Council for Medical Schemes: An overview

1. Council for Medical Schemes: An overview Prof Yosuf Veriava Chairperson: Council for Medical Schemes

2. Contents 1. Developments of CMS 2. Role of CMS 3. Industry overview Membership trends Benefits paid 4. Competition Commission “Market Inquiry “ 5. Complaints 6. Board of Trustees 7. CMS training 8. CMS indabas and forums 9. Future projects 10. RWOPS 11. Managed care programmes 12. Conclusion

3. Developments of CMS

4. Developments of CMS

5. Roles of CMS • Key Roles: • Adherence of schemes to the Medical Schemes Act (MSA) • Improved management and governance of schemes • Advises the Minister of Health on regulatory interventions

6. Reduction of medical schemes is noted in both sectors • On average the industry is losing 5 schemes per year • This translate to a reduction of up to 32 schemes in 2025 Membership trends

7. Membership by province – Inequity

8. Benefits paid **Data to be interpreted with caution due to underreporting by schemes and members

9. … the healthcare market does not meet the requirements for normal competition… • No barriers to enter or exit the market • Perfect information • Zero transaction costs • Homogenous products • Others: • Non-increasing returns to scale; infinite buyers and sellers; perfect factor mobility; profit maximisation

10. …imperfect information in healthcare renders the normal considerations in achieving a balance ineffective… • Consumer sovereignty is challenged • Ascertaining costs and benefits of treatment is not simple • Third party payer

11. The private hospital market in metropolitan areas (50%+ of medical scheme population) was concentrated by 1999… Only 12.3% of private hospital beds were outside three main hospital groups by 2006…

12. Non-price competition results in a very high level of high-tech equipment in private hospitals

13. Terms of reference “Market inquiry” • To explore in-depth factors causing escalation of costs. • To unpack contractual relationships and interactions between and within the segments of the market • To inquire into the nature of price determination

14. “Market inquiry” on healthcare costs in the private sector • Inquiry launch: end September 2013; aim completion June 2015. • Probe various segments of private healthcare market • This is “…a general investigation into the state, nature and form of competition in a market, rather than a narrow investigation of specific conduct by any particular firm”.

15. Complaints

16. Complaints categories • Technical/clinical complaints: highest of all categories • Payment of PMB’s at scheme tariff: highest number of complaints • Doctors frequently charge higher rates when providing PMB

17. Board of Trustees (BOT): Governance issues • Distribution of different types of trustees: Governance structure consists of 50% members vs. 50% employer groups

18. Major role of Trustees • Keep records of operations • Control systems • Communication • Payment of premiums • Professional Indemnity and Fidelity Guarantee cover • Expert Advice • Compliance with laws and rules • Confidentiality • Protect the interests of the members • Act with care, diligence, skill and good faith • Act impartially

19. Board of Trustees: compliance • Voluntary compliance not yet attained. • Schemes place too much reliance on advice from consultants and services providers. • Attendance rate of BOT training problematic.

20. CMS Training • Induction: Board of Trustees • In-depth: Board of Trustees • Broker training • Employer groups • Various consumer groups

21. CMS Indabas • Indaba means "business" or "matter" • Medical schemes industry challenges • Various opinions and interpretations of the Medical Schemes Act • Engage with stakeholders • Find common ground on pertinent issues • Optimal benefit for medical scheme members.

22. CMS Forums • Exchange information • 3 CMS stakeholder forums - Trustees and Principal Officers - Medical scheme administrators - Regulatory bodies

23. CMS Indabas and Forums • Next Indaba: Johannesburg 23 October 2013 • Next forums: Cape Town & Johannesburg end September • Regulators Forum: September

24. Future projects • Remunerative Work Outside the Public Sector (RWOPS) • National Health Insurance (NHI) • Health quality outcomes

25. RWOPSPCNS: Data Inputs, Information Processing & Reports

26. Managed care • As the medical schemes population continues to grow older, the incidence of chronic disease will likely increase • The rising cost of private healthcare necessitate a consideration of the “value” of managed care programmes

27. Managed care • Effective way of controlling health care costs is to: • Manage the scope of benefits provided • The associated costs • Appropriateness of utilisation

28. Managed care • Within this regulatory obligation, CMS is currently finalising the health quality outcomes framework, which will include: • A trend analysis of health quality outcomes • Quantitative and qualitative data analysis of the value of managed care programmes

29. Conclusion Industry encouraged to work together with CMS in making private healthcare affordable and sustainable. Membership growth is a critical area of concern. Member education about their rights and responsibilities is important. Complying with provisions of Medical Schemes Act is crucial.