1. The Impact of the Verification Criteria on the REF Grid Count
April 2007

2. REF Study 2005 Tables derived from data in REF Study 2005:
Four administrators: Discovery Health, Medscheme, MHG and Old Mutual Healthcare.
63.4% of beneficiaries in industry.
Data on prevalence and PMB expenditure for calendar 2005.
CASES and TREATED data using REF Entry and Verification Criteria v2, in force from 1 January 2007.
Graphs show final tables published with REFCT2007:
Prevalence: all beneficiaries with condition
Revised Prevalence: after application of multiple disease rules
Count: as in REF Grids, with allocation to highest cost disease
Final REFCT2007 used for order of diseases.
The tables are effectively for calendar HIV has been adjusted to the expected level of the epidemic in 2007.
Comparison: REF Study 2002 Count, adj. to 2006.
Source: REF Study 2005

3. Definition of TREATED and CASES
Two sets of data were extracted:
The first used the full Entry and Verification definitions and was called the “Treated Patient Data set” or “TREATED”
The second set was extracted without the test for “treated patient” and was called the “Total Cases Data set” or “CASES”.
While this meant a doubling of the extractions, it provided a powerful tool to investigate potential prevalence and cost if compliance improves and to be able to determine the impact if more people in future fall within the definition of “treated patient”.
Most important comparison for REF financial sensitivity is CASES Count vs. TREATED Count. Difference represents “bubbling under” for each disease.
Source: REF Study 2005

4. Ranking of Diseases in Multiple Disease Rules
Effectively uses an approach similar to hierarchical co-exiting conditions methodology.
Order of diseases from REFCT2007 using gender as a risk factor.
Only one disease in the following groups may be selected. Highest cost disease in bold:
respiratory: COP+AST+BCE
cardiac: CMY+CHF+IHD+DYS+HYP
renal: CRF+HYP
gastro: CSD+IBD
diabetes: DM1+DM2 (always default to DM2)
mental: BMD+SCZ
neuro: MSS+BMD+EPL
skeletal: SLE+RHA (other way around in REF Study 2002)
Source: REF Study 2005

5. Amounts above NON for Diseases
Source: REF Study 2005

6. Explanation of graphs using AST
All with AST diagnosis
After respiratory multiple rule
Allocation to highest cost disease. Potential AST count if compliance improves.
REF Grid Count: “treated patient”
respiratory: COP+AST+BCE
COP>BCE>AST
Source: REF Study 2005

7. Comparison to REFCT2006Ver
REF2006Ver has disease patterns largely taken from the REF Study 2002.
HAE updated with clinical information from the Haemophilia Society.
HIV updated to expected level for 2006 with advice from Leigh Johnson at the Centre for Actuarial Research and using the ASSA AIDS models.
MAT updated to levels seen in industry in Q In retrospect, the 2002 MAT levels were probably too low.
Comparison to this table effectively gives us a comparison to the previous REF Study shape.
Source: REF Study 2005

8. Respiratory Disease

9. AST At older ages AST reduces as COP > AST.
respiratory: COP+AST+BCE
Source: REF Study 2005

10. BCE At older ages BCE reduces as COP > BCE.
respiratory: COP+AST+BCE
Source: REF Study 2005

11. COP
COP Verified is same as COP prevalence because COP is most expensive respiratory condition.
respiratory: COP+AST+BCE
Source: REF Study 2005

12. Diabetes

13. DBI
TREATED very low compared to CASES
Source: REF Study 2005

14. Already applied to data during cleaning before this analysis.
DM1 with DM2 Rule
Version 2 of REF Entry and Verification Criteria:
Note that, in accordance with the Diabetes Mellitus table in section 6, Diabetes Mellitus Type 1 and Type 2 cannot co-occur.
5.7.2 Categorise Diabetes Mellitus cases as either Type 1 or Type 2 diabetes.
Table 11: For REF purposes, Type 1 and Type 2 diabetes cannot occur concurrently. Evidence of use of oral hypoglycaemic or euglycaemic medicines automatically leads to the classification of a diabetic case as Type 2.
NOT just a count issue as with other verification rules. If DM1 and DM2 found together, must default to DM2.
Already applied to data during cleaning before this analysis.
Source: REF Study 2005

15. DM1
Treated about half of previous levels due to application of Verification criteria and rule. Not due to DM1 and DM2 overlap: very little in 2002.
Source: REF Study 2005

16. DM1 and DM2 in 2002 DM1 and DM2 would be defaulted to DM2 now.
Source: REF Study 2005

17. DM2
DM2 Count dramatically higher than before. Result of change in ranking of common multiple diseases, as prevalence is reasonable.
Source: REF Study 2005

18. DM2 Prevalence
DM2 levels after application of criteria seem reasonable compared to 2002 Study prevalence.
Source: REF Study 2005

19. Change in Order of Diseases
DM2 now more expensive than RHA, AST, HYL, HYP hence many more swinging to DM2 in REF Grid Count
Source: REF Study 2005

20. Cardiac and Renal Disease

21. CMY
CHF no longer exists – combined with CMY. New combined disease exceeds CHF+CMY in 2002.
cardiac: CMY+CHF+IHD+DYS+HYP
Source: REF Study 2005

22. DYS
DYS substantially reduced by Verification criteria and cardiac rule.
cardiac: CMY+CHF+IHD+DYS+HYP
Source: REF Study 2005

23. HYL Why was not included in cardiac rule ?
[cardiac: CMY+CHF+IHD+DYS+HYP]
Source: REF Study 2005

24. IHD Impact of cardiac rule at older ages. cardiac: CMY+CHF+IHD+DYS+HYP
Source: REF Study 2005

25. HYP Impact of renal and cardiac rules at older ages.
cardiac: CMY+CHF+IHD+DYS+HYP
renal: CRF+HYP
Source: REF Study 2005

26. CRF Not verified due to “treated patient” definition
Very large numbers not verified. CRF essentially requires dialysis for “treated patient”. Unlikely to be significant movement to becoming “treated”.
renal: CRF+HYP
Source: REF Study 2005

27. Gastro-intestinal Disease

28. CSD No impact from gastro rule as CSD > IBD gastro: CSD+IBD
Source: REF Study 2005

29. IBD Only very small impact from gastro rule. gastro: CSD+IBD
Source: REF Study 2005

30. Skeletal Disease

31. RHA SLE now greater than RHA but very little impact from rule.
skeletal: RHA+SLE
Source: REF Study 2005

32. SLE
SLE now greater than RHA
skeletal: RHA+SLE
Source: REF Study 2005

33. Neurological Disease

34. BMD Neuro rule has almost no impact neuro: MSS+BMD+EPL
Source: REF Study 2005

35. EPL Neuro rule has little impact neuro: MSS+BMD+EPL
Source: REF Study 2005

36. MSS
neuro: MSS+BMD+EPL
Source: REF Study 2005

37. SCZ
Increase in Prevalence and Count at oldest age is odd. Very little data.
Source: REF Study 2005

38. PAR Verification criteria produce slightly lower result.
Source: REF Study 2005

39. Other Disease

40. ADS Large divergence at older ages from Prevalence.
Source: REF Study 2005

41. HAE HAE Count expected in 2006 was from REF Grids.
Source: REF Study 2005

42. GLC
Reasonable shape.
Source: REF Study 2005

43. TDH
Massive difference between Prevalence and Count: TDH is very low cost disease.
Source: REF Study 2005

44. HIV
Expected Count in 2007 slightly lower than Expected in Note REF Grids have been about half of Expected to date.
Source: REF Study 2005

45. Multiple Disease

46. CC2
CC2 CASES Count is higher than Prevalence – impact of multiple disease rules pushing more CC3 and CC4 down to CC2. As predicted.
Source: REF Study 2005

47. CC3
As predicted, reduction in CC3 from application of multiple rules. Large “bubbling under”.
Source: REF Study 2005

48. CC4+
As predicted, massive reduction in CC4 from application of multiple rules. Large “bubbling under”.
Source: REF Study 2005

49. NON
TREATED NON higher than CASES NON. Difference is “chronic not verified”.
Source: REF Study 2005

50. Summary
In some disease, very large differences between CASES Count and TREATED Count.
This represents a financial risk to schemes in REF: if more beneficiaries are compliant and hence meet the “treated patient” criteria, then the numbers with chronic disease go up substantially.
Affects some very high cost diseases like CRF (although not many likely to become “treated”) and MSS. Affects numbers with multiple disease.
If REF had an annual Industry Community Rate, REF Fund would take the risk during the year.
If REF has a monthly Industry Community Rate, then schemes immediately impacted.
Source: REF Study 2005

51. Revisions to Definitions
Important:
Revisions to Definitions

52. Date of Treatment not Payment
Original definition using “payment date” was contrary to general pricing practice and also the way PMBs and REF are priced.
Original definition open to being gamed. Possible to manipulate payment dates for a multi-line scrip across two months. Thus more beneficiaries qualifying for REF shadow payments than envisaged.
“Treatment date” can not be manipulated in this way.
Guiding principals for REF risk factors: "Invulnerability to Manipulation: The risk factors should not be subject to manipulation by medical schemes, managed care organisations, administrators, providers, intermediaries or the beneficiaries.".
"evidence is required that a patient has received the specified treatment during at least two preceding treatment months in the three treatment months preceding the current treatment month”
“Proof of payment is still required to be able to count a particular treatment date. Payment towards a specific treatment must have been made from the risk benefits in order to qualify as a treatment.”
Source: REF Study 2005

53. Components of BCE
One Under 1 case at OMHC: DTP_Hospital was R873,000 over four months. Baby died. Although met BCE criteria, diagnosis was uncertain.
After investigation, recommend treat as NON.
Source: REF Study 2005

54. Components of CC3
Diagnosis of multiple chronic for Under 1 ? Two cases found.
MS: EPL+CMY+HYP. Meds 4 months, no DTP.
MHG: AST+CMY+HYP. 7 months, meds 1 month, R423,400 DTP
Source: REF Study 2005

55. Prof Alan Rothberg on Neo-nates
"As for causes of neonatal costs, some general principles are that neonatal problems mostly fall into one of four categories viz. birth asphyxia, infections, congenital abnormalities and prematurity. In the funded environment asphyxia is uncommon (better prenatal care), and infections occur but are not really drivers, so your high cost cases really fall into the other two categories. Congenital abnormalities may be expensive especially if cardiac because of the corrective and often complex surgery involved and the need for pre- and post-op ICU, but the highest costs are related to prematurity, mainly in infants below 1500g and within that group particularly the ones weighing less than 1000g."
Note that congenital abnormalities are a PMB but would fall into the NON column. The problem arises when we try to use adult criteria for treatment of CMY and CRF on these cases.
Source: REF Study 2005

56. Counts for Under 1s
“… the algorithms and protocols are adult-based and one cannot simply squeeze kids in, especially those below 1 year of age.  In terms of the commonest conditions …, clearly schemes are including wheezing as asthma and seizures as epilepsy, and while some wheezers may go on to be asthmatic and the occasional fitter will become an epileptic, the majority will not.” 
Small children get repeated viral infections and because their airways are narrow they wheeze easily, and as for seizures, many kids have a fit when they have an infection and associated high temperature. 
Bronchiectasis is also very unlikely below one year of age, as is what we usually understand by the term chronic obstructive pulmonary disease.  
Inflammatory bowel disease is probably also over-represented, and is probably picking up chronic diarrhoeas. 
Cardiac failure, renal failure, diabetes are present in low numbers and may be realistically represented.”
Source: REF Study 2005

57. Counts for Under 1s cont.
“Getting to multiple diseases, I'd guess that the most common scenario relates to ex-prem babies (mostly below 1500gm birthweight) who were in ICU on ventilators, developed so-called chronic lung disease (or bronchopulmonary dysplasia) and ended up with low thresholds for lung infection, wheezing, pneumonia, and possibly associated heart failure.  
So bottom line is that I think you're being hoodwinked and will need additional evidence before you pay out for these alleged disease burdens (e.g. history of very low birthweight, prolonged ventilation/ICU stay, frequent admissions, nature of medications etc.).”
Prof Alan Rothberg, previously Professor and Head of Dept of Paediatrics and Child Health, University of the Witwatersrand
Source: REF Study 2005

58. Important Decision on Under 1s for REFCT2007
Considered whether to allow:
(A) the current chronic conditions for Under 1s
(B) to allow only a restricted set of conditions (from his comments these would be CMY, CRF and DM1) 
(C) to allocate all the cost to the Under 1 age band.
Pricing team, with clinical assistance, have chosen (C). Confirmed by RETAP and recommended to Council.
Pricing for REFCT2007 on the basis that there is no allocation of Under 1s to any chronic disease or multiple chronic disease.
All Under 1s to be defaulted to NON for payment from 2007.
Need to communicate in next REF Entry and Verification Criteria and for 2007 data.
Source: REF Study 2005