PRESENTATION TO THE HEALTH MARKET INQUIRY

Transcription

1 PRESENTATION TO THE HEALTH MARKET INQUIRY 19 May

2 Agenda Presenters Dr A Ramasia (Principal Officer) Mr R Cowlin (Trustee) Mr G van Emmenis ( Chief Operations Officer) Historical Overview and Scheme Profile Risk Management and Non-Healthcare Costs Market Forces 2

3 HISTORICAL OVERVIEW AND SCHEME PROFILE Dr A Ramasia 3 BONITAS PRESENTATION TITLE

4 Historical Overview Founded in 1982 primarily as a scheme for the black civil servants, within the Medscheme stable 34 years old Second largest open medical scheme in South Africa Manages lives R3.3 bn in reserves Solvency of 26% Largest general practitioner network in South Africa (6200 contracted GPs) Specialist network of 2600 practitioners Membership within Municipalities (SALGA), Eskom, Other large corporate entities 4

5 Bonitas open scheme market share 53,8% 13,4% 8,6% 4,6% 4,6% 3,9% 3,3% 3,0% 2,4% 2,4% Discovery Bonitas Momentum Medihelp Bestmed Medshield Fedhealth Sizwe Liberty Other schemes Source: CMS Annual Reports

6 BONITAS GOVERNANCE STRUCTURES Board of Trustees 11 positions 1 vacancy Audit and Risk 3 Independent members 2 Board members Working and Strategic Committee 5 Board members 2 Executives Investment 1 Independent members 2 Board members Remco 2 Independent members 3 Board members Appeals 3 Independent members 6

7 BONITAS MEMBERSHIP PROFILE LSM distribution relative to market Rest of mkt Market incl GEMS 4% 36% 42% 18% 3% Momentum 25% 38% 34% 5% Bonitas 32% 43% 21% 1% Discovery 17% 42% 40% 0% 20% 40% 60% 80% 100% LSM 1-5 LSM 6-7 LSM 8-9 LSM 10 7 Source: AMPS Expressed as percentage of each medical scheme

8 BONITAS MEMBERSHIP PROFILE Bonitas Fedhealth Indian 4% Indian 3% Coloured 7% Coloured 4% White 22% White 54% Black 67% Black 39% Discovery Momentum Indian 10% Indian 7% Coloured 6% Coloured 5% White 45% White 44% Black 39% Black 44% 8 Source: AMPS 2014

9 PMB cost graphs THE IMPACT OF PMBS 52% 19% % % PMB cost - R per beneficiary per year 9

10 Bonitas PMB claims as a proportion of total risk claims 100% THE IMPACT OF PMBS 90% 80% 70% 52,9% 51,2% 46,5% 44,6% 42,6% 41,0% 37,3% 35,6% 60% 50% 40% 8,4% 8,9% 10,2% 9,4% 9,3% 9,5% 9,7% 10,5% 30% 20% 38,7% 39,9% 43,3% 45,9% 48,1% 49,4% 52,9% 53,9% 10% 0% Risk Amt PMB IH Risk Amt PMB OOH Risk Amt Non PMB 10

11 MHC EVOLVING Managed care moving from rules based to member-centric initiatives with providers playing a key role Transactional Defined Benefit Contained Cost Empowerment Activation tailored to needs Improved outcomes Positive experience! VALUE-BASED 11

12 MHC EVOLVING Managed care moving from rules based to member-centric initiatives with providers playing a key role Stratified Disease Management (DM) Stratified scheme population High risk individuals Emerging risk individuals Diseased individuals High risk beneficiary programme (DM) + lifestyle interventions Emerging Risk (DM) + lifestyle interventions Other (DM) Cases + interventions Strategic purchasing Coordination of care Individual wellness Benefit utilisation risk management/exception management Fraud, waste & abuse management BI, analysis and monitoring Individuals with risk factors or acute episodes Healthy individuals

13 VALUE OF MANAGED CARE 2015 Savings Total Estimated (net) Reduction in Claims Total Estimated (net) Reduction in Claims R pmpm R559.1 million Reduction as a % of 2015 Risk Claims 6.3% Reduction as a % of 2015 Risk Contributions 5.3% Based on directly measurable savings only and does not take in to account behaviour change as a result of managed care interventions ( halo effect) and direct savings which cannot currently be quantified. 13

14 RISK MANAGEMENT AND NON-HEALTHCARE COSTS Gerhard van Emmenis 14 BONITAS PRESENTATION TITLE

15 Independent relationship between Scheme and Administrator - Managing the risk As seen from the Historical overview, the Scheme commenced operating as such within the Medscheme stable. Due to the change in the legislative environment, the Scheme had to be re-structured and exist in its current form The Scheme separated completely from Medscheme, which it retains as a strategic service provider. The Scheme is the dominant partner in the relationship Branding of the Scheme and Medscheme remains completely separate there is a concerted effort to ensure that both the corporate identities and the branding of the Scheme remains distinct from that of its administrator. Also, the Scheme ensures its independence by ensuring that the following elements remains fully within its control 15

16 CORPORATE GOVERNANCE PRINCIPLES Tariffs Negotiations Tariffs negotiations with Service Providers are done by the Fund With managed care agreements, the Schemes MHO only facilitates the negotiation process Final decisions and contracts concluded solely by the Scheme Procurement Procurement is done by the Scheme strictly in line with its own procurement process Independently managed internally by the Scheme 16

17 CORPORATE GOVERNANCE PRINCIPLES Banking & Investments Opening and closing of bank accounts are only done on instruction of the Board of Trustees Control is maintained over these bank accounts as is required in terms of section 26(1)(c) of the Medical Schemes Act The Scheme s investments are independently maintained by the Scheme s duly appointed investment advisors 17

18 MANAGEMENT OF THE ADMINISTRATOR The administrator of any scheme is a strategic partner While there is an aligned interest and relationship, the Scheme must maintain its independence, while ensuring that the Administrator renders quality services. Tools used to manage the administrator Delegations Administrator restricted in terms of authority to bind the scheme by a series of delegations Oversight Regular reports are submitted by the Administrator, and are monitored by the Scheme with the assistance of the Scheme s own internal auditors Penalties are levied against the Administrator in the event of mal- or under-performance 18

19 BONITAS PRIMARY HEALTHCARE FOCUS Risk claims expenditure relative to market 2,2% Market 5,7% 24,1% 6,4% 40,8% 14,4% 6,4% 2,0% Discovery 3,6% 28,6% 5,0% 45,3% 10,6% 4,8% Bonitas 7,0% 19,5% 4,2% 7,2% 36,1% 12,7% 13,4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% General Practitioners Medical Specialists Dentists & Dental Specialists Optical & Allied health professionals Hospitals (excl. medicines) Medicines Other benefits South Africa Medical Schemes Statistical Bulletin September 2015 (2014 expenditure) * Market refers to 15 open medical schemes representative of over 90% of the open medical scheme membership. 5 large restricted schemes (including GEMS, Polmed and Bankmed) were also included in this representation of the market ** Other benefits include Blood transfusion, Ambulance services, Foreign services, Special benefits, etc.

20 RISK TRANSFER MODELS Risk+Savings claims expenditure relative to market *Market 6,8% 25,1% 3,4% 8,0% 36,1% 17,9% 2,8% Discovery 5,8% 27,8% 4,8% 8,3% 34,6% 16,7% 2,1% Bonitas 7,5% 21,6% 4,1% 7,4% 35,5% 15,5% 8,3% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% General Practitioner Specialists, Pathology & Radiology Dentists & Dental Specialists Optical & Allied Health Professionals Hospital Medicines ** Other benefits South Africa Medical Schemes Statistical Bulletin September 2015 (2014 expenditure) * Market refers to 15 open medical schemes representative of over 90% of the open medical scheme membership. 5 large restricted schemes (including GEMS, Polmed and Bankmed) were also included in this representation of the market ** Other benefits include Blood transfusion, Ambulance services, Foreign services, Special benefits, etc.

21 RISK TRANSFER MODELS Risk claims expenditure relative to market 2,2% Market 5,7% 24,1% 6,4% 40,8% 14,4% 6,4% 2,0% Discovery 3,6% 28,6% 5,0% 45,3% 10,6% 4,8% Bonitas 7,0% 19,5% 4,2% 7,2% 36,1% 12,7% 13,4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% General Practitioners Medical Specialists Dentists & Dental Specialists Optical & Allied health professionals Hospitals (excl. medicines) Medicines Other benefits South Africa Medical Schemes Statistical Bulletin September 2015 (2014 expenditure) * Market refers to 15 open medical schemes representative of over 90% of the open medical scheme membership. 5 large restricted schemes (including GEMS, Polmed and Bankmed) were also included in this representation of the market ** Other benefits include Blood transfusion, Ambulance services, Foreign services, Special benefits, etc.

22 Index RISK TRANSFER MODELS Risk Transfer Arrangements: Costs maintained at or near CPI since inception in Claims and Capitation Fees Dental: DENIS Total In-hospital Claims Optical: PPN/Iso Leso CPI 22

23 RISK TRANSFER MODELS - DENTAL Dental costs contained in risk transfer arrangement 23

24 COMPARISON OF ADMIN AND MHC FEES Administration Costs pmpm Year Discovery Health Medical Scheme Bonitas Medical Fund Momentum Health Medihelp Bestmed Medical Scheme Medshield Medical Scheme Fedhealth Medical Scheme Liberty Medical Scheme Sizwe Medical Fund Keyhealth MHC Costs pmpm Year Discovery Health Medical Scheme Bonitas Medical Fund Momentum Health Medihelp Bestmed Medical Scheme Medshield Medical Scheme Fedhealth Medical Scheme Liberty Medical Scheme Sizwe Medical Fund Keyhealth Source: CMS Annual Reports

25 COMPARISON OF ADMIN FEES Comparison of Admin Fees: % of Contributions 16,0% 14,0% 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% Discovery Health Medical Scheme 13,7% 13,4% 12,4% 11,7% 11,2% 10,6% 10,2% Bonitas Medical Fund 8,9% 9,4% 8,8% 8,8% 9,3% 8,7% 8,2% Momentum Health 11,8% 10,8% 9,9% 9,6% 9,2% 9,2% 9,4% Medihelp 8,5% 8,4% 8,0% 7,8% 8,7% 9,5% 10,4% Bestmed Medical Scheme 14,0% 14,5% 9,9% 10,3% 10,2% 8,5% 7,8% Medshield Medical Scheme 13,0% 9,6% 6,8% 6,1% 6,3% 6,9% 7,7% Fedhealth Medical Scheme 11,6% 10,8% 9,2% 9,7% 9,8% 9,6% 9,9% Liberty Medical Scheme 10,8% 10,5% 11,4% 12,1% 11,4% Sizwe Medical Fund 10,7% 10,3% 9,4% 9,3% 9,0% 8,5% 9,0% Keyhealth 8,5% 8,4% 8,3% 7,5% 7,0% 6,8% 7,2% Discovery Health Medical Scheme Bonitas Medical Fund Momentum Health Medihelp Bestmed Medical Scheme Medshield Medical Scheme Fedhealth Medical Scheme Liberty Medical Scheme Sizwe Medical Fund Keyhealth 25 Source: CMS Annual Reports

26 COMPARISON OF MHC FEES Comparison of Managed Care Fees: % of Contributions 4,0% 3,5% 3,0% 2,5% 2,0% 1,5% 1,0% 0,5% 0,0% Discovery Health Medical Scheme 3,0% 3,0% 3,6% 3,5% 3,5% 3,4% 3,3% Bonitas Medical Fund 3,0% 3,0% 2,9% 2,8% 2,7% 3,2% 2,9% Momentum Health 3,1% 2,9% 2,8% 2,8% 2,5% 2,4% 2,4% Medihelp 1,5% 1,7% 1,5% 1,7% 2,0% 2,0% 2,1% Bestmed Medical Scheme 2,7% 2,9% 2,2% 2,2% 1,9% 1,9% 1,6% Medshield Medical Scheme 2,9% 2,7% 2,1% 2,0% 2,0% 2,0% 2,1% Fedhealth Medical Scheme 2,2% 2,2% 2,1% 2,3% 2,1% 2,5% 2,5% Liberty Medical Scheme 3,0% 2,8% 2,7% 3,0% 2,7% Sizwe Medical Fund 2,7% 2,2% 2,1% 2,0% 2,0% 2,2% 2,2% Keyhealth 1,8% 1,9% 1,8% 1,7% 1,7% 1,7% 1,8% Discovery Health Medical Scheme Bonitas Medical Fund Momentum Health Medihelp Bestmed Medical Scheme Medshield Medical Scheme Fedhealth Medical Scheme Liberty Medical Scheme Sizwe Medical Fund Keyhealth 26 Source: CMS Annual Reports

27 Tax Matters Tax contributions treated less favourably Largest impact in change in tax dispensation felt by higher LSM groups which traditionally can afford medical aid Many buying down Unintended consequence may be to add to the burden of public health care Misconception that self administered schemes save 14% VAT on administration fee saving is much less as VAT would be paid on the components necessary for self administration 27

28 FRAUD, WASTE AND ABUSE Provider behaviour (PMB s) Over- Servicing Billing agents Member apathy Fraud, Waste & Abuse Member participation Opportunistic Tariff manipulation Syndicated False claims 28

29 FRAUD, WASTE AND ABUSE 5-month analysis (medical professionals only) R1.4bn claims assessed for HCPs only 2.05m claim events; 4.5m lines Identified R72m FWA = 5% of claims 29

30 FRAUD, WASTE AND ABUSE Operational improvements to systemic weaknesses and policy gaps Focused member & provider education Change provider billing behavior ZERO Tolerance Policy Industry Consortium Predictive Analytics Preventative rather than reactive 30

31 MARKET FORCES Rodney Cowlin 31 BONITAS PRESENTATION TITLE

32 BROKERS No of new members brought on by brokers No Broker Broker 32 Note: The Prosano amalgamation impact has been removed in the 2013 figure

33 BROKERS No of new members by type of broker Corporate Broker Direct Medical Scheme Broker Note: The Prosano amalgamation impact has been removed in the 2013 figure

34 NEW VS LEFT MEMBERS New Left 34 Note: The Prosano amalgamation impact has been removed in the 2013 figure

35 No. of Members THE IMPACT OF GEMS Govt employees have left Bonitas since 2006, with remaining members showing a deteriorating profile Govt Employee Leavers (net) 52,0 Avg. Govt Employee Member Age ,0 48,0 46, ,0 42,0 40,0-38,0 35 Note: Prosano amalgamation lowered the impact in the 2012 figure

36 Summary Governance structures The impact of PMBs The impact of GEMS Brokers Risk share models Value based services Fraud, waste and abuse 36

37 THANK YOU 37