The recent High Court application for an interdict by the Board of Healthcare Funders against the Council for Medical Schemes has received widespread media attention. Will the push by medical schemes to only pay for members' prescribed minimum benefits up to scheme rule limits be successful? This will depend on the court's interpretation of the regulations published under the Medical Schemes Act.
Since the scrapping of the National Health Reference Price List (RPL) in July 2010, the private healthcare sector has been left without guidance as to what can be regarded as suitable fees and charges for healthcare services. Amidst all this uncertainty, one thing has remained constant, namely, the legal requirements relating to prescribed minimum benefits under the Medical Schemes Act, 1998 regulations.
Medical schemes benefit options must pay "in full", without co-payment or the use of deductibles, the diagnosis, treatment and care costs of the prescribed minimum benefit conditions that are listed in an annexure to the regulations. These include a limited set of 270 medical conditions as well as 25 chronic conditions, such as hypertension, diabetes and asthma. Emergency medical conditions are also included. Regulation 8 requires medical schemes to pay the full cost of the diagnosis, treatment and care of these conditions. At least, that is one interpretation given to the wording by the Council for Medical Schemes (CMS).
The other interpretation is one which the Board of Healthcare Funders (BHF), acting on behalf of medical schemes, is seeking to place on the use of the words "in full". The BHF argues that medical schemes should only be statutorily compelled to pay for prescribed minimum benefits in full up to a limit stated in the individual scheme's rules. This, they say, is the only interpretation that will keep the managed healthcare industry sustainable in the long run. To view the issue otherwise would result in spiralling premium increases which would be damaging to the healthcare consumer.
The interpretation has become an issue because the CMS, as the regulatory body for medical schemes, has recently issued a circular stating that it will continue to enforce the requirements stipulated in the regulations in respect of the "payment in full" provisions of Regulation 8. The interpretation given by the CMS appeal board is that "payment in full" means payment as per the healthcare provider's invoice and not at a medical scheme rate subject to limitation in terms of scheme rules.
The players will have to wait a little longer for an answer as to which interpretation is correct in law. The court application by the BHF has been postponed until the new year.
The debate around the interpretation of the regulations raises interesting questions for consumers. Firstly, consumers have already noticed a dwindling of their healthcare benefits under most medical schemes. This is understandable when one has regard to the latest statistics supplied in the CMS Annual Report for 2009/10 which reveal that medical schemes in South Africa are under financial stress. According to the same report, total operating losses across all medical schemes amounted to R2.6 billion in 2009. Some schemes have been forced to dip into their reserves to pay claims. With the deterioration in the financial health of schemes, certain medical scheme options have been closed. Others have seen a rationing of benefits.
Besides requiring "payment in full" of prescribed minimum benefits, Regulation 8 also allows medical schemes to make rules which provide that the diagnosis, treatment and care costs of prescribed minimum benefit conditions will only be paid in full if those services are obtained from a designated service provider. If they are not, a co-payment by the member or deductible is allowed. One might think that this is a stipulation in favour of medical schemes which should be enough in the circumstances.
Interestingly, the reasons cited by both the BHF and CMS for their respective stances in the matter are not exactly worlds apart. The statement issued by the BHF addressing private sector cost escalations cites as its reason the fact that prescribed minimum benefits are oriented towards high-cost interventions. Without a cap on charges for these conditions, healthcare providers may charge what they like for treatment and procedures. The result of this, they say, is that members will have to fork out more and more for their medical scheme premiums. Their aim is to ensure long-term sustainability, together with affordability of healthcare.
The CMS claims that it is concerned with the sustainability of medical schemes but that it is also concerned with affordability. According to the CMS, prescribed minimum benefits aim to ensure that all medical scheme members have access to certain minimum health services regardless of the benefit option they are on, so as to provide people with continuous care to improve their health and well-being. Ultimately, it is hoped that this will make healthcare more affordable.
Generally, the primary rule of statutory interpretation is that if the meaning of the words is clear, it should be put into effect. Only where the plain language of the wording used is ambiguous, or if strictly applied would result in absurdity, would a court deviate from the literal meaning of the wording used in a legislative provision.
The court will need to consider whether the words "in full" are ambiguous in their context. The CMS asserts that it means the full cost of treatment. An argument could be made that no co-payment or deductible is allowed in respect of payment for prescribed minimum benefit conditions, which does not curtail schemes' rights to include benefit limits in their rules.
While there are numerous other considerations, not least of all the Bill of Rights, it seems that the present case may be one where a consideration of the social, economic and political context of Regulation 8 will assist the court to ultimately reach a decision on the interpretation so as to best promote spirit, purport and objects of the Constitution and the Bill of Rights.
When the court considers the pending application, one can only hope that it will reach a decision which does exactly that: striking a balance between economic and social considerations, so that both medical schemes and their members can continue to afford to pay for private healthcare in South Africa.
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