Medical scheme tariffs are set for the whole of South Africa; while medical practices in some areas may find that the set tariffs offer fair value for both practitioner and patient, others may not. Let’s look at the way tariffs work and at what represents fair value.
Medical schemes calculate their tariffs applying the RBRVS model: they use the number of claims processed during prior periods, the risk of a re-occurrence of the number of claims, and the funds available, to assess their claims risk profile. From this they set tariffs based on what they can afford, not on the actual costs to the medical practitioner of delivering the relevant healthcare services. The tariff set may cover the costs to the practitioner and allow for a reasonable profit margin, but it may not. The contract between the healthcare professional and the patient will stipulate that the patient will be expected to make up the difference between the tariffs paid by their medical aid and the actual costs.
So how does the patient know that they are getting fair value?
The Health Professions Act 56 of 1974 allows patients access to a professional board if they feel that what they have been charged is not fair value:
“the patient may, within three months after receipt of the account from the healthcare professional, apply in writing to the professional board to determine the amount which in the opinion of the professional board should have been charged in respect of the services to which the account relates, and the professional board shall, as soon as possible after receipt of the application, determine the said amount and notify the practitioner and the patient in writing of the amount so determined: Provided that before the professional board determines the said amount, it shall afford the practitioner concerned an opportunity to submit to it in writing his or her case in support of the amount charged.”
So a fair value is one that is not less than the cost to deliver the service. A medical practice has to be run as a sustainable business and when medical scheme tariffs result in a loss, additional fees may be recovered from the patient. Of course exorbitant mark-ups, which are not justified by the level of skill and expertise, do not constitute fair value.
It becomes clear that healthcare professionals need to draw accurate figures about their costs and profit margins from their practice management systems, in order to establish fees that constitute fair value, and also to help them decide whether or not to accept the medical scheme tariffs under a contract to receive direct payment from the schemes.
In our next post we’ll look at the healthcare situation in South Africa to find out why the current medical scheme tariff model doesn’t fit the nation as a whole and see how healthcare professionals can work within this framework.