GEMS Presentation Health Market Inquiry - 1 March 2016

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GEMS Presentation Health Market Inquiry - 1 March 2016
GEMS Presentation
Health Market Inquiry

            1 March 2016
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
GEMS Presentation Health Market Inquiry - 1 March 2016
ABOUT GEMS
(Who We Are)
GEMS Presentation Health Market Inquiry - 1 March 2016
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
Our Mandate, Mission, Vision and 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           Mandates
cover.

                                                                 To provide all public service
                                                                 employees with equitable access to
                                             Vision              affordable and comprehensive
                                                                 healthcare benefits.

   An excellent, sustainable and
   effective medical scheme for all
   public service employees.
                                                     Mission

                                                  Values
                                                               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
Critical Aspect s for GEMS as a
Medical Scheme

                     Scheme
                    Members
                  Contributions
      Advisors                     o Scheme rules
                  Bank account
     Actuaries                     o Registrar and
      Auditors   Benefit options     Council
                                   o Medical Schemes
    Investment       Claims
                                     Act
                  Managed care
                  Administrators
Governance & Operational Structure
Governance , Direction & Oversight

                                     Members
                  Employer
                  Employees
                                      Board of Trustees            Committees       Support Services
                                                                                    Advisory,
                                                                                    Actuaries,
                                                                                    Auditors
Execution of Strategy &                                                             Investment
determination of Operational              Principal Officer
deliverables                         Executive & Head Office

                               OUTSOURCED SERVICES
Performance of
Operational             Administration                        Managed Care
Functions          o Enrolment and Registration        o Authorization Management
                   o Benefit Management and            o Disease Management
                     Claims Payment                    o Claims Adjudication
                   o Member servicing (Contact
                     Centre Support).
Conceptualisation and establishment

“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”

               Cabinet Mandate (2004)

               Registration (2005)

           Funding R28 Billion (2015)
GEMS’ Strategy and Plan
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:

                                Making healthcare spending a progressively smaller portion of
       Affordability         household income, while minimising member out-of-pocket spending
                               on healthcare for government employees from all income groups

                                Understanding member profiles and needs, promoting healthy
                                behaviours through well incentivised loyalty programmes that
  Understanding Members
                              encourage members to lead healthier lives, minimising their risk of
                                            developing lifestyle-related diseases

                             Promoting effective disease management of members and improving
    Healthier Members          the clinical outcomes so that they remain healthy and productive
                                                 members of the public service

                              Working together with government bodies and leading industry
  Partner to Organs of the     players, both local and international, to bring about innovative
            State            methods and leading practices in healthcare for the ultimate benefit
                                                           of society
Prioritising healthcare

                       GEMS has realised significant savings on non-healthcare costs.

                 Non-healthcare costs                                   Cost savings
15%
         13,0%
                                                   11,8%
12%

9%
                          8,7%
                                        7,4%
                                                                  R1 200 000,000
6%
                                                                      per year
3%

0%
      Open Schemes    Closed Schemes    GEMS         Total
                     (excluding GEMS)          (excluding GEMS)
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             Or the total healthcare costs of
                    investigations
                                                 70 000 beneficiaries per year

                   12 000 hospital
                     admissions
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
                  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

   Private Hospital and Medical Specialists comprises of more than 45% of
   the total
   Scheme paid R1.8 billion above Scheme rates as PMB
Utilisations Statistics
           2014 Beneficiaries vs. Claims
                      14 000 000 000
                                                                                      5% of beneficiaries incur 51% of costs in any given year
                      12 000 000 000
Benefit amount paid

                      10 000 000 000

                       8 000 000 000

                       6 000 000 000

                       4 000 000 000
                                                                                                      5 : 51
                       2 000 000 000

                                  0
                                       0% - 5%

                                                                                                                                                                                                65% - 70%
                                                            10% - 15%
                                                                        15% - 20%
                                                                                    20% - 25%
                                                                                                25% - 30%
                                                                                                            30% - 35%
                                                                                                                        35% - 40%
                                                                                                                                    40% - 45%
                                                                                                                                                45% - 50%
                                                                                                                                                            50% - 55%
                                                                                                                                                                        55% - 60%
                                                                                                                                                                                    60% - 65%

                                                                                                                                                                                                            70% - 75%
                                                                                                                                                                                                                        75% - 80%
                                                                                                                                                                                                                                    80% - 85%
                                                                                                                                                                                                                                                85% - 90%
                                                                                                                                                                                                                                                            90% - 95%
                                                 5% - 10%

                                                                                                                                                                                                                                                                        95% - 100%
                                                                                                                 Band of beneficiaries
Claims Ratio
2014 Claims ratio per family
  1800%

  1600%          79% of beneficiaries pay more than is claimed back in any given
                                             year
  1400%

  1200%

  1000%

   800%

   600%
                               79%
   400%

   200%

     0%
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
         2015                               2016            2016 Contribution per Member
     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
                                              2011                2015          2016
                                             Monthly             Monthly       Monthly
        Family structure
                                            medical aid         Medical Aid   Medical Aid
                                             subsidy             Subsidy       Subsidy
Principal Member without
                                              720.00                 925.00   1,008.00
dependants
Principal Member with one
                                            1,440.00            1,850.00      2,017.00
dependant
Principal Member with two
                                            1,880.00            2,415.00      2,633.00
dependants
Principal Member with three
                                            2,320.00            2,980.00      3,249.00
dependants
Principal Member with four or
                                            2,760.00            3,545.00      3,865.00
more dependants
   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.

                                                 Mammograms            Pap smears
                                                   (annual)             (annual)

                                                   PSA tests          Bone density
                                                   (annual)              scans
 GEMS will offer industry leading preventative
   care and screening test benefits in 2016.
                                                   Glaucoma            Occult blood
                                                   screening            screening

                                                   Influenza          Pneumococcal
                                                  vaccinations         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         Numbers (2015)
Programme

Diabetes                               90 634
Hypertension                          210 825
HIV                                   119 894
Mental Health                          48 446
Oncology                               11 133

 More than 20% of beneficiaries have Chronic Diseases

 Number of
The Funding Challenge
2014 Cost ratio examples

                 27
  Chronic Renal Disease

                3           For every beneficiary with hypertension,
                           GEMS requires 3 healthy members to cross-
          Hypertension
                                           subsidise

                 3
                   HIV

                 3
       Hypothyroidism
Hospital-centric Care is Dominant

             In- and out-of-hospital spend                                              Spend by discipline

                                                                                                          10%

                                                                                                                      13%
                                             38%                                  39%
              43%

                                                                                                                38%
                                 19%

   Hospital spend   Hospital related spend   Out of hospital spend         Family Practitioners   Specialists     Hospitals   Other

                                                                          Only 10% of spend pertains to family
 Nearly 60% of expenditure pertains to hospital
                                                                     practitioners (which is higher than the industry
           or hospital-related costs
                                                                                     average of 7,0%)
Healthier members

   Disease management programmes
   • Disease specific programmes aimed at improving clinical outcomes

   HIV programmes

   • Holistic wellness and prevention of avoidable hospitalisations

   Maternity programmes

   • Early detection and treatment of comorbidities and complications

   Back management programmes

   • Promotion of conservative treatment where clinically appropriate

   Diabetes management programmes

   • Holistic wellness and prevention of avoidable hospitalisation
2015 Healthcare Indicators
                                Q1    Q2    Q3    Q4    FY    Target

Disease Outcome Measures:

- HIV/AIDS

Enrolment on HIV DMP as a %
                                76%   79%   82%   83%   79%   77%
of Scheme prevalence rate

Viral Load 6
months who show an              83%   88%   84%   90%   86%   85%
improvement in CD4 count
2015 Clinical Statistics
HIV/AIDS                   Q1       Q2       Q3       Q4       FY         Target

Health Outcomes

Pneumonia hospital        13 110   16 974   14 760   12 121   56 965
admissions

                          2 299    1 763    1 957    1 913    7932
TB hospital admissions

% increase/decrease
                                                                       Reduce by 5%
over previous year -      -11%      4%      -19%      5%       -5%
                                                                         per year
Pneumonia hospital
admissions

                                                                       Reduce by 5%
% increase/decrease       -22%     -25%     -20%      -4%     -17%
                                                                         per year
over previous year - TB
hospital admissions
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

                                Supporting NHI pilot site in Eastern Cape

                                Benchmarking SA private hospital costs

                                Data sharing on male medical circumcisions
GEMS Model

  Efficient practitioner networks                  Comprehensive disease
                                                  management programmes

           Family practitioner networks
                (already well established)
                                                     HIV              Maternity

                Specialist networks
             (obstetricians and paediatricians)            Diabetes           Back pain

                 Hospital networks                                    And more
               (Currently in Development)                                …
Impact of GEMS
Growth

GEMS has realised significant and sustained growth and is now the second largest medical
                                 scheme in South Africa

2007   2009    2011   2013   2014

Over 1,7 million beneficiaries      1 in 5 beneficiaries       1 in R10 spent on healthcare
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.

                 Non-healthcare costs                                   Cost savings
15%
         13,0%
                                                   11,8%
12%

9%
                          8,7%
                                        7,4%
                                                                  R1 200 000,000
6%
                                                                      per year
3%

0%
      Open Schemes    Closed Schemes    GEMS         Total
                     (excluding GEMS)          (excluding GEMS)
Balancing Sustainability with Social
Solidarity

         GEMS has achieved solid financial results in the context of social solidarity.

                                                                               No waiting periods

                                                                            No late joiner penalties

                                                                          Income-related contributions
 2010   2011   2012   2013   2014      2010   2011   2012   2013   2014

    Increasing reserves                       Stable loss ratio           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
          PMB and non-PMB claims PLPM
        900
        800
        700
        600
        500
        400
        300
        200
        100
          0
              Jan MarMay Jul Sep Nov Jan MarMay Jul Sep Nov Jan MarMay Jul Sep Nov
                       2013                   2014                   2015
                                  Non-PMB claim      PMB claim
Incidence

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%.

                   100%

                   90%

                   80%
                                                                                   72%                      72%                       72%
                   70%                                    66%
                          61%         63%
% of expenditure

                   60%

                   50%
                                39%         37%
                   40%                                            34%
                                                                                           28%                      28%                      28%
                   30%

                   20%

                   10%

                    0%
                           2010        2011                   2012                     2013                     2014                     2015
                                                             PMB        Non-PMB
                                              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

                       By discipline                                      By diagnosis

                                                      % PMB
 % PMB

         2010   2011     2012   2013   2014   2015              2010   2011   2012   2013   2014   2015

   Increases are evident across provider types.      Increases are evident across diagnosis categories.
     Whether such substantial and consistent             Whether such consistent increases across
increases can simply be attributed to variances in    diagnoses is a function of changes in the mix of
     the clinical characteristics of patients is                 diagnoses is questionable
                    questionable
Cost

                  Payments in excess of tariff                                  Payments in excess of tariff, as a % of PMB
R 2 000 000 000                                                 R 100                         expenditure
                                                                        12,0%

R 1 800 000 000                                                 R 90
                                                                        11,5%

R 1 600 000 000                                                 R 80    11,0%

R 1 400 000 000                                                 R 70    10,5%

                                                                        10,0%
R 1 200 000 000                                                 R 60

                                                                         9,5%
R 1 000 000 000                                                 R 50
                                                                         9,0%
 R 800 000 000                                                  R 40
                  2011     2012      2013       2014     2015            8,5%

                     Payments in excess of tariff
                                                                         8,0%
                     Payments in excess of tariff PLPM                          2011       2012       2013       2014         2015

In 2011, payments in excess of tariff amounted to                       In 2011, the amount paid in excess of tariff was
R839 million. This increased by 22.2% per year to                       9.2% of the PMB expenditure. By 2015, this had
              R1,869 billion in 2015.                                                 increased to 11.4%.
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
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