What the new ruling means is that no matter what a provider (e.g. doctor/ specialist) charges for services rendered, a medical scheme is obliged to pay in full, provided the services fall under the 300 medical (including and 27 chronic) conditions listed under PMBs.
At face value this sounds like an absolute win for the medical scheme member. But is it a real victory for the consumer? "Not necessarily," says Cranke.
"Interestingly, the Council for Medical Schemes (CMS) has positioned the dismissal by the High Court of the BHF's application as a victory for consumers. However, the irony is that in the absence of any guideline tariffs, it's ultimately the very same consumers who will end up footing the bill as a result of this interpretation."
He explains: "In the absence of guideline tariffs (even the previous ceiling "ethical" tariff has been dispensed with), you can see how the situation is potentially open to exploitation. Bear in mind that medical schemes need to balance claims paid against the contributions made by members (ignoring investments etc.), in a scenario where it is hard to control what is claimed, schemes only have two options available to them: decrease benefits or increase contributions.
There are 300 PMB conditions - which includes 27 chronic diseases. Generally put, outside of the treatment required for the chronic disease, the conditions relate to hospital treatment required to address a medical emergency (diagnosis and treatment). The objective of the PMBs is effectively to protect the underlying principle of cross-subsidisation in medical schemes. If the PMBs didn't exist, schemes would be able to offer options that cater expressly for the healthy (by for instance offering mainly day-to-day cover, and very little chronic disease cover) which would result in the creation of very diverse risk pools within the scheme, because members with predictable / high healthcare costs would be obliged to join an option offering the cover they require - and without the cross subsidisation from the healthier members benefits this would result in a cost spiral, ultimately making the option unaffordable.
In order to contain costs in respect of the PMBs, schemes have adopted the strategy of establishing Designated Service Provider (DSP) networks. Initially this related mainly to hospital networks, but more recently many schemes are contracting with providers too, especially GPs, specialists and pharmacies.
Where medical schemes have DSP arrangements in place for the provision of PMBs, the onus is on the member to ensure they use the DSP, failing which they will be liable for a portion of the account. It's therefore vital that members familiarise themselves with any DSP arrangements their schemes have in place, and to use them wherever possible. Only where the DSP is not accessible or unable to provide the service required, will members be able to use non-DSP's without the potential for co-payments.
Almost all options on medical schemes now rely on a medication formulary in respect of chronic medication. The formulary may offer more choice on the high end options, but even there the emphasis is usually on generic medication. Members finding themselves with co-payments in respect of chronic medication should consult their doctors to establish if they could utilise the formulary medication or not. Where the drug/s on the formulary aren't effective, or potentially even harmful to the member, the scheme needs to provide an alternative - free of charge. Members in this situation need to approach their medical schemes with an appeal to have the effective medication funded by the scheme.
In conclusion then, the fact that PMBs have to be funded in full, in the absence of any tariff guidelines, is a short-sighted short term gain for medical scheme members and presents a huge challenge for the medical schemes themselves. Medical schemes without robust DSP networks already in place face an uphill battle to manage spiralling costs. These costs will eventually have to be absorbed by members.
"The solution for the industry," says Cranke, "lies in the provider groups and funders engaging each other on pricing requirements. However, in order for this to happen the Competition Commission ruling banning medical schemes and provider groups from negotiating tariffs would have to be revisited, and one hopes that the CMS and Department of Health will play a leading role in bringing this about."
There can be a win-win situation if a compromise is reached.
