The medical fraternity is up in arms over the Discovery Health Network — they call it “unethical” and an attempt by a dominant player to control their practices. Discovery says it is cutting the rate of medical inflation.
This year, Discovery introduced a direct payment plan for general practitioners and specialists who sign up to their network, which includes incentives for members to use network doctors.
Discovery Health argues that something has to be done about escalating healthcare costs, and managing patient care is one way of doing it. Doctors say Discovery should be focusing on the scheme’s exorbitant cost of administration, which is the most expensive in the industry and eats into member’s pockets.
Although officially the administration costs are at about 11%, when combined with managed healthcare it is closer to 18%. Registrar of Medical Schemes, Patrick Masobe, says the administration costs are far too high, especially as the scheme should be seeing economies of scale.
Whether it is doctors or Discovery to blame, either way the patient is definitely worse off with higher premiums and lower benefits. This year, Discovery members experienced a significant drop in benefits despite an increase in premiums. Last year, the top-end plans covered private doctor’s fees to the level of 300% of the Discovery medical aid rate, this year it was reduced to 200%.
According to Professor Christopher Joseph, president of the South African Society for Otorhinolaryngology/Head and Neck Surgery, Discovery was hoping to get all doctors on to the Discovery Health network so that the patients would not notice the decreased benefits. But Joseph says the network has been a failure with many surgical specialists not joining. Discovery has contested this, saying about 65% of specialists have joined.
Cracks
But it does appear that there are cracks showing. First of all, Discovery has changed the wording from the Discovery Health Network to a “direct payment arrangement”, selling it simply as an alternative payment system rather than an attempt to create a network controlled by the medical scheme. Discovery has also recently introduced a new plan, which is unusual for the middle of the year.
The Executive Plan provides private rates up to 300% of Discovery rates and looks suspiciously similar to last year’s Classic Comprehensive Plan, but at a 21% increase in premiums.
One of the problems Discovery has had, especially in wealthier areas, is that doctors are not prepared to accept the consulting fee recommended by Discovery. Their rental and staff costs are higher and their patients are prepared to pay. So Discovery, in an attempt to encourage them to join the network, allows them to charge according to the plan, ranging from 125% to 300% of Discovery’s medical-aid rate.
The practice of charging patients according to their medical plan was discouraged by Discovery in the past, but now they appear to have changed tack. Joseph says it is simply a way to lure doctors to the network — until members realise that they can get the same care for less money by downgrading plans. Soon there will be more patients being charged 125% and doctors will find themselves out of pocket.
Doctor-patient relationship
Another concern is that Discovery is interfering in the doctor-patient relationship. Doctors fear that an administration clerk will start to tell them what care to provide their patients. Dr Mike Wellsted, chairperson of Surgicom, the private practice arm of the Association of Surgeons, has a different view.
Although Surgicom has not given the plan its support and Wellsted has not joined, he says each doctor needs to make his or her own decision. He sees it as an alternative billing system, which could be effective for doctors who are based in lower-income areas. Patients in these areas cannot afford to pay private rates and, in many cases, the payment offered by Discovery is higher than they may already be receiving.
In addition, the doctors will get paid directly by Discovery, lowering their bad debt provisions. He believes that Discovery’s main error was that they assumed all doctors would sign up, and put them on the system without their consent, which made doctors highly irate.
He does not believe there is a problem with charging different patients different rates as doctors have to take what individual patients can afford into account. “It is really a payment option. If you agree to join, they will pay you directly.”
Wellsted says Discovery has also made the billing process a lot easier for doctors who have joined the network. Joseph, however, believes that doctors have been bullied into joining the network.
Discovery is one of only two medical aids that do not follow the practice of balanced billing, where the doctor submits the bill electronically to the medical scheme and the insured portion is paid to the doctor who then bills the patient the outstanding amount. Joseph says this cuts the administration costs of the doctor, thereby reducing fees.
It would also cut the cost of Discovery’s administration; it would deal with 40 000 doctors rather than close to two million members and beneficiaries. Joseph believes the only reason Discovery will not do balanced billing is to force doctors to join the network.
Crunch the numbers
Discovery Health is the largest medical scheme administrator with 26% of the market share. It covers 900 000 principal members and more than two million lives. Discovery Health says 65% of specialists and about 3 000 GPs have agreed to the direct payment plan, although there has been a lower take-up in wealthier areas. These numbers are, however, contested by the medical fraternity.