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Court action shows up seriousness of PMB dispute

December 4 2010 at 11:54am
www.iol.co.za 

An organisation representing medical schemes this week applied to court for an order giving clarity on what schemes have to pay for the prescribed minimum benefits (PMBs) that they are obliged to provide to you.

The court application reveals that the Council for Medical Schemes is investigating Medscheme, an administrator, and Fedhealth, a large open scheme, for not adhering to their interpretation of the law pertaining to the payment of PMBs.

The council has taken the view that schemes must pay at whatever rate healthcare providers charge for PMBs, while schemes say PMB claims should be paid at the rate the scheme has set for the relevant option.

The semi-urgent application by the Board of Healthcare Funders (BHF) in the North Gauteng High Court against the Council for Medical Schemes was, however, not heard this week, as other stakeholders, including the South African Private Practitioners Forum representing 800 specialists, the Pharmaceutical Society of South Africa, and hospital group MediClinic, have asked for an opportunity to intervene in the matter.

The BHF agreed to give other parties time to file papers and will seek to have a hearing of the application in full, instead of on an urgent basis, and to be given preference on the court roll when all papers have been filed early next year. The long-running dispute over what schemes must pay for PMBs centres on a regulation under the Medical Schemes Act that says schemes must "pay in full" without co-payments or deductibles for PMB claims.

Ruling interpretation
In 2008 the Appeal Board of the Council for Medical Schemes made two rulings stating that the regulation must be interpreted to mean that schemes must pay whatever a healthcare provider charges for a PMB claim.

Both cases involved paediatricians who treated new-born babies in emergencies covered by the PMBs but charged more than the rate provided for in the rules of the respective schemes - the Government Employees Medical Scheme and Samwumed, a scheme for municipal workers.

The BHF says the interpretation is unsustainable for schemes, which then face an open liability for the PMBs. It says this is especially so in the light of a court application earlier this year that resulted in the scrapping of the Reference Price List (RPL), the guideline tariffs for schemes and providers.

Schemes say insisting that they must pay the full cost of PMBs gives healthcare providers an open cheque book to charge as much as they like, knowing schemes are forced to pay.

In replying papers to the BHF's application, the executive officer of the Council for Medical Schemes and the Registrar of Medical Schemes, Dr Monwabisi Gantsho, says if schemes fail to pay for PMBs in full as invoiced, members may become liable for the shortfall.

Court papers reveal ongoing, but so far unsuccessful, attempts to resolve the issue, including those during a recent process of setting up a code of conduct for the PMBs.

The BHF's application says the matter became urgent for its members when the code failed to resolve the issue and the Council for Medical Schemes issued a circular in October stating it would enforce the interpretation that schemes must pay for PMBs at the invoiced rate.

The BHF's application refers to an investigation into Medscheme and Fedhealth and an instruction by the Council for Medical Schemes to schemes to report to it any failures to adhere to the appeal board interpretation of the PMB regulation. A council circular said a failure to do so could result in a scheme's accreditation being withdrawn or suspended.

Fedhealth recently lost an appeal to the appeal committee against a council directive that it should pay in full the PMB claims of an accident victim whose doctor charged more than the scheme rate, the court papers say. The BHF's application says legal opinion obtained by Medscheme and that of the BHF's former legal expert, Dr Debbie Pearmain, is that the council's view is incorrect.

According to the application by the BHF's managing director, Dr Humphrey Zokufa, Pearmain argues that the Medical Schemes Act binds schemes to paying benefits, including those for PMBs, in terms of its rules.

The BHF argues that, according to this view, paying for PMBs at a rate higher than that set by a scheme's rules would be illegal.
The registrar argues in the court papers that schemes' rules are not legislation and are not superior to the provisions of the Act or its regulations.

He says the rules of a scheme must be made, or amended if necessary, to conform with the provisions of the Act, including its regulations.

The registrar has also disputed the BHF's right to bring the case to court.

PMB cost implications 'will be huge'
The potential cost implications of the legal interpretation of a Medical Schemes Act regulation that deals with the payment of PMBs is huge, the BHF says in a statement released with the court application this week. The BHF says if healthcare providers increase their charges for PMBs because they know schemes will have to pay whatever they charge, you, as a member of a scheme, could face an average contribution increase of 18 percent.

The BHF says a recent study by an administrator analysed doctors' claims from January 2009 to July 2010 and found that if all doctors began charging at 300 percent of the now struck-down RPL tariffs, schemes' claims would increase by 20.4 percent. This would translate into an 18-percent contribution increase, on average.

A further study, the BHF says, found that among doctors submitting PMB claims to a scheme that reimburses at 100 percent of the former RPL, only three percent charged more than the scheme's rate. However, the claims of a scheme that reimburses up to 300 percent of RPL showed that 48 percent of all practices charged this scheme more for in-hospital benefits than they charged the scheme that reimburses at 100 percent of RPL, the BHF says.

http://www.iol.co.za/business/personal-finance/court-action-shows-up-seriousness-of-pmb-dispute-1.998817