hmi public hearings: consumer related issues - … · hmi public hearings: consumer related issues...

HMI Public Hearings: Consumer related issues Dr Jonathan Broomberg – CEO Discovery Health 2nd March 2016

Key observations

2

Structure of private

healthcare funding

01

Drivers of medical

inflation

02

\

Quality of care

04

• Discovery Health provides administration and managed care services to Discovery Health Medical Scheme and 17 restricted

medical schemes through contracts which fully align its incentives with those of its scheme clients

• Administration fees charged to DHMS have been increasing at below CPI since 2008, despite increasing complexity and

intensity of services

• Medical schemes have to maintain a delicate equilibrium between contributions, benefits and regulated reserve levels. This

creates a ‘blame paradox’ in which all stakeholders blame medical schemes for not meeting all of their demands

• Increasing utilisation of services by scheme members is the key driver of medical scheme cost inflation. Hospital and doctor

tariff increases track CPI very closely

• Utilisation is growing by 4.5-5% per annum in open schemes, due mainly to adverse selection, as well as ageing and

increasing disease burden

• The critical problem arising from the incomplete regulatory structure is adverse selection against schemes, and not risk

selection by schemes

• Schemes and administrators receive no routine data on quality of care and outcomes

• Discovery Health is investing substantial resources in measuring, monitoring and communicating quality of care data to

members and providers

• Quality of care and outcomes are being incorporated into value based contracting with all providers

\

Product complexity &

communication

03 • Scheme products are complex in response to widely varying member needs and complex PMB regulations

• Discovery Health and all its client schemes communicate intensively and pro-actively with members on all aspects of their

coverage, and comply fully with PMB legislation and the PMB Code of Conduct

AGENDA

Structure of private healthcare financing 1.

Product complexity & communication 3.

Quality of care 4.

3

Drivers of medical inflation 2.

Discovery Health provides administration and managed

care services in the open and restricted scheme markets

• 2.69 million members

• Competes with 23 open

medical schemes

• 17 closed scheme clients

• 550 000 members

• Total of 67 non-competing

restricted schemes

4

3.3 million members

FIXED FEE

CONTRACTS

FIXED FEE

CONTRACT

NOT-FOR-PROFIT | RESTRICTED SCHEMES

NOT-FOR-PROFIT | OPEN SCHEME

DH competes on: product innovation, service excellence, effective claims risk and fraud management and quality of care

Discovery Health’s incentives are fully aligned with its scheme

clients | Membership growth is a critical objective Discovery Health Strategic

Objectives

Impact on Restricted & Open

Schemes

Benefit to Discovery Health

Reduce healthcare costs without

compromising quality

Improve quality of care received by scheme

members

Design suitable benefit plans and

communicate effectively; Build extensive,

cost effective-provider networks

Provide excellent service to all

stakeholders

Make members healthier

Keep administration cost increases in line

with or below CPI

#1

#2

#3

#4

#5

#6

• Lower claims costs

• Lower premiums

• Improved quality of care and fewer adverse

incidents/errors

• Lower claims costs due to reduced waste

• Compliance with PMB regulations

• 90% of members see contracted doctors

• Reduced co-payments

• Members more satisfied with benefits and fewer

complaints

• Stakeholders satisfied with service levels and

fewer complaints

• Increased awareness of health risks

• Increased employer and member loyalty

• Reduced claims costs

• Real decrease in administration fees

• Lower premiums

Restricted Schemes

DH more competitive in

closed scheme market,

leading to new contracts

and increasing fee

revenues

DHMS

DHMS more competitive in

open scheme market, leading

to membership growth, and

increasing fee revenues

5

6

Discovery Health provides a comprehensive set of services to

all scheme clients

MEDICAL SCHEME Board of trustees, Governance, Structures & Policies GOVERNANCE

Benefit Management and Care Administration and

servicing

Marketing and Distribution Research and Development

New Business and Underwriting

Service Operations

Premium Collection

Claims Payment

People

Marketing

Technical Marketing

Distribution

Research and Innovation

Benefit and Product Design

Annual benefit and plan revision

Additional products & services

Managed Care Operations

Disease Management

Provider Relations and Network Management

Co-ordinated Care

Supply-side Development

Support to Brokers

Risk Management

IT and Systems

New business and admin Clinical Systems Channel

Applications Corporate

Applications Applications

Infrastructure Data Analytics

Actuarial Clinical Policy Unit Risk Intelligence Forensics Clinical Risk

Management

Enterprise Architecture

Healthcare funding is complex and increasingly transaction

intensive

7

9,000 35,000

219,000 1,120

R430m

1,700 2,700

51,000 47,000

TRANSACTIONS PER DAY

>4000 Employees

1000 Call centre agents

500 Health professionals,

actuaries & analysts

360 System engineers

SIGNIFICANT INVESTMENT IN HUMAN CAPITAL

Premiums

billed and

claims paid

New

policies

activated

Claims

received Hospital

admissions

Chronic

applications

HIV

registered

members

Oncology

patients

Calls Emails

Chronic

patients 550,000

8

Administration fees reducing as proportion of contributions

Claims 86,2%

Admin & Managed Care Fee

10,4%

Broker & Scheme

2,5%

Surplus to member reserves

0,9%

2015 DHMS

Expense

Breakdown

Administration Fees as a percentage of gross contribution income

Administration fees negotiated on a 3 yearly cycle.

Effective annual increase of CPI -1%

13,4%

13,1%

12,7%

12,0%

11,6%

11,0%

10,7% 10,4%

10.3%

11,8%

2008 2009 2010 2011 2012 2013 2014 2015unaudited

2016projected

DHMS Other Open Medical Schemes

Other open medical

schemes

87% of DHMS’s contributions are for claims

and reserves

9

DHMS administration fees are deflationary

Discovery Health Medical Scheme

(% growth in pabpm costs – 2008 baseline)

Administration fees

Total claims inflation

-4,2%

69,8%

-10,00%

0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

60,00%

70,00%

80,00%

2008 2009 2010 2011 2012 2013 2014 2015

Cumulative increases above CPI

Medical Schemes have to maintain equilibrium between

competing requirements

10

Contributions

Contributions Equilibrium = Reserves Benefits

Contributions

The “Blame paradox” – medical schemes are caught in the

middle

• Low premiums

• Rich benefits

• Simple products

• No restrictions on access to

services, medication, technologies

• Freedom to choose providers

• No co-payments

• Seamless, excellent service

Members:

• Freedom to make clinical decisions

without interference

• Immediate use of latest

technologies, regardless of cost

• High remuneration/return on capital

invested

• No administrative burden

Healthcare Providers:

• Open enrolment and community rating

• Low premiums

• Low administration fees

• High and rigid solvency requirements

• Complex PMB regulations

Regulator / Legislation

Medical Scheme

Board of Trustees

11

AGENDA



Quality of care 4.

12


Utilisation of services is the major driver of gap between CPI

and premium inflation; tariff increases closely track CPI

13

6,3% 0,5%

2,9%

1,7% 11,4%

CPI Tariffs Demand sideutilisation

Supply sideutilisation

Claims inflation

Average annualised inflation rates (2008 -2015)

If utilisation was constant

since 2008, premiums would

be 27% lower

If tariff differential was 0%,

since 2008, premiums would

be 2.8% lower

Data from several stakeholders confirms utilisation as the

major driver of gap between CPI and premium inflation

14

5,50% 6,70%

5,10% 5,80% 5,90%

0,55%

0,40% 1,15% 1,40%

2,60%

4,85% 4,20% 3,58% 4,50%

3,70%

Ave

rag

e a

nn

au

l in

cre

ase

Utilisation

Tariff

CPI

Source: Summary of data received by the Commission

Note: * Figures from Medscheme were estimated assuming the residual impact was split 50:50 between tariff and utilisation

• No dissenting

views on

utilisation as

key cause of

medical

inflation

• DH data: more

than 2/3rds of

utilisation is

due to anti-

selection and

demographic

changes

2008-2013

*

Adverse selection drives utilisation and cost increases in

open medical schemes

15

Young people opt out of medical

schemes

Medical schemes have higher

proportions of older people

“Impact of adverse

selection estimated at

R13.5bn – 23% of total contributions for

open medical

schemes”1

Source: 1 Barry Childs, Lighthouse Actuarial Consulting

MEDICAL SCHEME POPULATION TOTAL POPULATION

DISTRIBUTION

RISK SELECTION IS NOT A PROBLEM IN THIS ENVIRONMENT

Evidence of adverse selection in DHMS

16

2008 2015

31,51

33,68

13,90%

22,10%

60,10% 49,80%

From Risk Benefits; If Savings Accounts included, then non-claimants drop from 27.9% in 2008 to 20.7% in 2015

6.9%

59%

21%

% Chronic

Age

% Non-

claimants*

Serious illness should be randomly distributed by duration

17

17%

11% 10%

6%

9%

6% 7%

9%

5% 5% 6%

5%

2%

1% 0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 >15

Years on Scheme

14%

4%

5%

6%

5%

8%

6%

7%

9% 9% 9%

5%

4%

3%

2% 2%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 > 15

Years on Scheme

14% who claimed biologics for RA and related conditions had

been on the Scheme for <1 year 17% who claimed biologics for multiple sclerosis had been on

the Scheme for <1 year

Multiple Sclerosis Rheumatoid Arthritis and related conditions requiring

biologic medicines

R120 000 PER PATIENT

PER ANNUM

R97 000 PER PATIENT

PER ANNUM

Supply side: increase in the supply of hospitals drives an

increase in total admission rates

3.37% increase

in Western Cape

from 4 new

hospitals

YoY Change (September 2015)

3.20% increase

in KZN from 1

new hospital

1.08% increase in

Gauteng from 1

new hospital

The admissions in these three provinces account for more than 80% of all admissions on DHMS

17

Supply side: growing impact of high cost medicines

Effective

treatment

for Hepatitis

C

R1m

(12-week course)

New

treatment

for

Malignant

Melanoma R1.5m - R2m

per course

2008

13 ULTRA-HIGH

COST

CLAIMANTS

69 ULTRA-HIGH

COST CLAIMANTS

High cost medicines entering the market in

large numbers Increasing incidence of ultra high-cost medicine

2014

18

R1,73 million

R3 867

PER ULTRA-HIGH

COST CLAIMANT

AVERAGE COST PER

CLAIMANT

AGENDA



Quality of care 3.

20


21

Scheme members vary widely in their preferences and needs

and in income available for scheme premiums

Executive Comprehensive Priority Saver Core KeyCare Smart

SICK:

RICH

BENEFITS

HEALTHY:

RESTRICTE

D BENEFITS

HIGH

INCOME

LOW

INCOME

FREEDOM

OF CHOICE

RESTRICTE

D

NETWORKS

1

1

1

1

3

3

3

3

2

2

2

2

22

PMB regulations force complex product design and

decision making

Classified

as a PMB

YES

NO

Emergency

Elective

Procedure

Pay in full

Member able to

access a DSP?

Pay in full

Pay per benefits

YES

NO

DH and all client schemes comply fully with all aspects of PMB legislation and the CMS PMB Code of Conduct

Member willing to

go to DSP

Member not willing to

go to DSP

Pay in full

Pay per benefits

23

PMB regulations create significant complexity for schemes,

administrators, members and providers

Chronic Disease List

(CDL)

• 27 chronic conditions

• Well defined entry and verification

criteria

• Permanent automatic payment

once member registered

• Well defined medicine and basket

of care entitlements

27 chronic conditions 270 conditions

91% of identified PMB and potential PMB claims are paid in full from risk benefits

Diagnosis-Treatment Pairs

(DTPMB)

• Co-morbidity complexities

• Vague diagnoses

• Multiple sources of diagnosis codes

• Codes change during admission

• Not possible to pay most Out of Hospital claims automatically

• Recognised in PMB Code of Conduct

24

Extensive Member Communication at every point in the

client journey

JOINING ACCESSING THE HEALTHCARE

SYSTEM CLAIMING

Welcome Pack Health Plan Guides

How to access tools and information

Guarantee of Full Cover

Chronic Illness Benefit Designated Service Providers

Plan Comparison www.discovery.co.za

Detailed Broker

information and

training to help guide

plan selection process

Information provided to members on joining

What you are covered for

PMBs

Waiting period

Late joiner penalty Chronic Illness Benefit

25

Member Communication | Accessing the healthcare system


SYSTEM CLAIMING

IVR message when requesting

authorisation provides further

information on PMBs

MAPS tool: MEDICAL AND PROVIDER

SEARCH

Proactive call to members

admitted for an emergency

informing them of any potential

co-pays if not using DSPs

- Designated Service Providers Benefits

relating to plan type

- Waiting periods

- Deductibles

- PMB Cover

- Full cover and avoiding co-payments

- Limits

Hospital pre-authorisation:

Call Centre agent provides

information relating to:

Pre-authorisation

email confirmation

Information also available on website | app

| walk-in-centres

- Authorisation confirmation

- What are you covered for

- PMB Guide

- Clinical Procedure Guide

26

Member Communication | Claiming


SYSTEM CLAIMING

Claims notifications and

claims statements

Details of processed claim

Impact on day-to-day benefits

including breakdown of usage

against limits

Member App

Claims tracking & history

Reason for short/non-payment

Website

Step-by-step guide to

managing claims

Claims summary

Benefits used

Educational Videos

How to apply for a PMB

27

Generic sources of information available for members

Discoverer

BROKER COMMUNICATION DIRECT MEMBER COMMUNICATION

Discovery newsletter Member App

www.discovery.co.za

Health plan guides

Plan Series

Guides

Product Enhancements

Educational videos Library & Info

guides

Discovery Health has a clearly articulated service

escalation and complaints process

28

Client Services TL / Client services Manager

Specialist Consultant / Escalation CRM

Client Services Consultant

Ops /

Service

Exec /

Exec Office

Step 1: Complaint form

Step 2: Contact the Principal Officer

Step 3: Lodge a dispute (with independent Disputes Committee)

Step 4: Contact CMS

Unresolved query

Website App Service Centre Email Call Centre

DHMS dispute resolution process

29

A strong focus on compliance, service and communication

leads to low complaint levels

CMS complaints per thousand DHMS members

Ten open schemes with highest number of

valid complaints per 1 000 beneficiaries 2014

Scheme A 2.9

Scheme B 2.8

Scheme C 2.0

Scheme D 1.0

Scheme E 0.9

Scheme F 0.9

Scheme G 0.9

Scheme H 0.9

Scheme I 0.8

Scheme J 0.7

DHMS does not

feature on the

CMS’ top 10

complaints list

0,55

0,38

0,26 0,28

0

0,1

0,2

0,3

0,4

0,5

0,6

2012 2013 2014 2015

CMS complaints per 1000 beneficiaries in DHMS

<800 CMS complaints

per year out of 43.8

million claims

AGENDA



Quality of care 4.

30


31

Schemes and administrators receive very limited data on

quality of care and health outcomes

Law requires the

submission of ICD

codes only

Schemes/Administrators receive no routine data on:

Quality of care Clinical outcomes

Clinical summaries post

hospital discharge

Hospital mortality,

readmission and infection

rates

1 2

3 4

32

Discovery Health is investing substantially in measuring, monitoring

and communicating quality of care data to members and providers

HealthID for doctors Health record for members Patient Satisfaction Survey

(PaSS)

Listening to the Patient’s Voice is a Key Step to Improve

Quality of Care in Hospitals

26%

10%

14%

12%

6%

20%

19%

19%

13%

21%

15%

50%

69%

65%

85%

67%

79%

Medication info

Pain management

Hospitalenvironment

Care from doctors

Responsiveness ofstaff

Care from nurses

Never\Sometimes Usually Always

33

2015

Discovery Health Member Experience Survey

Hospital

Next phase will include hard outcome measures – mortality, re-admission, infection, adverse incidents

Defined daily dosage per 100 bed days, case mix-

adjusted

177

0

20

40

60

80

100

120

140

160

180

200

N=139 hospitals

Average = 77

6,4%

3,5%

5,6%

4,4%

200

8 -

Q1

200

9 -

Q1

201

0 -

Q1

201

1 -

Q1

201

2 -

Q1

201

3 -

Q1

21.4% reduction

N=238 hospitals

Monitoring and improving antibiotic utilisation in private

hospitals

In hospital antibiotic utilisation Decrease in inappropriate surgical prophylaxis,

2008-2013

33

Increasing focus on outcome measurement and improvement

0%

5%

10%

15%

20%

25%

30%

35%

N=111 hospitals

SA average = 7.4%

EU average = 5.5 - 7.8%

35

Mortality rate for Acute Myocardial infarction (%)

2008 - 2011

Note: EU benchmarks are based on national averages, SA figures show Discovery hospital based data. Reasons for deviations from the average mortality rate could be: small number of cases in a

hospital, random variation, different disease burden, quality issues. The detail is analysed for each hospital, and where there are potential quality problems this is discussed with hospital management

and specialists involved.

Discovery Health’s KidneyCare Programme

0%

2%

4%

6%

8%

10%

12%

14%

16%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

Phase 7 Phase 8

5% Improvement in

scores

13,8%

11,2% 9,6%

0%

2%

4%

6%

8%

10%

12%

14%

16%

All chronic dialysis patientsover 5 year period

Non-KidneyCare patients KidneyCare patients (Phase7)

1.6

%

4.2

%

~4,200 kidney failure patients ~1,500 renal dialysis patients 36

Kidney disease mortality rate for

Discovery Health Medical Scheme Population distribution of average member scores

Discovery Health Care Co-ordination Programme impacting

on quality and cost of care

12%

15%

6%

10%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Preventable admission rate Readmission rateNormal patient CCP patient

% admissions

1,00

1,51

1,10

1,00

0,9

1,1

1,3

1,5

3 6 9 12

Month since intervention

CCP Patient

Normal Patient

Cost index

34%

Mobility & Cognitive Assessments

Pre Post

67% 50%

33%

37

Improved quality Lower cost per event Decreased hospital admissions

VALUE IN HEALTHCARE | Discovery Healting shifting to

contracting for value, including cost and quality measures

Value

= max Cost

lowest

Quality best

Measure outcomes and costs

2

Move to bundled payments

3

Integrate practice units & delivery systems

1

4

38

Several cost and quality improvement projects with

specialist groups using bundled payments

Doctor Guided Funding Model for Coronary Artery Disease

INITIAL

RESULTS

41 interventional

cardiology practices

participating

Zero adverse patient

outcomes

Empowered

cardiologists with no

loss of earnings

Early Cost savings

73% increase in CT

scan rate

39

Meaningful reduction

in angiograms

SASCI Project

HMI Public Hearings Dr Jonathan Broomberg – CEO Discovery Health 2nd March 2016

hmi public hearings: consumer related issues - … · hmi public hearings: consumer related issues...

Documents