In a recent circular, the Council for Medical Schemes (CMS) prescribes requirements that must be adhered to by medical schemes for the assessment of annual medical scheme contribution increases, and benefit changes for the 2021 benefit year.
In the circular the CMS also reminds medical schemes of their purpose, i.e. to protect the interests of beneficiaries at all times and to control and coordinate the functioning of medical schemes in a manner that is complementary with the national health policy. To this end, CMS’ key objective is to ensure that annual medical scheme contribution rate increases remain affordable to encourage equitable access to quality healthcare, and overall In addition, the CMS outlines the various factors that will have a direct and indirect impact on the affordability of medical scheme contribution rates, the financial performance of schemes, risk pooling, cross subsidisation, membership growth and the long-term sustainability of the industry. “The economic shock sparked by recessions followed by the onset of the COVID-19 pandemic and the subsequent sub-investment grading by credit agencies has exacerbated the country’s economic distress,” according to the CMS.
The CMS guidance document provides medical schemes with key industry specific considerations that they will consider when assessing the appropriateness of benefit changes, contribution rate increases, and overall cost increase assumptions for 2021 benefit year. Headline inflationary expectations, medical scheme contribution dynamics and consumer inflation, Pre-COVID-19 utilisation and contribution increase trends and Single Exist Price (SEP) for medicines are some of the considerations listed.
Additionally, the CMS mentions that there is uncertainty about the potential cost to medical schemes as a result of COVID-19 related claims. Against this backdrop of economic constraints and a high degree of uncertainty, the CMS makes certain recommendations including providing financial relief to members in distress due COVID-19 economic contagion and inflationary -linked contribution increases amidst COVID-19.
Click here to download Circular 52 of 2020.