“Among the biggest cost drivers in the healthcare funding sector are knock-on costs resulting from the way that the practice of medicine has evolved through the years, given costly new technologies and developments, which have rendered the cost of healthcare service provision prohibitively high. The more services the healthcare professional performs, the higher the bill will ultimately be,” he says.

“Add to this over-servicing due to clinicians practicing highly defensive medicine, which is often in response to the highly litigious environment healthcare professionals find themselves in. Doctors argue that they must test for all possible conditions in order to protect themselves from legal liability in the event that they could possibly have missed something. Unfortunately, this tends to drive overly cautious behaviour, which in turn increases healthcare expenditure.”

Unnecessary tests

According to Dr Jacques Snyman, director of product development at Agility Health, this means that doctors in an emergency setting may perform a range of tests to guard against the possibility that they could miss something of medical significance. “However, quite a number of the tests performed may, in fact, be quite unnecessary,” he adds.

Snyman cites a recent example of a patient who presented with chest pain and breathing difficulties. She lodged a complaint after receiving a R4,000 pathology account from a Pretoria emergency room. “As a known cardiac patient, she was rushed off to the emergency room for fear of a heart attack and received a physical examination, electrocardiogram (ECG), which is a test measuring the electrical activity of the heart, as well as blood tests checking heart enzymes. Given her history, these tests were all necessary and were appropriately performed.”

“In addition, however, a thyroid function, cholesterol, full liver, renal function as well as electrolyte tests were also performed. All of these were unnecessary within this context, thereby constituting over-servicing as they were done in the immediate past during normal follow-up. A host of other markers was also requested, again with no real relevance to this case. The patient was eventually diagnosed with inflammatory costochondritis, which is an inflammation of the cartilage in the rib cage. This condition can present as mild to severe chest pain, which in this case responded well to pain medication,” notes Snyman

“It is of particular concern that the patient was never asked to consent to the tests performed or informed of the costs thereof. This constitutes a serious breach of the ethical codes and rules of the Health Professions Council of South Africa (HPCSA), which require that the doctor or healthcare facility to obtain informed consent from a patient prior to performing tests and that they explain billing practices up front.”

PMB encourages opportunistic behaviour

Masobe explains that in terms of prescribed minimum benefit (PMB) regulations, all relevant tests that are done to exclude acute PMB conditions, such as a myocardial infarction, must be fully covered by a medical scheme. “It is important to note, however, that the scheme is only liable to fund this as a PMB condition until such time as a PMB condition has been excluded. In this case, it meant that the clinical examination, ECG and heart enzyme tests were funded as a PMB but not the additional, extraneous and medically unnecessary tests. This becomes a dilemma for the patient, who now becomes liable for paying these fairly expensive additional costs from medical savings or, worse still, out-of-pocket.”

Snyman cautions that medical schemes products, which dictate that certain services will only be funded in-hospital, can further drive opportunistic behaviour, both on the part of patients and providers. “In such instances, emergency consultations typically involve admitting the patient to ensure that costs are covered by the medical scheme. This is also highly convenient in terms of access for both patients and doctors, whose consulting rooms are located at the hospital.”

An additional driver of costs is the fact that specialist visits are often facilitated without a referral from a general practitioner. With specialists being in short supply, this type of behaviour is not only costly and unnecessary but also places a considerable burden on scarce healthcare resources. “There is an urgent need to return to a more primary care-focused healthcare model in the private sector. Medical scheme members should be channelled through GPs instead of going straight to specialists. However, the PMBs, in their current form, discourage such behaviour and instead tend to encourage hospitalisations,” he observes.

Creative billing practices

According to Snyman, non-adherence to medicine accounts for as much as 30% of hospital admissions in patients who suffer chronic conditions, yet some schemes have overly simplistic formularies that cannot provide the flexibility so desperately needed to effectively treat patients out of hospital.

“Some doctors invent creative billing practices to increase their earnings. In certain instances, they are encouraging patients to make full use of their gap cover policies to cover additional healthcare costs.”

“The implementation of PMBs and subsequent scrapping of the National Health Reference Price List (NHRPL) by the High Court exacerbated this problem. The establishment of a framework within which funders, as an industry could negotiate and agree on tariff structures with health service providers, will assist in controlling the rising costs associated with PMBs. If medical schemes need to pay for all PMB treatments and medications, it is important for schemes to be able to influence the costs of this by agreeing to an upfront Reference Price List (RPL) with hospital groups and healthcare specialists,” he says.

It has often been said that this situation has been exacerbated due to the pricing of PMBs not being regulated. Some providers are charging as much as 500% or more than the recommended tariffs for PMBs because they know the schemes are legally compelled to cover them. Providers are consequently not willing to contract at lower tariffs and are able to charge such high fees because of a shortage of, and great demand for, their highly specialised skills.

Regulatory model placing all medical schemes on an equal footing needed

Masobe notes that PMBs were intended to form part of a broader risk pooling exercise, which unfortunately never materialised. “As a result, we are now left with only one piece of a broader strategy, leading to escalating costs throughout the healthcare industry to the detriment of medical schemes and their members.”

“What is needed is a regulatory model that places all medical schemes on an equal footing so that schemes can, for example, reward GPs for quality outcomes. This would ensure that care is not compromised and significantly improved. “

“Implementing a patient-centred healthcare system, where schemes’ funds are freed up to cover more preventative care such as regular diagnostic tests and health screenings, would ensure that members require less hospitalisation. Schemes could still provide continuous care to members with fewer PMBs, or at least have the tariffs regulated for PMBs within specified limits,” he says.

A unique and integrated personalised patient management intervention, based on clinical and statistical insights per patient and not per disease, implemented by Agility Health since 2009 for medical schemes contracted to them, has reduced the number of hospital stays for patients living with chronic illnesses by 15.2%. “We found that, overall, hospital events decreased by 15.2% for high-risk patients following the implementation of the Patient Driven Care initiative. The reduction in costs that this represents is, naturally, a very welcome development for these patients and their medical schemes,” concludes Masobe.