Money Matters April 2008

Minimum benefits – a quantum leap for medical aids

The health care industry in South Africa thrives on acronyms. In the last issue of Money Matters we touched on PMBs – Prescribed Minimum Benefits. These are conditions that ALL medical schemes MUST cover. In this issue we look at PMBs in more detail, explain their history and most importantly, show the role they have played in 'upgrading' the medical scheme industry in South Africa.

Before PMBs came into effect, a medical scheme could take you on as a member but with exclusions, even for a chronic condition. For example, if you had diabetes, a scheme could exclude treatment for this condition as a condition of your membership. Obviously this had huge implications not only for members, who had to fund treatment themselves, but for South Africa's healthcare system as a whole, with patients being forced to use government medical facilities and putting an increased burden on these facilities.

It was the Department of Health who set about changing this. In the late 1990's they appointed a company of health consultants to come up with a list of conditions that should be fully covered within the private healthcare system.

On the final list were 270 conditions, and you can view the list on the Council of Medical Schemes website (www.medicalschemes.com). Some examples are: hip fractures, melanomas, gangrene, and kidney failure. This list was legislated, and then later a further list of 25 chronic conditions was legislated as well.

According to the legislation, all medical schemes must pay for any diagnosis, treatment and care related to the conditions on both lists – with no ceilings, co-payments or capping of benefits. Emergency medical conditions are also covered by PMBs.

PMBs will be reviewed every two years. In February this year a review panel met for one such review session, "to identify what changes to the regulations are required in respect of prescribed minimum benefits to further the goals of improved access, quality and reduced costs in healthcare." (source: www.medicalschemes.com).

PMBs are without a doubt a quantum leap forward for medical scheme members. They ensure that treatment for the listed conditions cannot be denied, under any circumstances, and regardless of the benefit option members have selected.

There was some debate in the industry that PMBs would make health care more expensive. That issue is still debatable, but research in 2003 showed that the industry could provide the benefits package comfortably within its current expenditure. One way this happens is that legislation permits medical schemes to use managed care to ensure that the treatment received for these conditions is both appropriate and cost-effective.

The issue of managed care brings us to another term: DSP, which stands for Designated Service Provider. In a managed care system, members are given a list of service providers (specialists, hospitals, practitioners) that they may choose from. These are Designated Service Providers. Debate around managed care rages: on the negative side, some say it limits patient choice and autonomy; on the plus side it can be successfully used to control costs across all medical scheme option levels – which ultimately means member premiums can be controlled as well.

Keep an eye on the media for further developments in the area of PMBs. At February's review, the Board of Healthcare Funders (BHF), which represents medical schemes, suggested that schemes be required by law to provide you with a few more things, including:

• Certain primary and preventative healthcare benefits - for example, a set number of visits a year to general practitioners, optometrists and dentists;
• Medication for any acute or chronic illness, as long as it is on a list of essential drugs drawn up from medicines widely used in the public healthcare sector;
• Private hospital cover for maternity care, and treatment for common conditions or illnesses in line with the country's burden of diseases and the biggest contributors to death and morbidity (e.g. Aids).

Interesting developments! Related to all of this are two more interesting acronyms: EHP (Essential Healthcare Package), and REF (Risk Equalisation Fund). We'll look briefly at these in the next issue.

Click here for previous issues of Money Matters.