Department of Health and Council for Medical Schemes Annual Reports: briefings

Meeting report

HEALTH PORTFOLIO COMMITTEE
8 November 2005
DEPARTMENT OF HEALTH AND COUNCIL FOR MEDICAL SCHEMES ANNUAL REPORTS: BRIEFINGS

Chairperson: Mr L Ngculu (ANC)

Documents handed out:
Presentation of the National Department of Health’s Annual Report 2004/05
Presentation of the Council for Medical Schemes Annual Report 2004/05 [email [email protected]]

SUMMARY
The Director-General of the Department of Health, Mr T Mseleku, briefed the Committee on the Department’s annual report. The Committee was concerned about the limited operations and expenses of the South African National AIDS Trust. Concern was raised about funds that were not utilised. The Committee decided that there needed to be further discussions with the Department of Health about issues raised.

Mr P Masobe of the Council for Medical Schemes briefed the Committee on the Council’s annual report. The Committee was concerned about the decrease in claims from GPs, the large amount of money spent on health care brokers and administrators, and bad debt. The Committee asked about transformation in the medical schemes industry where there has been some transformation, and about consumer education, which was not included in the budget.

MINUTES

Department of Health Presentation
The Director-General of the Department of Health, Mr Mseleku, briefed the Committee on the Department’s annual report. The Department’s mandate was included in the Constitution, the National Health Act, the Mental Health Act, the Public Finance Management Act, the Medicines and Related Substances Act and the Medical Schemes Act.

The Department aimed to create an accessible, caring and high quality health system and to improve general health through prevention and the promotion of healthy lifestyles, to improve governance and management of the National Health Service, to contribute to human dignity by improving the quality of care, and to improve management of diseases. The Department aimed to strengthen service delivery systems, support services, human resource planning, management and development, planning, budgeting, monitoring and evaluation, preparation and implementation of legislation and international relations.

In 2005 the National Health Act was signed into law. The courts upheld the Department’s right to set policy regarding licensing of dispensers and single exit pricing. The Department enhanced communication through publications, radio and television interviews. The Department improved integrated planning with provinces and districts, reviewed annual reports of provinces, evaluated packages of care and analysed inter-provincial equity.

66 percent of health districts were provided with primary health care services, which were increasingly utilised. Provinces increased functional integration using a national checklist. All districts started using the national district health planning guidelines. Bilateral and trilateral agreements were signed with Iran, Rwanda, Mali, India and Brazil, among others and resources from donors was mobilised including R80 million from the Italian government. 30 percent of health institutions have a functional health information system and more than 17 percent received health broadcasts. 12 percent of hospitals have telemedicine facilities and more births and deaths are being registered.

Health reports have been published including the Quarterly Reports on the Comprehensive Plan, Antenatal Survey and Maternal Deaths. 70 percent of districts had 80 percent immunisation coverage. The Department was worried by an outbreak of measles and asked the World Health Organisation (WHO) to assess the problems with the immunisation system.

The integrated management of childhood illnesses strategy expanded to all 53 health districts. More than 8 000 health providers were trained; 64 % to provide services for children. School health serves were extended. More than 346 million male and one million female condoms were distributed. 74 NGOs were funded, with monitoring improved since last year. 57 percent of new smear-positive cases of tuberculosis (TB) were cured at the first attempt. The target was 65 percent. There was a problem with a rise in multi-drug resistant TB.

Better services for primary health care were launched with a process to strengthen the national complaints centre. All new pharmacies were licensed. Coverage of indoor residual spraying increased to 83 percent of targeted houses. Relations with neighbouring states improved. 10, 407 wheelchairs and 4, 547 hearing aids were distributed, eliminating the backlog. Cataract surgeries exceeded the target of 1, 39 million.

60 percent of hospitals adopted the guidelines to improve management. 11 percent of hospitals participated in the hospital revitalisation programme.

The draft human resources plan was completed and the consultation process begun. More than 9 000 health workers were trained to implement the comprehensive plan of co-ordination with the Department of Social Development on community care givers.

55 percent of grievances within the National Department of Health were resolved internally and 83 percent of disciplinary hearings were finalised within six months.

The challenges the Department faced included TB control, improving emergency services, improving services in public hospitals and retaining and recruiting health professionals.

Money allocated in the budget that was not spent was attributed to delays in delivery of current equipment or invoices and projects that were not started within the 2004/05 financial year. There was a delay in the development of Anti Retroviral modules for the comprehensive HIV and AIDS Treatment Plan, the tender for the Preparatory Training on Monitoring and Evaluation of the Comprehensive HIV and AIDS Care Management Treatment Plan for South Africa was awarded in December 2004 but will be implemented in three phases. There was a delay in finalising the tender for the reliable inventory management tracking system and the transfer of money for the HIV and AIDS Conditional Grant was withheld because Provincial Health Departments did not comply with Division of Revenue Act (DORA) requirements. Provincial Health Departments did not submit expenditure certificates for Poverty Relief projects. Life Line was not fully staffed. The business plan for Soul City’s second transfer was not received before 31 March 2005. Tenders for the purchasing of equipment could not be finalised in time and software programmes were not purchased during the 2005/05 financial year. Transfer of conditional grants was withheld because Provincial Health Departments did not comply with DORA requirements. There was a decrease in claims submitted by ex-mineworkers.

The King George V Silver Jubilee for Tuberculosis Trust was dormant. The trust would be closed down.

The South African National AIDS Trust (SANAT) had limited operation in 2004/05. The only costs were rent, water, electricity and bank charges. Only five instead of seven Trustees were appointed. Prior year expenses were paid in current year.

Discussion
Ms D Kohler-Barnard (DA) said the emergency medical services aimed to have a fifteen minute turnaround time in urban areas and a thirty minute turnaround time in rural areas. She asked what the current turnaround time was. Mr Mseleku said it varies in different provinces, but is about thirty minutes in urban areas and from an hour and a half to no access at all in rural areas.

Ms Kohler-Barnard asked why the Comprehensive AIDS Plan had not been implemented because the tender had been awarded a year ago and why only five out of the seven trustees for the South African National AIDS Trust had been appointed. Mr Mseleku said the tender was awarded in the 2004/05 financial year and would be implemented in three phases. He said the Trust had not deteriorated. It would be used as support and not for funding. This does not mean that no work had been done and the trust was working perfectly. There was no direct funding of programmes by the Trust.

The Chairperson said there were problems with SANAT that would need to be worked out. He asked why money was spent on the Trust if it had "very limited operation." He said this issue had been raised previously and would need to be addressed. Mr Mseleku said the rental obligation of the Trust ended in March and the whole operation of SANAT would be reviewed by June 2006. He said the Committee could contribute to the discussion on the need for the Trust. The Chairperson emphasised displeasure with this issue.

The Committee requested that Mr Mseleku elaborate on the issues of human resources and performance. Mr Mseleku said the Department was in discussions with the provinces and labour about scarce skills and with Treasury about remuneration of health professionals. The rural allowance meant that experienced doctors would move to rural areas but it meant that there were more junior doctors in urban areas. There was a problem with the definition of rural and urban but otherwise the system worked very well.

The Committee was concerned about the rise in deaths from TB. Mr Mseleku said patients had the option of staying for the full treatment and that the World Health Organisation was providing assistance.

Ms M Manana (ANC) asked why the two provinces that did not submit business plans were allocated money by the Department. Mr Mseleku said that the money was allocated but not transferred because they had not received the business plans.

Ms Manana asked why there were ‘savings’ of R5, 9 million, which was meant to go to NGOs. The money was meant to be utilised. Mr Mseleku said that some of the transfers had not gone through before the end of the financial year.

The Chair said there were further issues that needed to be discussed at a later stage.

Council for Medical Schemes Presentation
Mr P Masobe briefed the Committee on the Council for Medical Schemes (CMS) annual report for 2004/05. The main function of the Council is to implement the Medical Schemes Act and protect the interests of those on medical schemes.

New developments in the regulatory framework included mitigating unfair discrimination in benefit design and implementation of ICD-10 coding. This would allow for consistent collection of information and better implementation of claims. The National Health Reference Price List (NHRPL) would be a guide for medical schemes to decide what benefits to provide. The Council would work with the Department on the risk equalisation policy (REF). The Council would develop benefit options in medical schemes for people with low income and assess the impact of policy on the chronic diseases list (CDL), which would increase access to medical services, and assess the impact of policy on designated service providers (DSPs).

The Council categorised schemes into high, medium and low impact schemes. Risk assessment and risk mitigations plans have been completed for eight schemes. The Council worked with schemes to assist with their financial performance and completed the accreditation of 11 administrators, 47 managed care entities and 6 684 health care brokers were included in the database.

The Council assessed problems with governance and provided possible solutions. Trustees’ training and consumer education were the focus of the Council’s work. 91 percent of the 1 848 valid complaints against medical schemes were resolved by the end of the financial year. The Council heard 20 appeals against decisions of dispute committees of medical schemes or of the Registrar.

The operating expenditure of the Council was R34, 889 million on a budget of R35, 751 million. This was covered by an income of R29, 644, million and a surplus at the beginning of the year of R6 million. The Report of the Audit Committee contained details of the effectiveness of the Council’s internal controls. The Auditor-General’s report stated that the Council’s financial statements complied with the law.

The number of principal members of medical schemes increased by 1,1 percent to 2, 8 million. The number of dependents decreased by 1%. The total number of beneficiaries was about 7 million. The average duration of membership decreased from 32 years to 31, 9 years. The pensioners ratio increased from 6,4 percent to 6,7 percent.

Total contributions to medical schemes increased by 7,4 percent to R52, 2 billion. Total claims increased by 7 percent to R41, 4 billion. The largest increase in benefits paid was on hospitals which rose by an adjusted 16,9 percent to R15, 7 billion. Medical specialists claims increased by 6,9 percent to R8, 2 billion. GP claims declined by 3,1 percent and expenditure on medicine declined by 8,9 percent.

Since the introduction of the Medical Schemes Act, risk contributions increased by 60,5 percent and claims went up by 39,3 percent since 1997. Savings contributions increased by 133,9 percent and claims went up by 153,4 percent.

Reserves for most schemes was at 25 percent, therefore more members’ contributions should be used for benefits in future.

Administration expenditure increased by 10,5 percent to R5 billion. 73, 7 percent of administration expenses or R3, 7 billion were paid to contracted administrators. The remaining amount included staff fees and marketing expenditure.

Managed care fees increased by 11,8 percent to R1, 2 billion. Managed care and administration cost R6, 2 billion or 12,1 percent of contributions. Fees paid to brokers increased by 21,1 percent to R704 million. This made up 12,2 percent of total non-health expenditure.

Bad debts decreased by 34 percent from R321 million to R211 million. 13,5 percent of total arrear contributions were more than sixty days old.

The operating surplus went up by 17,2 percent to R2, 8 billion. The net surplus was R5 billion. Net assets increased by 35,4 percent to R20 billion.

There were too many benefit options. Open schemes had 260 options. Restricted schemes had 160 options.

The Council concluded that the cost of belonging to a medical scheme had decreased since 2000 and became more financially viable. Access to minimum benefits, governance and member involvement in the affairs of schemes had improved. Further challenges were to increase the number of people who could afford to join a medical scheme, containing the high cost of private hospital services, fair treatment of members by their medical schemes and the implementation of the risk equalisation scheme.

Discussion
Dr A Luthuli (ANC) asked why claims by GPs from medical schemes had decreased and also asked about the constant friction between GPs and medical schemes. Mr Masobe said it was an issue of concern and it may be a consequence of benefit design. People could be going to hospitals or specialists instead of GPs.

Ms R Mashigo (ANC) asked why so much money went to health care brokers and administrators. Mr Masobe said it had been argued that health care brokers introduced members to schemes and provided ongoing services. The Department did not think the R704 million should be spent in that manner because there was not enough evidence of ongoing service being provided. The use of administrators was unique to self-administered schemes. It was to prevent managers from owning the assets of the scheme and to make the process transparent.

Ms M Madumise (ANC) asked why accounts were sometimes unpaid. Mt Masobe said disputes between doctors or members and medical schemes often occurred because there was insufficient understanding of what the benefits were. Schemes could also decide that a practice profile was not appropriate. Some disputes went to court.

Ms P Tshwete (ANC) asked if it took six months to settle claims. Mr Masobe said six months referred to how long medical schemes were sustainable for.

Mr L Nzimande (ANC) asked why there were bad debts. He asked if expenditure included consumer education. He raised concern about the level of transformation in the medical scheme industry because the Report had not mentioned it. Mr Masobe said bad debts had decreased because medical schemes had to make allowances for them and some bad debt was written off which reduced the figure for outstanding debt. Mr Masobe said the budget did not include enough for consumer education. He said there has been a lot of Black Economic Empowerment (BEE) activity in the medical scheme industry and the Health Care Chapter published by the Minister would cover this more extensively.

Dr Luthuli was concerned about doctors asking for cash payments because they had difficulty getting money from schemes. This caused problems for members because the problem was transferred onto them. Mr Masobe said sometimes people were unaware that their benefits had been exhausted. He said that requests for upfront payments were decreasing, especially for protected benefits.

The Committee expressed concern about the moral obligation to protect members, the settling of complaints and the conduct of brokers. Mr Masobe said at the end of March 2005, 91 percent of complaints had been resolved. The law required complaints to be sent to the medical scheme and thirty days were allowed for a response. He said the Annual Report had been clear about which cases of poor governance and behaviour by medical schemes had been dealt with. The Department had dealt with allegations of theft and fraud. Sometimes these disputes went to court. The Fair Business Practice Declaration published last year included transparency and fairness and was useful to prevent those kinds of problems.

The meeting was adjourned.