towards universal health coverage: addressing competition ... · mmi position on universal health...
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Towards Universal Health coverage:
Addressing competition challenges in the private
sector
Hearing 3, Day 2 HEALTH MARKET INQUIRY Cape Town 2 March 2016 Boshoff Steenekamp Strategic projects, Metropolitan Health
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Approach for today
• Understand the context today Structure of the Private Healthcare Market in South Africa
Understanding equitable access to healthcare
• Later occasions
Availability of information about health care
Competitive dynamics of the private health care sector as a whole
Competitive dynamics among funders
Competitive dynamics among service providers
Regulatory framework
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Throughout, not always clearly identified
• Incomplete risk pooling
• Consumers unable to make informed choices due to lack of transparency
• Market power and its exercise, arising from concentration of funders and providers, and as coordinated conduct
• Imperative of access to services when needed and poorly incentivised health insurance markets
• Coherence of existing supply-side regulatory interventions
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Contents
• Background information on SA health system: Universal Health coverage
• Incomplete risk pooling: Impact on competition, transparency and member choice
• Information available to members in selecting a medical scheme
• Tariff determination, Health Economic evaluation and outcome based competition
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MMI Position on universal health coverage
• MMI is in full support of universal health care for all South Africans
• NDP requires the reduction of high private costs and strengthening of the public sector
• NHI white paper
• HMI is a critical first step in strengthening UHC
• Co-create the environment for MMI to fulfill its purpose
“To enhance the lifetime financial wellness of people, their communities and their business”
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Dimensions of universal health coverage
Source: World Health Organisation
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GINI Index
y = 2E-09x2 - 0,0003x + 41,082 R² = 0,1604
0
10
20
30
40
50
60
70
$- $20 000 $40 000 $60 000 $80 000 $100 000 $120 000 $140 000
GINI index (World Bank estimate) by GDP per capita (current US$) South Africa
United Kingdom United States
Thailand Poly. (GINI index (World Bank estimate) by GDP per capita (current US$))
Data sourced from www.worldbank.org.za
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Infant mortality rate
y = 3787,8x-0,634 R² = 0,7288
0
20
40
60
80
100
120
$- $10 000 $20 000 $30 000 $40 000 $50 000 $60 000 $70 000 $80 000 $90 000 $100 000
Infant mortality rate per 1000 by GDP per capita (current US$)
South Africa
Power (Infant mortality rate per 1000 by GDP per capita (current US$))
Data sourced from www.worldbank.org.za
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Life expectancy at birth
y = 38,855x0,0684 R² = 0,621
0
10
20
30
40
50
60
70
80
90
100
$- $10 000 $20 000 $30 000 $40 000 $50 000 $60 000 $70 000 $80 000 $90 000 $100 000
Life expectancy at birth, total (years) by GDP per capita (current US$)
South Africa
Power (Life expectancy at birth, total (years) by GDP per capita (current US$))
Data sourced from www.worldbank.org.za
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Health expenditure % GDP by GDP / capita
y = 5E-05x + 6,0651 R² = 0,1421
0
2
4
6
8
10
12
14
16
18
$- $10 000 $20 000 $30 000 $40 000 $50 000 $60 000 $70 000 $80 000 $90 000 $100 000
Health expenditure, total (% of GDP) by GDP per capita (current US$)
South Africa
Linear (Health expenditure, total (% of GDP) by GDP per capita (current US$))
Data sourced from www.worldbank.org.za
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Private health insurance as % of total health expenditure
7%
42%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Slovak RepublicEstoniaPolandFinlandGreece
LuxembourgNetherlands
KoreaOECD
SwitzerlandCanadaFrance
ChileUS
South Africa
Kumar, Ankit, et al., et al. Pricing and competition in Specialist Medical Services: An Overview for South
Africa. Paris : OECD Publishing, 2014. OECD Health Working Papers. http://dx.doi.org/10.1787/5jz2lpxcrhd5-
en.
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WHO OECD brief on affordability
International Comparison of South African Private Hospital Price Levels: Briefing note on affordability. Are South African private
hospital services expensive? WHO and OECD http://www.oecd.org/health/workingpapers
Comparing the Cost of Delivering Hospital Services across the Public and Private Sectors in South Africa.Shivani Ramjee, University of Cape Town
October 2013
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WHO OECD brief on affordability
International Comparison of South African Private Hospital Price Levels: Briefing note on affordability. Are South African private
hospital services expensive? WHO and OECD http://www.oecd.org/health/workingpapers
Comparing the Cost of Delivering Hospital Services across the Public and Private Sectors in South Africa.Shivani Ramjee, University of Cape Town
October 2013
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Fiscus
Appropriation Bill to Provinces Provincial equitable share formula
Provincial
government
allocate
funds to
health
Public facilities
Contributions General taxes
83 Medical
schemes
42 accredited
Managed Care
Organisations 27 accredited Administrators
Private facilities & independent professionals
3 Large hospital
groups,
independent
hospitals
Independent
practice
Specialists, GPs,
Dentists and
other
Pharmacies
Tax credits
SA Healthcare funding
NDoH
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System re-think
“But to tear down a factory or to revolt against
a government or to avoid repair of a motorcycle
because it is a system is to attack effects rather
than causes; and as long as the attack is
upon effects only, no change is possible.”
Robert M. Pirsig, Zen and the Art of Motorcycle Maintenance: An Inquiry Into Values
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Topics for this presentation
Priority setting and PMBs Tariff determination
Risk pooling Scheme selection
Scheme behaviour
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Incomplete risk pooling
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Equity elements in healthcare financing
Progressive taxation
for public funding
Income related
contribution tables
Tax credits for in-kind
benefits
Social spending PMBs
Open enrollment
Community rating
Adjustments for risk
Age, Gender, Chronic disease and
other
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CMS presentation to Health Portfolio Committee (2010)
20 CMS Presentation to Health Portfolio Committee 15 September 2010
CM
S p
resenta
tion
21 CMS Presentation to Health Portfolio Committee 15 September 2010
CM
S p
resenta
tion
22 CMS Presentation to Health Portfolio Committee 15 September 2010
CM
S p
resenta
tion
23 CMS Presentation to Health Portfolio Committee 15 September 2010
CM
S p
resenta
tion
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Why is risk adjustment important to MMI?
• Risk profile determine price and competitiveness
• Potential interventions to protect vulnerable scheme members attracts high risk members
• Challenge related to scheme selection
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Scheme selection
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Which medical scheme to choose? • Restricted schemes are employer related, employers determines
this, and often follows the advice of large broker groups
• Employers often select open schemes and employees often have a choice from a selection of open schemes, based on employee preferences and advice from large broker groups
• Open medical schemes are reliant on brokers to attract new members
Smaller open schemes have difficulty in penetrating the market at larger broker organisations
Smaller brokers have an advantage through association with bigger schemes
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MMI’s role in providing information
• Internal and external
• Variety of mediums that are best suited to the request as well as the receiving participant, training sessions, roadshow presentations, launches, internet and printed material
• Marketing material and product information (e.g. marketing brochures, member guides etc.), Scheme financials made available.
• Training sessions, roadshow presentations, launches, internet and printed material
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Improved marketing of open medical schemes
• Solve risk pooling challenges:
Compete on quality and price rather than risk profiles
Can create specific solutions for high risk members
• A broker who earns the bulk of his/her income from one scheme is vulnerable to that scheme terminating the broker contract. The possibility of undue influence by the scheme on the broker exists, in terms of the advising on our scheme’s products.
• Improve regulatory framework for brokers to ensure independence, and clear differentiation between marketing agents and independent advisors
CMS: Remuneration of Health Brokers: Revising the Regulatory Framework,
September 2008
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Priority setting and mandatory minimum benefits
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Legal obligation
• Reg 8(1) – Payment in full
• Reg 8 (4) “…. these regulations must not be construed to prevent medical schemes from employing appropriate interventions aimed at improving the efficiency and effectiveness of health care provision, including such techniques as requirements for pre-authorisation, the application of treatment protocols, and the use of formularies.”
• Reg 15D. Standards for managed health care
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Standard for managed care in regulations to MSA
• Reg 15D (b) …the managed health care programmes use documented clinical review criteria that are based upon evidence-based medicine, taking into account considerations of cost-effectiveness and affordability, and are evaluated periodically to ensure relevance for funding decisions
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Administrators and Managed care organisations must be accredited
3. CLINICAL OVERSIGHT
3.1 Protocols utilised are in compliance with Regulations 15D, 15H and 15I.
3.1.1 Documented protocols are in place in compliance with Regulations 15D, 15H and 15I.
3.2 Clinical effectiveness and quality management
3.2.1 The organisation has in place a documented and well defined quality management programme to measure clinical outcomes
3.2.2 Quality management function, reporting and outcomes.
3.2.3 Value added by the organisation.
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Measures in place to meet clinical oversight accreditation requirements
• Highly qualified medical staff, nurses, actuaries, economists internally
• Arrangements with Wits Health consortium and other academic institutions for access to highly specialised opinions on specific interventions
• Formal Health Technology Assessments done on new products, in consultation with academic health professionals
• Operational processes in place to ensure these clinical protocols are applied consistently
• Clinical governance and accountability processes
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In spite of extensive effort, resources, and high skill levels, some still fall through the cracks
• Evidence presented by clinicians, civil society organisations, and individual consumers challenges the process
Some consumers unaware about PMBs
Information not readily available
Some providers raised issues of incompetence
Expectations might not be in accordance with evidence, cost effectiveness and affordability
• Sometimes it may happen that clinicians do not apply evidence, cost effectiveness and affordability in their decisions
Appeal Board ruling: Medshield and Mabin 11 Nov 2013
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Complexity of “evidence-based” concept
Hierarchy of authority of various types of clinical, epidemiological or biomedical evidence
(i) Systematic review of randomised controlled trials, including meta analyses
(ii) At least one properly-designed randomised controlled trial;
(iii) Well-designed pseudo-randomised controlled trials
(iv) Comparative studies with concurrent controls and allocation not randomised, cohort studies, case-control studies, or interrupted time series with a control group;
(v) Comparative studies with historical control, two or more single arm studies, or interrupted time series without a parallel control group;
(vi) Case studies, case series, whether on a post-test or pre-test basis, inclusive of expert opinions
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Health economic analyses
Considerations of cost-effectiveness and affordability
• Cost benefit analysis
• Cost utility analysis
Incremental cost effectiveness ratio
What additional benefit is gained from an intervention?
What is the additional cost for the additional benefit?
• Cost effectiveness analysis
• But what about affected people?
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Priority setting processes
• Must create TRUST in the process Transparent, inclusive, and impartial
• Must ACTIVELY ENABLE participation and facilitate dialogue across groups Not all stakeholders are equal in power: gender issues,
marginalized groups, language, information gaps How do we level the playing field in which the priority‐setting
game is played? Need mechanisms to strengthen individual capacity; strengthen
institutional capacity; overcome gender barriers to participation, facilitate inclusion of marginalized groups
• Engage EARLY and OFTEN • Need to ensure that participation is not only inclusive, but
MEANINGFUL in that it allows the views of participants to be reflected in the ultimate decisions
Prince Mahidol Award Conference recommendations, January 2016:
https://www.dropbox.com/sh/t6zp7ml46f1yjrj/AAD7idUO-hc7mPoiOWAVqYyUa?dl=0
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Specialist cost per life index (Real terms)
0
20
40
60
80
100
120
140
160
180
200
2007 2008 2009 2010 2011 2012 2013 2014
Re
al c
ost
pe
r lif
e in
dex
: B
ase
20
07
MMB Non-MMB
Reference price set aside
Raath, Christoff. Prescribed Minimum Benefits Impact Analysis. Presentation to the Department of
Health. s.l. : Insight Actuaries, 12 November 2014.
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Incidence trend for MMB- and non-MMB mood disorder claims
0
50
100
150
200
250
300
350
400
450
2007 2008 2009 2010 2011 2012 2013 2014
Co
nd
itio
n c
ou
nt
ind
ex:
Bas
e 2
00
7
MMB Non-MMB
Raath, Christoff. Prescribed Minimum Benefits Impact Analysis. Presentation to the Department of
Health. s.l. : Insight Actuaries, 12 November 2014.
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PMB regulations are outdated • With some exceptions, no review since implemented in 2000
• Treatment algorithms no longer reflect current evidence, cost-effectiveness and affordability
• Cancer “treatable” definition is particularly problematic. Modern approach covers:
Curative intent
Control: controlled and managed as a chronic disease
Palliation: used to ease symptoms caused by the cancer
• Orphan diseases not covered
• Mental health needs better coverage
• Preventive care not covered
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Tariff determination
• Acrimonious history
• Up to 2004 Negotiated between representatives from medical schemes and healthcare providers on a collective basis
• Competition commission ruled against this as being collusive in 2004
• Reference price set aside by court in 2010
• HPCSA ethical tariff determination withdrawn in 2013
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Market power imbalances, tariffs, negotiations
• Bilateral oligopoly in respect of hospitals
• Specialist have market power: Numbers, highly skilled people
• GPs not able to bargain collectively
• Allied health professionals, private nurse practitioners, have little power
• Imbalances best corrected through formal multilateral negotiations, overseen by an independent organ of state
• Must leave room for additional negotiations for schemes and providers
• Technical work on coding system must be overseen by independent authority
CMS and NDoH: Discussion document. The determination of health prices
in the private sector. Version 1.00. 28 October 2010
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Incomplete regulatory framework
• Priority setting capacity is distributed and inadequately implemented
• Price determination on an ad hoc basis • Alternate reimbursement, outcome related
measures are poorly developed • Risk adjustment system not in place • Broker regulatory framework does not
incentivise independence • Limitations on optimal service delivery
structures
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National health insurance white paper proposals
• Single payer system
• Purchaser provider split
• Publicly funded, privately and publicly provided
…many interventions should be taken now to facilitate the transition from the current inequitable system…..
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Independent statutory healthcare commission
Commission
Coordinate negotiation
chamber
Independent dispute
resolution
Advice to Minister
Technical Review of prices
•Clinical codes and tariffs •Alternate
reimbursement •Hospitals and
professionals
•Compliance Investigation •Enforcement •Declaration of undesired practices
Private hospital licensing
HTA Pharma pricing
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Conclusion
• We can have a competitive and well-functioning private health care market, which delivers on social protection objectives.
• The market has been fragmentally regulated without an all-inclusive understanding and approach to the system as a whole.
• Serious consideration should be given to the desired market outcomes, and the structural pillars required for supporting their realisation through optimising the competition framework.
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MMI purpose
“To enhance the lifetime financial wellness of people, their communities and
their business”
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Thank you!