Opportunities and Challenges for Public sector Medical Insurance Schemes in a Private Sector Ms B Mfenyana 06 October 2016 Second colloquium

Opportunities and Challenges for Public sector Medical Insurance Schemes in a Private Sector Ms B Mfenyana 06 October 2016 Second colloquium

Contents Purpose GEMS Background Mandate, Mission, Vision, and Values Strategic Focus Critical Aspects as a Medical Aid Governance and Operational structure Scheme Statistics GEMS Impact GEMS Options Recommendations Basic benefit package NHI work streams Success Measures Conclusion

Purpose To discuss the opportunities and challenges for the public sector Medical Scheme in the private sector

ABOUT GEMS

Challenges The public service is the country's largest employer with approximately 1.3 million employees In fulfilment of its obligation as an employer, the public service provides its employees with a remunerative package structured to include and cover: o Retirement/Pensions (GEPF/GPAA) o Housing Benefits (Allowance) o Medical Benefits (Subsidy) Prior to 2005, one of the challenges faced by the Employer was that a significant and growing number of its employees were unable to gain entry into existing medical schemes due to the high cost structure o Toaddressthischallengeitwasresolvedtoestablishasinglerestricted membership medical scheme to cover public service employees

Our Mandate, Mission, Vision and Values To ensure that there is adequate provisioning of healthcare coverage to public service employees that is efficient, cost-effective and equitable; and to provide further options for those who wish to purchase more extensive cover. Mandates Vision To provide all public service employees with equitable access to affordable and comprehensive healthcare benefits. An excellent, sustainable and effective medical scheme for all public service employees. Values Mission Excellence Member-centricity Integrity Value for money Innovation

Critical Aspects as a Medical Scheme Scheme Members Advisors Actuaries Auditors Investment Contributions Bank account Benefit options Claims Managed care Administrators o Scheme rules o Registrar and Council o Medical Schemes Act

Governance and Operational Structure Governance, Direction & Oversight Employer Employees Execution of Strategy & determination of Operational deliverables Members Board of Trustees Principal Officer Executive & Head Office Committees Support Services Advisory, Actuaries, Auditors Investment Performance of Operational Functions OUTSOURCED SERVICES Administration o Enrolment and Registration o Benefit Management and Claims Payment o Member servicing (Contact Centre Support). Managed Care o Authorization Management o Disease Management o Claims Adjudication

GEMS Overview Average age of Scheme beneficiary 50% Level 1 5 employees 30.8 Medical Scheme beneficiaries 1.8m 92.63% Claims ratio

GEMS Impact GEMS has realised significant and sustained growth and is now the second largest medical scheme in South Africa 2007 2009 2011 2013 2015 Over 1,8 million beneficiaries 1 in 5 beneficiaries 1 in R10 spent on healthcare continue

GEMS Impact Hospital centric care is dominant In and out of hospital spend Spend by discipline 10% 43% 38% 39% 13% 19% 38% Hospital spend Hospital related spend Out of hospital spend Nearly 60% of expenditure pertains to hospital or hospital related costs Family Practitioners Specialists Hospitals Other Only 10% of spend pertains to family practitioners (which is higher than the industry average of 7,0%)

Opportunities

GEMS Options

Strategic Focus Activist Purchaser and Payer of Healthcare Services Place emphasis on the Healthcare outcomes Increasingly focus on the management of Overall Population Health Achieve healthcare delivery that is integrated and coordinated

Sapphire Option. Unlimited Family Practitioner Consultations Family Practitioner Network based Referral Based system to Specialist Tariffs on Network agreements Out of Hospital Benefits Consultations Unlimited Family Practitioner Consultations required from Preauthorization 5th required from 5 th Referral Referral from from Family Family Practitioner to to Specialist Acute Acute Medication Medication Prescribed by Prescribed FamiUnlimited by Family used Practitioner Subject to formulary Network Pharmacy used Optometry Subject to formulary Unlimited Optometry Pathology and Radiology Ordered Unlimited by treating Pathology Family and Practitioner Radiology or Specialist Ordered by treating Family Practitioner or Subject for formulary Specialist Subject for formulary. Out of Hospital Benefits In hospital Benefits Unlimited hospitalization at State Facility Contracted Hospitals Only Prescribed Medical Benefits

Basic benefits package Introduction of a basic benefit package across the NHI and existing healthcare funders during the period where medical schemes will be required to offer supplementary benefits Basic benefit package to incrementally enhances as and when it is feasible to do so

Support to NHI work streams Contracts Accreditation and contracting of primary healthcare providers Strategic Sourcing Develop a recommended procurement policy and system for the central and strategic sourcing of goods and services Value based Healthcare Key principles of value based care are that are key to a successful network are cost efficiency, quality and access Provider Network Management Implementation of disease management programmes Interdependencies with Hospital tariff negotiations

Eastern Cape Project Objectives Legal support to future litigation against the EC DOH estimated at R14 Billion To increase the revenue generation for services rendered to medical aid patients Proposed Interventions Call Centre and Complaints Management Medical Support Progress to Date Engagement session between GEMS and EC DoH problem definition Briefing session with GEMS Service Providers project scope definition Pilot the revenue generation with Mthatha General Hospital Review of case files from EC DOH R Legal Support Case Management Revenue Generation

Success Measures Accessibility Monitoring of Outcomes Monitoring and Evaluation Revenue generation Stakeholder Management Consumer Education

Conclusion GEMS believes that the best way to establish a comprehensive NHI benefit is by establishing a basic benefit package. The basic benefit package can be incrementally enhanced as and when it is feasible to do so. GEMS experience with the Sapphire option can provide a template on which the basic benefit package can be constructed.