The Medical Schemes Amendment Bill

Health Minister Aaron Motsoaledi took another step towards the introduction of the National Health Insurance (NHI) with the amendments to the Medical Schemes Act. This is aimed at aligning the Act with the envisaged financing system providing essential healthcare for all South African citizens.

The minister pointed out that the amendments in the Medical Schemes Amendment Bill form part of the ongoing process towards the implementation of the NHI.

The Bill

The Bill seeks to amend the Medical Schemes Act, 1998 (Act No. 131 of 1998), in order to align with the National Health Insurance White Paper and the National Health Insurance Bill.

The main drivers for the amendments were:

  • Given the NHI’s phased in approach – the Health Department needed to bring immediate relief from serious challenges experienced in the current medical scheme regime.
  • To manage a harmonious transition allowing uninterrupted access to health care the Department enacted steps to align the medical scheme environment with the envisaged NHI system.

The Department is of the opinion that the cost of private healthcare is out of the reach for many citizens. Former Chief Justice Sandile Ngcobo was appointed by the Competition Commission to conduct a Public Market Inquiry into the cost of Private Health Care. After more than three years, the provisional findings and recommendations was made public for comment.

While the Health Department was not yet privy to the contents of the Report at the time of announcing the Bill, the presentation of the World Health Organization (WHO) and the Organization for Economic Cooperation and Development (OECD) point out that only 10% of South Africa’s population can afford what is being charged in the Private Health Care.

Amendments to the Bill:

  • The first amendment is to abolish what has come to be known as co-payments. Co-payments mean that the scheme pays a portion of the bill that a provider (Hospital or Private doctor) charges to a patient. The rest of the money is supposed to be paid by the patient from his or her own pocket.

The amendment means that every cent charged to the patient must be settled fully by the scheme and the patient should not be burdened with having to pay.

The main drivers for this amendment were:

  • Complaints received from the public to the Department of Health as the Council for Medical Schemes (CMS)
  • The 33% unused medical scheme reserves exceeding the 25% statutory requirement means unnecessary accumulation at the expense of patients.

These huge reserves were accumulated partly through high premiums but also by introducing the co-payments such that medical schemes avoid having to pay or even dip into the reserves if the situation demands.

The Council for Medical Schemes (CMS) is reviewing this statutory requirement of 25% with a view to releasing enough money for patients rather than holding a lot of reserves while patients suffer the hardships.

  • The second amendment is to abolish the practice of using brokers within the medical scheme environment. Almost two thirds of principal members of medical aid schemes pay monthly to a broker as part of their premium. Many of these members do not even know that they are paying this money, which in 2018 is R90.00 per month. The total amount paid to brokers in 2017 was R2, 2 billion.

The Health Department believes that money should be made available to pay for direct health expenses of members rather than serving brokers who are not needed in the healthcare system. This is because the Department sees most of the work done by the Council for Medical Schemes – the statutory body.

  • The third amendment is to abolish the practice of Prescribed Minimum Benefits (PMBs) and replace it with comprehensive service benefits. Prescribed Minimum Benefits were mostly hospital-based conditions. Comprehensive service benefits will include Primary Health Care (PHC) like family planning, vaccination, screening and wellness services.
  • The fourth amendment deals with the various unequal and even unfair benefit options which medical schemes are subjecting their members to. The amendment prevents any medical scheme from implementing any benefit option unless approved by the Registrar of the Council for Medical Schemes and in doing this the Registrar will have to determine first that such an option is in the best interest of the member.
  • The fifth amendment declares the carrying on of the business of a medical scheme by a person not registered as a medical scheme to be a specific offence. This relates to various health plans and cash plans that purport to be selling health products like medical schemes do whereas they are not registered with the Council for Medical Schemes but opted to register with the FSB (Financial Services Board) now called Financial Sector Conduct Authority (FSCA). The FSCA has amended its rules to exclude such entities from registering with them.
  • The sixth amendment is the creation of a central beneficiary and provider registry and the management thereof by the Registrar of the Council for Medical Schemes. This enables the Registrar of Medical Schemes to understand the trends of behavior of medical scheme members in selection of medical scheme or options, their age profile, disease profile, health seekers behavior, as well as their geographic distribution. This information will assist in the planning of NHI services.Presently medical schemes are reluctant to give this valuable information and there is no Act to compel them.
  • The seventh amendment is to introduce income cross-subsidization model. The Department intends to initiate the NHI with medical aid schemes contributing to the plan. The present contribution table charges the same rate for a lower income earner and a high-income earner for the same benefits. This practice completely negates the principles of income cross-subsidization.
  • The eighth amendment is to compel medical aid schemes to pass back savings if a member uses a designated service provider according to the rules of the scheme. Presently medical aid schemes compel members to use designated service providers in order to save money. The driver behind this amendment stems from the practice of savings being managed by the scheme or the administrator instead of being passed on to the member in the form of premium reduction.
  • The ninth amendment deals with the cancellation of membership and waiting periods between joining a scheme and accessing benefits. This is to:
    • Align schemes with the envisaged NHI where there will be no penalty related to late joining or age.
    • To protect the interest of living spouses after the passing of the principal member or after retirement prior to payment of their benefits.
  • The tenth amendment is Governance of medical schemes requiring minimum education and expertise thresholds for Board of Trustees and CEOs of such schemes. These requirements do not preclude Trade Union representation in the Medical Aid Trusts where unions are allowed to appoint representatives with requisite skills if required. This is in line with the Health Departments NHI proposals.

Comment

IMPORTANT: other amendments do not have to be flagged here but you will find them in the Bill and be able to comment on them. All comments and input can be sent to Ministry of Health marked for the attention of the Minister Health.

  • Email address: Nominations@health.gov.za (The preferred method)
  • Physical address: Civitus Building Cnr Thabo Sehume & Struben Street Pretoria 0001
  • Postal address: Private Bag X 828, Pretoria, 0001