing things?

A: The late Dr Zokufa was forthright in deal-ing with individuals, and was confident in his approach to difficult situations. He was devel-opmental in his approach to junior officials and supportive of initiatives aimed at ensuring that the CMS achieves its goals.

Q: Your reflections on his contribution to the healthcare industry?

A: His dedication to the NHI initiative despite operating in a private health sphere demonstrat-ed his commitment to see the implementation of universal health coverage for all South Africans.

Q: Any lessons to be learnt from his example of leadership?

A: Be true to yourself and the cause that you serve.


Universal health coverage (UHC) is the goal which seeks to ensure that all people obtain the health services they need without risking financial hard-ship from unaffordable out-of-pocket payments (WHO Bulletin, 2013). According to the World Health Organisation (WHO), this goal includes health promotion, prevention, treatment, rehabili-tation and palliation healthcare services as well as coverage with a form of financial risk protection.

The universality feature means that there must be cover for everyone. Attainment of these goals is not always easy no matter which mode of imple-mentation is used by different countries. The WHO therefore acknowledges that whilst progress has been made, many countries are still far from attain-ing universal health coverage, even though differ-ent modalities of UHC have been implemented (WHO, 2013).

Universal Health coverage through the NHI The World Health Organization recommends that countries spend at least 5% of their total GDP on healthcare each year; by 2015/16, South Africa was spending around 8.9% on health, which is well above the majority of middle-income countries. The country still has a high burden of disease and poor health outcomes. Of the 8.9% of GDP, only 4.3% is spent on the public sector, which supports around 84% of the population.

This means that the remainder (4.6%) is spent in the private sector, which supports about 16% of the population (8.8 million individuals). In addi-tion, over the last few decades the gap between per-capita spending on medical scheme members and public-sector spending has been rising sub-stantially. Amado et al. observed that the per capita

UNIVERSAL HEALTH COVERAGE THROUGH THE NHI

CMS NHI COMMITTEE


expenditure for health is also evidence of this ineq-uity, with a public sector per capita expenditure of R2 766 and a private sector expenditure of R11 150 per capita (Amado, L. A. et al., 2012).

Furthermore, there is inequitable distribution of human resources between the public and private healthcare sector including within each sector. Gauteng, Western Cape and Kwa-Zulu Natal prov-inces have more human resources compared to other provinces. This trend defeats the principles of social justice, social solidarity and effective risk pooling which are all embedded within the National Health Insurance (NHI) proposed by the National Department of Health (NDoH).

The UHC goal through the implementation of the NHI in South Africa, seeks to address all of the above factors with the overall objective being to uphold the right to healthcare for all citizens, whether rich or poor. Ensuring that all South African citizens and legal residence will have access to promotive, preventive, curative, rehabilitative and palliative healthcare services, which are of suf-ficient quality and are affordable without exposing the population to financial hardships is a matter of paramount importance (NDoH, 2015).

Fragmented delivery & pooling As illustrated by Figure 1 below, the current nation-al system is also fragmented, with a privileged few having disproportionate access to health services. There is also a recognition that this system is not rational, and is instead saddled with challenges with regard to the efficient use of scare resources, including healthcare professionals, to benefit the country’s entire health system. Effective risk pool-ing is therefore required within the national health system in order to improve the overall country’s health outcomes.

Risk segmentation is inefficient and has a potential of eroding the attainment of broader social solidar-ity within the national health system. Inadequate funding and inefficient use of current resources has huge opportunity costs and need to be addressed through a significant overhaul of the current nation-al health system. The CMS, therefore, supports the initiative to pool funds, and provide access to quality and affordable health services for all South

Africans based on their health needs, irrespective of socioeconomic status.

The CMS also acknowledges that South Africa’s health outcomes have not been adequately aligned to the Millennium Development Goals (MDG), although some progress has been made in this regard (NDoH, 2015). This health financing reform is meant to provide sufficient financial protection for the population with the ultimate goal of real-ising improvements in the country’s health out-comes, and significant progress towards attaining the Sustainable Development Goals.

The CMS further applauds the initiative to coordi-nate health financing through the following prin-ciples:• Right to access to healthcare services • Broader social solidarity • Equity • Health is a public good• Affordability • Efficiency • Effectiveness • Appropriateness

The above principles are intended to provide mean-ingful financial protection for the entire population.

Recommendations The CMS has made the following recommendations to the National Department of Health regarding the NHI: • The definition of the NHI package should also

include a concrete strategy around the future role of other health insurance products, includ-ing gap cover products to ensure that the over-all financial protection is realised within the national health system.

• If not well considered and regulated, the exis-tence of other health insurance products in an NHI environment can be destabilising for the future role of medical schemes and the NHI fund, leading to the erosion of the overall financial protection. Within this context , some form of risk adjustment system might need to be considered to:• Reduce the current fragmentation of risk

pools.

The CMS, therefore, supports the initiative to pool funds, and provide access to quality and affordable health services for

all South Africans based on their health needs, irrespective of socioeconomic status.


• Reduce the impact of potential risk selec-tion.

• The development of supplementary and com-plementary insurance products must be care-fully monitored. The CMS welcomes interven-tions such as the Interim Virtual Risk Pooling arrangements, as mechanisms to protect risk pools and prevent discrimination against older and sicker members of the population. The risk adjustment mechanisms developed by the CMS in collaboration with the National Department of Health, with the participation of other stake-holders within the industry, can be considered for this purpose.

• As the public sector improves and the NHI capacity to purchase services from the private sector develops, it is likely that younger and healthier members will opt out of medical scheme cover before older and sicker members because they already pay taxes and do not

perceive the need for cover. This has a poten-tial of affecting the risk profile of remaining schemes, especially within the open medical schemes market. It is within this context that the CMS encourages the NHI Committee to discuss in detail the role of the Interim Virtual Risk Pooling arrangements within the transition period. Without some form of risk adjustment mechanisms these schemes may collapse and cause sudden dumping of large numbers of older and sicker members to the NHI fund in an uncoordinated manner.

• The legislation governing the NHI package should be comprehensive to cover all the loop-holes, thereby avoiding the problems experi-enced within the current PMB package. The CMS welcomes the current collaboration with the NDoH on the revision of the PMBs to align the package to the NHI with an explicit inclu-sion of Primary Health Care as well as identi-fication of the appropriate points of care for

Risk

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SA- NATIONAL HEALTH SYSTEM

(Dual system)

• Serves approximately 42 million population • National health budget • 9 Provincial health funds (different health needs and

budgetary allocations) • Local government health funds (different health

needs and budgetary allocations) • Conditional grants • Limited financial protection !Other funds • RAF • UIF • COIDA • Government subsidies • Other government departments (mining, correctional

services, education, social development etc.) !The review of the current resource allocation formula to

be in line with NHI and an overhaul of the healthcare delivery system.

!• Medical schemes serves 8.8 million members • Different benefit offerings • Different risk pools within benefit options • Out of Pocket Payments (can be catastrophic at an

individual level). • Limited financial protection (short payments by some

medical schemes) !Other products • Health insurance companies (different risk pools) • Gap cover products (different risk pools) !Concerns: • Removal of subsidies • Drop in membership • Worsening risk profile • Adverse selection • Affordability (cost escalation) • Risk pooling arrangements – complimentary space !Review of the current PMB package and align it to NHI

principles, price regulation (technical understanding of costs drivers)

Public health care Private healthcare

Limited monitoring & evaluation on quality health outcomes

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service delivery. Stakeholders are therefore encouraged to participate within this process as per the CMS circulars (see Circular 83 of 2016, Circular 90 of 2016 & Circular 1 of 2017).

• The timing of legislative changes must be care-fully considered in order to allow for a seamless transition from supplementary to complemen-tary benefits cover within the medical schemes environment.

• The Health Provider Registration Information System needs to be able to capture all data (financial and non-financial) on health profes-sionals involved in different types of contrac-tual arrangements within the NHI. This informa-tion can be used for monitoring and evaluation purposes, including contractual engagements between the NHI fund and the service provid-ers.

• Amongst others, the Office of Health Standards Compliance (OHSC) needs to ensure that there is compliance with norms and standards for quality, by all health establishments, with a technical consideration/review of cost drivers. There is also an opportunity to either expand the scope of the regulatory work for OHSC to including price determination or an oversight role, or else the OHSC can work closely with the Price Determination Unit within the NHI fund; or the independent regulatory body for price setting (if established).

• The private hospital licensing system needs to be updated and strengthened in order to address market concentration within the pri-vate healthcare industry, as well as improve competition by removing barriers of entry for other facility types (such as NGO hospitals).

• The National Department of Health can draw lessons learned from the private hospital licenc-ing process on issues related to licencing and/or renewal of licences within the context of access to minimum data set (that is financial and non-financial performance data) from all facility types to triangulate appropriately for regulatory purpose.

• In the absence of a statutory body responsible for price setting, the mandate of the Price Determination Unit can be expanded to influ-ence and/or regulate price setting within the national health system (that is, not only limited to the NHI environment).

• A mixed NHI funding method is recommended with a strong emphasis to progressivity on tax funding. This funding mechanism should be implemented within the context of efficiency and fiscal consolidation of all health related funding, including consideration as well as improvements in absorption capacity across all service delivery points within different prov-inces. Absorption capacity is largely attributed to deficiency in public health and managerial expertise.

• Although the current VAT rate within South Africa can be viewed as relatively low when compared to some middle income countries. The increase in the rate should be carefully con-sidered. A detailed impact assessment study from a societal perspective needs to be under-taken especially since other segments within the society might consider such increases as regressive, especially the poor.

• The communication and stakeholder awareness strategy should be proactive, innovative, and tap into the existing systems by government to expand consumer information about the NHI. These could make use of eHealth’s communica-tions and broadcasting capabilities. Taking into account the diversity and vastness of South Africa, a variety of developmental communica-tion approaches should also be employed to encourage public participation within the NHI engagements and implementation.

• Open enrolment, social solidarity and com-munity rating should still apply in the medical schemes industry post the implementation of the NHI to avoid affordability challenges.

• All necessary amendments to the Medical Schemes Act should be initiated as part of the broader phased implementation approach.

The communication and stakeholder awareness strategy should be proactive, innovative, and tap into the existing systems by

government to expand consumer information about NHI


The Council for Medical Schemes (CMS) has embarked on a process to review the Prescribed Minimum Benefits (PMBs). In terms of the Medical Schemes Act, No. 131 of 1998, the PMBs are sub-ject to review after every two years to address issues relating to:• inconsistencies or flaws in the current regula-

tions;• the cost-effectiveness of health technologies or

interventions;• consistency with developments in the health

policy; and• the impact on medical scheme viability and its

affordability on members.

Section 67(g) of the Medical Schemes Act also makes a provision for the Minister of Health, after consultation with the Council, to make regulations relating to the prescribed scope and level of mini-mum benefits to which members and their regis-tered dependents shall be entitled, under the rules of a medical scheme.

A brief backgroundThe Medical Schemes Act, No 131 of 1998 intro-duced PMBs as a policy instrument for defining minimum allowable levels of benefits to be covered by medical schemes. Regulations made in terms of the Act were promulgated on 20 October 1999 and came into effect on 1 January 2000.

PMB REVIEW Addressing the issues and flaws of the current regulations

EVELYN THSEHLA

CLINICAL RESEARCHER

COUNCIL FOR MEDICAL SCHEMES


Annexure A to the Regulations defines the PMBs in terms of a list of 270 diagnosis and treatment pairs (DTPs) that must be provided by each scheme, without financial limits, in at least one provider set-ting.

The objective of specifying a set of PMBs was pro-vided in the 1999 Regulations to:• Avoid incidents where individuals lose their

medical scheme cover in the event of serious illness and the consequent risk of unfunded utilisation of public hospitals.

• Encourage improved efficiency in the allocation of private and public healthcare resources

Rationale for the ReviewSince the promulgation of these Regulations, sev-eral observations have been made referring to amongst others, considerable developments in the management of a number of conditions; some level of inconsistencies and flaws in the current Regulations; as well as changes in the cost-effec-tiveness of health technologies or interventions.

The PMB package has also been a subject of debate for a number of reasons including the cost and affordability of the package, the construct of the package, inclusion and exclusion criteria, and the quality of care associated with the package.

The National Department of Health (NDoH) has also published the National Health Insurance (NHI) White Paper that is geared towards a massive reor-ganisation of the current national healthcare sys-tem, (both public and private). The CMS deems it necessary as part of achieving universal healthcare coverage, to review the current package in order to align it with recent health policy developments.

It is against this background that the CMS took a decision to review the PMB package. The cur-rent review process is aimed at addressing identi-fied gaps and inconsistencies in the current PMB Regulations, whilst taking into account the submis-sions that were made by different stakeholders during the previous review process. The process will focus on the following:• alignment of the PMB package with recent

developments in the health policy;• specification of a comprehensive set of out of

hospital and in-hospital essential healthcare benefits;

• identification of actions that should be under-taken to ensure the sustainability of the pack-age; and

• identification of measures required to ensure affordability of the package.

Framework for selecting the new PMB packageSome of the comments raised during the previous review exercise lamented the fact that the criteria for inclusion and exclusion of some of the condi-tions in the PMB package was not clear.

Literature review also reveals that the selection of a health package should be based on a country’s current health situation and needs, taking into account the costs of providing the services. The proposed PMB package will therefore be based on the following criteria:

• the current health situation of the country: the package should prioritise the health needs of the country i.e. services covered should be based on the needs of the population;

• internationally agreed instruments: the pack-age should contribute to achieving internation-ally agreed instruments such as the Sustainable Development Goals (SDG);

• clinical and cost effectiveness of interventions:

Some of the comments raised during the previous review exer-cise lamented the fact that the criteria for inclusion and exclu-

sion of some of the conditions in the PMB package was not clear.”


the services package should adhere to the prin-ciples of clinical effectiveness and cost effec-tiveness;

• affordability of interventions: the package should be affordable to schemes, i.e. the pack-age should be financially viable; and

• efficiency: the allocation of the services should be in a manner that optimises value for money. The package should clearly define the services that should be available at different levels of care.

Proposed construct of the new packageThe CMS is proposing a new PMB package that will move away from the current diagnosis based pack-age to a service based package.

The proposal put forth is that the new PMBs should have a primary healthcare package and hospital level package in line with developments in the health policy and best practices.

The CMS would like to ensure that the PMBs offered by schemes reflect essential benefits, and ensure adequate comprehensive coverage within a medical scheme.

The proposed new package will therefore incorpo-rate preventative services, maternal and child ser-vices, mental services, etc., to address the priority needs of the country. It is envisaged that primary level of care will serve as a gate keeping mechanism in order to control the escalating costs of care, and to improve quality of services received.

The ProcessThe process will assume a participative approach involving all key stakeholders affected by the regu-lations.

It will be governed by a steering committee, comprising officials of the NDoH and the CMS. Multidisciplinary committees dealing with the pro-posals will be appointed by virtue of members’ qualifications, relevant experience and exposure, as well as technical skills.

The committees will consider the submissions from different stakeholders and recommend a package to the steering committee. Geared towards sup-porting the PMB review initiative, the process will include the definition and specification of a com-prehensive essential healthcare package.

This will also take into consideration the identified restraints, and the proposed measures that are necessary to ensure sustainability of the package. It is envisaged that work by the various commit-tees will take place in the first half of the 2017/18 financial year.

ConclusionThe PMB review initiative provides an opportunity to rationally identify essential care that must be accessible to members of the public.

It is important however to recognise that the process of developing health policy such as the review of the prescribed minimum benefits could take time, as it requires participation of different stakeholders. The process is also complex as the definition of a health package could take many forms, and varies depending on the level of detail and specificity involved.

Evelyn ThsehlaClinical Researcher


On 2 December 2016, the Registrar of the Council for Medical Schemes (CMS) published the “Prescribed Minimum Benefits Review: proposed construct and work plans”.

SECTION27 welcomes the steps taken to conduct a review of the Prescribed Minimum Benefits (PMBs) initiated by the late Registrar, Dr Humphrey Zokufa.This review is long overdue. The Medical Schemes Act, No 131 of 1998 (the Act) states that the CMS is required to conduct the review of the PMBs every two years, together with the National Department of Health.

While efforts were made by the CMS to conduct this review in 2010, 2012 and 2014, these pro-cesses were never completed. As a result, there have been legitimate concerns that the PMBs are out of date and out of touch clinically, in terms of the public health needs of the population, and the PMB statutory framework itself.

According to the Act, the objectives of specifying a set of Prescribed Minimum Benefits are:• To avoid incidents where individuals lose their

medical scheme cover in the event of serious illness and the consequent risk of unfunded utilisation of public hospitals.

• To encourage improved efficiency in the alloca-tion of Private and Public healthcare resources.

In our view, the Review must be aligned with the stated purpose of the PMBs, the human rights context, and with the CMS’ statutory function to “protect the interests of beneficiaries at all times”1.

Human Rights contextSection 27(1) of the Constitution of the Republic of South Africa, 1996 (the Constitution) guarantees the right of everyone to have access to healthcare services, this includes those who seek to access their rights through the private sector. Section 27(2) of the Constitution enjoins the state to take

reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of this right. It is important to bear in mind that the state must, in compliance with section 7(2) of the Constitution, respect, protect, promote and fulfil the rights enshrined in the Bill of Rights. The Constitution also provides special pro-tections for children, guaranteeing in section 28(1) that every child has the right to basic health servic-es. At its core, the PMB framework is aimed at real-ising the constitutional right to access healthcare services. The PMB Review must therefore focus on the rights of the 8.8 million beneficiaries of medi-cal schemes who seek to realise their fundamental rights, particularly in light of the huge inequalities that effectively restrict the use of health services in the private sector to those who can afford to pay monthly premiums to a medical scheme.

SECTION27 believes that the inequalities within the health system is a reflection of the inequality in our society and that legislation such as this must be implemented to reduce those inequalities. The inadequate and incomplete regulatory environ-ments and inefficiencies of regulators place the

PERSPECTIVESSECTION27’s views on the process

Umunyana Rugege Attorney: SECTION27


health, finances, wellbeing and sometimes even lives of users of the private healthcare system at risk.

It is useful to remain cognisant of South Africa’s inter-national obligations, for example, the International Convention on Economic, Social and Cultural Rights. General Comment 14 of the Committee on Economic, Social and Cultural Rights requires that when pay-ment for healthcare services takes place it must be affordable2:

“Payment for healthcare services, as well as ser-vices related to the underlying determinants of health has to be based on the principle of equity, ensuring that these services, whether privately or publicly provided, are affordable for all, including socially disadvantaged groups”.3

According to the Grootboom case, both the con-tent and implementation of measures adopted to advance socio-economic rights must be balanced and inclusive. The Constitutional Court held in the context of the right to have access to adequate hous-ing:

“In determining whether a set of measures is rea-sonable, it will be necessary to consider housing problems in their social, economic and historical context and to consider the capacity of institutions responsible for implementing the programme”.4

Furthermore, in the context of realising socio-eco-nomic rights in the private health sector, Judge Matojane held that the Health Market Inquiry – the Competition Commission’s wide-ranging inquiry into the private health sector – is in its entirety, and all of its component parts, a “constitutional measure” in terms of the right to access to healthcare services.5 This necessitates properly conceived budgeting, cost-ing and spending for the right to access to healthcare services, in the particular context of regulators.

The CMS, as the regulator of medical schemes, should conduct the Review in light of its functions to protect the beneficiaries of medical schemes, and its own resources and capacity to do so adequately. The CMS must take this opportunity to introspect on its strength and effectiveness and take the necessary steps to protect all the users of private health ser-vices in South Africa.

The PMB ReviewThe Act envisages that the PMB Review will be conducted at least every two years by the National

Department of Health in a process that will involve the Council for Medical Schemes, stakeholders, Provincial Health Departments and consumer repre-sentatives. In addition, the review was expected to focus specifically on the development of protocols for the medical management of HIV/AIDS. However, given that Tuberculosis (TB) is the number one killer in South Africa; that people who are infected with HIV are 20 to 30 times more likely to develop active TB; and that the risk of active TB is greater in per-sons suffering from other conditions that impair the immune system, the care and treatment of TB should also be prioritised through the review process.

In addition, the PMB Review should endeavour to be responsive to the most up to date evidence on pub-lic health indicators. According to the latest StatsSA data, diabetes and cerebrovascular diseases are the second and third largest killers respectively. The data also shows that non-communicable diseases formed 60% of the ten leading underlying natural causes of death. Diabetes, cerebrovascular disease, other forms of heart disease, hypertensive diseases, chronic lower respiratory diseases and ischaemic heart diseases contributed to the rise in non-com-municable diseases (NCDs). NCDs are a recognised global epidemic, with the largest burden in low and middle income countries, and a major cause of pov-erty and inequality.

The starting point of the review, found in the prob-lem statement of the proposed PMB Review, is that the PMB package has been the ‘subject of scrutiny for a number of reasons including the cost of the package, the construct of the package, inclusion and exclusion criteria, the affordability of the pack-age and quality of care associated with the pack-age’. However, in our view, the PMB Review must remain true to the legislated purpose of the review, i.e. inconsistencies or flaws in the current regula-tions; the cost-effectiveness of health technologies or interventions; consistency with developments in health policy and the impact on medical scheme viability and its affordability to members.

During the Health Market Inquiry public hearings in 2016, the CMS, represented by the Acting Registrar, stated that while medical schemes complain about the abuse of PMBs, for example, by incorrect cod-ing, it was of the view that there was no evidence to show that PMBs are a significant cost driver or that there is widespread abuse of PMBs by practitioners.


There may be strong voices arguing for changes to the PMB framework that limit access to health ser-vices, however, the Review should not be distracted by unsubstantiated criticisms.

Importantly, the Review should not lead to a loss of benefits for Beneficiaries nor should they be required to pay excessive co-payments, which would result in a limitation of access to healthcare services, as this would be retrogressive in effect.

The state’s obligation to progressively realise the right to access healthcare services means that there is a continuing obligation to move as expeditiously and effectively as possible towards the full realisation of the right.

Furthermore, there is a strong presumption that retrogressive measures taken in relation to health-care rights are not permissible and if they are taken, the state bears an extremely high burden of proof to show the justification for such measures. Retrogressive measures would have to be preceded by careful consideration of alternatives and of the impact on all the rights in the Bill of Rights, in the context of the maximum available resources.6

The PMB review process must also extend to bet-ter enforcement of the Medical Schemes Act It is imperative for the CMS to take stringent mea-sures to effectively implement existing PMBs regula-tions and prevent what appears to be widespread non-compliance with the coverage that all medical scheme members are entitled to by law, without any co-payments. SECTION27 has previously argued that there is serious physical, emotional, psychological and financial harm caused by schemes’ non-compli-ance with the PMB framework.

At the Health Market Inquiry, SECTION27 presented a range of patient testimonials in which medical scheme members shared their lack of access to healthcare services. Many of their stories related to non-payment of PMB benefits by schemes. In its own presentation to the Health Market Inquiry,

the CMS stated that most of the complaints that they received related to PMB benefits. Other major complaints involved limits imposed on cover; mis-understanding of how designated service providers (DSP) work, primarily due to miscommunication by schemes; involuntary use of non-DSPs; confusion about coding of services. All these issues impact on whether members can access the treatment and care that they need.

The Health Market Inquiry also heard about the CMS’ complaints system. The CMS also acknowledged the fact that there is room for improvement to ensure that members’ complaints on PMB conditions are not unduly delayed due to lengthy processes.

The matter between Genesis Medical Scheme and J, which began in 2009 and was finally decided by the Supreme Court of Appeal (SCA) on 16 November 2015 illustrates the fact that the appeals process may delay the resolution of a matter as, in their nature, the court processes are lengthy. In this case Genesis contended that under its rules, it was only obliged to pay for J’s treatment if it was provided in a public hospital.

The SCA disagreed, and held that “simply put, the law obliges medical schemes to pay the costs of treat-ing PMB conditions in full, and that is what Genesis must do”.7 Genesis appealed the SCA judgment to the Constitutional Court, however, on 17 February 2016, the appeal was dismissed for lack of prospects of success. Genesis effectively avoided its obligations in respect of J for about 5 years.

ConclusionIn the process of this PMB Review, the CMS should ensure that the overall benefits of beneficiaries should not be diminished, as argued above, and continue to provide a social protection for all the beneficiaries. We recommend that the lived experi-ences of those people seeking treatment and care in the private health system be central to the CMS’ approach to the PMB Review.

1. Section 7 of the Medical Schemes Act.2. See Government of the Republic of South Africa and Others v Grootboom and Others (CCT11/00) [2000] ZACC 19; 2001 (1) SA 46 at para 45.3. General Comment 14 at para 12(b).4. Government of the Republic of South Africa and Others v Grootboom and Others ZACC 19; 2001 (1) SA 46 at para 43.5. Netcare Hospitals (Pty) Ltd v KPMG (Pty) Ltd & another at para 28.6. General Comment 14 of the Committee on Economic, Social and Cultural Rights at paragraph 32.7. The Council for Medical Schemes & Another v Genesis Medical Scheme & others (20518/14) [2015] ZASCA 161.


DEMARCATION REGULATIONS

STEPHEN MMATLI

GM: COMPLIANCE & INVESTIGATIONS

COUNCIL FOR MEDICAL SCHEMES

On 1 April 2017 the long awaited Demarcation Regulations, as well as the new definition of the ‘the business of a medical scheme’, came into effect. For the Council for Medical Schemes (CMS), the implementation of the Demarcation Regulations is a welcome development as it will ensure that the social solidarity principles inherent in the medical scheme environment, are not undermined by commercially driven health insurance products.


In terms of the Regulations, insurers are not allowed to continue to provide primary healthcare insurance policies and hospital indemnity products.

With effect from 1 April 2017, these types of health cover can be provided only by providers that suc-cessfully apply for exemption from the CMS. The Regulations are aimed at clearly demarcating the responsibility in terms of regulatory supervision of medical schemes and health insurance products.

The implication is that any insurer providing indem-nity products such as primary healthcare cover and hospital indemnity cover as of 1 April 2017 when the Demarcation Regulation came into effect, is regarded as conducting ‘the business of a medical scheme’ as defined, and falls within the ambit of the Medical Schemes Act.

The Medical Schemes Act, No. 131 of 1998 (the Act) provides a unique social security framework which offers members of medical schemes health-care protection that is unavailable through other means.

The Act is the only piece of legislation that makes provisions for open enrolment, community rating, the prescribed minimum benefits (PMBs), as well as strict governance requirements and oversight by the Council for Medical Schemes (CMS) regarding medical cover for members.

These health insurance products have all along been regulated by the Financial Services Board (FSB) in terms of the Long Term Insurance Act (LTIA) and the Short Term Insurance Act (STIA). This led to regulatory arbitrage: insurance providers that did not wish to be regulated under the Medical Schemes Act while providing indemnity for costs of healthcare cover (healthcare expense indemnity cover), elected the regulatory regime where they are not required to comply with open enrolment, community rating and PMBs requirements.

In 2000, the FSB and the CMS concluded a demar-cation agreement aimed at making a clear dis-tinction between health insurance products and medical scheme cover. In line with the demarcation agreement, health insurance products cannot pro-

vide benefits which are linked to the lists of tariffs for medical services and procedures.

This prohibition against health insurance providers is due to their non-compliance with the condition for open enrolment, community rating, and the PMBs. They have to-date fallen outside the over-sight scope of the CMS, which forms an integral part for medical cover under the Medical Schemes Act. While the long-term insurers stopped selling gap covers following the demarcation agreement between the FSB and the CMS, short-term insur-ers continued to sell gap covers and healthcare expense indemnity cover. Gap cover is a cover against shortfall between a medical bill invoiced by healthcare service providers and the amount paid under benefits by medical schemes. In 2006, the CMS took action against Guardrisk for selling short-term gap related insurance prod-ucts. This resulted in a judgement, in 2008, by the Supreme Court of Appeal that found these prod-

Stephen Mmatli General Manager: Compliance

and Investigations


ucts, based on the interpretation of the ‘the busi-ness of a medical scheme’1, not to be conducting the ‘the business of a medical scheme’.

The court held that an insurer has to do all three activities mentioned in the definition of the ‘the business of a medical scheme’ in order to be con-travening the Act. Since the short-term gap related insurance products were only executing one or two of the three activities, they were allowed to continue.

It became necessary for the Minister of Finance to make changes to the LTIA and STIA, which are consistent with the Guardrisk judgment. In 2008, the Insurance Laws Amendment Act was enacted to allow the Minister of Finance, with the concur-rence of the Minister of Health to make provision for the short term insurers2 to sell health insurance products even though such products fall within the ambit of the “business of a medical scheme”.

Such provision for health insurance products is made in terms of the Regulations. However, the effect of this 2008 change in law was held in abey-ance, and the Regulations were preceded by an extensive consultative process.

The consultative process, which lasted several years between the Ministers of Finance and Health as well as the CMS, the FSB and other affected stakeholders, culminated in the publication of the final Demarcation Regulations on 23 December 2016.

The Regulations distinguish types of healthcare products that are considered to be health policies and accident policies, i.e. the Medical Expense Shortfall policies (Gap cover plans), and the non-medical expense cover as a result of hospitalisation policies (Hospital cash plan) that with effect from 1 April 2017, are regulated in terms of the Medical Schemes Act because they conduct the business of a medical scheme.

The Minister of Health has requested the CMS to grant a two year exemption, subject to cer-tain conditions, for primary healthcare insurance policies while further research is being led by the National Department of Health (NDoH) into the development of a Low Cost Benefit Option (LCBO) guideline3. It is envisaged that the existing primary healthcare insurance policies will be required to transition into a LCBO framework once finalised.

The CMS working in consultation with the FSB, the National Treasury and NDoH, has put together an Exemption Framework for providers of healthcare expense indemnity products.

The purpose of the Exemption Framework is to provide for an exemption for insurers and their respective financial service providers who provide indemnity products such as primary healthcare and hospital products, that meet the definition of “business of a medical scheme”.

The exemption will be in place while the develop-ment of a Low Cost Benefit Option (LCBO) Guideline is still underway. Such exemption shall be in terms of section 8(h) of the Medical Schemes Act, and shall be subject to certain conditions that seek to protect product-holders, and the funding of the demarcation regulatory regime.

One of the major condition for the exemption is that, levies in respect of the indemnity products that conduct the business of a medical scheme underwritten by insurers, which form part of the exemption they are seeking, will be imposed on such insurers and their respective financial ser-vice providers that obtain exemption under this Framework. The Council for Medical Schemes supports Demarcation Regulations as they will prevent the operation of harmful health insurance products that undermine the principles and provisions of the Medical Schemes Act.

1. Guardrisk Insurance Company Limited v Registrar of Medical Schemes and another [2008] 3 All SA 431 (SCA) at 624/5 para 15.2. An insurer registered under the LTI Act to provide health policies or under the STI Act to provide accident and health policies. 3. Media Statement Health Insurance Policies To Complement Medical Schemes Through An Enabling Regulatory Framework Release Of Final

Demarcation Regulations: (http://www.treasury.gov.za/legislation/regulations/FinalDemarc2016/2016122301%20-%20Demarcation%20press%20statement.pdf)


CMS Education & Training Plan 2017

The Accredited Skills ProgrammeIs aimed at Trustees and Principal Officers. Training is spread over two sessions of two days each. The pro-gramme is made up of unit standards which are quality assured by the Insurance Seta (INSETA), and registered on the National Qualifications Framework (NQF) car-rying 30 South African Qualifications Authority (SAQA) credits. The Accredited Skills programme upon comple-tion, awards 24 knowledge CPD points and 2 Ethics CPD points.

Trustee Induction TrainingIs a two day training session aimed mainly at newly appointed members of the Board of Trustees. Participation in the training is open to all schemes. Participants consists of Trustees from open and restrict-ed schemes. This training programme is a pre-requisite for registering for the Accredited Skills Programme.

The CMS also provides an Introductory Broker Training programme. The Programme bears CPD points which are approved by the Financial Planning Institute.

Prescribed Minimum Benefits Training Is a tailor-made training programme offered to medical schemes, administrators, managed care organisations and healthcare service providers upon request.

The Advanced Broker Training Programme is aimed at Accredited Healthcare Brokers who have attended the Induction Programme of the CMS. It is also beneficial for Medical advisors, Healthcare intermediaries, Broker consultants, Client liaison officers and other employ-ees of the medical schemes, who need to acquire an in-depth understanding of the concept of medical scheme design, as well as compliance and pricing issues in relation to medical scheme financial soundness. Participants who are affiliated to the Financial Planning Institute (FPI) can claim up to six knowledge Continuing Professional Development Points (CPD) by attending the programme.

To attend any of the above training sessions, visit www.medicalschemes.com

APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER

Accredited Skills ProgrammePTA

19-20 RSVP

PTA 10-11RSVP

PTA 13-14RSVP

PTA 13-14RSVP

Induction Broker Training

PTA - 20DBN - 21PE - 27RSVP

CT11

RSVP

Trustee Induction TrainingPTA

14-15RSVP

CT12-13RSVP

Advanced Broker TrainingPTA - 7RSVP

PE - 17DBN - 18CT - 24RSVP

CMS Education & Training Plan 2017

CMS NewsC O U N C I L F O R M E D I C A L S C H E M E S

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