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News Article : High Court dismissal of BHF application has profound implications for medical schemes industry
Category: Healthcare Insurance : Medical Schemes
Author:Edited by ITInews
Email:[email protected]
Posted:11 Nov 2011

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Triumph of a fanciful ideology on healthcare financing that lacks sustainability

The High Court dismissal this week to have Prescribed Minimum Benefits (PMB) paid at medical scheme tariffs rather than actual cost could have profound implications for the medical schemes industry.

This is according to Michael Settas, director of the Healthcare Portfolio at Pollen Interactions, a specialist healthcare PR agency.

The Board of Healthcare Funders (BHF) brought an application before the Gauteng High Court seeking such relief whilst the industry regulator, the Council for Medical Schemes (CMS), opposed the application.

"The CMS has declared the dismissal a victory for consumers - but is it really?  It is a well-known fact that the typical supply and demand counter balances evident in functional free markets are not present in healthcare markets - and the dismissal of the BHF's application will make this imbalance even worse."

"Under these circumstances regulatory provisions should be seeking price control mechanisms - not offering unfettered price determination to the very same suppliers of the service," says Michael.

Current regulations under the Medical Schemes Act permit schemes to establish networks of preferred doctors (called Designated Service Providers or "DSPs") who deliver medical services to their members at a negotiated price.

"These regulations also dictate that if a scheme does not have a network of DSPs or if these DSPs are not readily available to members within a reasonable distance or time frame, then the member is free to use any other provider - and now, if this service is a PMB, medical schemes must pay these accounts at cost and not the scheme's tariff level.

"The crux for schemes without well-established networks is there now exists little incentive for doctors to enter into a DSP arrangement since the dismissal of the BHF's application offers providers a blank cheque book."

"Worse still is the incentive for current DSPs to withdraw from existing networks and rely on the regulations to charge fees for PMB services at any level," warns Michael.

"This can hardly be described as a victory for consumers but rather the triumph of a fanciful ideology on healthcare financing that lacks sustainability."

"The inflationary cost pressures of this ruling are simply going to be passed onto consumers in the form of higher medical scheme contributions.

"This ironically comes at a time when Health Minister Aaron Motsoaledi is talking about managing the already unacceptable cost increases in the private sector. It is surely incongruous that all the noble intentions shown by the good Minister could be undone by a legal challenge from within his own department," concludes Michael

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