An amendment to a regulation that could offer both minimum medical benefits and some relief from rising contributions may now have to await the outcome of a court case over the validity of the regulation.
As arguments about who may participate in the case got under way this week, the Department of Health confirmed it would follow the proceedings in the case and take legal advice before publishing for comment an amendment to the controversial regulation.
The case tests regulation eight under the Medical Schemes Act, which is intended to provide scheme members with full cover for certain legislated, or prescribed, minimum benefits. Eight applications, including one from the Council for Medical Schemes (the regulator), the Hospital Association of South Africa (Hasa) and a forum representing private practitioners were argued in court last week. This highlights the high stakes in the case, which challenges the regulation's provision that medical schemes must pay in full for treatment for the prescribed minimum benefits (PMBs), regardless of what a healthcare provider charges.
The requirement that medical schemes must pay in full while the tariffs that private healthcare providers can charge are unregulated has been cited as a key reason for the spiralling costs facing schemes - costs that they pass on to members, in the form of higher contributions. But regulation eight of the Medical Schemes Act has been defended as providing you with essential protection, because, without it, a scheme may not have to pay providers in full for PMBs and a member could face paying part of the bill.
Genesis Medical Scheme, an open scheme, and Samwumed, which is restricted to local government and allied service workers, last year lodged the application in the Cape High Court against the Minister of Health, Dr Aaron Motsoaledi, seeking to have regulation eight struck down as ultra vires (beyond the law). Samwumed has since withdrawn from the case, and the Board of Healthcare Funders (BHF) has decided against joining it.
The BHF approached the Minister in an attempt to avert the legal proceedings. The Minister then gave an undertaking that he would reconsider the regulation. According to the Minister's spokesperson, Joe Maila, the Department of Health's drafting of an amendment to regulation eight has reached an advanced stage. He would not say how the regulation would be amended, but did confirm that the department, although no longer opposing Genesis's case, was watching the proceedings, because the outcome could affect its intention to amend the regulation.
Humphrey Zokufa, the managing director of the BHF, says the BHF asked the department to revise regulation eight so that medical schemes would not face unlimited bills from providers for PMBs and so that members would not face any co-payments for PMB services. This would entail some kind of restriction on what providers could charge for PMBs. When Genesis lodged its application, it named only the Minister as a respondent. But last week, the Council for Medical Schemes, its chief executive, the Registrar of Medical Schemes, Hasa, the South African Private Practitioners' Forum, the Multiple Sclerosis Society of South Africa, the Infertility Awareness Association of South Africa, a psychiatrist and B Braun Avitum, a German medical equipment supplier that provides dialysis services in South Africa, all applied to the Cape High Court for leave to intervene in the application, arguing that they have an interest in the case.
Craig Burton-Durham, the general manager of legal at the Council for Medical Schemes, said the council argued before court that the council and the registrar are entitled to be party to any proceedings aimed at affecting the Act and its regulations and therefore should have been cited as party to the proceedings from the outset. The intervention of these parties is crucial, because the Department of Health, after initially filing notice to oppose the application, earlier this month filed notice of its intention to abide by the judgment. Maila said the department decided not to oppose the case in court, because it is in the process of amending the regulation. In its application, Genesis argues that the Medical Schemes Act grants the Minister of Health the authority to prescribe by regulation "the scope and level" of minimum benefits that schemes must provide to their members.
It said this does not give the Minister the right to prescribe the minimum financial benefits to which members are entitled for PMBs or the extent to which medical schemes are financially liable for PMBs. However, the regulation, which became effective in January 2004, states that medical schemes "must pay in full, without co-payment or the use of deductibles, the diagnosis, treatment and care costs of the PMB conditions". Medical schemes have long argued that regulation eight gives healthcare providers a "blank cheque" to charge medical schemes as much as they like for PMB services, because they know that schemes are obliged to pay in full.
In his affidavit with the application, the principal officer of Genesis, Dennis van der Merwe, said the Medical Schemes Act stipulates the financial benefits to which members are entitled, because it states that PMBs must be equal to the cost of obtaining the same services from a public hospital. Van der Merwe said it is not up to the Minister to impose a financially more onerous reimbursement regime; instead, the Minister is limited to prescribing the medical diagnoses and treatment regimes that fall within the range of the PMBs.
His affidavit said that regulation eight is incompatible with two sections of the Medical Schemes Act that deal with the PMBs. He said the regulation undermines the purposes of the Medical Schemes Act, "which results in potentially ruinous expenses for medical schemes, thereby threatening their very existence". Van der Merwe said schemes are not-for-profit entities that set their contributions to match the expected medical expenses of their members. Medical schemes are entitled to limit benefits other than those for the PMBs. Unlimited cover would make the contributions unaffordable, he said, and schemes are, in any event, prohibited from introducing steep increases in contributions.
Van der Merwe said Genesis also received numerous claims where practitioners charged well above the scheme's rates and indicated that their services were for an emergency medical condition that is included as a PMB, whereas other evidence showed the condition was not an emergency. In presenting the council and the registrar's arguments for leave to intervene in the case, Daniel Lehutjo, the acting Registrar of Medical Schemes, said an order setting aside regulation eight will affect not only the council's role and power, but also the rights and interests of millions of members and potential members of schemes, substantially and materially.
He said it was improper of Genesis to bring the proceedings without joining or giving notice to all parties interested in the matter. While not conceding the right of the council or the registrar to intervene, Genesis's legal team did not argue against the submissions from the council's lawyers. It also did not object to Section 27, representing the Treatment Action Campaign, People Living with Cancer and the South African Depression & Anxiety Group, from joining the application as friends of the court (amici curiae). However, Genesis's legal team argued that the other parties seeking leave to intervene did not meet the necessary legal requirements.
Judge Andre Blignaut reserved judgment on the applications for leave to intervene. Genesis's case is the second legal challenge to regulation eight. In 2010, the BHF unsuccessfully challenged the Council for Medical Schemes's interpretation of regulation eight as meaning that schemes must pay whatever amount they are billed. The case was dismissed in 2011 on the grounds that the BHF did not have locus standi (the right or capacity) to bring the application. The merits of the arguments were not considered. Rare Disease Organisation founder Kelly du Plessis‚ whose organisation was made a friend of the court in the case said minimum benefits are a fundamental aspect of the healthcare system in the private sector and we need to know that our interests are a priority to the Minister of Health.
She said the apparent lack of response from the Minister is worrying. The TAC's Anele Yawa said her organisation has always fought for affordable treatment for patients living with HIV and TB. She said the public sector is already over-burdened‚ with frequent stockouts of life-saving antiretrovirals and removing the PMB regulations will only further burden the public sector‚ where 5-million people currently access their treatment. Cassey Chambers from the SA Depression and Anxiety Group said many patients with mental health conditions will not be able to afford to pay or co-pay for the medicines they need and will land up in hospital with even more serious conditions.
Personal Finance, 20 June 2015
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