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Do you think you know everything there is to know about medical schemes and other types of medical cover in South Africa? Angelique Ruzicka speaks to medical scheme experts to find out what people are generally not aware of when it comes to medical cover options. Here are 15 intriguing facts:
Every medical scheme must have a minimum solvency ratio according to the CMS (Council for Medical Schemes) of 25%. “Schemes that do not comply with this regulation must put measures in place to increase their solvency and are closely monitored by the CMS,” says Alan Fritz, Bestmed’s executive head of marketing, sales and distribution.
Solvency ratios are used to measure the ability of a company to meet its long term debts, effectively measuring the ability of the firm to survive in the long run. “The increase of members of a medical scheme should not impact the solvency negatively, instead this should improve the solvency levels as there is an increase in medical scheme contributions,” says Gavin Griffin, the business unit head for healthcare at Aon Hewitt.
Scheme tariffs are in place due to the deregulation of the NRPL (National Reference Price List) tariffs. “The NRPL tariff was a guideline set out by the Department of Health for healthcare professionals to charge consultation fees according to the guideline. Since the removal of this national guideline, healthcare professionals may ask any tariff that they feel is reasonable for their services. Medical schemes now have individual scheme tariffs according to which they compensate healthcare professionals. Should a provider ask more than the Scheme tariff, the member will have to pay the difference from their pocket,” explains Fritz.
Medical schemes are not for profit entities. “They are like co-operatives so all member’s money is pooled into a ‘risk pool’ and money is paid out according to who needs it,” says Heidi Kruger head of corporate communications of the Board of Healthcare Funders (BHF).
The savings account portion is your own money and doesn’t form part of the risk pool. The risk pool is the money that is pooled every month from contributions.
Most medical schemes have an ex-gratia committee. “If there is something out of the ordinary that they don’t cover or they haven’t covered something in full and you can’t afford it there is an ex gratia committee that will look at isolated cases individually,” says Kruger.
Medical schemes are not allowed to ‘risk rate’. “They can’t charge you more for pre-existing conditions. They can however impose late joiner fees and waiting periods to protect other members in the scheme. This is because they work on a principle of cross subsidisation where the young and healthy pay for the old and the sick,” explains Kruger.
Medical schemes don’t keep all your money. Peter Jordaan principal officer of Fedhealth illustrates how his company deals with the risk pool money: “Our goal is to pay out 85% of the money we get. We have no shareholders. The other 15% goes to maintaining the 25% solvency reserves that we need and the rest goes toward administration costs.”
Every medical scheme has to cover a certain number of prescribed minimum benefits by law. These include 272 hospital based conditions and 25 chronic conditions. Hospital plans have to cover these too. Check out the BHF’s website for more information on which PMB and chronic illnesses are covered.
Medical schemes have to go through a budgeting process every year. “They will look at what conditions have cost in the past year and will base contribution increases on that,” says Kruger.
Medical schemes are not allowed to increase contributions by more than CPI (Consumer Price Index) plus a certain percentage, which is provided the regulator.
All new rules introduced by the medical schemes have to go through the regulator for approval first.
Not many people know about what gets paid out of the risk pool and what gets paid out of savings, points out Jordaan. Not all schemes cover GP’s out of savings, for example. “With Fedhealth if you go to a GP will it come out of the risk pool. Other schemes make you pay for it out of your savings component,” says Jordaan.
Closed medical schemes may not be joined by any man on the street, while open medical schemes may grant access to any member.
There are a number of different medical offerings out there, which include:
Hospital Plans: only pay in hospital procedures. Have no out of hospital benefits like consultations etc.
New generation Plans: have in hospital benefits and also a savings plan. All out of hospital expenses e.g. consultations and medications must be paid from the savings money.
Traditional Plans: have in hospital benefits and have benefits structured with limits, for example: consultations are limited to R1, 000 per annum per beneficiary.
Hybrid: these plans have in hospital benefits and a mixture of new generation and traditional benefits.