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Updates from Medical Schemes Council – Consolidation of smaller funds and Low-Cost Benefit Package reviewed

In September 2018, the Council for Medical Schemes (CMS) published a Draft Framework for Medical Schemes Consolidation for comment. In response to these comments the CMS has done additional analysis and as a result published two reports, i.e. Medical Scheme Consolidation High Level Analysis and a discussion document on Development of Low-Cost Benefit Options within the Medical Schemes Industry. The reports can be accessed via Circular 28 of 2019 and stakeholders are invited to submit further comments by 28 June 2019.

Medical Scheme Consolidation

The report shares a high-level analysis on consolidation of medical schemes with less than 6 000 members. Additional analysis was undertaken by the CMS to further enhance the aspects of the original draft that was presented in 2018 (Circular 42 of 2018). According to the CMS the analysis indicated that the membership, purely as a number, is an insufficient metric to identify the schemes which could be considered for consolidation. As a result industry-wide analysis of all medical schemes is recommended, based on a more holistic set of parameters and economic simulations.

Click here to download the Medical Scheme Consolidation High Level Analysis.

Low-Cost Benefit Package

Transitional provisions in the Demarcation Regulations allowed time until January 2018 or upon renewal, for amendment of health and accident policy contracts to become compliant with the Insurance Act. A two-year exemption was however agreed by the Minister of Health, whilst a Low-Cost Benefit Package is developed.

Recently, due to the pending expiry of the exemption period, Circular 18 of 2019 requested entities to submit renewal applications which will be evaluated on merit to extend the exemption period to 31 March 2021, pending the finalisation of the LCBO framework.

The CMS commissioned research to examine the most appropriate policy option for the establishment of the LCBO framework within the South African context. This discussion document seeks to stimulate discussion within the industry on matters related to the establishment of LCBOs. The objective is to present evidence and analysis that provides the CMS with the basis for taking the most appropriate decision on establishing LCBOs within the South African context.

Click here to download the Development of Low-Cost Benefit Options discussion document.

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