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Council for Medical Schemes 2008-9 Annual Report Presentation. KP Matshidze Acting CEO and Registrar Council for Medical Schemes 18 November 2009. Outline. Legislative Mandate Functions of Council Highlights of Operational Activities Overview of trends in the medical schemes

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Council for Medical Schemes 2008-9 Annual Report Presentation

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    1. Council for Medical Schemes 2008-9 Annual Report Presentation KP Matshidze Acting CEO and Registrar Council for Medical Schemes 18 November 2009

    2. Outline • Legislative Mandate • Functions of Council • Highlights of Operational Activities • Overview of trends in the medical schemes • Concluding remarks • Questions and comments

    3. Legislative Mandate • The Council for Medical Schemes was established in terms of the Medical Schemes Act, 131 of 1998, key policy objective of which is to: • Protect the interests of members • Promote non-discriminatory access to privately funded health care through: • Open enrolment • Community rating • Guaranteed benefits • Promote financial stability and sustainability • Encourage active participation of members in scheme affairs • Investigate and resolve complaints from members

    4. Other Legislative Provisions • Constitution • National Health Act • Medicines and Related Substances Act • Health Professions Act • Pharmacy Act • Nursing Act • Competitions Act

    5. Functions of Council • Protect the interest of the beneficiaries at all times • Control and coordinate the functioning of medical schemes in a manner that is complementary with national health policy • Make recommendations to the Minister on the criteria for the measurement of quality and outcomes of the relevant health services provided for by medical schemes, and such other services as the Council may from time to time determine • Investigate complaints and settle disputes in relation to the affairs of medical schemes provided for in this Act • Collect and disseminate information about private healthcare • Makes rules, not inconsistent with provisions of this Act for the purpose of the performance of its functions and the exercise of its powers • Advise the Minister on any matter concerning medical schemes and • Perform any other functions conferred on the Council by the Minister or by this Act

    6. Our Vision To regulate fairly and effectively in order to protect the interests of beneficiaries, and to promote equity in access to medical schemes

    7. Our 7 Strategic Aims • Secure an appropriate level of protection for beneficiaries of medical schemes and the public by authorizing the conduct of medical schemes business and monitoring the financial performance and soundness of schemes • Provide support and guidance to trustees and promote understanding of the medical schemes environment by trustees, beneficiaries and the public • Foster compliance with the Act by medical schemes, administrators and brokers and initiate enforcement action where required • Investigate and resolve complaints raised by beneficiaries and the public • Monitor the impact of the Act, research developments and recommend policy options to improve the regulatory environment • Foster the continued development of the CMS as an employer of choice • Develop strategic alliances nationally, regionally and internationally

    8. CMS Accountability Structures MINISTER OF HEALTH Dr Aaron Motsoaledi COUNCIL 12Members ACTING CEO & REGISTRAR KhathutsheloPatrick Matshidze

    9. Composition of the Council • Consists of Chairperson, Deputy Chairperson and 10 members, appointed by the Minister of Health • Chairperson – Prof William Pick • Deputy Chairperson – Ms Tracy Fortune • The Council comprises a broad spectrum of highly skilled senior people which include the representative from the National Department of Health, actuaries, lawyers, medical specialists, consumer representatives and general practitioners

    10. Committees of Council • Council comprises of the following committees: • EXCO • Council • The following specialist sub-committees have been established to aid Council in the fulfillment of its complex mandate: • Appeals • Human Resources • Audit


    12. Highlights

    13. Operational Activities • Ongoing support to DoH on Risk Equalisation Fund (REF) • Support to DoH on Prescribed Minimum Benefits (PMB) Review Process • Medical Scheme Amendment Bill – Bill lapsed • Technical amendments: minor corrections • Substantive amendments • Risk Equalisation Fund (REF) • Benefits restructuring • Governance • Low Income Medical Scheme (LIMS) • Demarcation • Task team • Investigations

    14. Operational Activities (continued) 5. Broker Consultation Documents 6. Guidelines on Good Governance 7. Guidelines on Fit and Proper Standards 8. Complaints • Total received: 3138 • Appeal Committee • Appeal Board

    15. Operational Activities (continued)Top 10 Complaints

    16. Overview of trends in medical schemes

    17. Entities in the industry

    18. Trends in number of schemes

    19. Coverage of beneficiaries from 2000 to 2008

    20. Demographic profile of beneficiaries Average Pensioner Age (years) ratio (%) Open 32.6 (31.9) 6.7 (6.3) Restricted 29.8 (30.4) 5.5 (6.0) All schemes 31.5 (31.4) 6.2 (6.2) *Figures in brackets are for 2007

    21. Contributions and claims Total: • Contributions increased by 13.2% to R74.0 billion • Relevant healthcare expenditure incurred increased by 13.6% to R64.9 billion Risk: • Contributions increased by 13.5% to R67.2 billion • Relevant healthcare expenditure incurred increased by 14.0% to R58.4 billion Savings: • MSA contributions increased by 9.7% to R6.9 billion • MSA claims increased by 10.6% to R6.5 billion

    22. Contributions and claims(pabpm) Total: • Contributions increased by 9.2% to R800.8 (R733.0) • Gross relevant healthcare expenditure incurred increased by 9.7% to R701.2 (R639.2) Risk: • Contributions grew by 9.6% to R726.0 (R662.4) • Relevant healthcare expenditure incurred increased by 10.0% to R630.7 (R573.3) Savings: • MSA contributions increased by 6.9% to R100.9 (R94.3) • MSA claims increased by 7.9% to R95.0 (R88.1) *Figures in brackets are for 2007

    23. Risk claims ratio for all schemes: 2008 prices*

    24. Utilisation of services (per 1 000 beneficiaries)

    25. Proportion of all benefits paid to providers

    26. Total benefits paid per beneficiary per month (2008 prices)

    27. Net healthcare results

    28. Industry solvency trends for all schemes

    29. Non-healthcare expenditure Consists mainly of : • Administration • Managed healthcare: management services • Brokers fees • Impaired receivables

    30. Non-healthcare expenditure (NHE) • Increased by 8.1% to R9.7 billion • Increases lower than CPIX over past 3 years • Pabpm figures increased by 4.3% • Open: Increased by 8.2% from R119.0 (R128.8) • Restricted: Increased by 0.7% from R64.8 (R65.2)

    31. Administration expenditure (GAE) • Increased by 6.5% to R6.8 billion • Open schemes: increased 5.1% to R5.1 billion • Restricted schemes: increased 10.8% to R1.7 billion • GAE main component of NHE: 69.4% • Adjusted for membership (pabpm): • Open: R87.5 (R81.5) • Restricted: R48.6 (R50.3)

    32. Managed healthcare: management services • Increased by 9.4% to R1.7 billion • Number of members covered: 7.8 million (5.8% increase) • 98.6% of all beneficiaries

    33. Broker fees • Broker costs: increased by 11.6% to R1.2 billion • Broker commission: increased by 13.0% to R1.1 billion • On a pampm: • Broker fees increased by 12.0% to R42.4 (R37.9)

    34. Broker fees in open schemes

    35. Gross non healthcare expenditure pabpa(2008 prices)

    36. Impaired receivables

    37. Average gross claims covered by cash and cash equivalents

    38. Findings • There is an increase in the consolidation of medical schemes arising from amalgamations and liquidations – this is more pronounced in restricted schemes • There has not been a net loss in membership as a result of consolidation but an improvement in risk pools • The rate of increase in contributions and claims appears to have stabilised even though the rate of increase in claims is higher than that of contributions • Schemes are subsidising contributions from reserves possibly to minimise the impact of contribution increases on members

    39. Findings(continued) • There has been a general decline in the utilization of services by members • The demographic profile of medical schemes particularly open schemes is worsening • Despite all these, schemes are still financially sound with solvency above prescribed level • Non healthcare expenditure is coming down

    40. Challenges and Possible Solutions

    41. Healthcare Reform Process • Support of the DoH 10 Point Plan • Participation in the NHI Advisory Committee • Ongoing interaction with the DoH to contribute in Health Policy Development

    42. Thank You