GEMS Presentation - The Competition Commission€¦ · GEMS has realised significant savings on...
Transcript of GEMS Presentation - The Competition Commission€¦ · GEMS has realised significant savings on...
GEMS Presentation Health Market Inquiry
1 March 2016
Structure
About GEMS o Background o Mandate, Mission, Vision and Values o Role of a Medical Scheme (Operating Framework) o Products (Plans) and Enrolment Criteria (Income Bands) o Governance and Service Structure o Scheme Statistics o Strategy and Approach
Impact of GEMS o Industry Growth o Access (No Underwriting) o Decrease in non-healthcare Spend
Our Challenges o PMBs o Absence of Tariff and Pricing Structure
Considerations
ABOUT GEMS
(Who We Are)
Background
The public service is the country's largest employer with approximately 1.3 million employees
In fulfilment of its obligation as an employer, the public service provides its employees with a remunerative package structured to include and cover:
o Retirement/Pensions (GEPF/GPAA)
o Housing Benefits (Allowance)
o Medical Benefits (Subsidy)
Prior to 2005, one of the challenges faced by the Employer was that a significant and growing number of its employees were unable to gain entry into existing medical schemes due to the high cost structure
o To address this challenge it was resolved to establish a single restricted membership medical scheme to cover public service employees
Mandates
Vision
Mission
Our Mandate, Mission, Vision and Values
An excellent, sustainable and
effective medical scheme for all
public service employees.
To provide all public service
employees with equitable access to
affordable and comprehensive
healthcare benefits.
Values
To ensure that there is adequate provisioning
of healthcare coverage to public service
employees that is efficient, cost-effective and
equitable; and to provide further options for
those who wish to purchase more extensive
cover.
Excellence
Member-centricity
Integrity
Value for money
Innovation
Evolution of the GEMS Mandate
and Role
Since 1999: Equitable Access to Medical Assistance
Cabinet approved the registration of GEMS in 2004
Registered in 2005 and commenced enrolment in 2006
July 2006 a new medical subsidy policy was introduced
GEMS like all medical schemes operates within the legal framework provided by the Medical Schemes Act
The Role of a Medical Scheme
“Business of a medical scheme” means the business of undertaking liability in return for a premium or contribution:
a) To make provision for the obtaining of any relevant health service; b) To grant assistance in defraying expenditure incurred in connection with the rendering of any relevant
health service; and c) Where applicable, to render a relevant health service, either by the medical scheme itself, or by any
supplier or group of suppliers of a relevant health service or by any person, in association with or in terms of an agreement with a medical scheme
“restricted membership scheme” means a medical scheme, the rules of which restrict the eligibility for membership by reference to:
a) Employment or former employment or both employment or former employment in a profession, trade, industry or calling;
b) Employment or former employment or both employment or former employment by a particular employer, or by an employer included in a particular class of employers;
c) Membership or former membership or both membership or former membership of a particular profession, professional association or union; or
d) Any other prescribed matter
“rules” means the rules of a medical scheme and include: a) The provisions of the law, charter, deed of settlement, memorandum of association or other
document by which the medical scheme is constituted; b) The articles of association or other rules for the conduct of the business of the medical scheme; and c) The provisions relating to the benefits which may be granted by and the contributions which may
become payable to the medical scheme
Scheme
Bank account Advisors
Actuaries
Auditors
Investment
Benefit options
Contributions
Managed care
Administrators
Members
Claims
Critical Aspect s for GEMS as a Medical Scheme
oScheme rules
oRegistrar and
Council
oMedical Schemes
Act
Support Services
Advisory,
Actuaries,
Auditors
Investment
Members
Board of Trustees Committees
Principal Officer
Executive & Head Office
Employer
Employees
Administration
o Enrolment and Registration
o Benefit Management and
Claims Payment
o Member servicing (Contact
Centre Support).
Governance , Direction & Oversight
Execution of Strategy & determination of Operational deliverables
Performance of Operational Functions
Governance & Operational Structure
Managed Care
o Authorization Management
o Disease Management
o Claims Adjudication
OUTSOURCED SERVICES
Conceptualisation and establishment
Cabinet Mandate (2004)
Registration (2005)
Funding R28 Billion (2015)
“The state as an employer seeks to ensure that there is adequate provisioning of healthcare coverage to public service employees that is efficient, cost-effective and equitable”
GEMS’ Strategy and Plan
Affordability Making healthcare spending a progressively smaller portion of
household income, while minimising member out-of-pocket spending on healthcare for government employees from all income groups
Understanding Members
Understanding member profiles and needs, promoting healthy behaviours through well incentivised loyalty programmes that
encourage members to lead healthier lives, minimising their risk of developing lifestyle-related diseases
Healthier Members Promoting effective disease management of members and improving
the clinical outcomes so that they remain healthy and productive members of the public service
Partner to Organs of the State
Working together with government bodies and leading industry players, both local and international, to bring about innovative
methods and leading practices in healthcare for the ultimate benefit of society
The Scheme’s Strategy is based on a Three Year Planning Cycle (Currently 2014 – 2016)
The GEMS Strategy is underpinned by four key pillars of:
Prioritising healthcare
GEMS has realised significant savings on non-healthcare costs.
13,0%
8,7%
7,4%
11,8%
0%
3%
6%
9%
12%
15%
Open Schemes Closed Schemes(excluding GEMS)
GEMS Total(excluding GEMS)
Non-healthcare costs Cost savings
R1 200 000,000 per year
Prioritising healthcare
The R1,2 billion saved on non-healthcare expenditure allows for more healthcare services to be funded.
3 million consultations with family practitioners
500 000 radiology investigations
12 000 hospital admissions
Or the total healthcare costs of 70 000 beneficiaries per year
Scheme Statistics
2015 Principal Members 674,936 Beneficiaries 1,781,770 Eligible Members on GEMS 55% Average Age 30.78 Level 1-5 46% Average Family Size 2.64 Pensioner Ratio 13.70% Claims Ratio 92.63% • Hospital Spend 38.22%
Gross Contributions 28,139,221,000 Claims 25,539 ,196,000 Non Healthcare Cost 2,043,505,000
Major Utilisation Cost Drivers
Private Hospital and Medical Specialists comprises of more than 45% of
the total
Scheme paid R1.8 billion above Scheme rates as PMB
Practice Type Cost Paid (R)
Medical Specialists 2 824 183 078
General Practitioners 1 925 785 906
Optometrist 529 751 877
Pathologists 1 488 219 231
Radiologist 975 135 470
Dentist 534 044 298
Supplementary & Allied Health Services 2 823 406 633
Emergency Medical Services (EMS) 287 282 331
Private Hospitals 9 606 324 013
Provincial hospitals 101 395 668
Medicines 4 346 497 705
Utilisations Statistics
0
2 000 000 000
4 000 000 000
6 000 000 000
8 000 000 000
10 000 000 000
12 000 000 000
14 000 000 000
0%
- 5
%
5%
- 1
0%
10
% -
15
%
15
% -
20
%
20
% -
25
%
25
% -
30
%
30
% -
35
%
35
% -
40
%
40
% -
45
%
45
% -
50
%
50
% -
55
%
55
% -
60
%
60
% -
65
%
65
% -
70
%
70
% -
75
%
75
% -
80
%
80
% -
85
%
85
% -
90
%
90
% -
95
%
95
% -
10
0%
Ben
efit
am
ou
nt
pai
d
Band of beneficiaries
5 : 51
5% of beneficiaries incur 51% of costs in any given year
2014 Beneficiaries vs. Claims
Claims Ratio
0%
200%
400%
600%
800%
1000%
1200%
1400%
1600%
1800%
79%
79% of beneficiaries pay more than is claimed back in any given year
2014 Claims ratio per family
Medical Plans/Options
Enrolment Criteria (Income Bands)
Sapphire and Beryl
Income Bands 2016 Contribution per Member
2015 2016 Sapphire Beryl
R0 - R6 860 R0 - R7 340 R776 R895
R6 861 - R9 625 R7 340.01 - R10 299 R813 R971
R9 626 - R16 490 R10 299.01 - R17 644 R864 R1 059
R16 491+ R17 644+ R961 R1270
Ruby and Emerald
Income Bands 2016 Contribution per Member
2015 2016 Ruby Emerald
R0 - R10 330 R0 – R11 053 R1 796 R1 996
R10 331 - R17 840 R11 053.01- R19 089 R2 000 R2 210
R17 841+ R19 089+ R2 224 R2 477
Onyx
Income Bands
2016 Contribution per Member 2015 2016
R0 - R10 330 R0 - R11 053 R3 193
R10 331 - R22 010 R11 053.01 – R23 551 R3 322
R22 011+ R23 551.01+ R3 587
Impact of no change in Subsidy
Member portion of contributions increased from 35% to 48%
Impact of New Subsidy
Family structure
2011
Monthly
medical aid
subsidy
2015
Monthly
Medical Aid
Subsidy
2016
Monthly
Medical Aid
Subsidy
Principal Member without
dependants 720.00 925.00 1,008.00
Principal Member with one
dependant 1,440.00 1,850.00 2,017.00
Principal Member with two
dependants 1,880.00 2,415.00 2,633.00
Principal Member with three
dependants 2,320.00 2,980.00 3,249.00
Principal Member with four or
more dependants 2,760.00 3,545.00 3,865.00
2015 Subsidy increase of 28.5% in line with the PSCBC Resolution
2016 Subsidy increase of 9% linked to Medical Price Index (MPI)
Affordability
On average, GEMS’ contributions represent 8% of income after allowing for employer subsidies (and 20% of income before allowing for subsidies).
\
Before subsidy After subsidy
Sapphire 19% 1%
Beryl 16% 4%
Ruby 20% 7%
Emerald 21% 9%
Onyx 17% 11%
Total 20% 8%
Affordability
On average, GEMS’ is 19% more affordable than comparable plan options \
Less expensive than
comparative Schemes
Sapphire 26%
Beryl 15%
Ruby 1%
Emerald 27%
Onyx 25%
Total 19%
Understanding members
Understanding member profiles and needs, promoting healthy behaviours through incentives that encourage members to lead healthier lives.
GEMS will offer industry leading preventative care and screening test benefits in 2016.
Mammograms (annual)
Pap smears (annual)
PSA tests (annual)
Bone density scans
Glaucoma screening
Occult blood screening
Influenza vaccinations
Pneumococcal vaccinations
GEMS is now participating in the Health Quality Assessment (HQA) – this is further indication of the Scheme’s commitment to improving healthcare outcomes.
Disease Management Programmes
Chronic Disease Management Programme
Numbers (2015)
Diabetes 90 634
Hypertension 210 825
HIV 119 894
Mental Health 48 446
Oncology 11 133
Number of
More than 20% of beneficiaries have Chronic Diseases
The Funding Challenge
Hypothyroidism
HIV
Hypertension
Chronic Renal Disease
27
3
3
3
For every beneficiary with hypertension, GEMS requires 3 healthy members to cross-
subsidise
2014 Cost ratio examples
Hospital-centric Care is Dominant
Nearly 60% of expenditure pertains to hospital or hospital-related costs
Only 10% of spend pertains to family practitioners (which is higher than the industry
average of 7,0%)
38%
19%
43%
In- and out-of-hospital spend
Hospital spend Hospital related spend Out of hospital spend
10%
13%
38%
39%
Spend by discipline
Family Practitioners Specialists Hospitals Other
Healthier members
• Disease specific programmes aimed at improving clinical outcomes
Disease management programmes
• Holistic wellness and prevention of avoidable hospitalisations
HIV programmes
• Early detection and treatment of comorbidities and complications
Maternity programmes
• Promotion of conservative treatment where clinically appropriate
Back management programmes
• Holistic wellness and prevention of avoidable hospitalisation
Diabetes management programmes
2015 Healthcare Indicators
Q1 Q2 Q3 Q4 FY
Target
Disease Outcome Measures:
- HIV/AIDS
Enrolment on HIV DMP as a %
of Scheme prevalence rate 76% 79% 82% 83% 79% 77%
Viral Load <1000 as a % of
those on first line regime of
ARVs for more than 6 months
82% 85% 89% 90% 87% 85 %
% of those on ARVs >6
months who show an
improvement in CD4 count
83% 88% 84% 90% 86% 85%
2015 Clinical Statistics
HIV/AIDS
Q1 Q2 Q3 Q4 FY Target
Health Outcomes
Pneumonia hospital
admissions
13 110 16 974 14 760 12 121 56 965
TB hospital admissions 2 299 1 763 1 957 1 913 7932
% increase/decrease
over previous year -
Pneumonia hospital
admissions
-11% 4% -19%
5%
-5% Reduce by 5%
per year
% increase/decrease
over previous year - TB
hospital admissions
-22% -25% -20%
-4%
-17% Reduce by 5%
per year
Partner to organs of state
Working together with government bodies and leading industry players to bring about innovative methods and leading practices in healthcare to the ultimate
benefit of society.
Data sharing and support of strategic initiatives
Benchmarking SA private hospital costs
Supporting NHI pilot site in Eastern Cape
Data sharing on male medical circumcisions
GEMS Model
Family practitioner networks
(already well established)
Specialist networks (obstetricians and paediatricians)
Hospital networks
(Currently in Development)
Efficient practitioner networks Comprehensive disease management programmes
Maternity HIV
Diabetes Back pain
And more …
Impact of GEMS
Growth
GEMS has realised significant and sustained growth and is now the second largest medical scheme in South Africa
Over 1,7 million beneficiaries 1 in 5 beneficiaries 1 in R10 spent on healthcare
2007 2009 2011 2013 2014
Impact of GEMS Growth on Industry
Medical scheme membership is flat in 2014 (CMS)
Prioritising healthcare
GEMS has realised significant savings on non-healthcare costs.
13,0%
8,7%
7,4%
11,8%
0%
3%
6%
9%
12%
15%
Open Schemes Closed Schemes(excluding GEMS)
GEMS Total(excluding GEMS)
Non-healthcare costs Cost savings
R1 200 000,000 per year
Balancing Sustainability with Social Solidarity
GEMS has achieved solid financial results in the context of social solidarity.
Increasing reserves Stable loss ratio
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
No waiting periods
No late joiner penalties
Income-related contributions
Broad beneficiary definitions
Aligned to the Principles of Universal Healthcare Coverage
Our Challenges
Industry Dynamics
Healthcare is increasing in real terms (CMS)
The PMB Challenge
The regulation stipulates that PMBs must be paid at cost
When PMBs were introduced the “pay in full” provision wasn’t a risk for medical schemes
Healthcare tariffs were collectively negotiated by medical schemes and healthcare providers at the time
Tariffs were published in a “reference price list”
Professional healthcare organisations published “ethical” charging guidelines setting limits
o Claims that are not PMBs are subject to benefit limits, co-payments and being paid at scheme tariff
PMB claims may be limited to scheme tariff if the scheme has a DSP for that healthcare service and the member voluntarily used a provider who is not a DSP
o This creates an incentive for providers to change the way they apply clinical coding to claims in order to ensure that claims will be paid as PMBs
The PMB Challenge
Like all Schemes a significant challenge for GEMS is the issue of PMBs
In 2015 the cost of PMB benefits alone was in excess of R760 per life per month
PMB cost for GEMS have almost doubled over the past five years and accounts for more than 50% of claims
0
100
200
300
400
500
600
700
800
900
Jan MarMay Jul Sep Nov Jan MarMay Jul Sep Nov Jan MarMay Jul Sep Nov
2013 2014 2015
Non-PMB claim PMB claim
PMB and non-PMB claims PLPM
Incidence
61% 63% 66%
72% 72% 72%
39% 37% 34%
28% 28% 28%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015
% o
f ex
pen
dit
ure
PMB Non-PMB
The proportion of claims classified as PMBs has increased significantly in recent years. In 2010, 60.7% of expenditure was classified as a PMB. By 2015, 72.3% of expenditure was classified as a PMB. This
amounts to an increase of 19.0%.
In this context, PMBs refer to claims flagged as PMBs as well as potential PMB claims on according to ICD 10 codes. Pharmacy claims are not considered given their limited impact on Prescribed Minimum Benefits.
Disaggregating Trends
Increases are evident across provider types. Whether such substantial and consistent
increases can simply be attributed to variances in the clinical characteristics of patients is
questionable
% P
MB
By discipline
2010 2011 2012 2013 2014 2015
Increases are evident across diagnosis categories. Whether such consistent increases across
diagnoses is a function of changes in the mix of diagnoses is questionable
% P
MB
By diagnosis
2010 2011 2012 2013 2014 2015
Cost
In 2011, payments in excess of tariff amounted to R839 million. This increased by 22.2% per year to
R1,869 billion in 2015.
In 2011, the amount paid in excess of tariff was 9.2% of the PMB expenditure. By 2015, this had
increased to 11.4%.
R 40
R 50
R 60
R 70
R 80
R 90
R 100
R 800 000 000
R 1 000 000 000
R 1 200 000 000
R 1 400 000 000
R 1 600 000 000
R 1 800 000 000
R 2 000 000 000
2011 2012 2013 2014 2015
Payments in excess of tariff
Payments in excess of tariff
Payments in excess of tariff PLPM8,0%
8,5%
9,0%
9,5%
10,0%
10,5%
11,0%
11,5%
12,0%
2011 2012 2013 2014 2015
Payments in excess of tariff, as a % of PMB expenditure
Considerations
Potential for Way Forward
There should be consideration of a pricing framework through a collective bargaining structure for fees and tariffs
Develop national PMB billing rate file that provides a ceiling or cap
o Regulation 8 to be amended to reflect billing and payment for PMBs to be at a national PMB billing rate
o Enforce uniform billing between PMB and non PMB services without a significant difference in the rates
o Opening up healthcare to competitive pricing below the cap
The current PMB framework is hospital centric and consideration should be given to revise PMB entitlements in the regulations with a shift to primary care
Thank You