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Low Cost Benefit Options and Demarcation – CMS provides further extension

Earlier this year the Council for Medical Schemes (CMS) responded to various protests from the healthcare industry, as well as appeals by insurers, by announcing the appointment of two advisory committees to engage with stakeholders on a low-cost benefit option framework and insurance demarcation issues. The industry objections were in reaction to the CMS decision in December 2019 that health insurance products will be banned after 31 March 2021.

Late last week, the CMS released an industry update on developments for insurers conducting the business of a medical scheme:

Engagement sessions with stakeholders

According to the latest circular, the CMS held several engagements in January and February 2020 with stakeholders including the Minister of Health, National Treasury, Financial Sector Conduct Authority (FSCA), Prudential Authority (PA), medical schemes, administrators, managed care organisations, insurers, brokers and related service providers on the 2019 report findings and the related two circulars.

Update on the establishment of the Advisory Committees

Progress has been made in the establishment of the advisory committees, but because of the coronavirus pandemic and subsequent national lockdown no physical meetings could take place. However, a Charter and Code of Conduct of the Advisory Committees has been circulated to all and more communication will be made available towards the end of September 2020.

Development of Conversion and Low-Cost Benefit Guidelines

There has been progress on the development of a Conversion Framework to transition insurers conducting the business of a medical scheme into the medical schemes’ environment.

In addition, the development of a Low-Cost Benefit Option Guideline, which sets out the process to be followed by medical schemes as it relates to benefit offerings for lower income earners has also progressed. Full details of both guidelines will be discussed at the first combined Advisory Committee meeting.

Exemption of insurers conducting the business of a medical scheme

The CMS extended exemption to insurers that conduct the business of a medical scheme, on options or products with active policyholders for two years, from 1 April 2019 to 31 March 2021. Conversely, exemption was not granted for requests for new products, or products that had no active policyholders, subject to conditions as contained in Annexure 1.

Details of the relevant insurers, their respective financial service providers and the exempted insurance products that are offered, are attached as Annexure 2.

Extension of the current exemption period post 31 March 2021

“In light of these developments, and after consultation with the National Treasury, FSCA and the PA, the Council has approved the extension of the current exemption period by another year. Therefore, the extension will be valid for an additional year, from April 2021 to 31 March 2022.” According to the CMS the extension is conditional on insurers and their respective financial service providers complying with the exemption conditions set out in Annexure 1.

“The CMS remains committed to ensuring that low-income earners have access to quality healthcare that is regulated effectively and complies with provisions of the MSA. For this reason, the CMS is open to engaging with insurers and medical schemes to work towards transitioning into the medical schemes’ environment for improved healthcare coverage,” the CMS concludes.

Click here to download Circular 56 of 2020.

Links to previous Moonstone articles on the topic:

Low Cost Benefit Options exemption – Council for Medical Schemes update

Low Cost Benefit Options and Demarcation – BHF also criticises announcements

CMS update on COVID Financial Reporting Guidelines

Earlier, the Council for Medical Schemes (CMS) communicated a concession for all medical schemes to apply for exemption to provide financial relief to members and employer groups to counter the economic impact of the COVID-19 pandemic. One of the requirements of such exemption was that medical schemes must report to the CMS, on a monthly basis, on the financial impact on their management accounts resulting from the various methods of relief granted. As a result of the inconsistency of these reports, the CMS has now introduced a standardised reporting template. Circular 54 of 2020 provides more information as well as access to the template.

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