15 September 2021 by Healthcare & Pharmaceuticals

Health Market Inquiry: Competition Commissioner proposes interim solutions

The Competition Commission (Commission) released its 260-page report detailing the findings and recommendations of the Health Market Inquiry (HMI) in September 2019, a process which commenced in 2014.

Two years later, the legislative intervention required to implement the HMI recommendations is still awaited.

Progress may have been paused by the pandemic, but it does appear that the Commission remains intent on ensuring that the years and money spent on the HMI do not go to waste.

Commission MOU with the CMS

In March 2021, the Commission entered into a Memorandum of Understanding (MOU) with the Council for Medical Schemes (CMS), which caters for, among other things, the provision of mutual support regarding the implementation of key HMI recommendations that impact the CMS. The MOU lists these as including the:

  • development of a single base package for medical aid schemes (schemes) aligned with the review of prescribed minimum benefits (PMBs);
  • review of the regulations relating to trustees, principal officers, and administrators to improve scheme accountability;
  • multi-lateral tariff negotiation forum (MTNF) framework for PMBs and a reference price list for non-PMBs;
  • designated service provider agreements that may raise competition issues;
  • quality and outcomes monitoring; and
  • any other matters requiring cooperation with respect to the HMI recommendations.

The MOU makes provision for the establishment of a joint working committee that will advise the CMS and the Commission and make recommendations on amendments to relevant or applicable statutes and deal with policy considerations.

Commissioner proposes interim solution

In August 2021, the Commissioner presented at the inaugural Health Funders Association (HFA) Lekgotla on the specific topic of the MTNF as a HMI recommendation for practitioners and funders.

Firstly, the Commissioner recapped the HMI’s recommendations on this issue, namely that the MTNF:

  • be established under the auspices of the Supply Side Regulator for Healthcare (SSRH);
  • determine maximum PMB prices for practitioners and a reference price list for non-PMBs;
  • review clinical coding to ensure that it aligns to tariffs;
  • support subsequent value and risk-based bilateral negotiations; and
  • allow for sharing of information to enable transparency in the negotiations.

The Commissioner confirmed the HMI recommendations that bilateral negotiations can continue for funders and facilities, but that within three years, fee-for-service contracts should be replaced by alternative reimbursement models.

The Commissioner then confirmed that the establishment of the SSRH requires legislative intervention, but pending that an urgent solution is required to assist practitioners and funders in their tariff determination processes.

The interim solution proposed by the Commission is that, for the next two to three years, the industry make use of the exemption provisions in the Competition Act 89 of 1998, which allows for competitors to engage in conduct which would otherwise be deemed collusive. If an exemption is applied for by the participants to the collective tariff negotiations and granted by the Commission, this would, according to the Commission, allow the industry to manage tariff increases (the Commission specifically cited a capped fee beyond which practitioners cannot charge) and commence collective discussions of the review of issues such as the clinical coding and PMBs, without fear of contravening the Competition Act. It remains to be seen whether the industry participants will follow the Commission's advice.

In conclusion of the presentation at the HFA Lekgotla, and in an apparent nudge to the National Department of Health to commence the long-awaited reform, the Commissioner cautioned that the HMI recommendations were intended to be a package of interrelated interventions designed to promote systemic changes and that other relevant recommendations would still need to be implemented to achieve the objectives.

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