Competition Commission Health Market Inquiry Public Hearings Presentation

Competition Commission Health Market Inquiry Public Hearings Presentation by The South African Medical Association 24 February 2016

Outline 1. 2. 3. 4. 5. 6. SAMA: Role in the Private Healthcare industry Procedural Coding Advocacy Relationship and Co-operation with Regulators Healthcare Expenditure Interrelationships between Practitioners and Funders and Hospital Groups 7. Scarcity of Skills

SAMA: Roles in the Industry • SAMA – Non-statutory, professional association for doctors in private practice and trade union for public sector doctors • Membership is voluntary – 17000+ members • Established in 1927 – continuous existence • Advocacy function and represents the interests of its members and the profession • Owns and administers the SAMA Procedural Coding System

Procedural Coding • SAMA first published procedural codes in 1944, and annually since then. • The system has been developed and administered for 7 decades by SAMA. • Based on the AMA CPT, but adapted for the South African environment. • It is used throughout the private healthcare industry as the accepted “language” of medical procedures. • No other procedural coding system is available or applicable in South Africa

Procedural Coding • SAMA has made the procedural coding system available – at no charge to: – – – National Department of Health – NHRPL / RPL HPCSA – “Ethical Tariff” Council for Medical Schemes – NHRPL Compensation Commission – COID tariffs Road Accident Fund

Development of Procedural Coding • Advances in medicine – revision, deletion and modification of codes. • Process for adoption of new codes, modifiers and/or descriptors; – Representative society/association submits a formal application to SAMA. – SAMA considers the application objectively taking into consideration comparison with the CPT system, whether proposed wording requires amendment and whether the proposal is applicable to the South African conditions. – If the application is approved by SAMA, the revised/new code is included in the procedural coding system for the following year. – No engagement or consultation is held with any medical scheme or related organisation in this process. • SAMA further monitors and responds to any reports of abuse of its coding.

Development of Procedural Coding • SAMA has no interest in the outcome of the process and derives no benefit from approving or amending codes. • The process is deliberated upon, records are kept and peer reviewed.

Procedure Code • A procedure code is comprised of the following: – A unique 4 digit numerical code – A descriptor which describes the professional medical service rendered. – A Relative Value Unit – which is ascribed to a procedure to indicate the level of complexity, difficulty, time etc in relation to other procedures • Pre 2004, a Rand Conversion Factor was also published which determined the fee that could be charged for the procedure. This is no longer published by SAMA, in compliance with a consent order entered into with the Competition Commission, 2004

The Necessity of Procedural Coding • Procedural Codes are used to identify medical, surgical and diagnostic interventions. • It is a common and universal language. • It facilitates statistical and analytical functions • Existing systems would fall into disarray without this uniform language. • Procedural Coding is an international norm.

Relative Value Unit • Based on the RBRVS published by Harvard University. • The relative value unit is a fixed, invariable allocation to each procedure according to its complexity, difficulty, time required etc. • The RVU includes components such as equipment and other practice costs • The objective scientific nature of the relative value unit allows a rational distinction between the relativities inherent in each medical procedure.

Rand Conversion Factor • A multiplier set to arrive at a monetary value. • Without an RCF it is impossible to set a fee/tariff for procedure code using the descriptor and RVU. • SAMA has not published the RCF since 2004 and not discussed, recommended or mentioned the RCF since then. • Industry members may be setting their own RCF but SAMA does not directly, or indirectly become involved in this.

Fees • Procedural coding does not fix a tariff or price. • It is a “common language”, standardizes descriptions and provides an objective assessment of the complexity of medical procedures, relative to each other.

Regulatory Vacuum • No valid Reference Price List exists. • SAMA has previously, and at its own significant expense, submitted practice cost studies to the Department of Health – contributions have been disregarded. • The absence of a valid, objective RPL threatens the stability and sustainability of the industry.

Advocacy • SAMA has, and will continue to advocate for a greater intake of medical students. • This presents a long-term sustainable solution to the scarcity of skills, importing medical skills from other countries represents a “stop-gap” measure which is not sustainable. • SAMA’s subsidiary, the Foundation for Professional Development, provides education and continuing professional development to healthcare practitioners, benefitting the community at large.

Relationship with Regulators • SAMA regularly interacts, in bilateral and multilateral forums, with various regulators, including the National Department of Health, the HPCSA, the CMS on issues relating to healthcare. • SAMA remains committed to assisting in the implementation of the National Health Insurance and provides constructive input on this project.

Healthcare Expenditure • SAMA is not involved in the determination of fees for medical services in the private healthcare sector. • SAMA members are, in fact, “price takers”, obliged to accept the reimbursement rates offered by medical scheme funders. • “Collective bargaining” with schemes on reimbursement is prohibited. • Commitment to affordable private healthcare, but not at the expense of sustainability.

Medical Practitioners / Medical Schemes • “Preferred Provider Networks” problematic for sustainable and quality private healthcare: – Reimbursement determined by medical scheme. – Formularies and protocols dictated by medical schemes – Asymmetry of Information between schemes and practitioners • Individual negotiation on reimbursement does not occur, contracts are “take it or leave it” • Quasi-Employment relationship. • May result in over- or under-servicing of patients

Medical Practitioners / Hospital Groups • Private Hospital Groups may not employ medical specialists but may select which specialists are permitted to practice in their facilities. • A vetting process is followed to allow a specialist entry to a facility, conducted by peers, but not regulated by an organisation or regulator.

Scarcity of Skills • It is common cause that there is a dire lack of medical professional skills, particularly among specialist disciplines. • The reallocation and redistribution of healthcare resources envisaged by the Certificate of Need (s 36 - 40 National Health Act) cannot address this crisis – there are simply insufficient healthcare professionals to be allocated. • The solution lies in a sustainable and attractive private healthcare industry in addition to a functioning, properly resourced public health sector.

Concluding Comments • SAMA has and will continue to provide coding services to the profession, and to the benefit of the private healthcare industry. • SAMA does not derive any profit from its administration of the procedural coding system. All income received from the sale of its MDCM is used to defray publication costs and subsidises, in part, salaries of the coding specialist employed to compile it. • The regulatory vacuum in respect of guideline tariffs continues to be a serious concern and continues to place medical practitioners, the foundation of the delivery of healthcare, at a serious disadvantage.

Concluding Comments • Medical practitioners are the foundation of the delivery of healthcare and must be permitted to participate in all aspects of the private healthcare industry, including the determination of professional fees, in a collective and meaningful manner.

Questions & Discussion

Thank You Julian Botha Legal and Strategic Accounts Manager: Private Practice South African Medical Association Tel: (012) 481 2122 Fax: (012) 481 2100 julianb@samedical. org