/ 2 November 2010

Health tariffs cause turmoil

Health Tariffs Cause Turmoil

In February this year the South African Medical Association and the Hospital Association instituted a court action against the department of health concerning issues relating to the National Health Reference Price List.

The list was a government-devised guideline against which providers benchmarked their rates.

In its ruling in July, the North Gauteng High Court scrapped the controversial tariff guide for healthcare fees on grounds of procedural unfairness.

With this pricing guide now being null and void, it will fall on medical schemes to negotiate favourable rates with their providers.

It is also important for medical aid members to know the difference between the negotiated rate and the actual amount being charged by their healthcare provider.

Shortfall between fees and amount paid
While healthcare providers have always been free to determine their own fees, the member is responsible for any shortfall between the service provider’s fee and the amount paid by medical aid schemes.

Consequently, if an account is in excess of the fee determined by the rules of a medical scheme for a particular service, the difference is for the member’s account.

The ruling is an unfortunate development for the government in light of the recently announced plans to introduce a national health insurance (NHI).

The rationale for the NHI is to drive down healthcare costs, but to function effectively it must hinge on a properly constituted tariff structure.

With that now null and void, the department will have to go back to the drawing board to devise a new system for determining rates for the private health sector.

Resolving the NHI issue
Resolving the issue is vital for the government’s plan to roll out the NHI, under which the proposal is for the state to contract doctors so that patients do not have to pay for healthcare in advance.

The ruling also presents serious challenges for medical schemes.

With no valid guide on which to base their tariff structures, schemes have been left to come up with their own tariff and rates structures for the coming year. This is typically a complex and lengthy exercise which requires much research and extensive negotiation with service providers.

In terms of the Competition Act, the industry may not come together to determine recommended rates and tariffs, which is viewed as collusion. Each scheme is therefore responsible for setting its own tariff structures independently.

Schemes also anticipate that some providers may take advantage of the uncertainty over tariffs and charge exorbitant fees, especially for prescribed minimum benefits, which by law medical schemes are obliged to cover in full. But those likely to suffer most are the medical aid members themselves.

While schemes will determine their own medical aid rates, some providers may set their rates higher than medical aid tariffs, leaving members to fork out for the shortfall.

Our advice to members is to be aware of the industry uncertainty over pricing and tariffs. Also, when consulting a doctor or any other service provider, always make a habit of understanding what you have been charged for.

Monitor your claims statements closely and query any irregularities with your service provider. Make sure you know upfront what portion of your account will be covered by your medical aid and what amount will be for your own account.

It is not unreasonable to discuss the cost of your treatment with your doctor, especially where additional co-payments are required from the member.

Members also need to get into the habit of negotiating discounts with their service providers to get more out of their benefits.

Service providers
Where possible, members should also look at using designated service providers, who are preferred service providers with whom medical schemes have pre-negotiated discounts on behalf of their members.

Finally, as the end of the year approaches and people finalise their medical aid options for the year ahead, it is imperative that members are aware of what their options are and what their needs are likely to be in the coming year.

Dr James Arens is the clinical operations executive of the Pro Sano Medical Scheme