A Brief History of Private Tariffs

Dr Chris ArcherSAPPF

Medical Practice before Medical Schemes

• Doctors billed patients according to their ability to pay. Some wealthy patients paid huge sums to see their doctor-especially if he was world renowned. Sir William Osler (1849-1919) for example is reputed to have charged his wealthier patients a thousand guineas a consultation-but he also gave freely of his services to the poor!

• Payments for services were often erratic

Medical Schemes in the early years

• First medical scheme established by doctors as a contribution towards their medical expenditure

• From this grew the notion of two tariffs- A tariff of fees and a tariff of benefits

• Medical schemes paid their members who were then expected to pay the doctor –but this often didn’t happen.

Amendment to the Medical Schemes Act of 1985-Section 29

• Guarantee of direct payment to providers• MASA “Guide to Fees for Medical Services”• RAMS “Scale of Benefits” published annually in the

Government Gazette at a 20% discount to the MASA rate• Doctors were able to chose to be either contracted in or

not

Extract from the SAMJ Vol.68 26th October 1985

• “ The philosophy underlying the current legislation is that MASA should be free to set its own tariffs…and that RAMS should enjoy the same freedom with respect to the SoB… but that it would be set at a reasonable level in accordance with the fees charged by the majority of doctors”

• The era of direct guaranteed payment prevailed until in 1992 section 29 was removed from the Act

• RAMS ceased to be a statutory body eventually being replaced by a voluntary association called BHF and the SoB was no longer published in the government gazette

The NHRPL Era

• Increasing tension between providers and funders due to the increasing disparity between fees charged and benefits paid resulted:

• In 2003 in the intervention by the Competition Commission• SAMA, HASA and BHF were fined for acting collusively and

the NHRPL was introduced• The SAMA private tariff became the HPCSA Ethical Price

List• On 24th November 2008 the HPCSA announced it was

scrapping it Ethical Price List in favour of the NHRPL rate

NHRPL to RPL

• In 2007 the DoH (Department of Health) took over the development of the NHRPL which became known as the RPL

• Significant in the regulations drafted to allow for the development of the RPL was that input costs were to be made EXPLICIT

The RPL Process

• 2009 RPL RCF (Rand Conversion Factor) = R 12.56

• Cost Studies RCF • R 18.25 (General Practitioners)• R 28.70 (Neurosurgeons)

Hospital Association of South Africa vs. Minister of Health

• Acting Judge Ebersohn stated: • “the fact that the 2009 RPL reflected rates that were

unreasonably low meant that private sector providers would continue to struggle to cover their cost …. a burden many of them had carried for a number of years”

Difference between “Tariff of Fees” and “Scale of Benefits”

• When SAMA last published it’s guide to billing which included a RCF, the difference between it’s RCF and the BHF tariff Schedules RCF was approximately THREE FOLD

• How did this happen?

Effect of Inflation on the RAMS/BHF Tariff

(1968 – 2010)

• 1968 RAMS RCF = R0.48• 2010 BHF

• Consults R 13.56 (R 21.97)• Procedures R 8.40 (R 21.97)

• In other words (in real terms) in 1968 the medical aid RCF was worth 3x what is today for procedures and 2x for consultations

HPCSA Ethical tariff v RPL

Comparison between the SAMA schedule of fees (the HPCSA ethical tariffs) and the cost studies mandated by the RPL process, show a striking similarity

With very similar RCF’s

Whereas the proposed Guideline tariff schedule RCF published recently and now withdrawn is VERY SIGNIFICANTLY LOWER than its own ethical tariff withdrawn in 2008!-Yet both are to be used as a guide to overcharging

It is completely inappropriate to use a benefit schedule as fees schedule

• Benefit schedules have historically always been lower than the fee schedule

• Many doctors have been bullied by the widespread practice of many schemes to make direct payment if the fees charged were based on the benefit schedule of the medical scheme

• Fees schedules have always included codes for services not necessarily covered by a scheme’s benefit schedule

The way forward

• An equitable schedule of fees and benefits must satisfy the following requirements• Affordability• Availability • Quality

• It should not beyond our ability to create a coding and tariff system that is “morally defendable, socially responsible and economically sustainable” – Author Unknown

In Conclusion

• South Africa deserves to have a legally acceptable process whereby all stakeholders can participate in a transparent bargaining chamber through which equitable fees for medical services can be developed.

• The process followed by the HPCSA recently in establishing its “Guideline Tariffs” for medical and dental services is NOT such a process.