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1
Prescribed Minimum Benefit compliance and the protection of
beneficiaries
Council for Medical Schemes
PMB Compliance workshop
11 May 2010
2
Contents
• Purpose of the day
• Context– PMB review process
– Industry trends
• Complaints received by CMS
• Compliance concerns
• Impact of PMBs on medical schemes
• Areas of structural non-compliance
3
• Presentations by Professor Pick and Mr. Nkosi• Presentations by stakeholders (position)
– CMS– Providers– Funders
• Discussion with other attendees: HPCSA, patient groups, manufacturers
• Establishment of a task team to develop a code of conduct and to assist with future changes to the PMB system (process)
Purpose of the day
4
CONTEXT
PMB review process
Industry trends
5
PMB review Process (2008)
• Two stakeholder workshops early in 2008
• Three draft consultation documents
• Numerous comments on documents
• Thirteen clinical advisory committees
• Review of clinical advice, presentation to Council
• Review of appeal committee and appeal board rulings
• Draft regulations prepared, approved by Council and submitted to the Minister
Concurrent Processes impacting on revised PMB regulations…
Number of individuals involved
Clai
ms
cost
per
ben
efic
iary
Few Many
Low
HighClaims cost per
beneficiary
Abo
ve-t
hres
hold
ben
efits
fo
r all
PMBs
Belo
w-t
hres
hold
ben
efits
for
spec
ified
se
rvic
es a
nd c
ondi
tions
Hig
h co
st e
vent
s co
vere
d th
roug
hPM
Bs (m
ostly
in h
ospi
tal)
CDL
and
othe
r co
nditi
ons
on c
ateg
oric
al li
st
Spec
ified
serv
ices
Day-to-day expenses on an out-of-pocket basis or paid from MSA
Proposed Essential Care Package
NHI Process
Technical analysis of economic
impact, affordability
pricing, construct,
related reforms
Clinical Advisory
committees
Drafting of Regulations
Stakeholder comments
7
INDUSTRY TRENDS
8
Medical scheme contribution costs have declined in real terms since 2005
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Ran
ds
Medical scheme per capita expenditure at the same level in 2008 as in 2003
9
Real non-healthcare expenditure in
medical schemes has been in decline
since 2005
0
200
400
600
800
1 000
1 200
1 400
1 600
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
pabpa (R)
Impaired receivables
Nett reinsurance
Broker fees and distribution costs
Managed care: management services
Administration (Risk+Savings)
pabpa = per average beneficiary per annum
Non-health per capita expenditure at same levels as in 2008 as in 2001
10
Industry solvency trends for all
schemes are stable and being sustained
at the levels achieved in 2004
10.0
13.5
17.5
22.025.0 25.0 25.0 25.0 25.0
20.2 20.422.9
29.3
37.339.1 37.9 38.0
36.6
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Solvency ratio (%)
Prescribed Solvency Level Industry Average All
11
Open scheme solvency levels are stable and
above the statutory solvency levels, with the
levels of 2004 constant to 2008
10.0
13.5
17.5
22.0 25.0 25.0 25.0 25.0 25.0
13.3 13.515.1
20.9
28.529.6
27.7 28.629.8
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Solvency ratio (%)
Prescribed Solvency Level Industry Average Open
12
Conclusions
• Scheme costs are contained
• Solvency levels are being maintained at healthy levels
• Non-health costs are contained
13
COMPLAINTS RECEIVED BY CMS
14
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2005 2006 2007 2008 2009
Unpaid accounts Benefit limitations
Denial of authorisation Other
Increase in complaints over five years..
15
Some schemes may have policies in place to deliberately frustrate access to PMBs…
• Schizophrenia– Claims submitted timeously
– Scheme required a “mental disorder form” to be completed
– Refuse payment because of late submission of completed form
• Heart attack– Authorisation granted for admission and treatment
– Scheme refused payment because the patient’s PMB condition was not registered with the scheme
16
Some schemes impose monetary limits on PMBs...
• Kidney failure
– 74 year old on dialysis through 2009
– Scheme informed member that dialysis and organ transplant is limited to R200,000 per annum from 2010
– Disregard for National guidelines on dialysis
17
Some schemes arbitrarily deny benefits...
• Emergency treatment for a heart attack
– Patient arrived comatose at Hospital
– Emergency treatment performed, drug eluting stents inserted in coronary arteries
– Scheme refused to pay for the stents – stating that there are no benefits for stents in his option, and that drug eluting stents are not cost effective
– No scheme protocol for the use of drug eluting stents
– No evidence provided that the drug eluting stents are not cost effective
18
Some providers may abuse the “payment in full” provisions of Regulation 8
• Overcharging for a device
– Provider charged R3,450 for a device
– Nappi price is R222
19
Some schemes may abuse DSP provisions to deny benefits...
• Maternity
– Member enquired in advance and had her baby at a DSP hospital
– Scheme refused to pay the anesthetist because the particular anaesthetist on call on that day was not a preferred provider
– Procedurally unfair
20
Some PMB claims are paid from Medical savings accounts...
• Baby with cancer– Diagnosis treatment and care paid from savings
account
– Once funds were depleted, member paid out of pocket
– Scheme refused funding, arguing that the baby should have been registered on the oncology programme
– Member completed an appeal form with the scheme, with no response
– Claims settled after patient laid a complaint with the CMS
21
COMPLIANCE CONCERNS
22
Accreditation of administrators
• Administration systems not aligned with clients’ registered rules– Scheme rates = cost – (x)
– Paid from savings accounts;
– Co-payments settled by members
• ICD Coding complexities often result in incorrect processing of PMB related claims– Poor coding quality (including z-codes)
– Some systems capture only one ICD10 code per claim line
23
Accreditation of administrators (cont)
• Full complexity of Regulation 8 requirements not reflected in system rules:– Payment in full
– Voluntary use of a non-DSP
– Requirement to apply managed care:• Authorisations, protocols, formularies
• No or little indication of interaction between schemes, administrators and providers to manage the adverse effect on members
24
IMPACT OF PROVIDER BEHAVIOUR ON MEDICAL SCHEMES IN RESPECT OF OVERCHARGING
Overall difference between charges for PMBs and non-PMBs is only 0.4%
293.3
84.6
94.5
102.2
109
99.7
99.6
97.9
104.4
94.3
104.4
121
160.7
101
112.8
105.1
102.7
105.2
107
307.2
98.7
100.5
104.3
119.4
99.6
99.8
101.8
106.8
92.7
105.4
107.9
160.8
156.1
112.3
100
103.5
104
107.4
0 50 100 150 200 250 300 350
Anaesthetists
General Medical Practice
Obstetrics and Gynaecology
Spec.Phys/Int …
Neurology
Psychiatry
Medical Oncology
Neurosurgery
Ophthalmology
Orthopaedics
Otorhinolaryngology
Paediatrics
Plastic and Reconstructive Surgery
Radiation Oncology/Nuclear …
Surgery/Paediatric surgery
Cardio Thoracic Surgery
Urology
Pathology
Total
Price index (Total claim / RPL tariff x 100)
Non-PMB
PMB
Source: large scheme sample
Overall difference Overall difference
Sample:• 9,975 different service
providers• Total claim value: R609
million• Index = total claim / RPL
tariff x 100
Most medical practitioners charge at the RPL, irrespective of whether or not treatment is for a PMB…
70.3%
67.0%
25.0%
26.3%
4.7%
6.7%
0.0% 20.0% 40.0% 60.0% 80.0% 100.0%
PMB
Non-PMB
Percentage of total
RPL Above RPL (100% - 300%) More than 300% of RPL
In fact medical practitioners are less inclined to charge RPL for non-PMBs than for PMBs !
Large scheme sample
Most medical practitioners never charge more than the RPL…
48.7%
55.8%
36.7%
22.1%
14.6%
22.1%
0.0% 20.0% 40.0% 60.0% 80.0% 100.0%
PMB
Non-PMB
Percentage of total
RPL Above RPL (100% - 300%) Over 300% of RPL
Large scheme sample
Most major medical is paid from the risk pool regardless of whether or not it’s a PMB…
818988
9595
84100
8492
8188
8559
9979
8690
9991
81858787
8264
1008385
838484
4490
859190
8685
0 10 20 30 40 50 60 70 80 90 100
Anaesthetists
General Medical Practice
Obstetrics and Gynaecology
Spec.Phys/Int …
Neurology
Psychiatry
Medical Oncology
Neurosurgery
Ophthalmology
Orthopaedics
Otorhinolaryngology
Paediatrics
Plastic and Reconstructive Surgery
Radiation Oncology/Nuclear Medicine/Oncologist
Surgery/Paediatric surgery
Cardio Thoracic Surgery
Urology
Pathology
Total
Percentage paid from the risk pool
Non-PMB
PMB
Up to 9% of PMBs are paid for out of savings accounts
Source: large scheme sample
29
Conclusions
• No evidence of systematic abuse by providers of PMBs
• There is evidence of over-charging, but unrelated to PMBs
• Some schemes have accommodated this overcharging regardless of PMBs
30
CONCLUDING REMARKS
31
PMB Compliance
• There is no evidence that PMBs destabilise medical schemes
• In the absence of PMBs, members would never be certain what benefits they are covered for and schemes would compete to selectively reduce benefits
• There is evidence of over-charging, but not related to PMBs
• Resolving the problems associated with over-pricing and over-servicing require solution, but not through any diminution of PMBs
• Non-compliance with PMBs therefore represents an important conduct-related matter that requires resolution
32
Systemic non-compliance
• Inadequate enforcement leads to non-compliance resulting from competition between schemes
• PMBs defined as conditions make their prospective identification in the case of out-of-hospital claims difficult – a situation that can be exploited by schemes
• Although there is no evidence of systematic gaming by providers, it is possible for them to abuse a PMB system
33
END
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