Alternative reimbursement in the private healthcare sector

Medshield Medical Scheme believes it’s time for new and innovative alternative reimbursement models in the South African private health-care sector. According to Thoneshan Naidoo, principal officer of Medshield, the current fees-for-service reimbursement models rely heavily on modality and do not entail proper care management or value measurement that truly serves the interest of the patient or medical scheme member.

The view is that the fee-for-service model includes perverse relationships at its core and supports industry ills such as supplier-induced demand. It is, therefore, calling for an alternative that will focus on value for money and measurement of quality outcomes.

The proposed alternative reimbursement model is focused on being more cost-effective, while providing better control. The alternative reimbursement model will be an improvement on the fees-for-service model that is often subject to abuse and claims fraud due to little control on use and quality outcomes. “Our rationale for the alternative model is providing better value for money to our members, while ensuring improved quality of health care based on measured outcomes,” says Naidoo.

At Medshield, quality is measured with the diagnosis-related group (DRG) tool and allows the tracking of cost versus quality based on reliable data, set against outcomes and predetermined parameters. The premise of the alternative reimbursement is diagnosis determined if a proposed procedure is in prescribed minimum benefits (PMB) or not, as opposed to the current procedure-led basis. The medical scheme is then obliged to pay the PMB rate for such a procedure or the contracted rate above PMB, according to the medical scheme choice taken up by the scheme member.

The most significant challenge in implementing the new model is that there is already some wastage in the system. One will need to apply best practice in negotiation based on evidence and ensuring the best value for money for scheme members. In gathering such evidence, big data is of the utmost importance.

A workable model relies on effective partnership between the medical scheme, health- care providers and the patient. In making care decisions, patients often have very little information and use whatever is presented to them, often by the health-care provider. Medshield is committed to improving educative communication to members for them to understand their choices and be able to make more informed decisions.

The Medshield claims mix for 2017 illustrates that greater value for money according to the patient’s need is required in the reimbursement model. Currently, more than 40% of the benefit category is allocated to private hospitals and 15.3% to medical specialists, based on a fee for service in a procedure-based modality. Greater value for money can be achieved if care decisions, and resultant benefit allocation, are based on diagnosis rather than procedure elements only.

The fee for service model holds distinct disadvantages that an alternative model can overcome. In Medshield’s view, some of the disadvantages of the fee-for-service model include increased premiums, spiralling and unsustainable health-care cost through over-servicing, as well as a prevailing imbalance between supply and demand.

Care is fragmented and uncoordinated, while the system leaves a lot of room for duplication and claims fraud.

Medshield’s primary concern is for its members. With the current fee-for-service model, poor health outcomes are experienced and less than optimal value for money is provided. The current system leads to increased deductibles and co-payments, while no or little provision is made for preventative-care medicine that can better manage the member’s claims and benefit availability in the long run.

Although the fee-for-service brings greater choice of doctors and no, or short, waiting periods to see specialists, the view is that the model fragments the care provision. There is a need to go back to care co-ordination with the family practitioner as the key co-ordinator or custodian of care. An integrated multidisciplinary approach to health care is imperative when required and best serves the interest of the patient.

Poor outcomes of the current model can be avoided, with improved measurement of clinical outcomes a focal point to enhance quality, stimulating approaches such as pay-for-performance and outcomes-based reimbursements. An alternative diagnosis-led model, with greater focus on outcomes and measurement, will avoid over-servicing without focus on measurable clinical outcomes.

“We recognise that the marketplace, providers and service approach need to reform. Payers and providers face a number of challenges to strike a balance between efficient value-based contracting and agreement based on performance metrics,” says Naidoo.

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