Transcript Slide 1 - Competition Commission

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
1
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
2
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
3
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
4
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
6
GINI Index
70
60
50
40
30
20
10
0
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
y = 2E-09x2 - 0.0003x + 41.082
R² = 0.1604
GINI index (World Bank estimate) by GDP per capita (current US$)
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
7
Infant mortality rate
120
100
80
60
40
20
0
$-
$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
y = 3787.8x-0.634
R² = 0.7288
Power (Infant mortality rate per 1000 by GDP per capita (current US$))
Data sourced from www.worldbank.org.za
8
Life expectancy at birth
100
90
80
70
60
50
40
30
20
10
0
$-
$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
y=
38.855x0.0684
R² = 0.621
Power (Life expectancy at birth, total (years) by GDP per capita (current US$))
Data sourced from www.worldbank.org.za
9
Health expenditure % GDP by
GDP / capita
18
16
14
12
10
8
6
4
2
0
$-
$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
y = 5E-05x + 6.0651
R² = 0.1421
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
42%
South Africa
US
Chile
France
Canada
Switzerland
OECD
Korea
Netherlands
Luxembourg
Greece
Finland
Poland
Estonia
Slovak Republic
7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
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/10.1787/5jz2lpxcrhd5en.
11
WHO OECD brief on affordability
Comparing the Cost of Delivering Hospital Services across the Public and Private Sectors in South Africa.Shivani Ramjee, University of Cape Town
October 2013
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
12
WHO OECD brief on affordability
Comparing the Cost of Delivering Hospital Services across the Public and Private Sectors in South Africa.Shivani Ramjee, University of Cape Town
October 2013
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
13
14
SA Healthcare funding
Tax credits
General taxes
Fiscus
NDoH
Appropriation Bill to Provinces
Contributions
83 Medical
schemes
Provincial equitable share formula
Provincial
government
allocate
funds to
health
42 accredited
Managed Care
Organisations
27 accredited Administrators
Public facilities
Private facilities & independent professionals
3 Large hospital
groups,
independent
hospitals
Independent
practice
Specialists, GPs,
Dentists and
other
Pharmacies
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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
Risk pooling
Scheme selection
Scheme
behaviour
Priority setting
and PMBs
Tariff
determination
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Incomplete risk pooling
18
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
19
CMS presentation
CMS presentation to Health Portfolio
Committee (2010)
CMS Presentation to Health Portfolio Committee 15 September 2010
20
20
CMS presentation
CMS Presentation to Health Portfolio Committee 15 September 2010
21
CMS presentation
CMS Presentation to Health Portfolio Committee 15 September 2010
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CMS presentation
CMS Presentation to Health Portfolio Committee 15 September 2010
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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
24
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
26
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 “evidencebased” concept
Hierarchy of authority of various types of clinical,
epidemiological or biomedical evidence
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Systematic review of randomised controlled trials, including meta
analyses
At least one properly-designed randomised controlled trial;
Well-designed pseudo-randomised controlled trials
Comparative studies with concurrent controls and allocation not
randomised, cohort studies, case-control studies, or interrupted time
series with a control group;
Comparative studies with historical control, two or more single arm
studies, or interrupted time series without a parallel control group;
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 cost per life index: Base 2007
(Real terms)
200
180
160
140
120
100
80
60
40
20
0
Reference
price set aside
2007
2008
2009
2010
MMB
2011
2012
2013
2014
Non-MMB
Raath, Christoff. Prescribed Minimum Benefits Impact Analysis. Presentation to the Department of
Health. s.l. : Insight Actuaries, 12 November 2014.
38
Incidence trend for MMB- and
non-MMB mood disorder claims
Condition count index: Base 2007
450
400
350
300
250
200
150
100
50
0
2007
2008
2009
MMB
2010
2011
2012
2013
2014
Non-MMB
Raath, Christoff. Prescribed Minimum Benefits Impact Analysis. Presentation to the Department of
Health. s.l. : Insight Actuaries, 12 November 2014.
39
PMB regulations are outdated
• With some exceptions, no review since implemented in 2000
• Treatment algorithms no longer reflect current evidence, costeffectiveness 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
40
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
41
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
42
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
43
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…..
44
Independent statutory healthcare commission
Independent
dispute
resolution
Commission
Coordinate
negotiation
chamber
Technical Review
of prices
• Clinical codes
and tariffs
• Alternate
reimbursement
• Hospitals and
professionals
Private
hospital
licensing
HTA
Pharma
pricing
•Compliance
Investigation
•Enforcement
•Declaration of
undesired
practices
Advice to Minister
45
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!
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