LCBOs will ‘broaden coverage, encourage innovation’…

An Adjunct Professor in the School of Statistics and Actuarial Science at the University of the Witwatersrand, Harris – who has been an active participant in the Council for Medical Schemes’ (CMS’s) LCBO Advisory Committee deliberations since its 2020 inception as a representative of the Health Funders Association –  also indicated that it was now accepted that from a National Health Insurance (NHI) trajectory viewpoint , LCBOs would encourage innovation in primary care delivery models as well as develop and provide a contracting framework for the NHI Fund.

Highlighting factors such as medical scheme cover being “stagnant” at nine million beneficiaries and was still not affordable to many South Africans, Harris also pointed out that there was now clear evidence that the industry was experiencing a worsening risk profile. For these reasons alone, she said, there was a dire need to expand access to cover.

Understanding the target market with reference to the CMS’s Circular 53 of 2022, LCBOs, she asserted, provided this opportunity. The target market, from the findings of the LIMS (Low Income Medical Schemes) Survey of 2006, had already expressed higher willingness to pay for primary care services. There was now a clear opportunity for coverage, the current target market being identified as the 16 million employed with only approximately six million with medical cover

And it would be affordable. Said Harris: “Simple structured benefit packages, a focus on a primary care package including preventative care which would alleviate the burden on the public sector, ensure affordability, and also address some public health priorities like HIV/AIDS.”

Clear eligibility criteria and acknowledging that benefit differentiation is a key driver of affordable cost of cover, she added, would preserve affordability at a monthly target range of between R150 to R350 per beneficiary per month.

“For the target market coverage immediately alleviates out-of-pocket expenditure and improves equity. Access to employer subsidies means greater access to care and care co-ordination, while improved health management impacts productivity and downstream health costs.”

On LCBO proposed cover, Harris explained that must-be-covered minimum benefits would be gatekeeper primary care – including ante-natal, mental health cover – medicines as per the Essential Medicines List (EML), core diagnostics (radiology and pathology), screening and emergency transport

Additional cover which can be added would include GP access, dentistry, optometry, extended formulary, extended diagnostics, and auxiliary services out of hospital: “Hospitalisation would only be covered by options compliant with full PMBs.”

Turning to her presentation topic on where would LCBOs fit in considering current structures, Harris noted that LCBOs met the definition of a “business of a medical scheme under the Medical Schemes Act” and therefore supported the recommendation that LCBOs be implemented under the Medical Schemes Act by exemptions or regulatory amendments.

Practical considerations in the implementation process would be:

· Exemptions: medical schemes allowed to offer LCBOs per framework (as with EDOs)

· Transition: policyholders on exempted insurance products can move without restriction

· Regulations: parallel process of drafting amendments

· Medical Schemes Act Amendments: ultimately included in amendments being prepared

The Advisory Committee recommended framework on LCBOs was scheduled to be submitted to the Minister of Health by the end of the first quarter of 2023.