This is following findings that the private health sector is characterised by high and rising costs of healthcare and medical scheme cover. Photographer: Armand Hough / Independent Newspapers
The government, through recommendations of a Health Market Inquiry (HMI) is establishing a draft block exemption to create a structured multi stakeholder framework for tariff determination for healthcare services to address abuse in the pricing of Prescribed Minimum Benefits, and well as non-Prescribed Minimum Benefits, in the form of overutilisation of services and co-payments, thus driving up cost of healthcare.
This is following findings that the private health sector is characterised by high and rising costs of healthcare and medical scheme cover, declining benefits and significant overutilisation of health services, without stakeholders having been able to demonstrate associated improvements in health outcomes.
In a joint briefing on recommendations of the HMI, Health Minister Dr Aaron Motsoaledi and Department of Trade Industry and Competition Parks Tau said on Monday that the HMI also found the lack of tariff determination framework, amongst other factors, has led to inefficiencies.
The Ministers said the HMI recommends a single, stand-alone, comprehensive standardised, obligatory base benefit package for all medical schemes.
"There is a serious concern about access to private healthcare in the country, given the high levels of market concentration and high prices.The cost of private healthcare should remain in check to ensure that majority of South Africans have access to affordable healthcare," Tau said.
The proposed multilateral negotiating forum excludes private hospitals as that sector is highly concentrated with the three largest hospital groups already possessing significant market power due to their size and account for approximately 80% of the beds in the private hospital market. Moreover, their exclusion aligns with the model recommended by the HMI following its assessment of bargaining dynamics among various stakeholders.
Motsoaledi said while the Health Department agrees with the recommendation, it was very complex so it is proposed that it should initially be voluntary and be built progressively to be obligatory.
He said the the proposal under discussion with the Council for Medical Schemes (CMS) is that the base cover of such a standard package should be comprehensive Primary Health Care.
While the HMI recommends the establishment of a series of totally new 3A entities, the National Treasury has made it clear that they discourage so many 3A entities and are actually in the process of deestablishing some of those which already exist.
"After all the NHI itself will be established as a 3A entity and hence a large number of these structures will fall under the umbrella of this 3A entity. It is for these reasons that we are implementing some of the recommendations of HMI as a temporary stop-gap measure which will be progressively upgraded to the levels envisaged. We are doing this because naturally the phased-in implementation of NHI is going to take longer and we need the interim to relieve the pressure which people experience when seeking health care services," Motsoaledi said.
Tau said the current practice involves medical schemes unilaterally revising the tariffs that they are willing to pay and health professionals either accepting these terms in return for direct payment, or charging a higher rate. In the latter case, the higher rate is generally collected from the patient who is liable for any portion not covered by their medical scheme or co-payment or balance billing.
Due to the lack of a formal tariff determination framework, consumers are faced with uncertainty on prices, potential balance billing, and tariffs which are not determined through a transparent process.
As a result of this gap in tariff determination, patients, medical schemes, and even smaller healthcare providers are often disadvantaged, resulting in rising healthcare costs, making essential healthcare services unaffordable.
"Given the above challenges, there is an urgent need for a structured regulatory framework to guide tariff determination in the healthcare sector,' Tau said.
According to the interim block exemptions, Healthcare Capacity Planning will be located within the NDOH, including licensing of establishments:
Tau said the HMI further found that the Commission's phasing out of collective negotiations in 2003 led to an imbalance of market power and unsustainable pricing practices.
He noted that the HMI, among others, recommended for an establishment of a Supply Side Regulator for Health, that would regulate the supply side of the private health sector, including tariffs for health services. The recommended regulator would establish a multilateral negotiating framework to facilitate collective tariff determination.
He said given the urgency of addressing the pricing practices in the sector, the HMI recommended alternative interim measures as government considers long term solutions for the sector, either through the Supply Side Regulator or within the National Health Insurance.
He said the framework developed in the draft block exemption therefore follows pricing recommendations presented in the HMI Report with the necessary adaptations.
The HMI flagged the urgency of establishing a tariff determination framework to fill the vacuum in collective tariff determination as there is no structured and transparent framework for determining tariffs for healthcare services.
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