MEDICAL ASSISTANCE RESTRUCTURING

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MEDICAL ASSISTANCE RESTRUCTURING

• Presentation to Portfolio Committee
• 25 September 2002

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MEDICAL ASSISTANCE RESTRUCTURING

• PROPOSED POLICY FRAMEWORK

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BACKGROUND

• Personnel Expenditure Review
• Resolution 7 of 2000
• Mechanism to introduce collective purchasing
• Extending medical assistance to all
• Feasibility of capping employer contributions
• Manage and control costs for employer and
  employees
• Measures and resources for the treatment of
  HIV/Aids
• Medical schemes for PS to strengthen the public
  health system
• Post retirement medical aid
• Resolution 9 of 2001
• Priorty given to the matters around HIV/Aids

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BACKGROUND

• Research report from NBC recommending direct
  capitation agreements with hospital networks and
  savings accounts.
• Task team workshop.
• Further exploration of solution within medical
  schemes
• Direct capitation is complex and untested in RSA.
• Risks of private hospital monopolies.
• Circumvention of Medical Schemes Act.

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BACKGROUND continued.

• Exploratory discussions with medical schemes and
  administrators.
• Consultation with Health and Registrar.
• Observations
• Closed scheme arrangement/mega scheme presents
  solution.
• Significant benefit by combining provider
  capitation agreements and closed scheme.
• Investigate delivery mechanisms in respect of
  closed scheme.

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BACKGROUND continued.

• DELIVERY MECHANISMS
• Capitation agreement with one large
  administrator Administrator take on risk .
• Central gate keeping system Administrator
  regulate access to services.
• Accredited multiple administrators with strategic
  partner Regional distribution with strategic
  partner and central database for co-ordination.

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RECOMMENDED FRAMEWORK

• Compulsory restricted membership scheme for
  public service, inclusive of SAPS and DCS.
• Range of benefit package options
  basic/medium/high.
• Basic package to include
• Comprehensive hospital cover.
• Comprehensive disease management programme
  including HIV/AIDS.
• Chronic medication.

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RECOMMENDED FUTURE SYSTEM

• Subsidy based on basic package and structured
  according to income and dependants.
• Employee contribution based on salary - sliding
  scale.
• Administration
• Accredited administrators.
• Geographic distribution.

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RECOMMENDED FUTURE SYSTEM

• Board of Trustees to contract for
• Uniform administration systems.
• Central database.
• Managed health care agreements and arrangements
  inclusive of central hospital admission system.
• Hospital rating and accreditation system.
• Public private partnerships.
• Enforcement and regulation regarding service
  level agreements.

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RECOMMENDED FUTURE SYSTEM

• Accredited administrators responsible for
• Premium collection.
• Claims processing and payment.
• Call centres.
• Administration i.t.o. service level agreements
  and uniform systems.
• Member education.

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RECOMMENDED FUTURE SYSTEM

• Governance and financial management
• National board of trustees with supporting
  regional management structures and committees for
  the specialised areas of investment policy,
  auditing, scheme rules and benefits and ex gratia
  decisions.
• Principal officer and staff.

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RECOMMENDED FUTURE SYSTEM

• Public private partnerships.
• Optimal usage of public health system.
• Upgrading of facilities and cost recovery
  systems.
• Post Retirement Medical Assistance
• Scheme membership and employer subsidy to
  continue.
• Migration strategy for existing pensioners.
• Research Prefunding of increased PRMA liability.

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CONSIDERATIONS

• Spending efficiency
• Bargaining power i.r.o. admin fees and health
  care providers .
• Remove risk of anti-selection.
• Stable and balanced risk pool.
• Removal of brokers.
• Mandatory solvency requirements.
• Potential to partly offset additional cost by
  spending efficiency.

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CONSIDERATIONS

• Administration and governance
• Prevent market domination.
• Survival of current profit makers in market.
• Expand black empowerment net.
• PERSAL problems related to multiple schemes.
• Governance risk managed by stringent service
  level agreements and strong Board of Trustees.

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CONSIDERATIONS

• Impact on health care market
• Public private partnerships and hospital rating
  system must ensure flow of revenue to public
  hospitals without undermining private sector or
  overburdening public sector.
• Quality of care
• Accreditation of health service providers
  according to rating system.

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FINANCIAL IMPLICATIONS

• Additional cost
• Extension of cover to low income employees.
• IT and administration infrastructure.
• Managed care fees
• Cost reduced with inclusion of POLMED and
  MEDCOR.
• Increased PRMA liability.

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INTERIM HIV/AIDS PROGRAMME

• HIV/AIDS - part of disease management programme
• Introduction of programme for the interim
• Cover all aspects.
• Independent service provider
• Funding
• Jointly from employees and employer

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RISK ASSESSMENT

• Failure of governance and administration
  functions.
• Resistance from employees-matching of existing
  benefits.
• Effect on medical schemes and administrators in
  open market.
• Lack of sufficient funding.
• Failure of implementation strategy.

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IMPLEMENTATION

• Once-off versus phased approach.
• Interim HIV/Aids disease management programme.
• Success require rigorous management.
• Outline of steps
• Framework agreement.
• Joint Working Group.
• Appointment of transaction advisor
• Communication.

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IMPLEMENTATION CONTINUED

• Benefit packages and subsidy structure
  development.
• Financial arrangements i.r.o. reserving.
• Registration under Medical Schemes Act.
• Partnerships/contracting by Board of Trustees.
• IT infrastructure and database.
• Administrator accreditation.
• Financial arrangements regarding bank accounts.
• Member education.
• Migration.