Picture: THINKSTOCK
Picture: THINKSTOCK

THIS year draws to a close with the private healthcare industry still struggling to resolve many of the key challenges facing the industry, the most pressing of which is pricing.

The long-running row over pricing has created deep divisions within the industry, strained relations with the government, and left consumers the ultimate victims. Hopes are pinned on a market inquiry by the Competition Commission, expected to take place next year.

"The biggest unresolved issue facing the (medical schemes industry) is a structure and process for determining codes and tariffs for healthcare professionals. It is absolutely fundamental," says Jonathan Broomberg, CEO of SA’s biggest medical scheme administrator Discovery Health.

Without agreement on tariffs, healthcare professionals in the same discipline may charge widely differing rates, and patients often get a nasty shock when they get billed and discover that their medical scheme will only pay part of their account.

Figuring out what constitutes a fair price for private healthcare has broader implications than simply putting an end to the constant tussles between funders and providers, as the government may well turn to the private sector to provide services under the reforms it envisages for National Health Insurance.

Pricing is not the only headache facing the industry, however.

There is still widespread disagreement on how to interpret regulation 8 of the Medical Schemes Act. This comes after the Board of Healthcare Funders failed to get the courts to provide clarity.

At issue is the extent to which medical schemes are liable for consumers’ bills for prescribed minimum benefits, a set of diseases and conditions defined by the Medical Schemes Act.

The Council for Medical Schemes says schemes must pay in full, but many funders argue that they cannot afford such open-ended liabilities and are within their legal rights to impose caps on what they will cover.

The courts rejected the Board of Healthcare Funders’ application on technical grounds, saying it did not have the requisite locus standi to represent the industry, and threw the case out before anyone had a chance to air the argument over regulation 8. The case strained relations between the council and the Board of Healthcare Funders, and left consumers no better off.

The year has been characterised by headline-grabbing governance scandals that tarnished the image of the medical schemes industry, says Board of Healthcare Funders chairman Humphrey Zokufa.

Sizwe Medical Scheme was placed under curatorship in September for alleged financial irregularities and fraud committed by its board of trustees. A month later Medshield was placed under provisional curatorship for alleged governance failures, including inappropriate payments to trustees.

"If we are saying we will not pay for claims, then we must handle members’ money better," says Dr Zokufa.

This year saw the government take the first step towards tighter control of health insurance products, with the publication in March of draft regulations to the Long-Term Insurance Act and the Short-Term Insurance Act.

The draft regulations try to draw a clear distinction between medical schemes and health insurance policies and propose scrapping most gap-cover products. However, they do allow health insurance for loss of income, travel, emergency travel, HIV/AIDS and frail care.

The proliferation of health insurance products has highlighted some of the shortcomings in the medical scheme industry.

Gap cover providers have flourished because many medical schemes will not pay bills in their entirety, leaving consumers to pay the balance, while the lack of medical scheme products for low-wage earners has created a market for companies selling health insurance products that offer limited protection for illness and injury.

Unlike medical schemes, which are governed by the Medical Schemes Act and the Council for Medical Schemes, there is little oversight of the providers of health insurance products. Also, unlike medical schemes, which must charge all patients buying the same product the same rate and must admit any person who can afford the monthly fees, health insurers can risk-rate their premiums and reject high-risk patients.

The year ended with Health Minister Aaron Motsoaledi and the private sector launching a "social compact". Industry pledged money to support the state’s initiatives to improve public healthcare and the minister promised to meet regularly with the leaders of healthcare enterprises. Whether it will fundamentally change the landscape remains to be seen.