competition commission health market inquiry · bsc (hons) fassa, ffa local and international...
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COMPETITION COMMISSIONHEALTH MARKET INQUIRY
TOWARDS SUSTAINABLE HEALTHCARE
17 May 2016
Presenters
CEO
Medscheme Holdings
CA (SA), MBA
Experience in the
healthcare and
banking industries
15 years with
Medscheme
Head: Actuarial
BSc (Hons) FASSA,
FFA
Local and international
healthcare actuarial
experience, ITAP,
ASSA, IAAHS
9 years with
Medscheme
Senior Medical Advisor
MBChB, MBA
Public and private
clinical practice with
public health medicine
experience in academic
and State sectors
2 years with
Medscheme
Head: Provider Relations
and contracting
MBChB
Local and international
experience in private
and public practice
11 years with
Medscheme
Head: Administration
B.Cur Honours, BCom
Honours, MBLExperience in both
public and private
healthcare in SA
16 years with
Medscheme
Head: Managed Care
Strategy
MBChB MPharmMed
Former Professor of Clinical
Pharmacology and Dept. of
Health Director of Primary
Healthcare
21 years with
Medscheme
Kevin Aron
Alex Brownlee
Dr Laubi Walters
Dr Manshil Misra Dr Mike Marshall
Modjadji Tati
Agenda
Part A
• Who we are
• What we do
• How we interact with stakeholders
Part B
• Key challenges
• Understanding healthcare financing
• Common language and purpose
Part C
• Recommendations
Part A
• Who we are
• What we do
• How we interact
Agenda
Medscheme – An overview
44yr Proven 44-year track record in Southern Africa
Largest Black owned managed care provider and administrator, Level 2 B-BBEE
More than 3.6 million lives under health administration and managed care
Country wide networks of 6 200 GPs, 4 000 specialists, 2 100 pharmacies
2 716 full time employees
ISO 9001 certification in health administration
17 South African client schemes (14 restricted schemes & 3 open schemes)
Medscheme – Part of a Health Focused Group
Medscheme’s Vision and Mission
Vision
Creating a world of sustainable healthcare
Mission
We create access to sustainable, affordable,
quality healthcare through the application of
innovation and expertise, delivered as an
efficient, seamless experience
Part A
• Who we are
• What we do
• How we interact
Agenda
Medscheme’s role
Medscheme’s Services
Administration
• Membership administration
• Claims assessing
• Fund management and secretarial services
• Member communication services
• Broker commission processing
• Legal, governance, risk and compliance
• Internal audit (ISAE3402)
• Forensic services
• Financial management and reporting
Incl. credit control management services
• Enquiries incl. appeals processes
Managed Care
• Hospital Benefit Management Services
- Pre-authorisation services
- Case Management
- Clinical Audit
• Pharmacy Benefit Management Services
- Pre-authorisation
- Drug Utilisation Review (DUR)
• Active Disease Risk Management Services
• Dental Benefit Management Services
- Basic and Specialised Dentistry
• Managed Care Network Management Services
and Risk Management
- Networks of General Practitioners, Specialists, Hospitals
and Pharmacies
Interaction with Client Schemes
Being a multi scheme administrator
• Client schemes determine their own strategy
• Medscheme’s function is to effectively implement each client’s individual strategy
• Dedicated business unit structures are reflective of individual clients’ needs
• Services are provided in terms of Service Level Agreements (SLAs)
• Regular, transparent reporting to schemes of Medscheme’s performance to SLAs
• Contracts with clients include penalties for poor performance
• Internal and external audits including independent SLA audits
• Trustee meetings driven by Scheme officials and Medscheme input provided by invitation only
• Client schemes can contract with any other service providers they choose
Key Stakeholders
Scheme
Beneficiaries
Medical
schemes
Healthcare
service
providers
Third PartiesIndependent advisors and
providers appointed by client
schemes
Brokers
57 external
IT interfaces Incl. other
administrators and
managed care
providers
Independent
advisors incl. actuarial firms
and other
consultancies
Regulators
Other
electronic links incl. Health24 portal
Member Communication Channels
Web Services
And Adaptive
Website
Member Event
Driven SMS
Walk-in Centres
Written Letters
(letters, ad hoc
and system
generated)
Instant
Messenger /
Web Chat
Interactive
Voice
Response
In- and outbound
Call Centres
Emails
Newsletters
and
educational
material Statements
Statements
and apps
Mobi
Voice of the
Customer
Surveys
Voice
Member Communication
• 52 million emails sent out to beneficiaries p.a.EMAILS
• 28 million SMS sent to beneficiaries p.a.SMS
POST • 1.8 million letters sent out to beneficiaries p.a.
INBOUND CALLS
VOICE OF
THE CUSTOMER
• 2.4 million inbound calls received p.a.
• Average 780 000 surveys submitted per annum
• 22% Return rate
• 89% rated our Service GOOD & EXCELLENT
Member Communication
Complaints
• Formalised complaints process
• Complaints on HelloPeter and social media
monitored daily
• Transparent reporting to the client schemes
Appeals Process
• Formalised appeals process in line with
Scheme’s mandate
• Clinical Review Committees (including the
inclusion of external consultants and opinions)
reviews escalations
Voice of the Customer surveys
• Customer can be a member, trustee, PO or
healthcare provider
• Data analysis and transparent reporting of
findings to client schemes and management
structure
In case of dissatisfaction
• Analysis of free format questions and call back
where concerns were raised
• Root cause is categorised and process includes:
Investigation of sequence of events, Tracking
reasons for experience, Remedial action taken
Accessibility: Our National Footprint
Functions
• Process authorisations
• Hold focus sessions with members
• Resolve members queries
• Assess refund claims
• Process membership transactions
• Enroll new members
• Member education
• Scan claims
• Assist brokers
• Print statements for members and
providers
• Conduct wellness days
• Print tax certificates & cards
288 000 Member visits per Annum
Managed Care
The Need for Managed Care
Cardiovascular %
Diabetes %
Mental health %
Respiratory (Chronic) %
Musculoskeletal %
Average Age
65%
23%
41%
16%
26%
55
16%
5%
10%
5%
8%
29
35%
13%
18%
7%
15%
47
Population % 4% 88%8%
Risk claims per life per year R84 349 R8 246R23 352
6.5 0.91.4
Already high prevalence of
lifestyle disease
Low co-morbidity index
Ave gross contribution plpy R16 925 R16 925R16 925
Value Based Healthcare
Volume
Value
Quality
Affordable
Access Outcomes
The patient journey illustrates the
importance of roles and relationships &
structural features driving adverse market
outcomes, e.g. information asymmetry
Patient Journey
Patient Primary Care Practitioner
Disease or injury
Coordination of Care and Information Sharing Needed
Informed
Activated
Beneficiary
More
Empowered FP
More Empowered Specialists,
Hospitals & Auxiliary
Professionals Contracts
with ARMs
Education,
Training
& Care
Pathways
Strategic Purchasing &
Coordination of Care
Home Based Care
& Community Support
Workplace
Integration
Patient / Family Education
& Counseling Digital Strategy
Including EHR, EMR
and PHR
Contracts
with
ARMs
Productive
Interactions
Part of Virtual/Actual
Primary Care Teams
Case managers and
medical advisory services
Arrows: Information sharing
Patient Journey
Patient Primary Care Practitioner
Disease or injuryPrescription
Pharmacist
HospitalStep down / home care
PathologistConfirming diagnosisSpecialist
Our Approach: Population Health Management Framework
Cornerstone of integrated administration and managed care capability and capacity
Fraud, waste and
abuse managementActuarial and clinical
policy services
BI modelling, analysis and
reporting (incl. data
warehousing)
Member- & provider-
centric processesReliable operational IT
systems with EHRLegal support
Strategic purchasing &
coordination of care
Contracting with ARMs
Education, training &
care pathways
Digital strategy & EMR with
decision support
Stratification of
beneficiaries
Pro-active
communications
Active disease risk
management (ADRM)
Intervention process
including lifestyle
interventions
Digital strategy
including PHR
Outcomes monitoring &
reporting & info sharing
Digital strategy including
central EHR
Outcomes monitoring &
reporting & info sharing
Managed care network
management services and
risk management
The relevant benefit
management services as well
as the disease risk
management support
services, adhering to CMS
accreditation standards,
processes, systems and
reports
Outcomes monitoring &
reporting & info sharing
Provider
Empowerment
Other
managed care
services
Patient
Activation
The Value of Managed Care – Our Experience
HIV/AIDS VIRAL LOAD: Above 80% below
400 copies/ml is considered exceptional
inpatient admission cost savingsR387.30 plpm
inpatient admission rate61 per 1000 intervened lives
hospital ALOS0.28 days
ER admission rate25.7 per 1000 intervened lives
chronic medicine costsR36.00 plpm
psychologist visits45.3 per 1000 intervened lives
pharmacy visits219 per 1000 intervened lives
GP visits112 per 1000 intervened lives
specialist visits3.1 per 1000 intervened lives
HIGH RISK BENEFICIARY – PREDICTIVE
INTERVENTION (TELEPHONIC ONLY)Measurable overall managed care savings:
Claims 5 to 10% lower with an
ROI consistently > 200%
A 10% claims saving results in a 8% saving on contributions
Part A
• Who we are
• What we do
• How we interact
Agenda
Medscheme’s Interaction With
Healthcare Professionals
How we Engage with GP’s and Specialists
General Practitioners
• Medscheme Independent Practitioner
Association (IPA) Forum
• Structured engagement (3 – 4 times
annually)
• Cooperation agreement
• Charter
• Other (less structured)
• SAMA
• Individual IPA’s
• Conferences
• Individual GP’s
Specialists
• Medscheme Specialist Forum
• Structured engagement (3 – 4 times
annually)
• Terms of reference
• Other (less structured)
• Specialist societies
• Specialist management groups
(Healthman / Spesnet)
• Conferences
• Individual specialists
What we discuss
• Benefits – non covered items, exclusions, co- payments
• Claims administration issues
• Managed care interventions – pre-authorisation process, letters of motivation
• Interpretation of tariff codes
• Funding protocols
• New interventions
Challenges
• Structural & ideological fragmentation of doctor representative organisations
• Clinical leadership – some societies employ CEO’s and other rely on leadership from
doctors in full time practice
• Concern of transgressing competition law
• HPCSA legislation governing how doctors can practice
• Legislative framework influencing contracting
How we Engage with GP’s and Specialists
Professional Societies
Performance Based Reimbursement
PBR components
• Contracted network
• Payment arrangement
• Tiered reimbursement
• Profiling (REPI2)
• Cost
• Quality
• Peer management
Performance Based Reimbursement Outcomes
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
40,0%
45,0%
Cholesterol Colonoscopy TDH screening PAP Smearcoverage
HbA1ccoverage
Monitoringnephropathy
Percentage improvement in Indicators of Clinical Care from 2007 to 2013: Schemes with GP Networks vs Schemes without GP Networks
Network plans Non-network plans
Average GP tariff PMB’s network vs non network
Conclusions
• Members are protected against co-payments &
scheme protected against payment at cost for PMB’s.
• Networks seemed to perform better on quality metrics
than non networks
• Marginal overall improvement in quality
• Future models will need increased adoption of Health
Information Technology.
• Need to address structural issues in the healthcare
delivery model.
101 103100
119 120
127
80
90
100
110
120
130
NetworkNon-network
Source: Medscheme
2011 2012 2013
Pe
rce
nta
ge
of S
ch
em
e r
ate
Specialist Contracting Dynamics
1. Open to any willing specialist
2. Essentially a “payment arrangement” with the objective of;
• Protecting members against co-payments
• Mitigating payment at cost for PMB’s
3. Uptake related to quantum of offer
Scheme A
130% scheme rate
Scheme B
165% scheme rate
Number of specialists
contracted (excl.
anaesthetists*)
2 623 3 172
In addition Scheme B has been able to contract an additional 845 anaesthetists at a
rate of 235% of scheme rate for the anaesthetic unit 140% for the clinical consult and
procedure unit.
Specialist Contracting
Challenges in measuring specialist performance
1. Measuring quality outcomes
2. Measuring entire care process versus a specific procedure
3. Accommodating diversity of practice within a specific
specialty
Global fee model for hip and knee replacements
Medscheme’s Interaction With Hospitals
1% 2% 1%
96%
Sub acutefacilities (049)
Mental healthfacilities (055)
Day hospitals(076 & 077)
Acute hospitals(057 & 058)
Hospital Landscape
Hospital expenditure as a % of total expenditure
Source: CMS reports Medscheme data
0%5%
10%15%20%25%30%35%40%
% Market share (by expenditure) per facility type & procedure
Herfindahl–Hirschman Index (HHI)
market concentration of hospital groups by province
Acute hospitals Day Clinics Sub-acute Facilities
Mental health facilities Cataracts
Hospital expenditure by facility type
How we Engage with Hospitals
Engagement
Structured engagement
Negotiations
ProfilingAlternative
Reimbursement Models
Networks / DSPs
How we Engage with Hospitals – Hospital Profiling
No standardisation of descriptions and calculations of quality metrics
as published by Hospital Groups in their annual reports
1,170,58 0,55 0,45 0,32
1,18
2,66
4,71
2,17
0,09
8,6
2,92,4
3,22,7
0123456789
10
VentilatorAssociatedPneumonia
Surgical SiteInfection
Central LineAssociated
BloodstreamInfection
CathheterAssociated
Urinary TractInfection
HealthcareAssociatedInfections
FIM/FAM Patientincident rate
Employeeincident rate
Hosp Group 1
Hosp Group 2
Hosp Group 3
Hosp Group 1 Hosp Group 2 Hosp Group 3
Reporting period 1 October - 30 September 1 October - 30 September 1 April - 31 March
Ventilator Associated Pneumonia per 1 000 ventilator days per 1 000 ventilator days per 1 000 device days
Surgical Site Infection per 1 000 theatre cases per 1 000 theatre cases
Central Line Associated Bloodstream
Infection per 1 000 central line days per 1 000 line days since 2012 per 1 000 device days
Catheter Associated Urinary Tract Infection per 1 000 catheter days per 1 000 device days
Healthcare Associated Infections per 1 000 PPD's per 1 000 PPD's
Source: Annual Reports
How we Engage with Hospitals
Carve outs ModifiersClinical
exclusions
Stop lossesLine item
data
0% 50% 100%
2014
2015
2014
2015
2014
2015
Hosp
Gro
up
A
Hosp
Gro
up
B
Hosp
Gro
up
C
Fee for Service Fixed Fees Per Diems
Engagement
Structured engagement
Negotiations
ProfilingAlternative
Reimbursement Models
Networks / DSPs
Part B
• Key challenges
• Understanding healthcare financing
• Common language and purpose
Agenda
Understanding healthcare financing
Inherent Complexity in Health Insurance
4 250
900
Life Assurance Car Insurance Health Insurance
Number of claimants per 1000
Non-claimants
Claimants
Insurer &
policyholder
Low anti-selection
1 payment at death
Insurer &
policyholder
Low anti-selection
1 defined payment
Insurer & policyholder & facility & doctor
& pharmacist
High risk of anti-selection
Multiple codes, subject to protocols,
PMBs, etc.
Unknown incidence and cost per claim
Complex human body
Why are Benefits so Complex?
From Simple Financial Limits to Clinical-Criteria Defined Benefits
From simple financial limits…
Financial limits
Not for PMBs, which are clinically
defined
Co-payments
Can be overridden on
clinical grounds
Reg15(h)(i)(c)
Conditions covered / protocols
Clinical criteria used
to define benefit need
Reimbursement rate
PMBs at cost
…to a hybrid design with complex
clinical-criteria defined benefits
Underpinned by social solidarity principles:
Clinically defined benefits are more equitable
But Benefit Restrictions are Critically Important
Benefits, including protocols/formularies
are 2nd largest determinant of scheme claims expenditure
Health Profile of
membersBenefit limits and
protocolsOther cost drivers2 31
If no benefit
restrictions were
applied
Fewer non-PMB
benefits
or
Higher contributions
Inequitable allocation
of limited resources, favouring those with
PMBs or higher income
The aim is to efficiently offer the widest cover to the whole population with the greatest healthcare need
Meeting unique customer needs
Different benefit packages meet different needs
Setting all benefit limits at maximum levels to cater for all members in one benefit option is simply not affordable
Legacy options
Even a scheme with a poor profile can compete by opening a new benefit option
The existing poor profile members remain in so called ‘legacy options’
Thus, whilst many schemes appear to have many benefit options, typically only a few are actively marketed
It is typically better to not close down legacy options, since the financial impact on the remaining scheme members is negative
Most parties would prefer to close legacy options, if not for reasons above
Why are there so many Benefit Options?
Common Language and PurposeHealthcare Professional Tariff Coding Challenges
Lack of a Common Language: Tariff Coding
• Medical codes describe the context and content of clinical encounters.
• They form the basis of communication between funders and providers of healthcare.
• Whereas some codes like those for the identification of diagnoses are standardized, there
is no common coding structure, including terms of use, for professional services rendered.
The standards used by providers and funders are not aligned.
SAMA and Professional
Societies maintain coding
structures that underpin
billing.
Individual funders maintain
their own coding structures
for purposes of payment,
using RPL codes as the
foundation.
Doctor bills code ‘x’ Funder says ‘x’ invalid
Patient/member liable for doctor’s account
Why are funders not uniformly adopting SAMA’s coding
structure?
• It represents the interests of the profession
• SAMA is not a statutory body.
• Professional Societies and SAMA coding guidelines are not
always aligned.
Lack of a Common Language: Tariff Coding
What is the problem with the use of tariff codes?
• No industry review of codes and/or their associated RVUs in
more than 10 years. Codes do not reflect current practice.
• Some codes have become obsolete as procedures
are outdated.
• New procedures have no associated codes.
Void of
Standardized
Industry
Coding
and
Billing
Common Language and PurposePMB Challenges
PMBs: Lack of a Common Understanding
State doctor
‘We support international clinical
guidelines. It is a PMB.’
Technology company
representative
‘Doctors in State use our
technology. It is PMB.’
Patient
‘My doctor says it is a PMB’
Private doctor
‘The condition is a PMB.
That is why my
treatment is a PMB.’
Funder
‘It is only a PMB
if…………’
Does the patient qualify for the healthcare service on the basis of
clinical condition according to ‘prevailing State practice’
Treatment
Determining a PMB
PMB – YES or NO?
Does the treatment fall within broad descriptor of the relevant DTP?
Are there limitations to treatment detailed in Annexure A?
Is the diagnosis a PMB diagnosis?
Was it related to an emergency?Diagnosis
Clinical
condition
DTP: Diagnosis and Treatment Pairs
Determining a PMB
DSP
• Should care have been obtained from a Designated Service Provider (DSP)?
• If yes, was there involuntary use of a non-DSP?
Protocols• Are there managed care protocols or formularies that apply?
Exceptions
• Must exceptions to such protocols and formularies be considered on clinical grounds?
PMB PAYMENT IN FULL
– YES or NO?
Prescribed Minimum Benefits: Administering PMBs
• Payment of all claims linked to a PMB diagnosis would result in overpayment, inefficient use of
limited resources and ultimately inequity.
• Manually adjudicating all claims for PMB eligibility once insured benefits are exhausted is
administratively impossible.
• Accurate and efficient PMB payment is ensured through a hybrid of operational processes.
Pay all care linked to
PMB diagnoses at
cost
Hybrid model of:
• Automation
• Pre-authorisation
• Contracting
• Exception management
Pay any PMB above
standard scheme rules
only on pre-
authorisation
Common Language and PurposeFunding Guideline Challenges
Managed care protocols must be developed on the basis of
evidence-based medicine, taking into account considerations of cost-
effectiveness and affordability
Clinical Standards: Differing Views on Best Practice
Hyperlipidaemia Guidelines
SA Clinical Guidelines European Clinical Guidelines American Clinical Guidelines
Titrate statin dose according to
LDL-C target
Target defined in terms of patient’s
10-year risk of any CVS event.
Targets defined in terms of LDL-C
cut-off values (ranging from <1.8
to <3 mmol/l)
Titrate statin dose according to
LDL-C target
Target defined in terms of patient’s
10-year risk of fatal atherosclerotic
event.
As for SA guidelines. For very high
risk patients, LDL-C reduction of
>50% is alternative
NO treatment target
The expert panel was unable to
find randomized controlled trial
evidence to support use of targets.
Intensity of statin dose according
to estimated 10-year risk of
atherosclerotic CVS event
Managed care protocols must be developed on the basis of
evidence-based medicine, taking into account
considerations of cost-effectiveness and affordability
Clinical Standards: Best Practice vs Funding Guidelines
Hyperlipidaemia
PMB Algorithm SA Essential Medicines List
Titrate statin dose according to LDL-C target
Treatment defined in terms of patient’s 10-
year risk of any CVS event.
Target defined in terms of LDL-C <=3mmol/l
or reduction of at least 45% from baseline
No treatment target
Treatment defined in terms of patient’s 10-
year risk of any CVS event.
Use statin dose that lowers LDL-C by at least
25%
(patients with very high cholesterol should be
referred)
Part C
• Recommendations
Agenda
Recommendations
• Establish an independent authority to define
the tariff coding, the Minimum Reference Price
to be used as well as define quality standards
• Benefits clearly defined relative to industry
Minimum Reference Price List (MRPL)
• Healthcare practitioners and providers to
transparently display their billing rates relative
to MRPL
• Regulation to ensure the transparent reporting
of healthcare quality and cost information is
recommended
Establishing a
common language
Facilitate value based
contracting
Overhaul the PMBs
Further recommendations
• Alignment of differing legislation to allow for
selective contracting based on value
• Allow employment of practicing healthcare
professionals by corporate entities
• Public disclosure of any potential conflicts of interest
Recommendations
Establishing a
common language
Facilitate value based
contracting
Overhaul the PMBs
Further recommendations
• Simplify PMBs
• Benefit definitions
• Level of care
• Align to NHI policy direction
• PMBs paid in line with scheme rates, subject to
MRPL
Recommendations
Establishing a
common language
Facilitate value based
contracting
Overhaul the PMBs
Further recommendations
Recommendations
• Implement Risk Equalisation Fund
• Mandatory membership with income cross-
subsidisation
• Revise solvency framework
Establishing a
common language
Facilitate value based
contracting
Overhaul the PMBs
Further recommendations
THANK YOU