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BHF seeks Competition Act exemption to publish reference price list

The Board of Healthcare Funders (BHF), a representative association for medical schemes, has applied for an exemption from provisions of the Competition Act so that it can publish a scale of benefits after negotiating with healthcare providers about tariffs.

The application was published in the Government Gazette on 6 May.

It has asked for the exemption from certain provisions of Chapter 2 of the Act for five years.

The BHF is seeking the exemption so that:

  • It can publish a scale of benefits that will serve as a reference price list that medical schemes, healthcare providers and consumers can use to make informed decisions with respect to benefit design, fee negotiations, what tariffs are considered reasonable, and whether or not to use a particular healthcare provider.
  • It can negotiate collectively with healthcare providers or their representative associations on coding and tariffs before publishing the scale of benefits.
  • The BHF and its members can use health technology assessments in collective bargaining with suppliers or providers to make health technology more affordable for scheme beneficiaries. They also want to enter collective agreements concerning rare, high-cost health technologies, to reduce prices while improving access for beneficiaries.
  • The BHF can make submissions “freely and effectively” on behalf of its members to the regulators and government institutions regarding the price of healthcare services, the quality of health care, trade practices, health technology, a standardised package of basic benefits, and coding and health outcomes, based on information supplied to it by its members. This may require members to disclose competitive information that is prohibited by the Competition Act.

Second time around

In 2004, the BHF undertook to stop publishing a recommended scale of benefits or pricing guidelines after the Competition Commission said collective bargaining between medical schemes and healthcare providers and the determination of tariffs amounted to price fixing.

In 2008, the BHF applied for an exemption from section 4 of the Competition Act, to enable medical schemes to engage collectively in relation to certain practices, including sharing and publishing prices and costs, preventing membership churn, making collective submissions to the state, and collective bargaining for medical materials, medicines and devices.

The Competition Commission rejected the exemption application because:

  • It had not been provided with evidence that suggested the exemption would yield benefits that would outweigh the proposed restriction in competition;
  • It had not been provided with evidence that the medical schemes industry was declining; instead, information suggested that the industry is relatively healthy; and
  • The Minister of Trade and Industry had not designed the medical schemes industry. Section 10(3)(b)(iv) of the Act empowers the commission to grant an exemption if it will contribute to the economic stability of a designated sector.

Costs are escalating for schemes and beneficiaries

In its latest exemption application, the BHF said the medical schemes industry has changed since 2008, and the industry and schemes were facing the following challenges:

  • Schemes and beneficiaries are struggling with the high cost of private health care for reasons identified by the Health Market Inquiry.
  • “Regulatory failures” and “inadequate stewardship” over the private healthcare sector for the past 15 to 20 years have resulted in runaway supply-side prices.
  • Schemes are significantly disadvantaged by the “rules-based and inflexible” regulatory approaches of the Council for Medical Schemes (CMS). Consequently, they have been severely hampered in their ability to exert downward pressure on the prices of healthcare services, keep contribution increases to a minimum, and devise innovative, cost-effective benefit packages that will promote competition and appeal to a wider market.
  • The CMS and the Department of Health have not meaningfully reviewed the prescribed minimum benefits package over the past 20 years.
  • Smaller schemes do not have the bargaining power to negotiate prices that are fair and reasonable on behalf of their beneficiaries.

The BHF said granting the exemption will:

  • Stop the decline in the medical schemes industry;
  • Promote the economic development, growth, transformation and stability of the industry; and
  • Result in competitiveness and efficiency gains that will promote the expansion of the industry.

Interested parties have 20 business days from 6 May to make written submissions to the Competition Commission as to why the exemption should or should not be granted.

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