On the 11th of September 2020, the Competition Commission issued a notice to stakeholders on the implementation of the outcome of the Health Market Inquiry.
A key aspect of the notice was to inform stakeholders that a process has been initiated which will, ultimately, result in annual negotiations around the prices that providers (doctors, hospitals, and others) can charge for the provision of health services. It is proposed that a price is set in respect of services rendered for Prescribed Minimum Benefit (PMB) conditions and providers would be prevented from charging above that price. For conditions other than PMBs the negotiated prices would be recommended prices and published to allow patients to compare what they are being charged with the published list.
There is much hope that this approach to pricing would stop or slow the runaway inflation experienced in health care – see this article in the Daily Maverick for examples of this optimism.
There are problems with this hope that costs will be contained by negotiating prices. The first is that prices were negotiated for many years prior to this annual process being stopped by the Competition Commission in 2006. These negotiations resulted in set tariffs which many, if not most, doctors charged.
Despite this, inflation in health care costs continued at a pace much higher than general inflation. This was attributed to the growing demand for health services (for a variety of reasons) which resulted in a greater volume of services being delivered. Cost is volume times price. Negotiating the price without managing the volume of care delivered will have a reduced impact on the overall cost. In addition, with advancing technology, more expensive (tech-supported) procedures tend to take the place of lower-cost, older, procedures over time.
Another problem is that the entire system of PMBs in South Africa is diagnosis based. Patients don’t approach health services with a diagnosis. They do so with symptoms. They do not know if they will be covered until a diagnosis is made and they are lucky enough that the diagnosis is a PMB. Getting to a diagnosis can involve expensive tests. If the diagnosis is not a PMB then the patient will only find out that they are not covered in terms of PMB regulations after incurring the costs. Will doctors be charging at different rates for the same procedure depending on what the diagnosis is? And, where a procedure is investigative, will the price be changed retrospectively once the diagnosis is made and found to be a PMB.
Make no mistake we, as Med ClaimAssist, see countless claims from providers where the pricing is sky high and the invoices padded with unnecessary codes resulting in very costly procedures. I’m just not sure that negotiating prices will fix the problem of skyrocketing healthcare costs.
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