Want to know about GEMS' designated chronic medicine service provider?

Make sure you are properly informed about what we do for our members.

Click here to read more

The position of GEMS

The Government Employees Medical Scheme (GEMS) was established to provide public service employees with equitable access to comprehensive and affordable healthcare benefits. The Scheme has grown tremendously in pursuit of this mandate, to a point where more than 50% of its members are new to the medical scheme environment.

• GEMS Ethics

The Scheme is governed by a Board of Trustees who have taken all steps to ensure that the Scheme is efficiently operated and soundly governed. The latter is evidenced by the Scheme's stellar ethics framework, clean audits and expansive governance controls.

GEMS Ethical framework and control system include a number of control measures to ensure that all procurement is transparent, objective and fair. Some of the controls are as follows:

1. All GEMS contracts are for 12 months renewable for a maximum period of 3 years.
2. Prior to the issuing of any tender, the Scheme develops a tender specification, based on the Scheme's needs and the interests of members, which the Board approves. Thereafter
3. All tenders over R1million are assessed by an independent audit firm who applies short listing criteria and formulates a recommendation, a GEMS Evaluation Panel consisting of three persons who assesses each tender and forms its own recommendation with a view on that prepared by the assessment auditor; and the Board who adjudicates.
4. Declarations are made by each person involved in the tender assessment and adjudication against each bidder and their directors. The declarations are reviewed by an attorney who then rules on whether officers should be recused.
5. In addition to the tender award, each officer (trustee and employee) is vetted annually by an independent firm (at a credit, CIPRO, academic and criminal level). The vetting reports are tested by our internal auditors and then reviewed by the attorneys before submission to the Scheme and with a statement on any conflicts and the manner in which they should be managed.
6. At a contract level, all contracts are managed against strict service levels with financial penalties. Independent service level audits are performed to ensure SLA compliance.

• Chronic Medicine Service and Contract

With regard to chronic medicine, the Scheme introduced a Chronic Medicine Designated Service Provider contract (which sees chronic medicine delivered to a destination of the members choice without any co-payments) to ensure that all members have access to their chronic medicine at affordable rates. The structure and objectives of this service should be seen in conjunction with Regulation 8(4) of the Medical Schemes Act which states that ".... these regulations must not be construed to prevent medical schemes from employing appropriate interventions aimed at improving the efficiency and effectiveness of healthcare provision...."

The Chronic DSP contract is annually renewable for a maximum of three years where after an open tender is issued for a subsequent three-year period. The contract term and tender process for this service comply with the GEMS Supply Chain Policy and it is worth mentioning that all tenders are only awarded by the Scheme's Board of Trustees when an independent auditor certifies the tender process. Since inception of the chronic service, two tenders have already been issued and in both instances the tender processes (which were advertised in national newspapers), were certified free, fair and transparent and only accredited professional pharmacies were considered.

A tender for chronic medicine services for 2013 to 2015 will be issued later this year.

• Fees Paid for Chronic Medicine Services

The essence of the enquiry about the fee paid to GEMS' DSP is that at the lower tier, where the single exit price of a medicine or schedule substance is less than R75.00, GEMS is paying its DSP a fee in excess of the maximum prescribed by Regulation 10(1)(a) of the Pricing Regulations for medication with a single exit price of less than R 38.00 given the contracted flat rate fee of R23.78. GEMS must point out that the contract between GEMS and its Chronic Medicine DSP is a cost-effective managed healthcare intervention and complies with Regulations 8 and 15 of the Regulations promulgated under the Medical Schemes Act of 1998. The fee payable to the DSP is a negotiated fee as defined in GEMS Rule 4.25, which forms part of the Tariff that GEMS pays as defined in GEMS Rule 4.32.  It is worthwhile pointing out that members are not faced with out-of-pocket payments when using the DSP and they have access to their medicine at all times through the courier service - access which can, depending on the instance, even see international deliveries take place.

It is important to point out that the fee paid by GEMS to its current DSP is a composite fee per line item on all four tiers. The fee is inclusive of a dispensing fee and other non-healthcare service elements, which the DSP is required to provide to GEMS under the contract between the parties. The Department of Health is aware of the extent to which the fee paid to the DSP extends beyond dispensing, as defined in the medicine regulations.

• Value Realised by the Chronic Medicine arrangement

Using January 2012 claim data, GEMS has analysed and quantified the numbers of items dispensed by the chronic DSP per medicine price tier and the relationship between the regulated fees and the fee paid to the chronic DSP. The results of this analysis is that only 48% of 689 298 chronic medicine items dispensed in January 2012 are for tier one at a cost of approximately 12% of GEMS' overall medicines spent on chronic medication amounting to R92 million. Based on the quantum of R92 million worth of chronic medicine dispensed, the regulated dispensing fee across all four tiers would have been R38 million as compared to the R17 million that GEMS paid to its DSP. The DSP's fees represent 44% of the regulated fees overall. It is important when assessing the value added through the DSP arrangement that one not only consider the fee for the lower tier, but for the other three tiers too where GEMS realises and enjoys a considerable saving. Especially as chronic medicine, typically received monthly, is not inexpensive.

In GEMS experience, the professional fee paid to Medipost, GEMS Chronic DSP, compares favourably with the regulated fees. A comparison of average figures in January 2012 is tabulated below:

4-Tier Pricing Brackets Average Medipost Fee Average Regulated Fee

Compliance

GEMS is of the view that it is not in contravention of the Pricing Regulations. The DSP arrangement benefits the members of GEMS and it is a cost-effective measure for providing GEMS members with chronic medication. It is worth pointing out that the performance of the provider appointed as the Chronic Medicine DSP is stipulated in a detailed service level agreement, which provides for stringent service standards and material penalties for poor performance. In addition to managing the delivery of service by the provider, the Scheme undertakes independent service level audits - the last of which found that service levels were met by the provider. Members are also surveyed on an ongoing basis to establish their satisfaction with the service and we have noted that in recent years member satisfaction, already on a high base, has improved further.

In conclusion, GEMS is required to provide equitable access to affordable and comprehensive care. It is necessary therefore that the Scheme employ innovative and efficient mechanisms to ensure that members realise true value, cost-savings and a comprehensive set of benefits - in keeping with the need for GEMS to always act within the best interests of its members as per Section 57 of the Medical Schemes Act. The Chronic medicine arrangement sees medicine delivered to members without out-of-pocket payments - saving them time, transport costs and money, whilst also promoting compliance as medicines are brought to them without excuse. The Chronic medicine arrangements are but one of a number of initiatives employed by GEMS to realise cost-efficiencies - cost-efficiencies, which collectively see GEMS non-healthcare costs amounting to 6.16% of contributions or about half the industry average. The cost-saving initiatives see GEMS able to offer an affordable benefit package to its 610,000 principal members - of whom more than 50% are new to the medical scheme environment.