1. Guideline Tariffs for Medical practitioners and dentists
HEALTH PORTFOLIO COMMITTEE
31 OCTOBER 2012

2. Context Competition Tribunal Consent Order of 2004 NHRPL of 2006
SAMA
HASA
BHF
NHRPL of 2006
Consultative process
Costs considered
General acceptance of process and outcome
RPL and regulations set aside in July 2010
National Health Act (S 6): User to have full knowledge
Competition Tribunal has previously expressed its view on the healthcare system in South Africa. The most apparent barrier to the provision of private healthcare services is affordability.
National Health Act 61 and the Medical Schemes Act covered a number of aspects pertaining to the healthcare industry, including the tariffs charged by healthcare providers and reimbursement tariffs for medical schemes. In addition, the legislation allowed for and promoted collective bargaining and co-operation between the medical schemes and various healthcare providers under the auspices of their respective industry associations. These industry associations representative included BHF, SAMA & HASA
2004 the Competition Commission passed a ruling that prevented medical schemes from negotiating and setting prices with service providers.
The premise for the Commission’s intervention was that the collective bargaining
and publishing of tariffs by these associations amounted to price fixing in breach of the provisions of the Competition Act45

3. Total benefits paid per beneficiary per month
This graph outlines total benefits paid by schemes for their members.
as can be observed, costs per member per month (pbpm) have increased slightly in 2011, the trend generally upward.
Per beneficiary expenditure on medical specialists increased by 74.3% between , private hospitals by 82.2%, medicines have decreased by 9.3% over the same period
this trend clearly shows that there is a need for a pricing commission to allow for negotiated prices – centralised bargaining
Furthermore, cost increases could also be influenced by the vertical relationships between hospital groups and their supply chain – pathology, radiology
CMS annual report 2011 / 12

4. Healthcare benefits paid per beneficiary per month
This graph shows a persistent increase in expenditure by private hospitals,& specialists.
In order to contain this increase there is a need for supply side regulation where private providers such as hospitals would be regulated.
CMS annual report 2011 / 12

5. Non healthcare expenditure
Administration expenditure is the largest component of Non health care expenditure
this expenditure has grown by 4.7% and is currently sitting at 8.1bn; whilst managed care is at 2.4bn and commissions and services paid to brokers is currently at 1.4bn.
In real terms, non health care expenditure (NHE) is decreasing but this decrease is from a high base.
CMS annual report 2011 / 12

6. CMS complaints requiring a clinical opinion
Member complaints have also increased between 2011 and 2012, Most of these complaints are in relation to PMB conditions.

7. Increasing number of CMS complaints revolve around tariffs
Numerous cases referred to HPCSA
Cases referred to competition commission and Competition Tribunal

8. Limitations of the application of 2006 NHRPL as the 2012 / 2013 guideline tariff
Outdated
Numerous new tariff codes
Limited
Volume / utilisation not considered
Does not consider household income
Administered tariff is problematic
Insurance funding: Member and Provider moral hazard
The 2006 National Reference Price List (NHRPL) is out dated since there are numerous new tariff codes. And the adverse market conditions that exist within the private health care market creates a further problem . Such problems include member over utilization of services or supply induced demand .

9. Consider available options
Immediate solution
HPCSA guideline tariff
Short term
Designation of the sector:
Interim negotiations
Competition commission market inquiry
Medium and long term
Consultative and transparent process to establish a statutory pricing authority

10. A statutory pricing authority might provide the solution
Credibility
Fair to providers and the public
Independence
Technical competence
Independent dispute resolution mechanism
Healthcare Pricing Commission
Oversee negotiations
Compliance
Investigations
Undesired practices
Private hospital licensing
Technical Review of Prices
Technical support for alternate reimbursement

11. Thank you