22 August 2012Parliamentary Portfolio Committee on Health

Who is SAMA?• SAMA is a Doctor’s organisation

– Originally founded in 1927– Transformed in 1998 by amalgamation of all major

doctor groupings

• Section 21 company and a registered Trade Union– Not for profit organisation

• Represents >17 000 Doctors in public service and private practice

SAMA’s Coding history• First coding booklet published in 1944

– Annually updated ever since –> called the Doctors Billing Manual (DBM)

• >60 years of intellectual property in DBM• SAMA is the steward of doctor’s codes

– Custodian for future generations of Doctors

The SAMA DBM• The DBM represents the scope of practice of

the medical profession• Current format first created in 1975• Why does SAMA do coding?

– SAMA is a neutral referee– Inter disciplinary relativity is maintained

• The DBM is the recognised industry standard– Today used by HPCSA & Discovery, GEMS and

BHF, representing over 80% of medical schemes

Tariffs past and present• Until 1978 SAMA Rate and RAMS Scale of Benefits were equal

– Scale of Benefits then became lower than SAMA rate– RAMS replaced by the BHF– Subsequently SAMA and BHF negotiated tariffs annually

• 2003 = last year SAMA calculated a rate on behalf of doctors

• 2004 – Competitions Commission ruled the above activity “anti-competitive”

• NRPL (National Reference Price List)– 2004 – 2005, CMS produced guideline NRPL– Codes based on SAMA DBM

• NHRPL (National Health Reference Price List)– 2006 NHRPL produced by NDoH– Codes based on SAMA DBM

• HPCSA– Produced an “Ethical Tariff” in 2006– Used NHRPL (multiplied by 3)– 2008 the Ethical Tariff was scrapped

• RPL– basis of the RPL was challenged – RPL declared invalid by High Court of South Africa

Tariffs past and present

SAMA/HPCSA Guideline Tariff process• 15 July 2011

– HPCSA Ombudsman invited SAMA to discuss tariff guidelines

• 22 July 2011– SAMA submits written Tariff Guideline Proposal to HPCSA

• 17 January 2012– SAMA meets with acting HPCSA registrar and enquires

when guideline will be published – stresses importance of using updated DBM for process

• 11 June 2012– SAMA meeting with the new Registrar – above again

emphasized

SAMA/HPCSA 2012 Guideline Discussion Background

• SAMA offered 2012 DBM to HPCSA– Contains 150 altered codes since 2010– Contains 445 altered codes since 2009– Contains 1202 altered codes since 2005

• SAMA offered services of coding department• SAMA delayed publishing of 2012 DBM• SAMA requested a single RCF across all

specialities– RVU gives interdisciplinary relativity

Healthcare InflationHealthcare Inflation• 1990

- Average CPI Inflation = 14.2% - Average Medical Scheme inflation =27.3%- Average contribution PBP/m = R74.45

• 2000-Average CPI Inflation =5.4%- Average Medical Scheme inflation =7.5%- Average contribution PBP/m = R343.45

• 2010-Average CPI Inflation =4.3%- Average Medical Scheme inflation =11.3%- Average contribution PBP/m =R975.82

1981R11.73 PBPm

2010R168.08 PBPm

2010R975.82 PBPm

Scheme Expenditure per beneficiary per month

2010 ContributionsR975.82 PBpm

2010 ContributionsR975.82 PBpm

Healthcare Costs?• Administrator cost

• Managed Care cost

• Broker fees

• Actual cost of healthcare

2010R11,564,770,000

Council for Medical Schemes 2009/2010 Annual report p214

“Administrators and businesses associated with administrators

often provide managed healthcare services. In many instances, these

services are merely additional layers of administration costs with questionable benefits for the

schemes themselves.”

Medical Scheme Membership as % of Population

Broker Summary• 2000 - 2010

– 16% population growth• 19% MS membership growth• 9.4% MS membership growth excluding GEMS

– 1 326 587 new MS members• 665 377 new MS members excluding GEMS

– Cost of R8.85 Billion• R6 670.13 per new MS member• R13 298.50 per new MS member excluding GEMS

Conclusion• Brokers are being paid large sums of

money but have effectively attracted few new members

• MHC has not succeeded bringing down healthcare costs only GP visits

• Administrators are charging medical schemes significantly

• Hospitals are a significant cost

How to determine an RCF?Days Per Year 365Weekend Days -104Annual Leave -22Public Holidays -11CPD Days -5Sick Leave -8Available Working Days 215Working Hours Per Day 8Available Working Hours 1,720Productivity Factor 0.75Productive Hours Per Year 1,290Consulting RVUs per hour 45

Annualised 2012 Overheads

2012ALL

SPECIALISTSCONSOLIDATED

SURGICALCONSOLIDATED

CONSULTING GP'S

Staff Salaries & Related Costs R 367,641.41 R 388,408.88 R 327,993.68 R 307,750.50 Equipment Costs R 79,696.59 R 79,591.03 R 79,898.33 R 66,201.14 Rend and Utilities R 84,652.12 R 90,249.23 R 73,966.95 R 93,099.39

Practice Management & Administration R 205,769.88 R 216,428.07 R 185,423.48 R 151,330.63 Finance & Insurance R 131,315.00 R 146,343.44 R 102,623.38 R 91,300.15 Other R 17,762.48 R 18,794.64 R 15,792.00 R 18,134.29 Total Costs R 886,837.48 R 939,815.28 R 785,697.83 R 727,814.93

SAMA 2012 RCF = R28.93

2012 Salary Comparison of Private Practitioners versus Public Sector Practitioners versus Corporate Employed Accountants

Job Title & DescriptionSalary Per Annum Salary Per Productive

Hour RCF

Lowest Highest Lowest Highest Lowest Highest

*Calculated Private Practice GPs SalariesGP - More than 10 years R 1,418,732.93 R 1,591,619.93 R 1,099.79 R 1,233.81 R 24.44 R 27.42

Comparative Salary if GPs Private Practice overheads are added to Public Sector Salaries

Senior Clinical Manager (Medical) Grade 2 R 1,686,500.93 R 1,760,582.93 R 1,307.37 R 1,364.79 R 29.05 R 30.33*Calculated Private Practice Specialists' Salaries

Specialist - More than 10 years R 1,817,395.48 R 2,050,243.48 R 1,408.83 R 1,589.34 R 31.31 R 35.32

Comparative Salary if Specialists' Private Practice overheads are added to Public Sector Salaries Head : Clinical Department (Medical) Grade 2 R 2,385,331.48 R 2,477,290.48 R 1,849.09 R 1,920.38 R 41.09 R 42.68

*Comparative Salary if GP Private Practice overheads are includedRobert Walters Survey of Corporate Salaries for Accountants 2011Audit/Tax/Accountancy/Treasury Director Level - 5+ years exp R 1,627,814.93 R 1,727,814.93 R 1,261.87 R 1,339.39 R 28.04 R 29.76

*Comparative Salary if Specialists' Private Practice overheads are includedCorporate Finance (CA (SA)) Corporate Finance CA - 5-10 years exp R 1,636,837.48 R 1,886,837.48 R 1,268.87 R 1,462.66 R 28.20 R 32.50Tax Specialists (CA (SA)) Director - 8+ years exp R 1,986,837.48 R 3,386,837.48 R 1,540.18 R 2,625.46 R 34.23 R 58.34

*Excludes risk compensation factor

2012 HPCSA Tariff Guideline

– 62% increase in doctors’ input costs since 2003– Malpractice insurance costs are increasing

exponentially– Massive administrative burden

• 98 Medical schemes with on average 5 options each• 490 different tariff guides• 490 different protocols and formularies• Exhaustive authorisation and motivation procedures• 5 -10% of income to claims bureaus

Conclusion• Benchmark tariff is essential

– Provide much needed stability and framework– NHI process will require an appropriate tariff

guideline

Suggested Way Forward• SAMA suggests a benchmark tariff

– Must be based on actual practice cost studies– Must include Tiered Tariffs

• SAMA 2012 DBM used as the standard– Tariff codes are the scope of practice of the

medical profession

• Access = affordable healthcare + available doctors

Suggested Way Forward• SAMA willing to work with the HPCSA

– Use the 2012 DBM as basis for tariff guideline– Must use actual cost studies on which to base tariffs

• Competition Commission– Medical Industry must be exempted– Allow SAMA to suggest guideline to members– Allow doctors and funders to negotiate tariffs

• Pricing Commission– The composition of Pricing Commission to be

equitable