health market inquiry - compcom sa · gtc medical aid survey report . ... • members are not...
TRANSCRIPT
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HEALTH MARKET
INQUIRY
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• Introduce Cape Medical Plan
• Regulatory Environment
• Not-for-Profit Insurance model vs the For-Profit model
• Third Party Administration
• Tariff Negotiations
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• Member Choice on Scheme Selection
• Third Party Payer
• Strength of Anti-selection
• Billing Rules
• Prescribed Minimum Benefits and Co-ordination
of Care
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INTRODUCTION
Purpose of Inquiry
to determine if competition in the sector is working
and how it can be improved
CMP
• A small self-administered not-for-profit scheme
• Not administered as a typical short-term insurer
• Scheme is run as a mutual society
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INTRODUCTION continued
• The framework exists and management
structures are designed to allow positive
member input and involvement
• This gives life to the concepts of Social
Solidarity and Mutuality
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MUTUAL SOCIETY REFERENCE MODEL
Use relevant Technology to
improve personal contact with
all stakeholders
Skilled, Knowledgeable
staff who support & identify with
the concept of mutuality
Product Design & Benefits that support the Collective in
terms of long term
sustainability
Communications to meet & support
Transparency compliance & governance
requirements
Fully integrated system & processes
which drive rationalised Admin
& improved service delivery
Increased CMP Mgt visibility
(to membership at large)
Increased Board visibility (to membership
at large)
Genuine Empathy
that can be supported & afforded by
the collective
Peace of Mind & confidence in CMP’s decision
making
Experience a sense of
pride in belonging to this mutual society
Promoting Mutuality to create the balance between entitlement & responsibility
Providing Means to defray legitimate Healthcare costs
Long Term sustainability
Promoting social solidarity
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INTRODUCTION continued
• At CMP the members are the Scheme and
the Scheme is the members
• 100% of the monthly contribution paid by
the members goes to funding benefits
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CAPE MEDICAL PLAN
THE
MEMBERS
OF CAPE
MEDICAL PLAN
THE SCHEME ADMINISTRATION SUPPORTING THE MEMBERS
BROKERS
HEALTH CARE PROVIDERS
MANAGED CARE PROVIDERS
OUTSOURCED ADMINISTRATION
OTHER SERVICE
PROVIDERS
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ADMINISTERED SCHEMES
THE
SCHEME
BROKERS
HEALTH CARE PROVIDERS
MANAGED CARE
PROVIDERS
OUTSOURCED
ADMINISTRATION
OTHER SERVICE
PROVIDERS
THE
MEMBERS
PROVIDERS OF OTHER
PRODUCTS
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REGULATORY ENVIRONMENT
Regulations related to: • Open Enrolment
• Community Rating
• Inclusion of PMBs
Missing regulations: • Mandatory cover
• Some form of equalisation of Risk
• Payment tariffs for PMBs
THE MUTUAL SOCIETY HAS NO PROTECTION
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REGULATORY ENVIRONMENT continued
DEMARCATION
• Not subject to the same regulations
• Consumer is not protected
• Medical schemes losing younger, healthier members
• Losing cross-subsidy
• Gap cover - and how they deal with PMBs
• Hospital Cash Plans and the hidden incentive to over utilise hospitals
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NOT-FOR-PROFIT vs FOR-PROFIT MODEL
• South Africa is a developmental state
• Massive inequalities and large numbers of poor
citizens
• For-profit healthcare financing is not the most
desired model
• Is healthcare provision and access a public
good or a market to be exploited?
• Medical scheme contributions are beyond
many individuals
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NOT-FOR-PROFIT vs FOR-PROFIT MODEL continued
• This undermines the constitutional imperative of access
to healthcare
• Unregulated insurance market exaggerates the
problem
• Recognise that it is improbable that all For-profit health
service provision from practitioners or healthcare
providers can be removed from the equation
• Greater scrutiny of fees and profits are in the public
interest
• Consumers cannot exercise the same level of control
over demand for healthcare as they can for other
necessities
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NOT-FOR-PROFIT vs FOR-PROFIT MODEL continued
• CMP recognises there are advantages to the economies
of scale of large administration organisations
• Is there a place for Not-For-profit administrators and
managed care organisations
• They would be fully owned by the scheme members in
the same way that they own their scheme
• Current environment does not enable this type of
arrangement and undermines the provision of
healthcare in a developmental state as a public good
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THIRD PARTY ADMINISTRATION
• Advantages of a large administrator
• Controlled by Insurance companies
• Trustees completely reliant on information given to them
• Economies of scale not evident
• CMP administration cost R108 pbpm
• Entirely funded out of investment income
• No extra cost layers
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THIRD PARTY ADMINISTRATION continued
• CMP members have an extra R1 296 per annum
• A family of 3 will have an extra R3 888 per annum
• Never use BROKERS
• Often locked into commercial arrangements with large
insurers
• Our product information is materially misstated – example
GTC Medical Aid Survey report
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TARIFF NEGOTIATIONS
• Hospital groupings listed on JSE and vulnerable to
investor sentiment
• Consistently high ratios of operating earnings before interest, tax and depreciation
• Small scheme a PRICE TAKER
• Collective bargaining for medical schemes outlawed in
2004
• Still happens through third parties
• Fee for service not ideal, but other models often lack
transparency
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MEMBER CHOICE ON SCHEME SELECTION
• CMP does not pay brokers in any form
• A member chooses to join, wanting to be part of a scheme
with the philosophy of a member-centric mutual society
• To have a say in determining their particular level of funding
• We do this by member involvement and a reciprocal sense of belonging amongst the collective membership
• Benefit set is simple and easy to understand
• Management, Principal Officer and Trustees are visible
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MEMBER CHOICE ON SCHEME SELECTION continued
• Members are not enticed through sophisticated marketing techniques which make it difficult for people to identify their
true needs
• Members join through referrals
• Staff are knowledgeable and support and identify with the
concept of social solidarity and mutuality
• Benefits support the collective membership
• Use the IT system we have developed and own
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MEMBER CHOICE ON SCHEME SELECTION continued
• Member-centric mutual society
• Communicate with our members in plain language, consistently and openly
• Use electronic and paper-based communication
• Hold open days, benefit information sessions
• Personal visits with members
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MEMBER CHOICE ON SCHEME SELECTION continued
• As a society we need to change the attitude of citizens
and organisations
• We do not just exist for ourselves, but also the good of society
• Without a well informed society our own rights will be
compromised
• Few schemes have a member-centric approach
• Often make it difficult for members to exercise their rights and do not pay PMBs as they ought to
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THIRD PARTY PAYER
• Consumers are not able to compare or evaluate prices
• Lack of understandable information to make a decision on
treatment
• Difficult to assess quality and efficiency of healthcare
delivery
• The payment mechanism distorts the incentives of both the
consumer and the provider of healthcare
• Opportunity for supplier-induced demand
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THIRD PARTY PAYER continued
• Excessive and unnecessary consumption with no
improvement in outcomes
• Vertical relationships - shares held in the hospital
• Hospital depends on specialist to generate
utilisation of the facility
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STRENGTH OF ANTI-SELECTION
• Providers assist consumers to access the system in order to
ensure continued payment
• Differential rates are charged by suppliers
• Examples with Renal dialysis
• 2014 - R1 118 private
R1 880.79 medical aid
• 2016 – R1 642 private
R2 172.20 medical aid • Supplier referral
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BILLING RULES
• Tariff coding system
• Controlled by the various societies and
professional groups
• Make unilateral changes
• Used to maximise income
• Unbundling of codes to support this
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PRESCRIBED MINIMUM BENEFITS
• As we use 100% of contributions to fund benefits, if benefit
spend increases, so does the amount of money required
to fund this
• Why does it matter if PMBs and particularly those linked to
end-of-life care rise much faster than non-PMB benefits
and general inflation?
• Compulsory inclusion of PMBs was good for social
solidarity reasons
• The “pay in full at invoice cost” has had the negative effect of extending high cost treatments with little
likelihood of a positive outcome
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PRESCRIBED MINIMUM BENEFITS continued
• Should we be incentivising clinicians to limit expensive
treatment?
• If we do not, is the bill simply maximised as it has to be paid?
• In the current environment unnecessary costs are being
added
• Necessity to have co-ordination of care for what is at the
moment a very fragmented delivery system
• We require clear, ethical and realistic protocols that are
nationally supported and drawn up by an independent
clinical body, with no link to hidden financial gains
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PRESCRIBED MINIMUM BENEFITS continued
• CASE STUDY 1
• Baby born at 25 weeks, weighing 510 grams, respiratory difficulties
• Born with brain damage incompatible with life – missing temporal
and occipital lobes
• Suffered a stage 4 intraventricular brain haemorrhage
• Stopped breathing after a few weeks and was resuscitated
• Suffered and struggled for months and passed away at 7 months
• Cost to the collective of R3.2 million
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PRESCRIBED MINIMUM BENEFITS continued
• CASE STUDY 2
• Patient underwent an uncomplicated right carotid
endarterectomy
• Developed a cardiac arrest and remained in a depressed
conscious state
• Showed no signs of recovery, no reaction to pain, verbal
commands, no spontaneous eye movement
• The neurologist at a point confirmed that the patient had suffered a “hypoxic brain injury” and was in a vegetative
state
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PRESCRIBED MINIMUM BENEFITS continued
• Not responding to external stimuli and showed slow
frequency activity
• The patient remained in ICU fully ventilated for a further 3 weeks
• At this point palliative end-of-life care should have
been instituted
• Case cost R2 million of which R600 000 was incurred
after the neurologist confirmed the patient was in a
vegetative state
• Excessive treatment costs did not change the final
outcome
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CONCLUSION
• Is the self-administered mutual society a better option
than private healthcare run by companies listed on the
Johannesburg Stock Exchange?
• We believe it is a more cost effective and fairer model
• It supports the intentions of moving healthcare into the
domain of a social good
• It will create a transparent environment where competition
in the sector will work for the people it is meant to serve
• Lowering of costs will support the constitutional imperative
of universal coverage and can run concurrently and
support NHI