Waiting periods bares fruit - GEMS much healthier

'Target for solvency surpassed'

The Government Employees Medical Scheme's (GEMS) financial position is much better than a year ago when there was great concern over its finances.

GEMS, just like other medical schemes, saw a sharp increase in hospital claims, which, according to GEMS, was as a result of all the new hospitals that had opened.

This lead to GEMS's solvency ratio - how much money it has in reserve - to sharply decline last year. The law stipulates that a medical scheme should keep 25% of the premiums that it receives in reserve.

Because it grew so quickly, GEMS could not reach this target since its inception, but according to some reports it had declined to as low as 5% and there was worry about its future existence.

Hospital claims lower
"We are in a much better financial position as a year ago, said Dr Guni Goolab, principal officer, in an interview. This year, the target was to reach a solvency ratio of 8,2% after GEMS closed at 7% last year. Goolab said that this target will easily be exceeded and that the scheme's reserves will end up in the double figures.

Hospital admissions were 4% lower from January to September than in the corresponding time frame. This makes a big difference, because for each 1% increase in admissions, the costs rises with about R180 million.

Recently, hospital groups denied that the new hospitals were the driving force behind the high hospital admissions. Goolab is not convinced however. He says that hospitals means that it is as a result of ageing scheme members, but the last couple of years saw hospitalisations decrease even though members keep ageing.

Case managers
The decrease in hospital admissions at GEMS is partly thanks to the stricter protocols for hospitalisation and partly thanks to the deployment of case managers at hospitals in KwaZulu Natal, where a sharp rise in hospital admissions was experienced.

Goolab says that the waiting periods that GEMS implemented for the first time last year, also bore fruit.  In the past, people would join the scheme before an operation and directly after the operation, resign from the scheme. Waiting periods of three months were implemented to government employees that were on GEMS previously and resigned as well as for dependants that joined the scheme at a different time than main members. For specific conditions, a waiting period of 12 months was implemented.

Since the waiting periods' implementation on 1 November 2016, new members claim less than what they contribute in the first three months. Since the start of GEMS, the experience was that new members would claim more than they contribute in the first three months.

GEMS's contribution increases for 2018 has not been announced yet, but it has been sent to the Council of Medical Schemes for approval. 

"It is considerably lower than last year's increase - it is a single digit increase," says Goolab.

NHI and tax
Goolab spoke at the time of the annual GEMS symposium in Cape Town. This year, the focus was on National Health Insurance (NHI).

In response to a question whether GEMS is positioning itself to become the NHI fund, he said that following the NHI white paper, consolidation between medical schemes for the private and public sector must take place. According to him all the public sector medical schemes will be consolidated into GEMS.

He says that everyone is holding their breath to see what will happen to the medical aid tax credits. He is not too concerned or worried about whether the credits will be decreased or taken away, but more about the order in which events will take place and when the changes will come.

"In the future, there will be a basic list of benefits that will be financed by the NHI fund, but the progression to this fund in terms of subsidies (for government employees medical aid funds) and tax credits must be managed in such a way that members are not worse off because of it.

PMB's changed rapidly
He does not expect that there will be too many changes over the next year or to, but rather voluntary changes by schemes, such as to simplify benefit options so that is easier to understand.

He means that the first amendments to the lay of medical schemes will most likely be in regards to prescribed minimum benefits (PMBs). This is the package of minimum benefits that all medical schemes must offer.

"Currently it is very focused on hospitals. It will change to focus more on primary and preventative healthcare."

Another amendment will most likely be on law 8, which currently places no limit on what must be paid for PMB's. "Some or other price determining mechanism will be designed for PMB's."