Funder Relation Update

This is a particularly busy time of year for both medical schemes and providers in the Funder Relations space as the medical schemes begin launching their price increases, products and networks for 2020 to their members and the industry at large.

From a provider perspective, this is when engagements are held with administrators and medical schemes to negotiate the tariffs applicable for the following year. Medical schemes generally use consumer price inflation (CPI) over the past 12 months when framing their tariff increases.

The Council for Medical Schemes (CMS) releases a circular referencing what they believe is an appropriate tariff increase for medical schemes. The circular referenced National Treasury’s Economic Outlook in providing an average CPI of 5.4% for 2020. It must be noted that the 5.4% referred to by CMS is a “cost increase” to be budgeted for and not a “price increase” and, accordingly, will factor in other cost drivers. CMS highlighted that cost increases higher than the projected CPI will have an adverse effect on the ability of members to continue their medical scheme memberships and, accordingly, discouraged increases at such levels.

It is also an interesting time for the industry as schemes merge and network appointments are finalized and released. In the merger’s news, it was recently announced that the amalgamation of Compcare Medical Scheme and Selfmed was approved by the regulatory authorities and would now be proceeding. The amalgamated scheme would be administered by Universal Health, the current administrators of Compcare Medical Scheme.

In terms of networks, the results of two Request for Proposals (RFP’s) are expected by the end of October 2019. Both the GEMS and Nedgroup RFP’s were well supported by providers and the final results are eagerly anticipated. With respect to the Nedgroup network, whilst we are not aware of all facilities appointed, we have been informed that Lenmed facilities have been appointed to this network.

This is another feather in the Lenmed cap and is indicative of the value that we provide to both medical schemes and their members.

The cost efficiency scores continue to be a focal point for medical schemes and are a large component in the decisions of which facilities are appointed to networks. It is therefore important that we continue to collaborate and work together in removing unnecessary costs and wastage from the system as this will assist us in retaining our network provider status, where we are already participating, or convince schemes to appoint us to their networks as far as new networks are concerned. As far as networks are concerned, we continue to engage Funders on a regular basis to ensure maximum representation on networks.