CMS Annual Report 2010-2011

Dr Monwabisi GantshoRegistrar & Chief Executive

26 October 2011Parliament, Cape Town

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WELCOME

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Outline of presentation

1. Legislated mandate of the Council for Medical Schemes (CMS)

2. Highlights for the CMS in 2010-2011– Financial year 1 April 2010 to 31 March 2011– Dr Gantsho joins the CMS on 1 June 2010

3. Overview of medical schemes industry 2010– Financial year 1 January-31 December 2010

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1. Our legislated mandate• Medical Schemes Act 131 of 1998• Governs us and industry

– Medical schemes– Administrators– Managed care organisations (MCOs)– Healthcare brokers and broker organisations

• Heart of the Act: protecting medical scheme beneficiaries and regulating schemes

– CMS is a Statutory Regulator as opposed to self-, co-, and independent regulator– As we become effective we are constantly being accused of “abuse of power”

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How the Act protects members• Promote non-discriminatory access to

privately funded healthcare through:– Open enrolment– Community rating– Guaranteed benefits (prescribed minimum benefits/PMBs)

• Promote financial stability and sustainability• Encourage member’s active participation in

scheme affairs• Investigate and resolve complaints as per Act

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Our revised strategic goals

• Goal 1: Access to good quality medical scheme cover is maximised

• Goal 2: Medical schemes and other regulated entities are properly governed, are responsive to the environment, and beneficiaries are informed and protected

• Goal 3: CMS is responsive to the needs of the environment by being an effective and efficient organisation

• Goal 4: CMS provides influential strategic advice and support for the development and implementation of strategic health policy, including support to the NHI development process with the benefit of regional and international experiences.

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2. Highlights for CMS in 2010-2011• Revised strategy

– Mandate has not changed– NHI Green Paper: schemes will continue to exist

side by side NHI although their role may change– Better performance information reporting– 4 strategic goals instead of 7 starting this year

• Alignment with Consumer Protection Act (MoU with Consumer Commissioner)

• 11th clean audit in a row (since inception). – We need your support in facilitating concurrence between MoH and MoF to approve

2012/13 budget 7

Our Annual Financial Statements• Clean audit by AG• Robust internal controls• Competent Audit & Risk Committee which oversees

the role of the internal auditors • CMS has passed the readiness test of AG in terms of

the Performance Information report• Revenue- Levies, Broker Fees ,etc• Major Expenditure Items• Rental• Telecommunication Expenses

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• Audit Fees• Consumer Education• HR/Organisational Strategy• Investigation Costs• Legal Fees• Media and Promotion• Strategic planning costs• Trustee Training• Staff Costs

Our Annual Financial Statements cont..

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CMS expenditure 2010 / 11

Item AmountStaff cost 51.6 R mLegal fees 9.9 R mAdministrative expenses 6.1 R mOther operating costs 5.5 R mRental 4.3 R mAudit fees 1.4 R mDepreciation 1.2 R mConsumer education 1.1 R mAmortisation 0.8 R mTrustee training 0.3 R m 10

CMS expenditure 2010/100

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3. Overview of industry 2010Strategic overview:– National Health Insurance (NHI) system– Governance– Health costs– Prescribed minimum benefits (PMBs)– Complaints resolutionIndustry overview:– Non-financial information– Financial information

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NHI system

• Council has always supported and continues to support strategic reform of the entire health system

– Sect 7 of the Act: Advise the Minister– Support the DG of DoH– Assistance to HPC researcher: Contribute to health economics and policy research

• A task team is exploring the NHI Green Paper to formulate a view on it by 31 December

• Green Paper recognises continued existence of medical schemes although their role may change

– There is recognition that medical schemes further advance health systems and access to quality healthcare in SA

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Governance

• There are provisions in Medical Schemes Act• Boards are removed & curators are appointed• Schemes can be put under liquidation or

deregistered (Section 27)• Currently formulating a view on scope of

applicability of King III to medical schemes; guidelines will be published in 2011-2012

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Health costs

• CMS monitors health costs; they are rising• Supply-side regulation is required:

– CMS assists in curbing possible perverse behavior– Monitoring and reporting on private hosp costs

• Price negotiations between schemes and providers should take place

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PMBs

• Prescribed Minimum Benefits: 1 pillar of MSA• Guaranteed by the Medical Schemes Act• Regulation 8: schemes must pay for PMBs in

full (at cost). Awaiting judgment by end Oct.• Must be covered from risk pool, not savings• Serious & life-threatening diseases/conditions

– 270 PMB diseases/conditions; 25 chronic disease list and any emergency condition

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Resolving complaints

• In 2010-2011 we received 5 617 complaints• Almost 1 000 more than in last financial year• Of those, 5 351 complaints were resolved• Of those, 4 734 were valid complaints and 617

were enquiries• 3 480 complaints were resolved within 120

days

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Top 10 types of complaintsTypes of complaints Financial year 2010-2011

PMBs / formularies / DSPs 1 749

Unpaid accounts 1 230

Scheme refuses to issue authorisation 272

Administrative inefficiencies 261

Reversal & short-payment of accounts 228

Termination of membership 163

Misunderstanding with scheme 131

Non-payment of refund 127

Unauthorised deductions 92

Exclusion of condition and/or benefits 87

New CMS Sharecall hotline 0861 123 267

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How to complain

• Speak with your scheme first• Contact the CMS if no resolution• complaints@medicalschemes.com• 0861 123 267 (Sharecall hotline / consultants)

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NON-FINANCIAL INFORMATION

Thulani MatsebulaHead: Research & Monitoring

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Schemes and beneficiaries

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Schemes and beneficiaries cont.

• Fewer medical schemes• No negative effect on number of beneficiaries• Consolidation through amalgamations

(mergers) and liquidations• Number of smaller schemes declining faster

– Restricted schemes folding into larger schemes

• Consolidation trend continues – 99 medical schemes currently

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Benefit options

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Age of beneficiaries

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Age of beneficiaries cont.

• Open schemes are getting older• Restricted schemes are getting younger

(impact of GEMS)• Implications for beneficiaries in other schemes• Implications for industry

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% of total benefits paid ( 09 vs. 10 FY)

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Total healthcare benefits paid pbpm

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Utilisation of servicesConsolidat

ed

2009

General practitioner 746.7 760.8 739.9 2.80%

Dentist 216.9 229.9 225.7 1.90%

Private nurse 8.3 9 8.8 2.30%

Beneficiaries admitted to hospital* 195.5 184.6 193.2 -4.50%Beneficiaries admitted for emergency 44.6 43.6 NC NC

Admissions** 239.4 220.6 NC Nc

Same-day admissions 18.4 41.2 NC NC

Total admissions 257.8 261.8 280.4 -6.60%Beneficiaries admitted to hospital for PMBs 96.3 95.3 96.5 -1.20%

Beneficiaries admitted to hospital* 4.5 9.6 9.5 1.10%Beneficiaries admitted for emergency 0.1 0.6 0.6 0.00%

Admissions** 6.9 6.2 NC NC

Same-day admissions 0.2 12.3 NC NC

Total admissions 7.2 18.5 NC NC Beneficiaries admitted to hospital for PMBs 3.2 5.1 5.1 0.00%7.7

Number of beneficiaries visiting a public facility at least once in 2010

16.7

1.2

5.2

28.9

34.1

169.6

42.2

194.8

72.4

267.3

93.8

Number of beneficiaries visiting a private provider at least once in 2010

780.3

247.9

10.1

Number of beneficiaries visiting a private facility at least once in 2010

 

Open schemes

Restricted schemes

Consolidated

2010Consolidated

% change

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Utilisation of private hospitals

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Benefits paid Benefits paid

Amount (R) Amount (R) % changes% changesGPs 6,2 (5,7) 9,0 (8,4)Meds specialists 18,8 (16,7) 12,2

(19,1)Medicines 14,0 (13,3) 5,6 (18,6)Hospitals 31,1 (28,3) 10,0 (18,1)

Figures in parenthesis are prior year figuresFigures in parenthesis are prior year figures

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FINANCIAL INFORMATIONTebogo Maziya

Head: Financial Supervision

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Contributions and claimsTotal• Contributions increased by 13.7% to R96.5 billion (R84.9 billion)

• Relevant healthcare expenditure increased by 11.0% to R84.7 billion (R76.3 billion)

Risk• Contributions increased by 13.7% to R87.7 billion (R77.1 billion)

• Relevant healthcare expenditure incurred increased by 11.2% to R76.6 billion (R68.9 billion)

Savings• Medical savings accounts contributions increased by 13.2% to R8.7

billion (R7.7 billion)• Medical savings accounts claims increased by 12.0% to R8.3 billion

(R7.4 billion)Figures in brackets depicts 2009 figures

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Contributions and claims(pabpm)

Total• Contributions increased by 9.6% to R975.3 (R890.0)• Relevant healthcare expenditure increased by 7.3% to R858.4 (R800.2)Risk• Contributions increased by 9.6% to R886.9 (R808.9)

• Relevant healthcare expenditure incurred increased by 7.2% to R774.6 (R722.5)

Savings• Medical savings accounts contributions increased by 4.9% to R110.8

(R105.7)• Medical savings accounts claims decreased by 3.7% to R105.0 (R101.2)

Figures in brackets depicts 2009 figuresPABPM=per average beneficiary per month

pabpm = per average beneficiary per month

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Risk claims ratio all schemes 2010 prices

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Cost trends pbpa: 2010 prices

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Non-healthcare expenditure

Consists mainly of:• Gross administration expenditure (biggest

component) – 67.6%• Managed healthcare: management services – 19.5%• Brokers fees – 11.4%• Impaired receivables – 1.5%

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Non-healthcare expenditure

• Increased by 6.9% to R11.6 billion• pabpm figures increased by 3.1%

– Open: increased by 4.8% to R147.1 (R140.4)– Restricted: increased by 3.5% to R74.1 (R71.6)

Figures in brackets depicts 2009 figures37

Gross administration expenditure

• Increased by 4.4% to R7.8 billion– Open schemes: increased 1.4% to R5.6 billion– Restricted schemes: increased 13.1% to R2.2 billion– GAE is main component of NHE: 67.6%

• Adjusted for membership (pabpm):– Open: R96.6 (R95.5)– Restricted: R54.2 (R52.3)

Figures in brackets depicts 2009 figures

pabpm = per average beneficiary per month

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Managed healthcare: management services

• Increased by 16.2% to R2.3 billion• Number of members covered: 8.2 million (3.3%

increase)• 98.8% of all beneficiaries covered

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Broker costs

• Broker costs: increased by 8.9% to R1.3 billion• On a pampm basis:

– Broker fees increased by 7.7% to R44.4 (R41.2)

Figures in brackets depicts 2009 figures

pampm = per average member per month

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Broker fees and membership

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Net healthcare results

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Solvency: all schemes

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Overall trends

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