Haroon Wadee Head: Health Systems & Policy BHF Trends in Specialist Costs 2005/2006

Annual increases to providers Remuneration = Volume X unit price % Funder perspective Provider perspective

Which is the correct perspective? ¿

CMS 2006 report Specialist payments continue to climb Hospital payments levelling –? Dispensing fee & SEP Verifiable pattern in BHF 2006 KPI report (in press)

Medical specialist cost trends 3 administrators data aggregated ,000 1,200 1, Millions 1.PMB 2.8% NHRPL

Payment trends of some disciplines for a administrator ? ICD10 ?Spesnet Millions

Result of SAMA participation in NHRPL! ? Some science behind NHRPL process

6.3% impact expected

Key issues currently exploring Policy and economic analysis of specialist cost increases in South Africa –Contextual analysis (historical, political- economy & health system landscape) –Economic analysis – agency theory & moral hazard –Preliminary stakeholder analysis

Funder Perspective Key issue emerging is that of allocative inefficiency in service provision. –Potential to off-set any efficiency gains from other policy interventions –Potential to undermine cost-containment overall, impacting on ability to increase access to medical aid market and in BBP context to widen the scope of benefits –Efficiency relative to GEMS – exploration of issues – large risk pool, high employer subsidy, access of previously uninsured (or shifting of current insured) –Sustainability of current schemes environment important factor – but also the future – LIMS and SHI

Remedies No Golden Rule Political pressure on SAMA with close engagement with NDOH, CMS and media

Key Messages Increases above NHRPL impact Increases above CPIX Increases above economic growth Increases above employment growth High increases – Paediatrics and O&G – undermines ability to meet UN MDGs and SAs overall health system performance and ranking Obstacle to LIMS and eventual transition towards SHI

Remedies No Golden Rule Political pressure on SAMA with close engagement with NDOH, CMS and media Medium-term – review experience of financing/service-delivery models that have demonstrated affordable and quality service delivery. –To inform strategy

Traditional financing-services flows

Flows (with co-payments and out-of-pocket expenditure)

Member (consumer) Perspective Increased rate of co-payments and/or out- of-pocket expenditure –Equity consideration – regressive nature of OOP –Relationship between consumer and scheme under spotlight with fragmentation of trust – tilting scales in favour of providers

Remedies Improved communication to members to address information asymmetry – ongoing Engagement with CMS

Force-field analysis vis-à-vis NHRPL Process

Key issues currently exploring Policy and economic analysis of specialist cost increases in South Africa –Contextual analysis (historical, political-economy & health system landscape) –Economic analysis – agency theory & moral hazard –Preliminary stakeholder analysis Diagnosis and procedure coding –Coding creep? –CPT4 vs ACHI vs ICHI – design and implementation impacts

Thank You