Comparing and understanding medical aids in 2018

Medical aids can be difficult to understand. After reading the emails, websites, short and long brochures, rules and annexures I struggle to know what cover I’ve got. This makes it hard to compare plans and options. And I’m not alone. The Health Market Inquiry has noted “the inability of individuals to compare options effectively”.

More disclosure on coverage would allow for easier comparison between plans and options, and go a long way in making consumers cost conscious and aware of what their medical aid offers.

There are many excellent articles and guides on how to compare medical aids. In three easy steps you look at your state of health and what cover you might need, the options available in your price range, and the state of health of the medical schemes you are considering.

Determining your state of health and the state of your schemes’ health is fairly easy. Schemes publish detailed annual reports and the Council for Medical Schemes (CMS) annual report contains industry and scheme information. Although you can’t forecast every illness, you’ll have a good idea if you are a high, medium or low consumer of healthcare.

But when you start looking at what schemes cover, the information available isn’t always helpful.

Take the two largest medical costs – hospitalisation and specialists.

In 2016 these accounted for 37.4% and 24.02% of medical expenditure according to the CMS annual report. That’s just over 60% of medical costs, so you’ll want to know if you are covered or not.

Here’s how three open scheme medical aids say they cover hospital costs:

“Unlimited cover in any private hospital.”

“Hospital accounts are covered in full at the rate agreed upon with the hospital group.”

“An account can either be covered in full or covered up to an agreed rate.”

The first one might lead you to believe you are covered for everything, but unlimited is unlimited for most procedures  – not all. Scopes (‘oscopies) and radiography for example often have copayments and limits. Fortunately, copayment and limit information is fairly easy to find in brochures.

The second and third examples use a well-worn medical aid term – ‘rate’. Unless you know what the rate is, how do you know what you are covered for?

Specialists, whose consultations in hospital don’t form part of hospital costs, are also covered at a ‘rate’.

“Specialists: We don’t have a payment arrangement with and other healthcare professionals (are covered at) 200% of the (scheme) Health Rate.”

“Specialists: We pay 100% of the (scheme) rates for professional fees.”

“Funded in full at the negotiated rate.”

Two hundred percent of R750 is R1 500. But what is 200% of the ‘rate’ and how do you compare this to other schemes and options? Do you need 200% cover or will 100% be enough? Is 200% cover of one scheme equivalent to 200% cover of another scheme?

A number of healthcare advisors I contacted indicated that rates don’t differ by much per scheme – 10% to 20%, but that can make a difference to your decision and your pocket.

Rates are negotiated on an individual basis with hospitals and specialists. Specialists’ rates history lies in a reference price list intended to be used as a guide, but declared invalid by the High Court in 2010. So each hospital and specialist can have a different rate with different schemes, renegotiated at different times.

While appreciating the confidentiality of negotiations, it would be good to know how close rates are to the actual costs, and how those rates differ scheme to scheme to make comparison easier.

I asked open scheme medical aids for comment on rates. Some schemes have Prescribed Minimum Benefit (PMB) tariffs on their sites, and rates are referred to as percentage increases each year in some scheme’s rules, but for most, rates are the result of private negotiations and they aren’t made available upfront when you are choosing a medical aid.

These rates aren’t strictly confidential because when you have treatment or undergo a procedure the costs are known.

There is a lot of information on rates because the amount of medical treatments and procedures runs well over 200 pages. Not everyone is going to read that much information. But that isn’t a good enough reason for not making it available. As medical aid is expensive and important I am prepared to spend time getting to know what I am buying so I know if I have adequate coverage or not.

Out of pocket expense figures based on claims not paid by medical aids can give some idea of how close coverage is to cost.

Hospital accounts are generally well covered and the CMS figures for out-of-pocket expenses (claims not paid from risk benefits) show that only 7% (R2 billion) of out-of-pocket payments went the way of hospitals in 2016. Only is a relative term. If you’re required to pay R7 000 of a R100 000 bill, it’s significant.

A total of R4.158 billion was paid as an out-of-pocket expense to specialists in 2016 – 14% of out-of-pocket payments, according to CMS figures. (The highest (32%) out-of-pocket spend is for medicines.)

The December 2016 Health Market Inquiry (HMI) reports show that specialist and doctor rates cluster around medical scheme rates, with a few outliers. The 2014 figures in an HMI publication show that around 4% of claims were unpaid by medical aids for in-hospital expenses; 6% to 7% of out-of-hospital expenses’ claims were not paid by medical aids.

Gap cover brochures also contain good examples of costs not covered by medical aid. And figures for individual schemes are included in some schemes’ annual reports.

It’s good to have these numbers – but they are overall numbers or averages. In a system where some are very high consumers of medical aid and some consume extremely small amounts, averages don’t lend themselves to useful comparisons.

I’d like to be a cost conscious healthcare consumer – but I can’t if information on costs and coverage is not available.

Too often I feel I am selecting an option with limited information, and signing a contract without being able to adequately compare options and without knowing all the terms and conditions that may apply.

Getting to know financial products and reading rules, terms and conditions is a good idea. Rare or not.

More disclosure on coverage would increase awareness of the cost of medical care, and avoid the surprise medical bill not covered by medical aid.

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