NHI BILL Dr Selaelo Mametja Head of Knowledge Management and Research Department SAMA
Background: Historical Phases of Healthcare Financing dialogue in SA Policy Context: The Reconstruction and Development Programme (RDP) Constitutional mandate (Section 27) 1997 White Paper for the Transformation of the Health System Medical Schemes Act of 1998: Community rating, prescribed minimum benefits SAMA supports Universal Coverage and access to good quality medical care
Key issues Quality of care Equitable access to health care, Health risks and financial protection Improved efficiencies Role of Voluntary Medical schemes clearly defined Governance and regulatory independence
NHI Policy Phases in SA GREEN PAPER (2011) WHITE PAPER (2015) NHI POLICY (2017) SAMA written submission SAMA written submission SAMA written submission NHI BILL (2018)
NHI Bill, 2018 Released concurrently with Medical Schemes Amendment Bill Both Bills have 3 months comment period (21 June -21 Sept) Followed by HMI draft report comments due 08 September A lot of the implementation detail will be in the Regulations BUT o o o o Referral Guidelines Guidelines on Formularies Tender for Universities (Test) and Clinical Service Provider (Oncology, school health, psychiatry, maternal health SAMA busy with member consultations towards a Submission
NHI Bill, 2018 FOOD FOR THOUGHT: The hallmark of (any) Legislation is Functionality Not Perfection - Lawyer NHI Bill Consists of 9 Parts, comprised of 55 Sections
Definitions Definitions are based on existing legislation but serious discordance in definitions or relevant sections Missing definitions E.G. i. Quality : Remains measure of Health systems accountability. The ambiguity becomes stark in the phrase reasonable quality (Section 6.1.h) and sufficient quality : Quality was defined in White paper. ii. Complementary coverage iii. Mandatory pre-payment: who is going to pay iv. Active purchasing/ strategic purchasing
Objective of the Fund establishing and maintaining an efficient Fund through the consolidation of revenue so as to protect users against financial risk; serving as the single public purchaser of health services in terms of this Act > the equitable and fair distribution and use of health care services; ensuring the sustainability of funding for health care services; and providing for equity and efficiency in funding by actively purchasing health care services, medicines, health goods and health related products from certified, accredited and contracted service providers. The objective is not to improve quality of care despite recognition that Quality is important
Types of Quality of Care Measures Donabedian proposed for quality of care assessment Structure : Through OHSC norms and standards Processes of care: necessary for quality improvement outcomes of care: Outcomes are as a result of entire health system, cannot blame clinicians only
Sec 2- Application of the Act Act applies to Both Public and Private health establishments (except military health establishments) ~ However, size of the private sector stake in NHI remains unclear (details in Regulations?)
PA RT 1: Sec 3-6 The NHI Fund & functions FUNCTIONS AND DUTIES National public entity in terms of PFMA Accountable to the Minister???? mandatory prepayment Single public purchaser Enters into Contracts with certified & accredited parties, Determines Prices annually: Problematic as the fund cannot play role of buyer and determine prices Design health services-committee of the Board Pays providers in accordance to quality & value of services Develops & maintains a Service & Performance Profile for each contracted provider, supplier etc Providers etc will be contracted with the proviso of servicing at lowest possible price
PA RT 2: Sec 7-12 Rights to HealthCare Eligible users have rights to: Comprehensive Health package object to affordability and means Citizens, permanent residence, dependants, inmates Refugees: ONLY emergencies, notifiable conditions and MCH at PHC Free at point of care, standard of care at reasonable time Information (His /hers ; or info about by the Fund) Not to be refused care on unreasonable grounds To be transferred to a more equipped provider at no cost Complain and appeal against decisions of funds- more on complains process
Role of Medical Schemes SUPPLEMENTARY COVERAGE: private insurance complements coverage provided BY NHI and covers a limited set of interventions that address the particular gaps in a country s public coverage COMPLEMENTARY: provide coverage that is not covered by NHI N can be used for co-payments or to cover areas of care such as oral and eye care SUBSTITUTIVE: provides coverage that will otherwise be available in state: provided to those who cannot be covered by NHI
Role of Medical Schemes NHI GREEN PAPER As part of the transition process, medical schemes will play a supplementary role. Once NHI is fully implemented, medical schemes will offer complementary cover to fill gaps in the universal entitlements offered by the State NHI WHITE PAPER the role of medical schemes in the health system will change and once NHI is fully implemented, medical schemes will offer complementary cover to fill gaps in the service coverage offered by the NHI. NHI BILL Users have rights to purchase complementary services not covered by schemes through voluntary medical insurance, out of pocket and private health insurance
PA RT 2: Sec 7-12 Rights to HealthCare cont.. NHI Fund will NOT fund services in these instances: Medically unnecessary Cost-ineffective interventions Bypassing referral system, But how about vulnerable populations: Perpetuate inequities
PA RT 3 & 4 :Sec 13-24 Board of Fund Freedom to make decisions Cambridge Dictionary Board is purportedly Independent ; accountable (expected to justify actions) to Parliament Max term of office is 5 years renewable only once Board consists of no more than 10 persons with expertise in areas including/care financing; health economics; public health planning; M& E; Law; Labour; Actuarial science; IT & Communication
PA RT 3 & 4 :Sec 13-24 Board of Fund Appointment of the Board Call 4 public nominations : Minister Adhoc committee appointed by Cabinet MUST Conduct public interviews Forward recommendations to Minister for approval The Minister MUST notify Parliament of the final appointment Minister can dissolve the Board after consulting with Cabinet> No input from Parli The Board will advice the Minister The Minister will also approve the CEO appointed by Board CEO report to the Board and Parliament on annual basis
Structure and functioning of SA government: NATIONAL LEVEL Legislative Authority Executive Authority Judiciary Authority Parliament 1. National Assembly 300-400 members 2. National Council of Provinces Cabinet President Deputy president Ministers Parliament Constitutional Court Supreme Court High Court Magistrate Court
PA RT 3 & 4 : Sec 13-24 Board of the Fund Sec 22.3: CEO must establish the following Units within the Fund: a) Planning b) Benefits design c) Price determination> Separate body d) Accreditation e) Purchasing & Contracting f) Service provider payment g) Procurement h) Performance monitoring i) Risk and fraud prevention Investigation j) Investigating
PA RT 3 & 4 : Sec 13-24 Board of Fund Distressed COLLAPSING keep the Minister informed of the quality of the health services
PA RT 5: Sec 25-31 Ministerial Committees(1) Sec 25: Benefits Advisory Committee Appointed for 5 years, renewable once Composition: a)all heads of medical schools b)who delegate c)9 nominees from Provincial Health Departments d)1 nominee by the CMS e)1 nominees by HASA or similar private body Mandate 1. Health service benefits 2. Level of care at which services will be reimbursed 3. detailed and cost effective treatment guidelines
PA RT 5: Sec 25-31 Ministerial Committees (3) Sec 26:Health Benefits Pricing Committee Composition: (16-24 members) a)health DG b)1 person at the level of Deputy DG from National Treasury c)not more than 11 members appointed on basis of their special knowledge & experience in: o Clinical & service delivery o Operational health mx establishment & service delivery o Actuarial and health benefit design or pricing strategy o Health economics o Labour relations Mandate: to recommend prices of health service benefits to the Fund
PA RT 5: Sec 25-31 Ministerial Committees (4) Sec 27: Stakeholder Advisory Committee Composition: a) One member from each Statutory Councils: HPCSA, SAPC, SANC, Allied Health professions Council, Traditional Health Practitioners Council, SA Dental Technicians Council b) Other Regulatory bodies: MRC, CMS, c) NGOs, organised labour AND Business d) Tertiary institution (2) Mandate a) Advice to Board and Minister on the functioning of the Fund b) Comments & advice from a community perspective c) Comments & advice from a provider perspective
PA RT 6: Sec 32-39 General Provisions Sec 32: Role of Minister The Minister is responsible for the: governance & stewardship of the national health system governance & stewardship of the Fund Definitions Governance: Stewardship rule; control the job of supervising or taking care of something
PA RT 6: Sec 32-39 General Provisions Sec 38: Accreditation of service providers Conditions for contracting: Certification with OHSC and Professional Regulator eg HPCSA Adherence to treatment protocols and National pricing regimen Adherence to referral pathways Submission of info to National Health Info database Fund has rights to deregister the provider if above not met Will the same conditions fro contracting apply to public sector?
PA RT 6: Sec 32-39 General Provisions Sec 34: National Health Information Repository & Data System NHA 74 (NHIS) Providers must submit info for the Health Payment Registration System: procedure codes, medicines, LOS, diagnostics, referrals The Fund may use submitted information to: Monitoring & Evaluating outcomes, Plan and budget, Monitor performance of providers, Monitor compliance with guidelines Providers etc. must comply with the law i.r.o access & protection of health records:
PA RT 6: Sec 32-39 General Provisions Sec 35: Purchasing of health care services NHI Fund must active and strategic purchasing from public and private on behalf of users: Directly to Hospitals or CUP 1. National Level: based on Diagnostic Related Groups as determined by Minister in consultation with Nat Health Council and Board: contract All hospitals excluding District, all inclusive performance based. 2. Provincial Level: based on Global Budget or DRGs as determined: All inclusive/performance based. Provincial, District?, regional, specialised hospitals 3. At sub District Level: Funds for PHC will be transferred to Contracting Unit for PHC (CUP). Capitation based 4. Emergency services: Capped fee based basis, with adjustment for severity where necessary
PA RT 6: Sec 32-39 General Provisions Sec 39: Payment of service providers The Fund, in consultation with the Minister, must determine the nature of service provider payment mechanisms I. Specialist & Hosp services all-inclusive, Performance based payment II. Primary care Establishments Risk adjusted capitation for population size and services BUT not epidemiology III. Certified & accredited Primary care Providers must be remunerated by the CUP
PA RT 6: Sec 32-39 General Provisions Sec 37: Contracting Unit for PHC (CUP): The CUP is the organisational unit with which the Fund contracts for the provision of PHC services within a specified geographical sub-district area CUP is composed of: a District hospital, Clinics, and/or CHCs and WBOTs, Private primary providers organised in horizontal networks Assists the Fund on its function incl identifying service needs; identifying accredited providers & issuing certificates, etc.
Appeals process Appeal tribunal has s same powers as high court CEO s office Investigating unit Users have right to complain the job of supervising or taking care of something Appeal tribunal Appointed by Minister Lodge appeal in 60 days to the Ministerial appointed tribunal Decision in writing Office should respond in 30 days
THE SOUTH AFRICAN MEDICAL ASSOCIATION Tel: +27 (0)12 481 2000 Fax: +27 (0)12 481 2100 Block F Castle Walk Office Park Nossob Street Erasmuskloof Ext 3 Pretoria 0183 PO Box 74789 Lynnwood Ridge 0040 Reg No 1927/000136/08: NPC www.samedical.org
PRESENTATION OF THE NATIONAL HEALTH INSURANCE FUND BILL Dr Anban Pillay SAMA CONFERENCE Sun City 19 th August 2018
WHAT IS NHI? NHI is a health financing system that pools funds to provide access to quality health services for all South Africans based on their health needs and irrespective of their socio-economic status. NHI is intended to ensure that the use of health services does not result in financial hardships for individuals and their families. NHI represents a substantial policy shift that will necessitate a massive reorganisation of the current health system, both public and private and also derives its mandate from the National Development Plan (NDP) of the country. 2
UN Sustainable Development Goals (SDGs) Goal 3.8 Achieve Universal Health Coverage, including financial risk protection, access to quality essential health-care services, and access to safe, effective, quality and affordable essential medicines, and vaccines for all. 3
South Africa is an outlier: world s largest share of spending from VHI Source: WHO estimates for 2012, countries with population > 600,000 4
The Country s Plan - The NDP Chapter 10: Promoting Health - Targets for 2030, Under Universal Health Coverage: Everyone has access to an equal standard of care regardless of their income; A common fund enables equitable access regardless of what people can afford to pay or how frequently they need to make use of health services 5
THE WHITE PAPER ON NHI 6
FEATURES OF NHI Universal access Mandatory prepayment of health care Comprehensive Services Financial risk protection Single fund Strategic purchaser Single-payer 22/08/2018 7
Stewardship of financing and provision (governance, regulation, information) Provision of services Allocation mechanisms (provider payment) Purchasing of services Allocation mechanisms Pooling of funds Allocation mechanisms Collection of funds Health care Economies of scale and efficiencies Single Payor / purchaser Social solidarity and cross-subsidisation Single Pool for Income and Risk Prepayment Taxes/ Contributions COVERED POPULATION 8 8
The NHI Bill This cannot be achieved without creating a single common fund, which in itself will directly contribute towards: a unified health system by improving equity in financing, reducing fragmentation in funding pools across both the public and private sectors, and making health care delivery more affordable and accessible for the population The NHI Bill is a crucial step in creating the common Fund. 9
Parts of the NHI Bill Establishment of the NHI Fund Right to health care The Board of the Fund The CEO Ministerial Committees General provisions applicable to operation of Fund Complaints and appeals Financial matters Miscellaneous 10
Key Features of the Bill Beneficiaries Covered (Section 7) Rights of users (Section 9 (a)) Purchaser-Provider Split (Section 35(1)) Mandatory Prepayment (Section 3(4)) Fighting Corruption (Section 6 (1) (I)(vi), Section 6(1)(L)) Single Purchaser (Payer) (Section 3(3)) No co-payments, free at point of service (Section 9 (a)) Strategic Purchasing (no more tenders for health services) (Section 35(1) Comprehensive Health Service Benefits (Section 11 (1) & 11 (2)) Registration of users (Section 8) Public and Private Providers (Section 5(1)(d)) Affordability (Section 9) 11
Key Features of the Bill (contd.) Entry point to health care system PHC (clinics, GPs and other PHC providers) (Section 11(2)(a)) Sources of Funding - Minister of Health and Finance to jointly determine (Section 46 (1), (2), (3)) Ministerial Committees (Section 25, 26, 27, 28) Referral Pathways Section 11 (2)(b) Procurement through Chief Procurement Officer (National Treasury) Appeals and Complaints (Section 40) When are Services not covered Section 12 (2) Method of Payment capitation, DRGs, Global fees (Section 35 (2), (3), (5) Schedule of Amendments (Annexure) 12
Benefits Advisory Committee NHI Committee Health Benefits Pricing Committee Stakeholder Advisory Committee Technical committees 13
Transitional Arrangements Described in section 54 of the bill. Specifies the structures, and process of implementation Phase 1 was from 2012 to 2017. Phase 2 will be for a period of five years from 2017 to 2022 and will i. continue with the implementation health system strengthening initiatives, including the alignment of human resources with that which will be required under the Fund; ii. include the development of National Health Insurance legislation and amendments to other legislation; iii. include the undertaking of Initiatives which are aimed at establishing institutions that will be the foundation for a fully functional Fund; and iv. will include the interim purchasing of personal healthcare services for vulnerable groups such as children, women, people with mental health disorders, people with disability and the elderly. 14
Transitional Arrangements Phase 3 will be for a period of four years from 2022 to 2026 and will include i. the continuation of Health systems strengthening activities on an ongoing basis; ii. the mobilisation of additional resources as approved by Cabinet; and iii. the selective contracting of healthcare services from private providers. 15
Consolidation of Financing Streams Presently, according to STATSSA, this is how the SA population is divided in terms of income, employment and hence, indirectly medical scheme coverage In reorganising the population, cognisance will be taken of these various categories, i.e. when we implement NHI, we have to start with those who are not covered Interim Insitutional Structure Civil servants and their dependants (incl. SoEs) Formal Sector Employed and their dependants (large business) Formal Sector Employed and their dependants (SMMEs) Informal sector and their dependants Individuals in households with no income or are not employed 5.5m 12m 6m 8m 24m Government Employees State Owned Enterprises Public Entities Only 8.8m of these people have access to health services via medical schemes Domestic Workers Hawkers Taxi industry Casual labourers The elderly with no income Children School kids (12m) Unemployed Unemployable The central philosophy of Implementation of NHI is to bring into fold those people who are not insured (specifically those who are unable to afford medical scheme cover). 16
THANK YOU 17
NHI and Scheme Regulation Dr Sipho Kabane NHI and Scheme Regulation SAMA Conference
NHI POLICY REFORMS (1998-2018) Social solidarity, Efficiency, equity, effectiveness, Health care as a Public Good, affordability and appropriateness Towards Universal Health Coverage National Health Insurance Policy : towards Universal Health White Paper: National Health Insurance: towards Universal Health Coverage NHI Implementation: Institutions, bodies & commissions Coverage NHI Bill Medical Schemes Amendment Bill Nominations: NHI Ministerial & National Advisory Committee Members Medical Schemes Act Regulations Green Paper: National Health Insurance: Healthcare for all South Africans Medical Schemes Act promulgation
Phase 1: NHI (2012-2017) Improving the management of health facilities; Improving throughput from training institutions to address key Human resources for Health requirements; Strengthening infrastructure programme and procurement of equipment; Implementing improved and integrated health information systems and technology; Rationalising of laboratory services; Effective and integrated procurement of Health Commodities; The implementation of and compliance with National Quality Standards for Health; Re-engineering of Primary Health Care; The contracting of health practitioners to strategically enhance the quality of Primary Health Care; Restructuring and improving the provision of Occupational Health, Mental Health, Disability and Emergency Medical Services as part of the comprehensive health entitlements that will be covered by the NHI Fund.
Phase 2:NHI (2018-2022)
NHI Transitional Structures Ministerial Advisory Committee on Health Care Benefits for National Health Insurance National Health Service Pricing Advisory Committee National Advisory Committee on Consolidation of Financing Arrangements Ministerial Advisory Committee on Health Technology Assessment for National Health Insurance
Health System Reform Forum
HEALTH SYSTEMS REFORM FORUM
CMS: NHI related Strategic Projects Standardization of Options Consolidation of schemes <6000 membership Consolidation of government funded schemes Risk based Capital Solvency Framework Elimination of Co-payments and Balanced Billing Beneficiary Registry Service Benefit Review Low income benefit option framework
Contracting for Vulnerable Groups Maternal Health (Pre, Peri and Post Natal) Child Health (School Health Services: Vision, Hearing and Oral Health) Elderly (Cataracts, Hip & Knee replacements) Mental Health Users
Medical Schemes Act Bill
Contents Background and Context Ministerial Policy Statements Comments on Policy Statements Key Features of the Bill Areas requiring strengthening Conclusion
Pronouncements: MSA Bill Abolish Co-payments (Complaints; 25% solvency to be reviewed) Abolish usage of Brokers Shift from PMB s to Comprehensive Service Benefit Standardization of Scheme Options Declare entities conducting a business of a MS without registration illegal Central Beneficiary and Service provider registry Introduce income subsidization model Pass discounts back to members in DSP s Membership Terminations and waiting periods Board of Trustee and PO requirements
Background and Context CMS was a key contributor to the Bill CMS will like all stakeholders comment on the Bill CMS will maintain a keen interest in the process up to promulgation CMS will be the key implementer of the new Act and Regulations Medical schemes industry will be regulated based on the provisions of the Act and Regulations Mandate of CMS based on the MSA as amended and Regulations CMS will continue playing this role for as long as the Act and Regulations are in force
Background and Context MSA Bill needs to be read with the NHI Bill and the HMI provisional recommendations NHI policy document and NHI Implementation structures released in June 2017 also important for context Comment period on the Bill still open Industry players should add their inputs into the process
Ministerial Policy Statements Elimination of Co-Payments Review of 25% solvency requirement Elimination of Broker Services Replacement of PMB s with Comprehensive Service Benefit ALL benefit options to be approved by Registrar Outlawing Fake Schemes Central Beneficiary Registry and Service provider registry Income Distribution Model Discounts and Savings passed on to members Cancellation of Scheme membership Improved Governance of Schemes
Comments on Policy Statements Co-payments: Complaints by members Out of pocket expenditure Estimated at R29bn (does not include claims not tendered) All schemes have about R59bn of reserves (Average of 33% vs 25% solvency) Balance solvency requirements against impoverisation due to OOP expenses CMS to move towards a Risk Based Capital Solvency Framework
Comments on Policy Statements Elimination of Broker Services: Membership to schemes stagnant (8.8m) Schemes are reducing in numbers Broker numbers are not decreasing Members collectively paid R2.2bn to brokers Members have never known their brokers What were the value added services Members should only pay for services rendered
Comments on Policy Statements CMS supports these statements by and large as these are aimed at member protection CMS understands the reasoning behind these pronouncements CMS sees these statements as providing direction and policy intentions CMS takes these pronouncements very seriously CMS sees some of these as immediately implementable and some in the medium to long term CMS will unpack and bring these up for consultation with key industry stakeholders Those that can be implemented through the legislative process will be brought into the current engagements Those that do not require a legislative will be appropriately handled with the key industry players
Key Features of the Amendment Bill To exclude the application of the Consumer Protection Act, 2008; Creation of a Central Beneficiary Register; To empower the Registrar to amend the rules of a medical scheme that has failed to amend its rules in accordance with a directive; To re-determine the provisions relating to the admission of beneficiaries to a medical scheme and the cancellation of membership To set out various requirements applicable in determining the contributions payable to a medical scheme by its members; Mandatory Minimum Benefits instead of PMB s
Key Features Continued To provide for a Health Services Providers Register; Council may require information from suppliers of relevant health services concerning the services rendered by them to beneficiaries; To do away with appeals to the Council To establish an Appeal Board consisting of part time members, and to determine its jurisdiction and powers To introduce an enhanced system of governance of medical schemes To empower the Council to determine broker fees from time to time and define the circumstances in which a medical scheme may receive payment of broker fees due by its members to a broker To declare the carrying on of the business of a medical scheme by a person not registered as a medical scheme, to be a separate offence and to prescribe the criminal penalties that may be imposed on persons convicted of that offence
Areas of the Bill that need strengthening Definitions Central Beneficiary Registry section needs rewording Governance of Administrators To provide for application to the High Court for an appropriate order in the event of irregularities in any election of a member or members of a board of trustees of a medical scheme; To extend the functions of the Council for Medical Schemes ( the Council );
Definitions to be added Associated party (linked to medical scheme or intermediary by virtue of a family or business relationship. Emergency medical condition, public sector health service and preferred providers. Mandatory Minimum Benefits Comprehensive Service Benefits
INTERSECTION-NHI BILL AND MSA BILL NHI Bill Corporation between the Fund, DoH and CMS Benefits Advisory Committee Stakeholder Advisory Committee Health benefits pricing committee Annual determination of prices (Facilities & professionals) Collate utilisation data (M&E) Implementation of information management system National Health Information Repository and Data System contribution Service and performance profile of all contracted service providers Comprehensive health service benefits Referral pathways (no copayments) Purchasing of voluntary health insurance (complementary services)
INTERSECTION NHI BILL & MSA REPORTS MSA Bill Share available resources, expertise and processes with the Fund Comprehensive health service benefits Collect prices, utilization and costs of relevant health services Establish, maintain and administer a Central Beneficiary Register Health Care Providers Register No co-payment or the use of deductible Regulation of Voluntary Health Insurance
Conclusion Excited and happy that Bills have finally been released On the whole the Bills are supported by the CMS There are areas that need redefining and strengthening CMS will be making further inputs into the process like other stakeholders We hope this publication of the Bills and attendant process, answers the often asked question about the immediate future of schemes We are looking forward to the finalisation of the process to ensure that the CMS is an effective and efficient industry regulator
Conclusion We note the interactions between the 2 Bills and the Health Market Inquiry provisional recommendations We see all three as talking to the Health Reform that is cited in the NDP We also see the CMS in particular playing a key role in the transition towards the full implementation of the NHI
Prof Alex van den Heever Chair in the field of Social Security Wits School of Governance alex.vandenheever@wits.ac.za A CRITICAL ASSESSMENT OF SOUTH AFRICA S HEALTH REFORM LANDSCAPE Presentation to the South African Medical Assoication 19 August 2018
There is quite a lot to talk about Significant structural concerns with the health system, both the public and private health sectors/systems Three sets of reforms have recently been tabled, two in Bill form and a third the provisional outcome of the Health Market Inquiry into the private health system This talk reviews the adequacy of tabled reforms against the backdrop of a health systems diagnostic - the focus is principally on the systemic features of the system influencing performance
Context
Universal Health Coverage Is an objective of all countries Is achieved through many different mechanisms with no country the same But note: National Health Insurance is a mechanism and not an objective South Africa has universal health coverage with lapses entirely a consequences of government failure to act
Percentage of GDP 10 9 8 7 6 5 4 3 2 1 0 1.5 3.4 National Health Accounts: South Africa (% of GDP) 1.4 1.3 1.2 1.2 3.3 3.6 3.7 3.9 1.1 1.0 0.9 0.9 0.9 0.8 0.8 0.7 3.7 3.9 3.9 4.0 3.9 3.6 3.4 3.4 3.3 3.7 3.6 3.5 3.3 3.2 3.2 3.1 3.2 3.1 3.2 3.3 3.3 3.5 3.9 3.9 4.1 4.1 4.1 4.1 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Year 2006 2007 0.7 3.5 2008 0.6 0.6 0.6 0.6 0.6 0.6 3.8 3.9 3.9 3.9 4.0 4.0 2009 2010 2011 2012 2013 2014 Sum of Gov exp (% of GDP) Sum of Private pre-paid (% of GDP) Sum of Social security (% of GDP) Sum of OOP (% of GDP) Source: World Health Organisation, National Health Accounts
Some features of the public health system
There a number of headline concerns regarding the performance of the public health system Contingent liabilities medico-legal claims R35 billion (National Treasury) (Actual figure likely to be higher and increasing) Accruals relating to non-staff expenses around R7 billion for Gauteng Province with an unknown level for provinces outside the Western Cape Quality of care indicators suggest the public health system is under-performing relative to what is feasible (i.e. performance failures are not principally a function of resources which have in fact improved over time)
Real changes in public health sector remuneration broken down by cost driver (from 2005/6 to 2015/16) (2015/16 prices) 10 000 8 000 6 000 Rands (million) 4 000 2 000 0-2 000-4 000 2006/7 2007/8 2008/9 2009/10 2010/11 2011/12 Financial year 2012/13 2013/14 2014/15 2015/16 Unit cost change Population Post changes (residual)
Quality of public health care the Office of Health Standards Compliance Score range Number of hospitals % of total Number of beds % of total 80%+ 16 11,9% 8 377 18,8% 70-80% 25 18,5% 11 798 26,5% 60-70% 38 28,1% 13 775 30,9% 50-60% 27 20,0% 6 658 15,0% 40-50% 25 18,5% 3 521 7,9% 30-40% 2 1,5% 110 0,2% 20-30% 1 0,7% 40 0,1% 10-20% 0 0,0% 0 0,0% 0-10% 1 0,7% 240 0,5% Total 135 100,0% 44 519 100,0% But the quality assurance scores don t correlate with health outcomes using facility-based MMRs (Facility-based MMR (maternal mortality ratio per 100,000 live births) averaged for the period 2010 to 2012)??? Only 11.9% of public hospitals meet the basic OHSC norm, representing only 18.8% of the beds evaluated Row Labels Weighted average quality score MMR Benchmark MMR Western Cape 74,5 77,1 19,0 Gauteng 72,2 141,1 19,0 Eastern Cape 59,0 167,2 19,0 North West 73,6 179,2 19,0 Limpopo 61,4 182,7 19,0 Kwazulu Natal 71,2 185,2 19,0 Mpumalanga 58,4 194,2 19,0 Northern Cape 46,3 202,6 19,0 Free State 63,0 209,4 19,0
Changes in total beds in South Africa 1976 to 2010: public and private sector Beds 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Years Beds (pub) Beds (prv) Source: derived from Health Systems Trust data
Some features of the private health system
Medical scheme real per capita claims cost changes from 1980 to 2016 Rands per beneficiairy per annum (2014 prices) 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Year General practitioners Medical specialists Dentists 2006 2008 2010 2012 2014 2016 Dental specialists Allied and support Private Hospitals Provincial Hospitals Medicines (out-of-hospital) Ex-gratia payments Other benefits Source: Annual Reports of the Council for Medical Schemes
ICU/HC beds per 100,000 in South Africa (2016 estimate) 60,0 50,0 40,0 30,0 20,0 10,0 0,0 21,3 5,9 4,0 49,4 33,4 17,4 11,9 7,4 7,6 42,0 8,9 4,2 19,4 16,9 14,7 8,0 1,9 3,3 4,9 4,8 1,4 1,3 2,6 3,0 31,7 14,3 8,5 35,8 10,0 4,9 Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo Mpumalanga North West Northern Cape Western Cape Total ICU/HC per 100,000 RSA ICU/HC per 100,000 PUB ICU/HC per 100,000 PRV
What happens elsewhere? Country ICU/HC per 100,000 France 11,6 Switzerland 11,0 Spain 9,7 United Kingdom 6,6 Netherlands 6,4 Sweden 5,8
Index trends in private hospital beds compared to medical scheme claims data 2000 to 2017 220 200 Indices 180 160 140 120 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Total beds Acute beds ICU & HC beds Psych beds Day beds Beneficiaries Hosp costs Specialist Claims (pbpa)
Number of medical schemes Number of medical schemes 140 120 100 80 60 40 20 0 129 124 121 113 110 100 97 92 86 83 82 83 81 83 80 78 77 73 71 67 62 60 60 60 46 41 41 35 33 27 26 25 24 23 22 21 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year Open Restricted Total
Medical scheme beneficiaries (000) Medical scheme beneficiaries 10 000 9 000 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 6 836 7 127 7 478 7 875 8 069 8 316 8 526 8 679 8 776 8 814 8 792 8 865 1 930 2 077 2 527 2 986 3 253 3 516 3 766 3 919 3 929 3 914 3 871 3 925 4 906 5 050 4 951 4 889 4 815 4 800 4 760 4 760 4 847 4 900 4 921 4 940 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Year Open Restricted Total
Average age by open medical scheme (2016) Average age of scheme 60,0 50,0 40,0 30,0 20,0 10,0 0,0 Thebemed Makoti Hosmed Genesis Medimed Sizwe Discovery Medshield Suremed Bonitas Momentum Medihelp Keyhealth Compcare Resolution Fedhealth Topmed Bestmed Cape MP Spectramed Selfmed Open commercial medical scheme Average age by scheme
Medical scheme age structure by monthly risk contribution band (2016) Contrib band (risk) (Rands) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0-501 22 19 26 23 24 20 25 25 24 24 25 18 501-1001 18 16 16 15 16 15 17 17 19 20 20 18 1001-1501 22 22 22 24 23 23 21 20 20 21 22 21 1501-2001 34 35 35 35 34 30 29 29 32 33 32 31 2001-2501 35 39 44 43 45 40 35 37 41 37 36 38 2501-3001 50 45 44 41 48 53 50 43 39 42 44 47 3001-3501 49 57 51 50 46 48 48 50 54 53 55 53 3501-4001 49 54 60 63 46 46 35 53 52 55 53 56 4001-4501 50 69 64 61 58 62 59 49 49 56 62 70 4501-5001 56 64 67 58 55 58 57 58 59 5001+ 26 54 58 60 49 64 63 59 59 60 49 52 Average 32 32 31 32 32 32 32 32 32 32 33 33
Underwriting results by contribution band (2016 prices) for the 2016 financial year (Discovery Health Medical Scheme) year 0-501 501-1001 1001-1501 1501-2001 2001-2501 2501-3001 3001-3501 2005 15 178 294-57 951 059 255 314 737-1 209 590 189 2006 1 533 047 561 419 462-1 150 736 188 2007 399 492 263 925 530 650-170 866 280 2008 389 527 784 804 991 442-434 076 759-288 713 007 2009 194 565 568 880 507 890-637 713 094-294 266 816 2010-23 767 937 1 056 213 575-708 568 036-359 894 247 2011-86 872 044 1 162 869 151-805 002 624-377 951 287 2012-327 685 936 1 612 581 488-697 821 391-344 037 109 2013-131 616 267 1 973 050 385-2 226 767-463 028 120-314 914 766 2014-233 119 822 1 657 866 830 405 786 290-623 382 462-330 841 858 2015-469 663 653 1 652 357 090 365 785 600-660 736 649-348 639 776 2016-445 440 004 1 421 009 737 287 774 602-810 367 370-350 527 015 Grand Total 15 178 294-790 998 060 13 963 712 435-4 059 433 445-4 576 161 351-1 338 433 509-350 527 015 Source: Council for Medical Schemes data from schemes audited financial statements from 2005/6 to 2016/17
National health insurance bill
Key features Establishes a National Health Insurance Fund Functions Procurement/purchasing Accreditation in conjunction with the OHSC Provincial health services Private health services
WHAT PROBLEM ARE WE SOLVING IN SOUTH AFRICA TO ACHIEVE UINVERSAL HEALTH COVERAGE? Rationale DEEPLY ENTRENCHED INEQUITIES The World Health Organisation recommends that countries should spend 5% of GDP on health. South Africa currently spends 8.7% of GDP on health (2018) The private sector spends 4.5% of GDP on health but only provides care to 16% of the population. The public sector spends 4.2% of GDP on health but only provides care to 84% of the population There is no diagnostic provided that talks to the actual structural problems in the health system
The Big Idea Revenue General Taxes Household contributions Supplementary benefits Pooling/ Purchasing National Fund Medical Schemes Contract Contract Provision Public services Private services
The Big Idea Revenue General Taxes Household contributions Assumes 100% substitution of expenditure from medical schemes to public sector (zero-sum game) Pooling/ Purchasing National Fund Medical Schemes Contract Contract Provision Public services Private services
The Big Idea Revenue General Taxes Household contributions Pooling/ Purchasing National Fund Medical Schemes Contract Contract Provision Public services Private services
Financing according to the MOH We made a mistake with the figures. I then went for advice to the World Bank and the World Health Organisation and they asked why am I trying to do this, it can t be quantified by any human being because the costs are so variable. (Minister of Health)
The following are the financing issues not addressed In developing countries general tax revenues cannot fund a single system for all it will hit a limit insufficient to offer universal coverage Additional revenue needs to be mobilised through Contributory social insurance schemes Contributory regulated private health insurance usually mandatory, risk-equalised and government subsidised with a package of services that must be guaranteed and underwritten by private actors rather than the government
The package what is to be covered? Public sector - funded exclusively by general taxes Supply-driven what is provided is the package subject to treatment protocols and referral systems Contributory/insurance - funded mainly by own contributions + Explicit positive and = negative lists Risks Prices not managed Service quality not transparent and not managed Public sector demand exceeds supply Insurance systems supplier induced demand Poor contracting The system of guaranteed protection (of the package) requires constant review, which takes account of societal priorities and technical considerations no such reviews are presently carried out and the NHI Bill does not suggest it understands the distinction between a supplydriven and an insurance package
Key proposals with systemic implications Governance of the NHIF and the OHSC Effectively everyone appointed by the MOH Central hospitals to fall under the national MOH
Transitional arrangements Phase 1 Phase 1 encompassed a period of five years from 2012 to 2017 and included testing of effective health system strengthening initiatives. There is no evidence of any system strengthening initiatives
Phase 2 will be for a period of five years from 2017 to 2022 and will - continue with the implementation health system strengthening initiatives, including the alignment of human resources with that which will be required under the Fund include the development of National Health Insurance legislation and amendments to other legislation include the undertaking of Initiatives which are aimed at establishing institutions that will be the foundation for a fully functional Fund will include the interim purchasing of personal healthcare services for vulnerable groups such as children, women, people with mental health disorders, people with disability and the elderly
Phase 3 will be for a period of four years from 2022 to 2026 and will include- the continuation of Health systems strengthening activities on an ongoing basis the mobilisation of additional resources as approved by Cabinet the selective contracting of healthcare services from private providers
Building blocks of a costing Rands per capita Private contributions General tax funded public sector package Tax credit Low High Income
Building blocks of a costing approach The enhancement of the per capita expenditure on public sector users, even if realised, is very unlikely to materially improve service quality by much while retaining a strong demand for those with adequate incomes to demand private coverage Rands per capita Additional funding? Private contributions (how would the private sector topup an in-kind subsidy?) General tax funded public sector package Low High Income
Health market inquiry
Key findings Substantial market failure on both the funder and provider sides of the system Significant market concentration Medical schemes Medical scheme administrators and related corporate groups Hospital groups
Funder (administrator) profitability Sustained high profit margins Discovery at multiples of other administrators! No disruptive market innovation despite high costs and sustained high profits Supplier induced demand significant, with funders showing little interest in addressing the problem (retaining ffs) Providers and funders don t compete on features that matter to consumers (such as costs and quality)
Market lacks transparency for consumers Scheme benefits complex No information on health provider quality Brokers not incentivised to properly advise members HPCSA ethical rules represent a barrier to innovation
Remgro 28.2% RMBH 42.0% Mediclinic 30.3% 15.0% Royal BHPL 15.0% 33.9% FRG 13.5% RMIH 8.0% GEPF Ordinary shares of unknown proportion 10.4% 8.6% MMI HL 25.2% 25.8% DHL MM-Health MMI-G/risk Majority shareholder D-Health D-Insure (ST) MetrP-Health MMI-CareC D-Life (LT) D-Life CI MMI- Wellness D-Vitality
AfroCentric Investment Corporation 71.3% Sanlam Wealthsmiths 28.7% AfroCentric Health Assets Formerly Lethimvula 94.1% AfroCentric Health 100.0% Pharmacy Direct Pharmacy dispensing 100.0% Curasana Wholesaler Pharmacy and medical products wholesaler 28.0% Activo Health Sells medical products to pharmacies 100.0% Medscheme Bonitas marketing Dedicated broker arm for Bonitas open scheme administered by Medscheme Aid for Aids Helios IT solutions Bonitas Marketing was previously owned by Bonitas and sold to Mescheme following regulatory action by the CMS
Recommendations Proposals take the form of a package and partial implementation not supported Risk adjustment mechanism on basic benefits Basic and supplementary benefits to achieve easy to understand standardised benefits Reinsurance (social) for start-up schemes Efficiency discounts Contribution subsidy for income subsidy (converted from tax credit)
Brokers Opt-in system (annual) Explicit contracts with members Members free to choose their broker Only pay if a broker is chosen Tied brokers earn less Schemes must be able to deal directly with members if members so choose without an additional fee
Supply side regulator for healthcare (SSRH) Supply side regulator for healthcare (SSRH) Licensing unit Economic value assessment unit Health services monitoring unit Health services pricing unit
Outcomes measurement and reporting Outcomes Measurement and Reporting Organisation (OMRO) To be functional within 6 years OMRO must be strictly independent from government
Tariff setting for fee-for-service tariffs Regulated prices with meaningful consultation Multilateral negotiations (Coding systems public domain and determined by the SSR) Bilateral negotiations (non-ffs)
The array of contracts in the private health system Price only (ffs) Purchaser-driven contracts Price + Demand Price + Demand + Quality Medical schemes/ administrator Consumer-driven contracts Price only (ffs) Price + Demand Price + Demand + Quality Only this part of the system would have prices determined through multilateral negotiations Industry has full discretion to enter into value-adding bilateral contracts
Impact of the Risk Adjustment Mechanism Rating bands (number of) B Supplementary benefits 7 Mandatory benefits 6 5 4 3 2 1 A Removal of demographic competition C Current system, with proliferation of options at varying levels of coverage 0 1 2 3 4 5 Medical scheme options/plans differentiated by levels of coverage in order to indirectly risk rate (number of) A, B, and C reflect stable equilibrium points that fully accommodate for risk differentials between schemes
Change in organisation of medical schemes benefits heightening productive competition Risk group 1 Risk group 2 Risk group 3 Risk group 4 Supplem. benefit 1 Supplem. benefit 2 PMB PMB PMB PMB Mandatory benefit Non-transparent (current) Transparent (with revised regulatory framework)
A complete framework not in recommendations Mandatory reinsurance system pooling increasing opportunities for market entry of small insurers without sacrificing opportunities for purchasing at scale Mandatory reinsurance Retrospective reimbursement for relevant catastrophic claims up to a fixed value, where incidence for a diagnostic category exceeds what is predicted by the REF Reinsurance reimbursement Expected cost before REF Expected cost after REF Actual cost experienced
Mandatory package can be differentiated based on efficiencies, with cost savings available to consumers (in MSAB not HMI) Medical scheme chooses the providers but information on provider quality must be made explicit (i.e. scheme must make value-based choices to attract membership) Risk equalised contribution/pric e per member (P) P1 P2 P3 Standard Network 1 Network 2 Competition generated between networks, network arrangements and free consumer choice) Consumers choose providers based on transparent indicators of value (cost and quality) (providers can provide cash rebates/discounts to attract consumers
Strategic way forward? Although the currently proposed NHI is a notional option, it cannot achieve any meaningful health systems objectives in the foreseeable future
For arguments sake lets say there are two options Option 1 the NHI as proposed model for universal health coverage Consolidates and centralises the pooling (vertical and horizontal) and purchasing/procurement for the basic package of services for the entire population (does not address structural failures of the public and private systems; centralises functions that should be decentralised; fails to address governance framework) Option 2 the hybrid NHI model for universal health coverage Strategic pooling at the national level Decentralised purchasing through Provinces but with enhanced governance Medical schemes as proposed by the Health Market Inquiry Structural reforms targeted at systems weaknesses (governance for decentralisation in the public sector; in the private sector removal of competition on unproductive market features + enhanced competition on productive market features)
Option 2 NHI designed on uniformity of the subsidy regime Revenue General Taxes Household contributions Min benefits Pooling Risk adjusted resource allocation Contribution subsidy Supplementary benefits Conditional allocations Risk equalisation Purchasing Provinces Medical Schemes Contract Contract Provision Public services Private services
overnment tier Public health system architecture Current NHI proposal Feasible and desirable Resource allocation (not health-specific) Centralised resource allocation Centralised resource allocation National All purchasing Strategic purchasing and catastrophic cover Private Private Provincial Resource allocation Purchasing Sub-regional resource allocation Purchasing Public Public Public Private Resource allocation Local Purchasing Public Public Public
Discussion
Medical schemes amendment bill This is provided as additional material as it is too long for the talk. It can be referred to if questions arise. In large part the Health Market Inquiry supersedes what is contained in the disjointed MSAB. It is however noteworthy that the Minister s briefing was at odds with the actual content of the MSAB raising serious questions about the quality of the policy process
Medical Schemes Amendment Bill what the Minister said The first amendment is to abolish what has come to be known as copayments Furthermore, the data at our disposal shows that medical schemes are holding reserves of close to R60 billion that are not being used. Granted, there is a statutory requirement that medical schemes should have 25% of their income in reserve. This is to cater for emergencies. But presently the R60 billion is equivalent to 33% reserves, which means unnecessary accumulation at the expense of patients. These huge reserves were accumulated partly through high premiums but also by introducing the co-payments such that medical schemes avoid having to pay or even dip into the reserves if the situation demands. Furthermore the Council for Medical Schemes (CMS) is busy reviewing this statutory requirement of 25% with a view to releasing enough money for patients rather than holding a lot of reserves while patients suffer the hardships. The MOH fails to understand the nature of a reserve relative to a current liability such as a benefit payment
The second amendment is to abolish the practice of using brokers within the medical scheme environment We are aware that most of the work supposedly done by brokers is actually done by the Council for Medical Schemes - the statutory body. (MOH) We believe that brokers play an important role in advising members but that their interests should be aligned more closely to those of applicants/members. (HMI) Brokers are not abolished in the MSAB!