A Discovery member just won a major case against the medical scheme – here are the implications

Business Insider SA
The Tygerberg state hospital. Some medical scheme members are only entitled to treatments that are available in the state sector. Photo: Netwerk24
  • Discovery Medical Scheme refused to cover the cost of a new type of eye stent – because it wasn't available at state hospitals.
  • One of its members won a case against the scheme, which will now be forced to pay for the stent. 
  • All medical scheme members are entitled to basic benefits for certain illnesses, but funds were only forced to pay for treatments that are available in the state sector.
  • Theoretically this could mean that medical schemes may now have to cover pricier treatments - but the reality is not so straightforward.
  • For more stories, go to Business Insider South Africa.

The appeal board of the Council for Medical Schemes has ruled against Discovery Health Medical Scheme after it refused to cover the cost of a new type of eye stent for one of its members who suffered from the eye disease glaucoma.

Ironically, the cost of the stent (R9,000) was much lower than an alternative treatment (R20,000), which Discovery was prepared to fund. But Discovery refused to pay for the stent as it is not available in state hospitals.

According to South African law, all medical scheme members – no matter which option they selected – are entitled to certain basic benefits for a list of illnesses, such as asthma, hypertension, and some types of cancers. For some of these Prescribed Minimum Benefits (PMB), medical funds only have to pay for treatments that are available in the state sector.

Once you get cancer, for example, there are many of the cheaper “PMB only” scheme options that will only pay for the radiation or chemotherapy that is used in state hospitals.

In theory, therefore, the new ruling against Discovery may open the door for members of even the cheapest medical schemes to get treatments that are not offered by state hospitals. 

For cancer patients, some of the treatments that aren't currently covered include Yervoy therapy – which in the US can cost almost $7,000 (R120,000) for 10ml – that can help your immune system find and kill cancer cells. Another immunotherapy medicine, Keytruda, is also not widely covered in South Africa. Other treatments, like stereotactic radiosurgery, used for certain brain cancers, and so-called biological cancer-fighting agents like Avastin and Velcade, are also not covered by PMBs.

But in reality, the new ruling won’t mean that medical scheme will be forced to cover these super-expensive medicines, says Dr Ernst Marais, COO of ICON Oncology, which represents more than 80% of oncologists in SA.

“It is clear that the CMS ruling does not necessarily give carte blanche for expensive cancer treatments. Instead, it is important to note that CMS ruled on a treatment that is much cheaper than the treatment that the Discovery Medical Scheme was willing to pay for. One will have to assume that clinical efficacy was carefully evaluated and taken into consideration by CMS.”

Professor Alex van den Heever, chair in the field of social security systems administration and management studies at the Wits School of Governance, says the appeal board found against Discovery on scientific grounds.

“Not only had the treatment been approved by the FDA [the US Food and Drug Administration], but the treating doctor made sound arguments about its value in this instance. It was argued that Discovery's proposed covered treatment was in fact harmful to the patient.” 

Van Den Heever also cautions against expectations that the new ruling will open the door for medical scheme members to get expensive medicines covered.

“The ruling is important principally for the manner in which it reasoned its decision. In no way does it arbitrarily expand benefit coverage to less needed and less catastrophic conditions, instead it prevents the restriction of benefits on arbitrary criteria – such as a crude reference to practice in public services.”

The state does not have routinely established protocols for many treatments, and different doctors and hospitals offer different treatments, he says. 

“It is furthermore important to note that in this instance the Appeal Board compelled Discovery to cover a treatment that costs less than the one they covered (R9,000 versus R20,000).”

Monthly medical scheme contributions will skyrocket if schemes are forced to pay for everything, says Marais. “The challenge is South Africa is to ensure that patients have access to high quality care, with good clinical outcomes while ensuring sustainable funding. In short: make sure the right patient gets the right care but also at the right price.”

The trouble with 'kickbacks'.

While the new ruling may not ensure that medical scheme members get access to pricier treatments, Van Den Heever says it does highlight an important issue with medical schemes.

“While it cannot be proven in this instance, one of the reasons why such judgements are important, are that there are often arbitrary and unfair reasons applied by administrators for not covering a treatment. These can include kickbacks – a common feature of the private health system in South Africa. In other words, some suppliers pay to access a formulary, which results in higher-priced and less efficacious treatments finding their way into coverage."

Van den Heerver believes “the problematic relationships between administrators and product suppliers presents a serious threat to patients that the department of health has for years done nothing about”.

In this case, the CMS decided against the patient, he stresses. It was only the appeal board (a separate legal entity to the CMS) that reached this finding.

Van Der Heever is scathing in his assessment of the efficacy of the CMS and the department of health (DOH).

“As things stand, I don't think either the DOH or the CMS has the capacity to properly institutionalise protections for medical scheme patients. The CMS, in my view, has been subject to substantial political interference, both in its operations and appointments. It is this that has led to a collapse of its capabilities.” 

Towards the end of last year, five CMS executives were suspended amid allegations of collusion in the appointment of service providers, the irregular placement of schemes under curatorship, irregular spending on service providers, lifestyles not matching salaries, and close and corrupt relationships with entities that the council regulates.

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