02 - Medical Schemes (Legislative and Governance Framework)

Question 1

Why have we adopted community rating as opposed to risk-rating?

Answer 1

The problem: risk-rating = when a medical scheme determines the contribution which a member is required to pay on the basis of his/her age and/or health status (outlawed in South Africa)

The solution to risk-rating: community rating = a principle enshrined in the Medical Schemes Act to prevent risk-rating by medical schemes by prescribing that members on the same benefit option must pay the same contribution, regardless of their age and/or health status

Question 2

What is the purpose of the Medical Schemes Act and Regulation?

Answer 2

The Medical Schemes Act and Regulations provides the legislative framework and control with regards to medical schemes.

It gives expression to certain health policy principles.

The Act also:

• Aims to improve governance and management of medical schemes;
• Aims to improve and maintain the solvency of medical schemes;
• Prohibits any unfair discrimination, either directly or indirectly

Question 3

What are the aims of the Medical Schemes Act and Regulation?

Answer 3

• To consolidate the laws relating to registered medical schemes
• To make provision for the registration and control of
  medical schemes;
• To provide for measures for the co-ordination of medical schemes;
• To provide for the establishment of the Council for Medical Schemes;
• To provide for the appointment of a Registrar;
• To protect the interest of members;
• To provide for incidental matters.

Question 4

What are the regulations of the Medical Schemes Act?

Answer 4

Internal

• Administrative Requirements
• Accumulated Funds and Assets
• General Matters
• • Annexure A : Prescribed Minimum Benefits

Members

• Contribution and Benefits
• Waiting Periods and Penalties

External Stakeholders

• Provision of Managed Care
• Administrators of Medical Schemes
• Conditions to be complied with by Brokers

Question 5

What/Who is the CMS (Council for Medical Schemes)?

Answer 5

The CMS is a statutory body.

It is the regulatory authority responsible for overseeing the medical schemes industry in South Africa.

It administers and enforces the Medical Schemes Act 131 of 1998.

An autonomous public agency funded through levies charged to medical schemes.

It is accountable to the Minister of Health who is responsible for national health matters.

Question 6

What is the structure of the CMS?

Answer 6

Governance
Board appointed by Minister of Health
-Chairperson
-Deputy Chairperson
-13 members

Management

• Registrar – Executive Head
• Executive management

Question 7

What are the functions of the CMS?

Answer 7

Members

• Protect the interests of medical scheme members at all times
• Investigate complaints and settle disputes

Medical Schemes

• Control and co-ordinate the functioning of medical schemes
• Collect and disseminate information about medical schemes and private health care in general.

General

• Make recommendations to and advise the Minister on any matter concerning medical schemes and quality of care
• Make rules for the purpose of the performance of its functions and the exercise of the Council’s powers
• Perform any other functions conferred on the Council by the Minister or by the Act.

Question 8

How has the approach to risk changed for the CMS?

Answer 8

Previously medical schemes were able apply risk-rating practices;

Business model shifts from:
-Focus on avoidance and exclusion of risk
to
-Focus on the effective management of risk.

Therefore:
Integrate sound financial management with sound clinical management i.e.
-Clinical intervention are clinically appropriate
-Cost-effective

Question 9

What are the Functions and Powers of the Registrar?

Answer 9

Registration

• Registration of Medical Schemes
• Deregister a medical scheme

Information

• Request information on quality of health services
• Do an inspection on affairs of a medical scheme
• Request auditors reports

Accreditation:

• Administrators
• Managed Care Organizations
• Brokers

Question 10

What is a Medical Scheme?

Answer 10

A legal entity whose reason for being is to provide for access to health services for its members in the private health sector in South Africa.

Registered in accordance with the provisions made within the Medical Schemes Act, Act 131 of 1998 as amended.

A medical scheme operates as a non-profit organisation.
- In terms of section 26(1) of the Act the medical scheme, at registration, “becomes a body corporate capable of suing and being sued and of doing or causing to be done all such things as may be necessary for or incidental to the exercise of its powers or the performance of its functions in terms of its rules.”

Question 11

What is the business of a Medical Scheme?

Answer 11

The business of undertaking liability in return for a premium or contribution –

1) To make provision for the obtaining of any relevant health service;
2) To grant assistance in defraying expenditure incurred in connection with the rendering of any relevant health service; and

3) Where applicable, to render a relevant health service,
- either by the medical scheme itself,
- or by any supplier or group of suppliers of a relevant health service
- or by any person, in association with or in terms of an agreement with a medical scheme.

Question 12

What is the definition of a Relevant Health Service?

Answer 12

Any healthcare treatment of any person by a person registered in terms of any law, which treatment has as its object –

• The physical or mental examination of that person;
• The diagnosis, treatment or prevention of any physical or mental defect, illness or deficiency;
• The giving of advice in relation to any such defect, illness or deficiency;
• The giving of advice in relation to, or treatment of, any condition arising out of a pregnancy, including the termination thereof;
• The prescribing or supplying of any medicine, appliance or apparatus in relation to any such defect, illness or deficiency or a pregnancy including the termination thereof;
• Nursing or midwifery.

Keywords

• Physical/MEntal
• Diagnosis/Treatment/Prevention
• Defect/Illness/deficiency
• Advice/Prescribing medicine
• Pregnancy including termination there

Question 13

How do you register a Medical Scheme?

Answer 13

Application in writing

• Rules
• PO and Board
• Administrator

Guarantees and guarantee deposits

Detailed business plan

Members: 6000 within 3 months

Each medical scheme is also governed in terms of its own rules.

Question 14

What is the nature of the rules of the Medical Scheme?

Answer 14

Each scheme is also governed in terms of its rules

• which are also called its constitution
• which form the basis of the contract that members conclude with their scheme.

Rules of schemes become valid only once they have been registered by the Office of the Registrar at the Council for Medical Schemes

Section 32 of the Act makes the rules of the scheme binding on the member, the scheme and its officers.

Question 15

What are the categories for Medical Scheme rules?

Answer 15

The governance and management

Rules regarding membership

Rules regarding Benefits

Rules regarding reimbursement for services

Rules regarding for mechanisms to settle complaints or disputes

Question 16

What does section 29 of the Medical Schemes Act stipulate?

What does the Medical Schemes Act say about the rules of a medical scheme?

Answer 16

Section 29 of the Act stipulates what should be provided for in the rules.

Appointment and Removal of officers

• The appointment or election of a Board of Trustees to govern the scheme;
• The appointment of a Principal Officer by the Board of Trustees;
• The removal of officers;

Members

• The terms and conditions applicable to the admission of a person as a principal member and his/her dependant(s);
• The manner in which complaints and disputes are to be settled;

Benefits

• The scope and level of benefits;
• The scale or tariff for the payment of benefits.

Question 17

What is important for members of medical schemes to know?

Answer 17

Governance - To understand how the chosen medical scheme are governed. Know the responsibilities of the Board of Trustees.

Benefits - Members need to study the schedule of benefits that the scheme provides

Contributions - Should familiarise themselves with the table of contributions in accordance with the selected benefit options.

Exclusions - Note the conditions and/or procedures that the scheme does not cover.

Disputes - Note the provisions of the rules regarding the convening of a disputes committee to resolve disagreements between the scheme and its member(s).

Question 18

Where do members find the scheme rules?

Answer 18

Once a person has been admitted as a member of scheme, the scheme must give the member a copy of its rules and the schedule of benefits.

Dependants may ask the scheme for these documents.

The Act gives members the right to demand the rules of any scheme upon paying a fee to the Registrar of Medical Schemes.

Members are also entitled to inspect the rules of their scheme at the Office of the Registrar.

Many schemes provide their rules to members in a condensed form, but members should insist on the unabridged version of the rules, particularly when they need to make an important decision relating to health and/or finances.

Question 19

What are model rules?

Answer 19

Developed by the CMS

• They are there to provide clarity on the relationship between a scheme and its members
• Aims to provide best practice guidance for complying with the Medical Schemes Act in order to nurture an industry-wide culture of compliance.

The rules also aim to foster co-operation among medical schemes and other regulated entities by standardising submissions to the CMS on matters such as governance, contributions and benefits.

To assist stakeholders in a practical way on matters of compliance with:

• The Medical Schemes Act 131 of 1998
• Common law provisions
• Sound corporate governance practices
• Various internal policy decisions taken by the Office of the Registrar.

Question 20

What changes were made recently to the model rules and why?

Answer 20

The revision of the model rules was necessitated to a large extent by:

The promulgation of the Consumer Protection Act 68 of 2008, Circular 28 of 2011.

• The CPAct Applies to the medical scheme industry as well
• CMS tries to align provisions of Medical Schemes Act with that of CPAct.

Circular 5 of 2012 (on personal medical savings accounts)(Circular 38 of 2011)

• “All interest and other income earned is to be paid to members or accrued to Savings Account balances.
• No portion of the investment income earned on savings investments may be retained by the scheme for any reason or purpose.”

Question 21

What are the key principles of Medical Schemes?

Answer 21

Open enrolment / Open access – (Sec. 29.3)

Community rated – (Sec. 29.1 n)

• Income
• Number of dependents
• Child dependant
• Cross-subsidization
• No rebates, bonuses, dividend

Prescribed Minimum Benefits - (Sec. 29)

• 27 common chronic conditions
• 271 Diagnosis and Treatment Pairs

Non-mandatory

Question 22

What are factors that a Medical Scheme may not use for underwriting purposes?

Answer 22

Age
Gender
Health Status
Where you live

The principle is in support of

• universal access/coverage,
• social solidarity,
• equity.

Question 23

What does sec 20. of the Medical Schemes Act say?

Answer 23

Sec. 20: Prevents any person from carrying on the business of a medical scheme unless registered in terms of the Act;

Question 24

What does sec 21. of the Medical Schemes Act say?

Answer 24

Sec.21: Prohibits anyone from using the designation “medical scheme” to mislead people into believing that a business is a medical scheme unless it is;

Question 25

What does sec 21 A. of the Medical Schemes Act say?

Answer 25

Sec.21A: makes it an offence to market, advertise or in any way promote a business in a manner that is likely to create the impression that the person conducts, will conduct or is entitled to conduct the business of a medical scheme;

Question 26

Membership conditional on purchase of non medical scheme product.

Answer 26

The MSA prohibits making membership conditional upon the participation in or purchasing of any product or service provided by a person other than a medical scheme in terms of its rules.

Question 27

What types of Medical Schemes are there?

Answer 27

Open medical scheme
- Open for membership to any member of the public.

Restricted medical scheme
The rules of which restrict the eligibility for membership to:
- Employment or former employment or both employment or former employment in a profession, trade, industry or calling;
- Particular class of employers;
- Profession, professional association or union;
- Any other prescribed matter.

Question 28

What is the Solvency Ratio of a Medical Scheme?

Answer 28

MSA - Regulation 29

Minimum accumulated funds to be maintained by a medical scheme.—

(1) In this Regulation “accumulated funds” means the net asset value of the medical scheme, excluding funds set aside for specific purposes and unrealised non-distributable reserves.
(2) Subject to sub-regulations (3), (3A) and (4), a medical scheme must maintain accumulated funds expressed as a percentage of gross annual contributions for the accounting period under review which may not be less than 25%.

> 25% of gross annual contributions for the accounting period under review

Question 29

What are the requirements for having multiple benefit options within a Medical Scheme?

Answer 29

MSA makes provision for registration of different benefit options

Each option shall be self-supporting in terms of:

• Membership;
• Financial performance and need to be financially sound
• Include the Prescribed Minimum Benefits
• Will not jeopardise the financial soundness of any existing benefit option

Schemes allow movement of members between options once a year

• 3 months written notice
• Some exceptions

Question 30

What is the structure of a Medical Scheme Benefit?

Answer 30

Hospital Plan

• With PSA (New generation) (PSA = Personal Savings Account)
• Without PSA

Traditional options

• Benefits from risk
• Day-to-day cover
• Options for lower Income
• Networks/Limited choice

Above Threshold cover

• Richness of benefits
• Cost per option
• Limits
• Choice

General structure

• Day to day expense
• PSA (Personal Savings Account)
• Major Medical Expenses
• Above Threshold

Question 31

What are the classes of benefits?

Answer 31

Risk benefits – paid from common risk pool

• PMB
• Hospital
• Other

PSA (Personal Savings Account)

Above threshold benefits
- Self-payment gap

Question 32

Briefly describe the different options available in GEMS?

Answer 32

Sapphire - Was specifically designed to be inexpensive and it achieves this by providing out-of-hospital care at private facilities and in-hospital cover at public facilities.

Beryl – Entry level cover by DSP. Beryl provides in-hospital cover at both public and private facilities.

Ruby - Ruby offers members a savings account for day-to-day medical expenses as well as a hospital plan.

Emerald - The traditional option and has been designed to resemble the medical scheme plan most public service employees were enrolled on prior to the establishment of GEMS.

Onyx - Onyx is the top of the line, comprehensive option.

Question 33

How does one use benefit characteristics in Benefit Option Design?

Answer 33

Nature of cover: Financial benefit

• Medical Scheme Rates vs. Private Provider Rates
• Internal sub limits or other limitations

Amount of Cover: Richness of benefits
- Unlimited vs. fixed annual amount

Freedom of choice

• Preferred providers and Designated service Providers
• Capitated arrangement vs. choice of facility

Note oncology, organ transplants, renal/haemo dialysis, specialised dentistry, internal and external appliances

Question 34

What is a PMSA (Personal Medical Savings Account) and how does it work?

Answer 34

The personal MSA is literally a savings accounts linked to the medical scheme risk benefits but where there is no cross-subsidisation and the member decides how to use those funds.

This benefit represents self-funding by members for mainly day-to-day healthcare expenses.

MSA funds are used to cover discretionary benefits; this means that members with a benefit option with an MSA, exercise discretion on how the available funds in their savings accounts are used to pay for relevant healthcare services for themselves and/or their dependants.

At the end of each financial year, the member’s unused funds are carried over to the next financial year.

Question 35

What are the restrictions on a MSA?

Answer 35

May not amount to more than 25% of the total gross contribution per financial year in respect of each individual member of the medical scheme;

Gross allowed to accumulate

Shall only be used to purchase or reimburse those relevant health services which do not form part of the PMB as defined in section 29(1)(0) of the Act;

No portion for PMB conditions funded from MSA – to ensure coverage for conditions where the social benefits exceeds the social costs;

Transferable to other MS.

It may NOT be used offset contributions;

It can be used to offset debt owed by the member to the medical scheme following that member’s termination of membership of the medical scheme.

Question 36

What happens to a members PSA credit balance if they decide to leave the MSA?

Answer 36

Shall be transferred to another medical scheme or benefit option with a MSA when such member changes medical schemes or benefit options.

Must be taken as a cash benefit, subject to applicable taxation laws, when the member terminates her membership of a medical scheme or benefit option and then

• Enrols in another benefit option or medical scheme without a MSA;
• or Does not enrol in another medical scheme.

Question 37

What are EDO’s (Efficiency-Discounted Benefit Options)?

Answer 37

The contributions of these options are determined based on the healthcare providers available to members that choose that specific option.

This means access for medical services are limited to networks of providers (doctors, dentists and hospitals).

Through these negotiated arrangements between providers and the medical schemes, efficiency gains are generated that makes it possible to raise a lower contribution rate.

Because this practice is in conflict with the principle that contributions may only be determined based on income and family size or both, these EDO need exemption from Section 29(1) of MSA from the CMS before they can operate.

Question 38

What are the main sources of revenue and the main areas of expenditure for a medical scheme?

What does a medical scheme do with its profits/loss?

Answer 38

The revenue of a medical scheme

• Member monthly contributions
• Investment income

The expenses of a medical scheme risk pool

• Claims from cost of care (±85%) = R118.8 billion
• Cost of managing the medical scheme (±15%)

Profit/Loss

• Any “profit” will be accumulated as reserve to the benefit of members.
• Any “loss” will reduce the reserve of the medical scheme (and therefore) members’ accumulated reserve.

Question 39

Under what conditions will a medical scheme pay for a benefit?

Answer 39

• For a relevant health service
• To a duly registered health professional
• With a registered practice number
• If the rules make provision for the benefit
• If funds are available
• If all the provisions for codes and information on the account are correct.

Question 40

What are non-healthcare costs?

Answer 40

These costs are represented by:
- Administration fees
- Managed Care fees
- Broker commissions
- Bad debt

Currently, it represents on average 16% of gross contribution income while the Council has set a target of 10%.

Question 41

What are the membership requirements and entitlements for joining a Medical Scheme?

Answer 41

Open enrolment

Right to admission

Continuation membership

Employer group moves

Waiting periods

Late joiner penalties

Pro-ration of benefits

Question 42

What is the definition of a member in the context of a medical scheme?

Answer 42

“Member” means:
A person who has been enrolled or admitted as a member of a medical scheme, or who, in terms of the rules of a medical scheme, is a member of such a scheme.

Foreign students need proof of medical scheme cover.

Question 43

What is the definition of a dependent?

Answer 43

Spouse or partner ;

• Child under the age of 21 or older;
• A child who is dependent upon the member due to a mental or physical disability
• Immediate family in respect of whom the member is legally liable for family care and support;
• Such other persons who are recognized by the scheme as dependants.

Immediate family:
Mother, father, brother or sister of the member.

The scheme concerned may require proof of such dependency and appropriate additional contributions in respect of such extended cover must be expected.

Question 44

Under what conditions will a Medical Scheme suspend or cancel a member’s membership?

Answer 44

A medical scheme cannot cancel or suspend a member’s membership or that of his dependents except on the ground of:

• Failure to pay, within the time allowed in the rules of the medical scheme, the monthly membership contribution;
• Failure to pay any debt owed to the medical scheme;
• The submission of fraudulent claims;
• Committing a fraudulent act;
• The non-disclosure of material information.

Question 45

What is material information?

Answer 45

Is that information which is relevant to the decision by a scheme on whether or not to impose a:

• general
• or condition-specific waiting period.

Applicant would have to disclose conditions:

• For which medical advice, diagnosis, care or treatment was recommended or received
• Within the 12-month period ending on the date on which (s) he applied for membership.

Important Advice:
- Be honest when completing the application form - clinical history

Question 46

What mechanisms exist that allow medical schemes to protect against adverse risk selection?

Answer 46

To protect medical schemes against prospective members who wait until they are older or develop an ailment before joining, the Act makes provision that medical schemes, at the time of evaluating an application for membership, can apply:

• Late joiner penalties (address anti-selection re open enrolment)
• Waiting periods

Question 47

What is a waiting period?

Answer 47

A waiting period refers to a period during which the member pays

• A contribution monthly
• but during which time the member are not entitled benefits.

There are two types of waiting periods

• A general waiting period of up to three months.
• A condition-specific waiting period of up to 12 months.

Question 48

What considerations need to be taken into account when determining the waiting period?

Answer 48

• New application, no membership 90 days prior to application
• Applicant who was member 2 years
• Dependent born during membership
• Married, join spouce’s

Question 49

Under what conditions will a 3 month general waiting period apply?

Answer 49

New application, no membership 90 days prior to application

Applicant who was member >2 years

Question 50

Under what conditions will a 12 month specific waiting period apply?

Answer 50

New application, no membership 90 days prior to application

Applicant who was member

Question 51

Under what conditions will a waiting period apply to PMB’s?

Answer 51

New application, no membership 90 days prior to application

Question 52

What is Gross Contribution Income?

Answer 52

Amounts payable by members and/or employers, in terms of the rules of the medical scheme, for the purchase of healthcare benefits.

Gross contributions include savings plan contributions.

Question 53

What is Net Contribution Income?

Answer 53

Represent contributions for which the medical scheme is at risk

GCI minus savings contributions

Question 54

What are the factors affecting solvency?

Answer 54

1) Pricing of contributions relative to benefits provided
(incl. whether such benefits are provided from the risk pool of the scheme or from member’s savings accounts).

2) Non-healthcare expenditure
3) Investment Income
4) Membership growth

Question 55

What can influence healthcare spend relative to contribution income?

Answer 55

The membership profile of a medical scheme including variables such as:

• average age of the schemes beneficiaries
• pensioner ratio
• number of male vs. female dependants
• dependant ratio

Question 56

How are tariffs determined?

Answer 56

The National Health Reference Price List (NHRPL) – Published by BHF (Board of Healthcare Funders) as Scale of Benefits
- This taken over by Council for Medical Schemes and is used to reimburse service providers and then DOH - RPL.

Professional Association Guidelines
- These tariffs are developed and maintained by the professional provider associations like the South African Medical Association, the Dental Association of South Africa etc.

Medical scheme rate
- The medical scheme decides what rate of reimbursement will be paid for services rendered by a health professional. - - That rate may be equivalent of the NHRPL or a multiple of the tariff i.e. 1.5 or 2 or 3 times the NHRPL.

Question 57

Are healthcare professionals allowed to negotiate tariffs with medical schemes individually?

Answer 57

2004
Competition Commission ruled that collective negotiation on healthcare tariffs is outlawed.

Healthcare professionals must negotiate tariffs with medical schemes individually

Trade unions and representative associations (for healthcare professionals) are not permitted to negotiate tariffs on behalf of their members.

This ruling has forced healthcare professionals in the private sector to increase their awareness of the financial reporting function of their practice.

Question 58

How do co-payments work in a medical scheme?

Answer 58

A medical scheme may provide in its rules that a member is required to pay a charge to the provider for certain healthcare services received. The co-payment can be a fixed rand amount or a percentage of the cost.

Question 59

What are some alternative reimbursement models?

Answer 59

Capitation agreement

“an arrangement entered into between a medical scheme and a person whereby the medical scheme pays to such person a pre-negotiated fixed fee in return for the delivery or arrangement for the delivery of specified benefits to some or all of the members of the medical scheme”.

Question 60

What is the difference between split-billing and balance-billing?

Answer 60

Split-billing (illegal):
Provider charges twice for the same service by submitting more than one account for said service, e.g. a GP charges R1 000 for a consultation and submits one account for e.g. R200 to the scheme for the portion that is covered by the member’s benefits, and another account for the remaining R800 to the member for the part which the scheme does not cover.

Balance-billing (legal):
Provider submits one account for a service to either the scheme or member, or both, e.g. the GP charges R1 000 for a consultation and submits the account for R1 000 to either scheme or member, or both, but keeping both in the loop and ensuring there is transparency in the dealing. This account specifies how much the scheme must pay and the amount that the member must pay.

Question 61

What is an ex GRATIA payment and how do members access such benefits?

Answer 61

It is a discretionary benefit which a medical scheme may consider, normally when the member suffers undue hardship.

Schemes are not obliged to make provision therefor in the rules and members have no statutory right thereto.

Question 62

What type of codes are there and who provides them?

Answer 62

ICD10

• International Classification of Disease
• Disease code
• Developed by WHO

Procedure Codes

• Developed by DoH
• NHRPL (National Health Reference Price List
• Linked to tariffs

Medicine Codes
- NAPPI codes (National Pharmaceutical Product Index)

Question 63

What is a death spiral and how do medical schemes enter it?

Answer 63

• A scheme with an adverse, high-claiming membership
  profile
• need to adjust its contributions and/or benefits.
• This can result in options with older and sicker members being over-priced, causing younger and lower-claiming members to move to less expensive options or even to other medical schemes.
• This leads to the scheme losing the cross-subsidy provided by younger members and therefore its losses increase and it becomes necessary to increase contributions or reduce benefits even further.

Question 64

What is late joiner penalty?

Answer 64

Regulation 13 (1) provides that a
“medical scheme may apply premium penalties to an applicant or dependant of a late joiner and such penalties must be applied only to the portion of the contribution related to the member or any adult dependant  who qualifies for late joiner penalties.”

Anyone who is 35 years of age or older; and
Who was not a member of one or more medical schemes as from a date preceding 01 April 2001;

And excludes:

Any beneficiary who enjoyed coverage with one or more medical schemes as from a date preceding 1 April 2001, without a break in coverage exceeding three consecutive months since 1 April 2001. (Regulation, 2002, 10)

Question 65

What is the formula for the late joiner penalty?

Answer 65

A = B – (35+C)

A=Penalty band
B= Age of late joiner
C=Credible coverage

Question 66

What is credible coverage?

Answer 66

Any period in which a late joiner was—

(a) a member or a dependant of a medical scheme;
(b) a member or a dependant of an entity doing the business of a medical scheme which, at the time of his or her membership of such entity, was exempt from the provisions of the Act;
(c) a uniformed employee of the South African National Defence Force, or a dependant of such employee, who received medical benefits from the South African National Defence Force; or
(d) a member or a dependant of the Permanent Force Continuation Fund,

but excluding any period of coverage as a dependant under the age of 21 years.

Question 67

How does a member prove former membership?

Answer 67

1) “that a medical scheme must, within 30 days of the termination of membership or at any time at the request of any former member, or dependant, provide that member or dependant with a certificate, stating the period of cover, type of cover and whether or not the person qualified for late-joiner status”.

2) The Regulations also provide that the certificate of membership must be forwarded on request to any medical scheme to which the former member or dependant subsequently applies for membership.

3) The applicant is also entitled to produce a sworn affidavit in those instances where reasonable efforts to obtain documentary evidence of previous membership were unsuccessful.

Question 68

What are the late joiner penalties?

Answer 68

Penalty bands - Max penalty
1-4 years - Contribution x 5%
5-14 years - Contribution x 25%
15-24 years - Contribution x 50%
25+ years - Contribution x 75%

Question 69

What are PMBs?

Answer 69

“PMBs are guaranteed benefits which your medical scheme has to cover, regardless of the benefit option you have chosen to join.

In terms of the Medical Schemes Act, PMBs cover the costs related to the diagnosis, treatment, and care of:
- any emergency medical condition.
- a limited set of ±270 medical conditions (called the Diagnosis and Treatment Pairs or DTPs) listed in the Act.
- the 27 Chronic Diseases List (CDL) conditions.

Keep in mind that there are chronic diseases that are not part of the CDL but that fall under the ±270 conditions of the PMBs. The full list of PMB conditions is available on our website.”

Question 70

What is an emergency medical condition?

Answer 70

Put simply, the following factors must be present before an emergency can be concluded:

1. There must be an onset of a health condition.
2. This onset must be sudden and unexpected.
3. The health condition must require immediate
   treatment (medical or surgical).
4. If not immediately treated, one of three things would result:
   - serious impairment to a bodily function;
   - serious dysfunction of a body part or organ;
   or death.

In an emergency it is not always possible to diagnose the condition before admitting the patient for treatment.

However, if doctors suspect that the patient suffers from a condition that is covered by PMBs, the medical scheme has to approve treatment.

Schemes may request that the diagnosis be confirmed with supporting evidence within a reasonable period of time.

Question 71

What is a member entitled to in terms of PMB’s?

Answer 71

Regulation 8
The medical scheme must pay in full without co-payment or deductible, the diagnosis, treatment and care costs of the PMB condition;

Subject to section 29 (1) (p) of the Act, the rules of a medical scheme may, in respect of any benefit option, provide that

(a) the diagnosis, treatment and care costs of a prescribed minimum benefit condition will only be paid in full by the medical scheme if those services are obtained from a DESIGNATED SERVICE PROVIDER (DSP) in respect of that condition; and

Question 72

Under which conditions will members be liable for co-payments for PMB’s?

Answer 72

Co-payment if services VOLUNTARILY obtained from non-DSP Provider

No co-payment if services INVOLUNTARILY obtained from non-DSP Provider

• Service not available from DSP without unreasonable delay
• Immediate treatment for the PMB condition needed
• No DSP within reasonable proximity

Question 73

What is a Designated Service Provider?

Answer 73

A Designated Service Provider means a

• health care provider or group of providers selected by the medical scheme concerned
• as the preferred provider or providers to provide to its members
• diagnosis, treatment and care in respect of one or more prescribed minimum benefit conditions.

Question 74

What are the implications of these PMBs for medical schemes?

Answer 74

Medical schemes must provide minimum benefits for the full range of PMBs in every option.

No payment for PMB conditions may be paid from the member’s MSA.

Medical schemes have to pay cost associated with services rendered for PMB conditions from the insured risk pool.

The medical scheme may, however, apply certain risk management techniques to mitigate the risk of providing these comprehensive benefits to members, including the:

• appointment of a DSP.
• requirement of authorisation for patients with PMB conditions with the medical scheme.
• use of treatment protocols.
• use of medicine formularies.

Question 75

What is the cost of PMB’s driven by?

Answer 75

The cost of PMBs is mainly driven by:
The beneficiary profile, which speaks to the level of cross-subsidisation between young and old beneficiaries, the sick and the healthy.

The cost of treatment, which is strongly linked to contracting between schemes and providers.

The prevalence of chronic conditions and disease burden.