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					                                                “Working together for a skilled tomorrow”




National Certificate in Insurance Administration

                        NQF Level 3

 Unit Standard 8991:             Explain health care benefits
                                 administration in South Africa

 Credits:                        2

 Notional Hours of Learning: 20




                      Learner Material



 This outcomes-based learning material was developed by IISA
           with funding from INSETA in March 2003.

                  The material is generic in nature.
It’s purpose is to serve as a guide for the further development and
        customization of company-specific, learner-specific
           and situation-specific learning interventions.




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Contents



Topic                                                                                                                                     Page
Unit Standard            ........................................................................................................................ 3
Learner material ........................................................................................................................ 6
                        Instructions ...................................................................................................... 6
                        Process/Activities ............................................................................................ 7
                        Examples: Guide for Assessment of Portfolio .............................................. 10
Additional Notes/Resources .................................................................................................... 12




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1.   TITLE:                      Explain health care benefits administration in South Africa



2.   UNIT STANDARD NUMBER:                       8991

3.   LEVEL ON NQF:                               3

4.   CREDITS:                                    2

5.   FIELD:                                      Business, Commerce and Management Studies
     SUB FIELD:                                  Finance, Economics and Accounting

6.   ISSUE DATE:

7.   REVIEW DATE:

8.   PURPOSE:

     This unit standard introduces the concepts of healthcare benefits administration and provides a
     broad introduction to healthcare administration to enable learners to be informed workers in the
     industry.
     The qualifying learner is capable of:
            Explaining medical insurance and the products classified as medical
            Comparing medical schemes and medical cover.
            Knowing what healthcare benefits administrators do with policyholders’ money.
            Asking questions to obtain information.
            Using the Government Gazette to find information.
            Explaining how medical schemes are regulated in South Africa.

9.   LEARNING ASSUMED TO BE IN PLACE:

     There is open access to this unit standard. Learners should be competent in Communication and
     Mathematical literacy at Level 2.

10. SPECIFIC OUTCOMES AND ASSESSMENT CRITERIA:

SO   Description                      Assessment Criteria
1.   Explain health care benefits.    1.1 Providers, members, healthcare benefits administrators and
                                          healthcare consultants are indicated as the players in the
                                          healthcare benefits market.
                                      1.2 The place of healthcare benefits is understood and reasons are
                                          given to explain why healthcare benefits administration is
                                          classified as long term.
                                      1.3 The different classes of healthcare benefits are named and
                                          compared in terms of the different products marketed.
                                      1.4 The difference between closed and open schemes is explained
                                          and reasons are given to explain why some public bodies and
                                          industrial concerns choose closed rather than open schemes.
                                      1.5 Reasons are given for taking out healthcare cover for two
                                          different types of benefit.




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2.     Compare medical insurance        2.1 The concepts of medical schemes and medical insurance are
       and medical scheme cover             explained with examples of each.
                                        2.2 Products marketed as medical insurance are researched and two
                                            similar products are compared in terms of security for the
                                            customer.
                                        2.3 Products marketed as medical scheme cover are researched and
                                            two similar products are compared in terms of security for the
                                            customer.
                                        2.4 The needs of the customer and the risks that the customer is
                                            prepared to take are considered and a list is compiled of
                                            questions to ask of a broker about a product.
                                        2.5 A personal decision is made as to whether medical insurance or
                                            medical scheme cover best provides for own needs.

3.     Explain what health care         3.1 Different avenues of investment are named and compared from a
       administrators do with policy        healthcare benefits administration perspective.
       holder’s money                   3.2 The concepts of threshold and medical savings accounts as
                                            applied in new generation products are explained with reference
                                            to the role of managed care in minimising costs and optimising
                                            the quality of care.
                                        3.3 The purpose of excluding the pharmacological treatment of
                                            certain expensive chronic medical conditions for the first twelve
                                            months of membership is explained with reference to the
                                            purpose/role in minimising financial risk.
                                        3.4 Transacting risk transfer through a reinsurance company is
                                            explained with reference to the advantages and disadvantages to
                                            the member and the scheme.
                                        3.5 Treaty reinsurance and facultative reinsurance as they apply in
                                            healthcare benefits administration are explained and compared
                                            with examples of each.

4.     Explain the ways in which        4.1 The Regulations to the Medical Schemes Act are identified with
       health care administrators are        reference to their application in selected schemes.
       regulated                        4.2 The role of the Department of Health in healthcare benefit
                                             administration is explained and an indication is given of how the
                                             Department of Health has positively and negatively affected
                                             healthcare benefits administration.
                                        4.3 The concept of minimum benefits is explained with reference to
                                            current legislation.
                                        4.4 The role of the Board of Health Care Funders’ is explained in
                                            terms of its control of the industry.
                                        4.5 The relationship of the South African Medical Association to
                                            healthcare benefits administrators is outlined and an explanation
                                            is give as to how decisions are made that affect the two
                                            organisations.
                                        4.6 The Government Gazette is used to access information
                                            applicable to medical schemes.
                                        4.7 The role of the Council of Medical Schemes and the Appeal
                                            Board in regulating healthcare


11.     ACCREDITATION AND MODERATION:

This unit standard will be internally assessed by the provider and moderated by a moderator registered by
INSQA or a relevant accredited ETQA. The mechanisms and requirements for moderation are contained
in the document obtainable from INSQA, INSQA framework for assessment and moderation.




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12.     NOTES:

CRITICAL CROSS-FIELD and DEVELOPMENTAL OUTCOMES:
This unit standard supports in particular, the following critical cross field outcomes at unit standard level:

1.      Learners are able to organise and manage themselves effectively by becoming responsible
        citizens when making personal decisions regarding their medical cover.

2.      Learners can communicate effectively using visual, mathematics and language skills to indicate,
        compare and present their conclusions in the activities required by the unit standard.

3.      Learners are able to act as responsible citizens in the organisation and local community when
        researching and comparing medical cover for products relating to customer security.

4.      Learners are able to identify and solve problems when identifying reasons for taking out
        healthcare cover for 2 different types of benefits.

5.      Learners are able to demonstrate an understanding of the world as a set of related systems when
        explaining ways in which healthcare benefits administrators are regulated.




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Instructions:

 This task will require 20 hours of reading, research and response by you.
 Your notes, summaries, written feedback, and transcribed oral feedback (where applicable)
  must be collected and stored in a portfolio.
 The portfolio can be a flip file, scrapbook or exercise book.
 Each article / notes or summary should be neatly pasted, dated and headed “Specific
  Outcome 1, 2, 3, or 4” depending on what aspect it covers.
 Your portfolio will be assessed at the end of the period.
 You should have regular contact and discussion sessions with your trainer / facilitator.
  During these sessions the progress of your portfolio will be checked. Should you live in a
  rural / distant area, your contact session can be telephonic / via fax or via e-mail.
 At these contact sessions you will be asked to comment on some of the articles you
  selected and this oral input will form part of your assessment for this unit standard.
 After three months you will also need to fill in a questionnaire as part of the assessment of
  this unit standard.




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ACTIVITIES


Number                 Aspect of task                                                             Done

Specific Outcome 1:    Consult     your     resources   and     indicate    the   players
                       (participants/organisations) in the healthcare benefits market.
Explain health care    Compare and discuss your findings with the members of your
benefits               study/syndicate group and then record the various players.

Action 1
Specific Outcome 1:    Consult your resources and from your understanding describe how
                       healthcare benefits fit into the broader field of financial planning and
Action 2               give three reasons as to why healthcare benefits administration is
                       classified as long term. Record your reasons.

Specific Outcome 1:    Consult your resources and list the different classes of healthcare
                       benefits. Compare the different products marketed in the classes.
Action 3               Record your findings in your portfolio.

Specific Outcome 1:    Consult your resources and from your understanding explain the
                       difference between closed and open medical schemes and give
Action 4               three reasons to explain why some public bodies and industrial
                       businesses choose closed rather than open schemes. Record your
                       findings.

Specific Outcome 1:    Consult your resources and give three reasons for taking out
                       healthcare cover for two different types of benefits. Record your
Action 5               reasons.

Specific Outcome 2:    Consult your resources and from your understanding explain both
                       medical schemes and medical insurance. Give an example of each.
Compare      medical   Compare and discuss your findings with the members of your
insurance        and   study/syndicate group and record the agreed findings.
medical      scheme
cover

Action 6
Specific Outcome 2:    Using your resource materials, research products marketed as
                       medical insurance and compare the security for the customer
Action 7               under two similar products. Record your findings.

Specific Outcome 2:    Using your resource materials, research products marketed as
                       medical scheme cover and compare the security for the customer of
                       two similar products. Record your findings.
Action 8
Specific Outcome 2:    Consult your resources and from your understanding consider the
                       needs of the customer and the risks that the customer is prepared
Action 9               to take and compile a list of questions to ask of a broker, about a
                       product. Record the questions

Specific Outcome 2:    Make a personal decision as to whether medical insurance or
                       medical scheme cover best provides for your own needs. Compare
Action 10              and discuss your needs and decision, with those of the members of
                       your study/syndicate group. Record your needs and the choice you
                       have made.




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Number                Aspect of task                                                         Done

Specific Outcome 3:   Study your resource materials and from your understanding name
                      and compare the different types of investment that a healthcare
Explain what health   benefits administration may be interested in using. Write these
care administrators   down in your portfolio.
do with policy
holder’s money

Action 11
Specific Outcome 3:   Study your resource materials and from your understanding explain
                      the concepts of threshold and medical savings accounts in new
Action 12             generation products and explain how these link with managed
                      care, minimising costs an optimising the quality of care.
                      Record your findings

Specific Outcome 3:   Study your resource materials and from your understanding explain
                      why the pharmacological treatment of certain expensive chronic
Action 13             medical conditions is excluded for the first twelve months of
                      membership of a medical scheme. Compare and discuss your
                      findings with the members of your study/syndicate group and record
                      the findings of the group.

Specific Outcome 3:   Study your resource materials and from your understanding explain
                      the advantages and disadvantages of reinsurance to both the
Action 14             member and the scheme. Record your findings

Specific Outcome 3:   Study your resource materials and from your understanding explain
                      and compare treaty reinsurance and facultative reinsurance of
Action 15             healthcare benefits administration, with two examples of each.
                      Record your findings.

Specific Outcome 4:   Identify the Regulations to the Medical Schemes Act, with reference
                      to their application in selected schemes. Compare and discuss your
Explain the ways in   findings with the members of your study/syndicate group and record
which health care     your collective findings.
administrators are
regulated

Action 16
Specific Outcome 4:   Study your resource materials and from your understanding explain
                      the role of the Department of Health in healthcare benefit
Action 17             administration, giving an indication of how the Department of Health
                      has positively and negatively affected healthcare benefits
                      administration in the past few years. Record your findings.

Specific Outcome 4:   Study your resource materials and explain the concept of minimum
                      benefits, which appears in current legislation. Record your
Action 18             explanation

Specific Outcome 4:   Study your resource materials and explain the role of the Board of
                      Health Care Funders in controlling the healthcare industry. Record
Action 19             your explanation

Specific Outcome 4:   Study your resource materials and outline the relationship of the
                      South African Medical Association to healthcare benefits
Action 20             administrators, giving an explanation as to how decisions are made
                      that affect the two organisations. Record your findings.


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Number                Aspect of task                                                        Done

Specific Outcome 4:   Source the relevant Government Gazette and access the
                      information applicable to medical schemes. Record the reference
     Action 21        details of the gazette.

Specific Outcome 4:   Study your resource materials and from your understanding
                      describe the role of the Council of Medical Schemes and the Appeal
     Action 22        Board in regulating monitory accreditations and appeals in
                      healthcare benefit administration. Record your description

Specific Outcome 5:   The needs of the customer and the risks that the customer is
                      prepared to take are considered and a list is compiled of questions
Compare     medical   to ask of a broker about a product.
insurance       and
medical     scheme
cover

     Action 23
Specific Outcome 5:   A personal decision is made as to whether medical insurance or
                      medical scheme cover best provides for own needs.
    Activity 24




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Guide for assessment of portfolios

Assessment Criteria              Learner is competent               Learner is not yet competent

                                  The 4 players in the              All or part of each activity not
Specific Outcome 1
                                   Healthcare industry are            done or incomplete
Explain Healthcare benefits        identified and written down

                                  An explanation as to why          NOT done or all questions
                                   healthcare benefits                not answered.
                                   administration is classified
                                   as long term, is written
                                   down.

                                  The different classes of
                                   healthcare benefits are
                                   written and then compared in
                                   terms of the different
                                   products marketed.

                                  The difference between
                                   closed and open schemes is
                                   explained in writing with
                                   reasons as to why some
                                   public bodies and industrial
                                   concerns choose closed
                                   rather than open schemes.

                                  Reasons for taking out
                                   healthcare cover for two
                                   different types of benefit are
                                   written down.

                                 
                                                                     Explanation and examples
Specific Outcome 2                The concepts of medical
                                                                      NOT noted.
                                   schemes and medical
Explain what healthcare            insurance are explained in
benefit administrators do with     writing. Examples of each,
policyholders’ money.              are recorded in writing

                                  Sources are consulted and         Product comparison NOT
                                   products marketed as               noted
                                   medical insurance, are
                                   researched and two similar
                                   products are compared in
                                   terms of security for the
                                   customer, in writing.

                                  Sources are consulted and         Product comparison NOT
                                   products marketed as               noted
                                   medical scheme cover are
                                   researched and two similar
                                   products are compared in
                                   terms of security for the

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Assessment Criteria   Learner is competent              Learner is not yet competent
                        customer, in writing.

                       The different types of
                        Retirement funds are named
                        and examples given of each.
                       Summaries of 2 sentences         Summaries not written
                        are written about the key
                        benefit of each type of fund.
                       The learners own retirement      No table drawn showing
                        fund is classified according      features and benefits
                        to its type. A table is drawn    Funds and benefits NOT
                        showing the features and          listed and or question NOT
                        benefits of the Learner’s         answered.
                        specific fund.
                                                         Benefit statement NOT
                       In table format the exit          analysed and explained
                        options and benefits of each
                        to the member are written.       List NOT compiled
                       The important features of the
                        contributions and benefits
                        scale of the fund are
                        underlined in red.
                       A personal list of reasons to
                        remain in a retirement fund
                        is given.




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ADDITIONAL NOTES

Facilitators’ Notes.

The specific objectives of this programme are:
The qualifying learner must be able to:
    1.   Work with other learners in a group as a team or on his / her own.
    2.   Show that he / she can organise and manage the activities responsibly and properly
    3.   Collect and organise information in order to do a presentation.
    4.   Use language and visual skills, written or spoken, to communicate while doing the presentation.
    5.   Think about and explore other ways to learn more effectively and better.

Specific Outcome 1
Explain healthcare benefits

Providers, members, healthcare benefits administrators and healthcare consultants are indicated as the
players in the healthcare benefits market.

As indicated the major role players in the healthcare industry is identified as:
Providers:
Providers are companies who specifically provide medical care benefits. There are two general types of
providers:
Companies who offer medical aid as an employee benefit, i.e. Libcare for Liberty staff and dependants
only (administered by Medscheme for Liberty).
Medical aid companies who offer medical aid to individuals and groups, such as Discovery Health (self
administered) and Liberty Healthcare (administered by Medscheme).
Members:
The members consist of individuals or groups of people as mentioned under Providers. Members select
a healthcare plan on offer and pay contributions accordingly on a monthly basis. The Medical Schemes
Act No. 131 of 1998 protects members and their rights. However, the Act also prescribes certain rules
and regulations for the member.

Healthcare Benefits Administrators:
Administrators manage a medical scheme on behalf of the scheme provider. Administrators are required
to comply with the Regulations as set out in the Medical Schemes Act.
Administrators who use the data to establish the annual medical inflation rate keep a record of usage on
each individual. This rate is the increase imposed on medical aid contributions every year.

Healthcare Consultants:
They fulfil a similar role as Brokers and Intermediaries with the difference that legislation requires that
Healthcare Consultants be accredited to sell Healthcare products.
Companies such as Liberty Healthcare and Discovery Health train their Consultants, assess their abilities
and then accredit them to sell their products.

The Department of Health and related SETA (Sector Education and Training Authority) is currently
working on a national accreditation program specifically for Healthcare Consultants.
The place of healthcare benefits is understood and reasons are given to explain why healthcare benefits
administration is classified as long term.
The different classes of healthcare benefits are named and compared in terms of the different products
marketed.

Healthcare providers make provision in their product packages for those people who can afford the
minimum right up to executive level who can afford the best available on the market.
The difference between closed and open schemes is explained and reasons are given to explain why
some public bodies and industrial concerns choose closed rather than open schemes.
What this means in simple language is that closed schemes are for employees of a company only, as the
company wishes it to be so, for example the Liberty scheme LIBCARE, which is for Liberty employees
and their dependants only. The average person in the street cannot elect to be a member of this scheme.


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or
because of the type of employees that require specific cover.
Examples are: Aviation, Mining, and Metal Workers. The schemes provide for specific hazardous
circumstances, which are particular to the profession. The average person in the street will not benefit to
pay for the dangers facing mine workers, if he / she is not a miner.
An open scheme is the opposite of a closed scheme. Any person or group of people can join an open
scheme as members.

Reasons are given for taking out healthcare cover for two different types of benefit.
The type or package type of healthcare cover that a member chooses must suit the member’s pocket and
particular needs.
The simple diagram below illustrates the basic needs of members and the affordability levels thereof.


                    Benefit                                  Plan A                      Plan D
     1. Hospital Benefit                                        X                           X
     2. Insured Procedures Benefit                              X                           X
     3. Out Patient Network                                     X
     4. Medical Savings Account                                 X                           X
     5. Chronic Illness Benefit                                                             X
     6. Above Threshold Benefit                                                             X


          1. Hospital Benefits. The choice of medical aid tariff or private rates highlights the major
             difference between the two plans. Affordability of the type of Plan plays a big role in
             choosing a Plan.
          2. Insured Procedures Benefit. The choice of annual limit and medical aid rates or private
             rates indicates the major difference. Affordability is the important factor here.
          3. Out Patient Network. This is only available to members who cannot afford paying for
             certain benefits out of their own pockets. The Provider has an agreement with the network
             that members are treated at reduced rates, but still receive the same professional level of
             healthcare. These accounts are submitted to the Provider for payment.
          4. Medical Savings Account. This assists the member with costs in that they can save for an
             event before it happens. The positive aspect is that the savings are there for use when
             unexpected problems pop up, such as medication for a feverish child late at night, or
             urgent replacement of spectacle lenses. A positive balance at the end of the rate year will
             be carried over to the next rate year. A rate year runs from January till December.
          5. Chronic Illness Benefit. This is a separate medication benefit to normal pharmacy benefits,
             which is not required by all members. This benefit makes sure that expensive medication
             for certain illnesses are within reach of the member’s pocket.
          6. Above Threshold Benefit. The member, submitted to the provider for recording purposes,
             pays normal accounts. Once the member paid accounts up to the limit stated, this benefit
             will kick in and the provider will pay the accounts as a benefit from that moment on.




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Specific Outcome 2
Compare medical insurance and medical scheme cover.

The concepts of medical schemes and medical insurance are explained with examples of each.

Concept                  Medical Scheme                                   Medical Insurance
Provider / Insurance     Registered Medical schemes provide the           Life assurance companies offer this product
Company                  healthcare benefit
Members                  Member of a scheme                               Policyholder also referred to as member at
                                                                          claims stage
Dependant                A spouse, child or family member                 A spouse or child. A family member,
                         financially dependant on the scheme              financially dependant, will usually take out an
                         member                                           own policy paid for from the member’s bank
                                                                          account. (separate policy)
Beneficiary              A member or a person admitted as a               Anybody or anything can be nominated as
                         dependant of a member.                           beneficiary on the investment or life cover
                                                                          portion only.
Child                    A member’s natural child, stepchild,             A member’s natural child, stepchild, or legally
                         legally adopted or a child placed in             adopted child. A child placed in custody of
                         custody of the member.                           the member, will have an own policy.
Act                      Adhere to rules as stated in the Medical         Adhere to rules as stated in the Medical
                         Schemes Act.                                     Schemes Act.
                                                                          The investment / life cover is governed by the
                                                                          Life Offices Code of Conduct, the Life
                                                                          assurance companies standards, rules and
                                                                          regulations.
BHF (Board of            Applicable in the management process             Applicable in the management process of the
Healthcare Funders)                                                       medical insurance portion.
Waiting Periods          Apply as set out in the Act.                     Apply as set out in the Act.
Continuation             Retain membership of a scheme should             As long as the premium / contribution is paid
                         you change your job, or a dependant who          membership will continue.
                         becomes a member.
Contribution             An amount paid by the member towards             Monthly amount paid by the policyholder in
                         membership fees of a scheme.                     order to keep a policy active. Also referred to
                                                                          as a premium.
Cost                     This is in relation to a benefit in respect of   This is in relation to a benefit in respect of a
                         a health service                                 health service
Employee                 Employee benefit provided by an                  Policyholder of an insurance contract with a
                         employer                                         medical insurance portion attached to the policy
Employer                 Employer offering a full or partially funded     Employers do not usually purchase this type
                         benefit to an employee.                          of contract on behalf of an employee.
Income level             Income is a factor in relation to the            Income is not a factor; age, gender and
                         monthly contribution paid.                       normal underwriting rules apply.
Minimum Benefits         The Medical Schemes Act stipulates that          The specified list of minimum benefits form
                         a specified list of minimum benefits must        part of the Benefit schedule.
                         be provided.
Pre-Existing Condition   A pre-existing condition can have a              A pre-existing condition can have a twelve-
                         twelve-month waiting period imposed              month waiting period imposed before the
                         before the actual benefit becomes a part         actual benefit becomes a part of the package
                         of the package again.                            again.
Scale of Benefits        This is published by the Board of                This is published by the Board of Healthcare
                         Healthcare Funders                               Funders
Eligibility              Membership is open to any person or              Policyholders can be turned down based on
                         group of persons.                                underwriting criteria.
Retired                  Membership continues till death, even            A particular age or term or whole life selection
                         after retirement.                                is available

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Concept                 Medical Scheme                                Medical Insurance
Dependants of           Membership can continue for dependants.       Membership can continue for dependants.
deceased members                                                      Dependant then the Principal Life Assured
                                                                      under the policy.
Registration of         On birth, adoption or agreement.              On birth, adoption or agreement.
Dependants
De-registration of      On reaching age 21 years and or               On reaching age 21 years and or financially
dependants              financially independent of the member.        independent of the member.
Life Cover              No life cover under a medical scheme.         This policy offer a small life cover portion,
                                                                      which is the primary reason why it is called
                                                                      medical insurance.
Change of Employment    Membership continues or can be carried        Makes no difference to the contract, unless
                        over to a new scheme.                         the member occupation changes to a more
                                                                      hazardous occupation.
Transfer of Employer    Membership can be transferred within a        The policyholder is underwritten at
Group                   three-month window period.                    commencement of the policy and is not
                                                                      transferable.
Membership Card         Presented as proof of membership to a         Presented as proof of membership to a
                        provider.                                     provider.
Termination of          Written notification one month prior to       The policy terminates when a member does
Membership              termination.                                  not pay contributions or surrender the life
                                                                      portion of the policy.
Failure to pay          Benefits cease.                               Policy lapses and benefits cease. Cannot
                                                                      make this policy paid up, as it doesn’t serve
                                                                      the purpose of this type of policy.
Abuse of privileges     Membership can be terminated by the           Policyholder will be held liable in a court of
                        provider and member sued.                     law.
Liability of Member     Pay contributions to keep membership          Pay premiums to keep policy and benefits
                        and benefits active. The provider may         active.
                        recover outstanding amounts.
Benefits                As per the schedule of benefits of the        Fixed schedule of benefits. Type of policy will
                        provider and type of plan selected.           indicate money value of particular benefit.
Payment of Accounts     The provider will pay accounts, in order to   The provider will pay accounts, in order to
                        keep a record of it for medical inflation     keep a record of it for medical inflation
                        purposes.                                     purposes.
Governance              Governed by the Medical Schemes Act,          Governed by the Medical Schemes Act,
                        associated institutions and the provider’s    associated institutions and the provider’s
                        terms and conditions.                         terms and conditions, as well as the Life
                                                                      Offices Association.
Investment portion of   Not applicable to a medical scheme.           The investment portion attached to the
Contract                                                              package is what allows this to be called a
                                                                      medical insurance.
Complaints and          A designated committee will handle            A designated committee will handle issues.
Disputes                issues.
Late joining            A threshold age of 35 years was imposed       Not applicable as the terms and condition
                        before a scheme can ask if the person         state the maximum age a policyholder can be
                        was a member of a scheme during the           to take out this type of policy. The minimum
                        past two years.                               term is 10 years for the contract; therefore the
                                                                      maximum entry age is 60. (Some companies
                                                                      may allow a higher age).
Medical Savings         Applicable to certain packages or Plan        Not applicable at all.
Account                 types, depending on affordability.




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Concept                Medical Scheme                              Medical Insurance
Reinstatement          Not applicable. Enter as new member.        Policy can be reinstated prior to two years
                                                                   passing of the contract being out of force.
                                                                   Certain rules apply before a policy can be
                                                                   reinstated.
Community rating       Contributions to the medical scheme may     The opposite apply: age, sex, health,
                       only be calculated on the basis of income   occupation, number of dependants is some of
                       and / or the number of dependants and       the factors, which is taken into account.
                       may not take into account age, sex or
                       state of health.
Administrator          Administered by registered medical aid      Administered by the relevant Life Assurance
                       and scheme providers. Registered with       company.
                       the Department of Health.
Broker Accreditation   Stringent accreditation rules apply and     Accreditation is mostly in house at the life
                       brokers must be registered as healthcare    company, but is still a requirement before they
                       consultants at the Council for Medical      can market this product.
                       Schemes.

Products marketed as medical insurance are researched and two similar products are
compared in terms of security for the customer.

Company A markets a medical insurance product named Medical Lifestyle Cover.
The new series Medical Lifestyle Cover allow policyholders two choices:
High Series Cover: provides a cash payment for treatments of a more serious and costly
nature leaving the minor costs to be self-insured. This product is designed for a policyholder
who is not a member of a medical aid or healthcare plan. The scale of benefits fall in line with
the tariffs decided upon by the Board of Healthcare Funders.
       Extended – Series Cover: provides a cash payment for treatment of a more serious
        and costly nature. This benefit is calculated based on 30% of the Value of Medical
        Service. The idea is that this is an ideal policy to take out if a member already has a
        medical aid or healthcare plan. The member can claim costs from the healthcare plan
        and the policy for the same procedure, disease or illness at the same time. The money
        paid out under this policy will cover additional expenses, which the medical aid or
        healthcare plan fall short on. Funds left over after all costs are paid stays with the
        member to do with as he / she pleases.


Both these products have two sections, the medical portion and the investment portion.
The following forms part of these contracts, as well as the contracts for Company B.
       The tax on medical schemes apply.
       Governed by the Medical Schemes Act and Regulations.
       Fraud watch (policyholders cannot claim for the same procedure twice within a specified
        time limit, unless there is a legal follow up on the same procedure).
       Hospital prenotification: policyholders must request permission, for a particular
        incidence or procedure, from the provider before being allowed admission to a hospital.
       Crime trauma benefit: Examples are, car hijack, rape, physical attack.
       Chronic medication benefit: (this benefit is always separate from normal pharmacy
        benefits. Examples are asthma, cancer, Parkinson’s disease.

Products marketed as medical scheme cover are researched and two similar products are
compared in terms of security for the customer.

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                                                                                                         Page 17



Sections of Product          Product A                                   Product B
Major Medical Benefit        Compulsory portion as it forms the core     This product provides this benefit as
                             of the scheme offered. The benefit          two separate benefits, such as Hospital
                             schedule is comprehensive and fulfils       Benefit and Insured Procedures Benefit
                             the minimum benefit requirements as
                             mentioned in the Medical Schemes Act.
                             Includes hospital benefits.
Hospital Benefit             Not offered separately                      Covers medical expenses incurred if
                                                                         members are admitted to hospital and
                                                                         treatment is authorised.
                                                                         Cover benefits to a maximum of 100%
                                                                         of private or 100% of medical aid tariff
                                                                         in an ICU (intensive care unit), high
                                                                         care or general ward.
Insured Procedures Benefit   Not offered separately.                     Provide cover to a maximum of 100%
                                                                         of private rates and 100% of medical
                                                                         aid tariff for over 35 defined procedures
                                                                         that can be performed without requiring
                                                                         admission to a hospital. Subject to
                                                                         authorisation.
                                                                         Examples: cataract removal,
                                                                         gastroscopy and angiograms.
                                                                         Includes selected MRI and CT Scans,
                                                                         subject to approval.
                                                                         Benefits can be structured to individual
                                                                         needs.
Medical Access Facility /    Medical Access Facility                     Medical Savings Account
Medical Savings Account
                             A personal savings account to pay for       Any deposit amount can be selected,
                             day-to-day out of hospital medical          subject to a specified minimum.
                             expenses.
                                                                         A personal savings account to pay for
                             The amount contributed is available for     day-to-day out of hospital medical
                             the year.                                   expenses.
                             Pays for visits to the doctor,              Pays for visits to the doctor,
                             prescription medicine, dentists, etc.       prescription medicine, dentists, etc.
                             Contribution amounts can be selected        Unused funds can be carried over to
                             according to each member’s needs.           the next year.
                             Unused funds can be carried over to         The first 20% of the unused annual
                             the next year.                              amount will not be carried over to the
                                                                         next year
                             Contributions for daily expenses are
                             made available in total at the beginning    On withdrawal or death the positive
                             of the year, and are recovered from         balance is paid to the deceased’s
                             contributions on a reducing basis           estate.
                             throughout the year.
                                                                         Refund rates can be medical aid tariff
                             Interest is paid on a positive balance      or private rates, depending on the type
                             and charged on a negative balance.          of cover.
                             On withdrawal or death the positive
                             balance is paid to the deceased’s
                             estate. A negative balance is written off
                             by the scheme.
                             Minimum monthly contribution is
                             R100,00.
                             Contributions can be increased or
                             decreased during the year, but not
                             below the minimum or if the account is
                             negative.


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                                                                                                              Page 18


Sections of Product              Product A                                    Product B
Threshold Benefit                Available on expensive package               Available on expensive package
                                 schemes only.                                schemes only.
                                 When the amount spent on day-to-day          When the amount spent on day-to-day
                                 out of hospital expenses is higher than      out of hospital expenses is higher than
                                 expected, this benefit is a “safety net”     expected, this benefit is a “safety net”
                                 and will cover expenses after the            and will cover expenses after the
                                 Threshold is reached (in the same            Threshold is reached (in the same
                                 medical year). Payments will be at           medical year). Payments will be at
                                 Board of Healthcare Funder rates.            Board of Healthcare Funder rates,
                                                                              subject to the overall non-hospital limits
                                 The provider at Board of Healthcare          as per the schedule.
                                 Funder rates keeps a record of
                                 accumulated expenses.                        The provider at Board of Healthcare
                                                                              Funder rates keeps a record of
                                 The accumulation of amounts is reset         accumulated expenses.
                                 to zero at the beginning of each year.
                                                                              The accumulation of amounts is reset to
                                                                              zero at the beginning of each year.
Chronic Medication Benefit       Can be selected as an additional             This is a separate benefit which covers
                                 benefit if required, and covers about 60     approved medication for over sixty
                                 different conditions classed as chronic.     specified conditions.
                                 Annual limits apply.                         Medication covered at 100% of cost if
                                                                              bought from one of the specified
                                 Supports the use of Direct Medicines as      medication providers.
                                 a cost saver, but not compulsory.
                                                                              Annual limits apply
Provision Fund                   The Provision Fund is designed to            Not available at this company
                                 assist members to save for medical
                                 contributions after retirement. The
                                 saving is an ongoing process
                                 throughout the lifetime of the member
                                 till retirement.
Benefit Management               Available for all benefits, but especially   Forms part of all benefits, no specific
Programmes                       for:                                         conditions targeted.
                                 Crime Trauma Benefit
                                 HIV Benefit
                                 Chronic Medication Benefit
                                 Oncology Benefit
                                 Haemodialysis and Peritoneal Dialysis
                                 Benefit
Pre-authorisation of benefits    A 30% co-payment will be imposed if          A 30% co-payment will be imposed if
(example: hospitalisation).      procedure not authorised within a given      procedure not authorised within a given
                                 time period.                                 time period.
Dental procedures in hospital.   Removal of impacted wisdom teeth,            Removal of impacted wisdom teeth,
                                 basic dentistry under general                basic dentistry under general
                                 anaesthetic for children 7 years and         anaesthetic for children 7 years and
                                 younger                                      younger
                                 Maxillo facial procedures                    Maxillo facial procedures
Hospital tariffs                 Provider has an agreement with a             Provider has an agreement with a
                                 specific hospital group for preferential     specific hospital group for preferential
                                 rates if members use their facility.         rates if members use their facility.


As with the medical insurance products members can choose cover and package types to suit
their needs. The healthcare consultant must do a full needs analysis in order to give the
member the best advice available.


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                                                                                            Page 19


The needs of the customer and the risks that the customer is prepared to take are considered
and a list is compiled of questions to ask of a broker about a product.
Each customer’s needs are personal, specific and affects financial affordability. The customer
is very seldom knowledgeable about products and services available, with associated costs, in
healthcare provision.
The role of the healthcare consultant is important in educating the customer to valued products
and services available, to best suit and satisfy the individual needs.
The customer has the right to know which products are on offer, which companies offer the
products and quotes detailing the financial costs involved, in order to make an informed and
educated choice where their hard earned money should be spent.


Example:
A woman past her childbearing years will not require a pregnancy benefit.


The risk to the customer is high costs involved in benefits not suited to the customers needs, as
in the above example.
Other risks are:
      Prescription medication when a doctor could prescribe equally effective generic
       medication, which is cheaper and saves on the medicine limit.
      Medical inflation costs, which can soar out of proportion if the provider is careless in the
       investments the company makes, or salary increases do not match the inflation
       increases.
The customer exceeds personal financial affordability in selecting a healthcare package.
(Finding out afterwards that the healthcare consultant poorly advised him / her in order to earn
greater commission).

Questions to think about when you plan on healthcare provision.

      How do I know which scheme or plan is best suited to my needs?
      How do I join a scheme?
      What role does an Administrator play?
      How do I prove that I am a member of a scheme?
      Who is not eligible for cover?
      Who can be registered as my dependants?
      Are my dependants still covered if I pass away?
      When would my surviving dependants no longer be eligible for cover?
      If I leave my employment with a company, can I stay on the company medical aid?
      What does it mean if my medical aid cover is suspended, and under what circumstances
       might this occur?
      Can I change my address and bank details telephonically?
      Can I change options during the year?
      What is a special or adult dependant?
      What benefits are available to me?
      Do I have to pay any levies?
      When is the start and end date of my benefit cycle?
      What happens when my benefits are depleted?
      How do I know if my benefits are depleted?
      How can I establish my savings balance? (If applicable to your scheme / option )
      Can I use my savings to pay for medical costs that my medical aid does not cover?

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                                                                                              Page 20


      Do I have overseas cover on my medical aid?
      Do I have overseas medical aid insurance?
      How are my contributions calculated?
      What portion of the monthly contribution does the company pay?
      Where and to whom should I pay my debits/debit orders?
      Can the administrator or provider deduct money from my salary?
      Why do the administrator or provider deduct from my claim refund amount?
      When is the start and end date of my tax year?
      How do I go about submitting a claim?
      Can accounts be faxed through to the claims department?
      How can I ensure that my payments are not delayed?
      How can I help to speed up the issue of refund cheques, repayment of accounts rejected
       in error and the stopping and re-issuing of cheques?
      When can I expect payment?
      What is Elektropay?
      Sometimes I am not paid or not paid the whole amount. Why?
      How can I best understand the claims statement?
      How will I know that I have been paid?
      What can I not claim for?
      If a claim is rejected, who is advised, the member or the provider of the services?
      Who is responsible for submitting the claims, the member or the provider?
      If a provider is contracted out, will my medical aid still pay the claim?
      What does it mean if a claim is rejected on the basis of being “stale” and what can I do in
       such a case?


Specific Outcome 3

Explain what healthcare benefit administrators do with policyholder’s money.

Different avenues of investment are named and compared from a healthcare benefits administration
perspective.


 Core          FUND                              Customised benefits
Purpose        Type          Lifestyle                          Illness                  Education
                    - Life Cover                   - Severe Illness Benefit
                    - Capital Disability           - Global Health Protector
Lifestyle LIFE FUND
                    - Income Continuation          - Family Trauma Benefit               Global
                    - Premium Waivers              - Female Benefit                      Education
                                                   - Child Severe Illness Benefit        Protector
            IMPAIRMENT
  Illness                                          - Childbirth Benefit
               FUND
                                                   - Premium Waivers
                                           GLOBAL LINKAGES, FUTURE FUND,
                                             MINIMUM PROTECTED FUND.


As can be seen in the example above providers and administrators advise members of the
different investment portfolios used for the different products. Members have a choice of
investment avenues for the life portion of the package they choose.
Other investment options are:
International Funds


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                                                                                          Page 21


Unit trust funds
Multi Manager funds
Frank Russel funds (American based with portfolios in America, Europe, Far East).
Property / Mining
Equities and Bonds
Johannesburg Securities Exchange (JSE), with the entire range of share options available
there.
Trade and Financials
Dollar Money fund and Euro Money fund (offshore investments).


Administrators and providers use member contributions to invest in any or combinations of the
above portfolios available. The profits gained from these investments are used to help the
company grow, pay medical claims and to make sure the obligatory reserve fund is always
above the minimum levels.
Investments are used to pay interest to members with a Positive Medical Savings Account or to
write off a negative Savings Account balance in the event of death.


Responsible and careful investments by Administrators and Providers helps to keep the
company afloat with the added ability to provide the benefits and services they sell.

The concepts of threshold and medical savings accounts as applied in new generation products
are explained with reference to the role of managed care in minimising costs and optimising the
quality of care.
Threshold Benefit:
The Threshold Benefit insures against large and cumulating non-hospital expenses.
Examples of non-hospital expenses are contact lenses, glasses, normal GP (General
Practitioner) accounts for flu, rash, fever, dental accounts for filling, pulling teeth, cleaning,
pharmacy accounts for over the counter medication (with a Doctor’s prescription).
Cover commences above a fixed Rand amount called an Annual Threshold. The member pay
accounts from his / her own pocket until the Threshold amount is reached (it is very important
that accounts paid in full are sent to the medical aid as proof of payment).
Once the Annual Threshold has been reached claims will be reimbursed at a maximum of the
medical aid tariff, subject to the overall non-hospital limits as per the benefit schedule.


Medical Savings Account:
The Medical Savings Account empowers members to cover day-to-day non-hospital expenses.
It is a personal account, which covers expenses such as visits to the general practitioner,
specialist and dentist. Over-the-counter medicines can also be reimbursed from the MSA.
Members can choose to have claims reimbursed from their MSA at the medical aid tariff or
private rates.
Any deposit can be selected, subject to a specified maximum. Legislation restricts the total
contribution per individual to 25% to the scheme. The regulations also provide for the pay out to
the member, of credit balances in savings accounts on termination of membership. This applies
where the member does not transfer to another medical scheme or where the member transfers
to a medical scheme that does not have a medical savings account. If a member transfers to a

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                                                                                           Page 22


scheme that does have a savings account the funds must be transferred to the savings account
of the new scheme.
There is no limit to the cumulative balance that may be held in a medical savings account.
The full annual amount is available for use immediately and at the end of the year, any funds
not used are carried forward to the next year.

Managed Care:
The best way to describe what Managed Care is by using an example. This is a tool used by
administrators and Providers to reduce costs in healthcare provision. Specialist Managed Care
Consultants are employed to monitor and control the processes for Administrators and
Providers.
Previously the minimum required stay in hospital for childbirth was six days, irrespective if there
were complications or not, later on the days in hospital was reduced to four. As healthcare
costs escalated Administrators and Providers managed the days in hospital more effectively, by
applying Managed Care principles.

Competitive Advantages
With the emphasis of containing costs within the private healthcare industry currently it has
become ever more important for provider networks and funders to consider managed
healthcare as a viable alternative to reduce the cost of healthcare. Managed healthcare
requires a delivery system that can influence the utilisation of services and measure
performance outcomes without compromising quality of care. Managed care is also a means of
providing healthcare services within a defined network of service providers, who are then given
the responsibility of managing and providing quality, cost effective care and ensuring that only
appropriate services are delivered.
The purpose of excluding the pharmacological treatment of certain expensive chronic medical
conditions for the first twelve months of membership is explained with reference to the
purpose/role in minimising financial risk.
Administrators and Providers employ specialists in their particular fields to advise and manage
chronic conditions and the medication provided for such a chronic disease. These professional
people will advise the Administrator or Provider on whether they should exclude treatment for a
specific condition for twelve months or not.

Reasons for exclusion can be:
    Medical evidence, blood tests, examinations, questionnaires on lifestyle.
    Completion of medicine provided previously.
    Pre-existing conditions.
    Certain illnesses which must be treated and cleared up first as the chronic medication
      may work against the healing properties of medication that the member may be using
      already.
    Members are advised to change their lifestyle, example asthmatics must stop smoking.
    Managing the condition may be more successful than medication, example promote a
      healthy lifestyle, follow advice and rules provided by the Administrator or Provider
      management care people.

Transacting risk transfer through a reinsurance company is explained with reference to the
advantages and disadvantages to the member and the scheme.

Here are some definitions of the concept of reinsurance:
The healthcare Provider or Administrator is in the same position as an Insurer, thereby the
definitions are applicable as well.



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      "Reinsurance may be defined as the insuring again by an insurer of a risk it has already
       insured itself”.
      "A renewed or second insurance, specifically one in which an insurer or underwriter
       secures himself (wholly or in part), against the risk he has undertaken”.
      "A new insurance, effected by a new policy, on the same risk which was before insured
       In order to indemnify the underwriters from their previous subscriptions and both
       contracts are in existence at the same time.

The Benefits of Reinsurance
    Spreading the Risk. As you know, the concept of spreading the risk is one of the
      fundamental principles behind insurance, and it applies to reinsurance as well.
    Capacity Boosting: When we speak of capacity in insurance, we mean the amount of
      insurance that an insurer is able to accept. In other words, it is the number of policies
      the insurer can sell before it has reached the point where it will be unable to meet too
      many claims if they come in at the same time. In most countries there are legal limits,
      which control the amount by which an insurer's assets must exceed its liabilities. These
      are known as solvency ratios or solvency margins. In simple English, there are legal
      requirements, which mean that what the insurer has/owns (assets) must have a higher
      value than what the insurer owes or may owe in the future (liabilities). Reinsurance
      enables the insurer to accept more business and take on more risk because part of the
      risk and some of the original premium is being passed on to the re-insurer. Thus the
      insurer can sell more policies without risking its solvency.
      Financial Advantage. The way in which reinsurance boosts the capacity of an insurer
       and allows it to take on more business is highly beneficial to the business, as is the
       increased spreading of the risk. It allows the company to be more flexible in terms of the
       size and type of risk that it can accept, as the original insurer can sell some of the risk on
       to the re-insurer. This enables the insurer to increase its competitive edge as well as
       allowing the insurer to spread its overhead costs over a larger volume of business, which
       helps it to control costs.
      Financial Stability. This benefit is closely related to the first one, which is the spreading
       of risk. The more the risk is spread, the less severe the impact of loss is on any one
       insurer.
      Protection against a cumulative Catastrophe. This is known as "risk accumulation".

Disadvantages of Reinsurance

      There is a danger that the original underwriter will accept a risk with the expectation of
       arranging reinsurance on the risk, only to have it rejected by the re-insurers. This would
       leave the healthcare Provider or Administrator committed to a risk without having the
       capacity to meet possible claims. In some cases, the original insurer protects him self
       from such an event by making their own acceptance of the risk conditional upon
       negotiating reinsurance for it.
      Negotiations for reinsurance tend to generate a great deal of administrative work. This
       can be expensive, especially if the amount of risk transferred is small.
      There may be errors and disagreements if the transactions are not negotiated in good
       faith.
      The original healthcare Provider or Administrator will have to give up some of the
       commission for the re-insurer.
      The healthcare Administrator or Provider is not able to "shop around" for the best terms
       for the reinsurance and may end up paying more than s/he should for the cover.


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                                                                                            Page 24


       The healthcare Administrator or Provider may end up sharing a part of a risk that it may
        otherwise have been prepared to keep in full.

Treaty reinsurance and facultative reinsurance as they apply in healthcare benefits
administration are explained and compared with examples of each.
Facultative reinsurance:
This is the oldest form of reinsurance and is still used widely. The underwriter may accept a risk
and then decide to pass it on to another risk carrier or re-insurer. The original insurer will do
this either by approaching the re-insurer directly or by going through a reinsurance broker. The
insurer must present the re-insurer with all of the facts relevant to the risk: the class of
business.
The re-insurer will consider a facultative proposal in exactly the same way that the primary
underwriter considered the original risk, and may reject or accept the risk accordingly. The
facultative reinsurance underwriter also may apply financial terms to the risk by adjusting the
amount of reinsurance commission that s/he is prepared to allow to the cedant or original
insurer.
Treaty reinsurance:
As the name suggests, treaty reinsurance involves drawing up a treaty or legally binding
agreement between the cedant and the re-insurer. Usually, the treaty allows that the primary
insurer will cede and the re-insurer will accept automatically any reinsurance, which fall within
the limits of the treaty.
The limits of the treaty will include:
       The types of risk the re-insurer will accept,
       The geographical area in which the risks may be located,
       The size of risks, and
       The amount of risk, which the re-insurer considers acceptable.

Specific Outcome 4

Explain the ways in which healthcare benefits administrators are regulated.
The Regulations to the Medical Schemes Act are identified with reference to their
application in selected schemes.
The Minister of Health has, in terms of section 67 of the Medical Schemes Act, 1998 (Act No.
131 of 1998), after consultation with the Council for Medical Schemes, made the regulations in
the Schedule.
Broker: means a person whose regular business or part thereof provides a service or advice in
respect of the introduction of prospective members to a medical scheme.
Child dependant: means a dependant who is under the age of 21 or older if he or she
permitted under the rules of a medical scheme to be a dependant.
Creditable coverage: means any period of verifiable medical scheme membership of the
applicant or his or her dependant, but excluding membership as a child dependant, terminating
two years or more before the date of the latest application for membership;
Enhanced option: means any benefit option which offers benefits in respect of scope of
treatment and care, location of care or level of amenities available or both in addition to those
required under the prescribed minimum benefits package;




                                                                                           07/04/12
                                                                                            Page 25


Hospital treatment: means any treatment, which requires:
   (a) an overnight stay in hospital or
   (b) the use of an operating theatre together with the administration of a general or regional
       anaesthetic or
   (c) the application of other diagnostic or surgical procedures that carry a significant risk of
       death, and consequently require on-site resuscitation or surgical facilities or both; or
   (d) the use of equipment, medication or medical professionals not generally found at a place
       other than a hospital;.
Late joiner: means an applicant or the adult dependant of an applicant who, at the date of
application for membership, is 35 years of age or older and has not been a member or a
dependant of a member of any medical scheme for a period of two years immediately prior to
applying for membership;
Managed health care: means an arrangement through which utilisation of health care is
monitored through the use of mechanisms, which are designed to monitor appropriateness,
promote usefulness, quality and cost effectiveness of the delivery of relevant health services;
Pre-existing sickness condition: means a condition for which medical advice, diagnosis, care
or treatment was recommended or received within the twelve-month period ending on the date
on which an application for membership was made;
Public hospital system: means the entire system of hospitals of each provincial government,
and includes any necessary transfer to a public hospital outside the province of residence for
specialist treatment not available at the province of residence.


Other regulations are:
      Every application for registration – of a medical scheme must be in writing and signed by
       the person applying for the registration of the medical scheme and must contain:
       An application and registration fees as prescribed must accompany the application.
      The minimum number of members required for the registration of a medical scheme
       established after these regulations have come into operation is 6000, and this number
       must be admitted within a period of three months of registration of the medical scheme.
      Proof of membership - Every medical scheme must issue to each of its members, written
       proof of membership containing prescribed particulars
      A medical scheme that provides more than one benefit option may not in its rules or
       otherwise, preclude any member from choosing, or deny any member the right to
       participate in, any benefit option offered by the medical scheme, provided that a member
       or a dependant shall have the right to participate in only one benefit option at a time.
      Accounts by suppliers of services
      Manner of payment of benefits
      Prescribed Minimum Benefits
      Limits on benefits
      Personal medical savings accounts - Credit balances in a member’s personal medical
       savings account shall be transferred to another medical scheme with a personal medical
       savings account regime when such member changes medical schemes.
      Waiting periods and premium penalties - A medical scheme may impose a general
       waiting period of up to three months upon a new member and the member’s

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                                                                                             Page 26


       dependant(s) before such member or dependant(s) is entitled to claim any benefits. A
       member may choose to make a payment of up to three months to a medical scheme in
       lieu of the waiting period


      No waiting period may be applied:
               in respect of any treatment or diagnostic procedure covered within the prescribed
               minimum benefits;
               to a member or dependant who changes from one benefit option to another
               within the same medical scheme unless the member or dependant is subject to a
               waiting period on the current option, in which case any remaining period may be
               applied.
      Premium penalties for persons joining late in life. Number of years an applicant was not
       a member of a medical scheme after age 30:
               5-9 years 1.05 x contribution
               10-19 years 1.25 x contribution
               20-29 years 1.5 x contribution
               30+ years 1.75 x contribution
      Provision of managed health care. A medical scheme shall not enter into any
       arrangement where a provider of a relevant health service is forbidden in any manner
       from informing patients of the care they require, including various treatment options, and
       whether in the provider’s view, such care is medically necessary and appropriate.
      Administrators of medical schemes.
      Internal financial controls: means controls which are established in order to ensure a
       reasonable safeguarding of assets against unauthorized use or disposition, the
       maintenance of proper accounting records and the reliability of financial information used
       within the business of the administrator.
      Termination of administration agreements.

Appointment of auditor.
A condition to be complied with by brokers has been accredited by the Council to act as a
broker or apprentice broker.

Accumulated funds and assets
Reinsurance.
Fees payable.

The role of the Department of Health in healthcare benefit administration is explained and an
indication is given of how the Department of Health has positively and negatively affected
healthcare benefits administration.

The concept of minimum benefits is explained with reference to current legislation.
Every medical scheme must make provision in its rules for the cover of a specified list of
benefits known as the Minimum Benefits Package (MBP), which are mostly high cost
procedures.
Cover for these benefits must be in full and without limitation in at least one provider network,
which must at all times include the public hospital system.



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The role of the Board of Health Care Funders’ is explained in terms of its control of the
industry.

The objectives of the BHF shall be to -
      Promote the interests of members with a view to promoting the effective and efficient
       access of their subscribing members to healthcare benefits;
      Promote the viability of the healthcare funding industry;
      Promote co-operation and facilitate communication between the members and various
       stakeholders in the healthcare funding industry;
      Act as a body representative of members and as an authority for the members on
       matters agreed by the members, including matters which require agreement with
       suppliers of service or statutory authorities;
      Promote, propose, support or oppose legislation affecting members, and/or healthcare
       matters in general;
      Promote and strengthen the BHF through encouraging the admission of members;
      Facilitate the transformation of the healthcare funding industry and the mechanisms for
       delivering healthcare services;
      Promote the efficient utilisation of healthcare resources to extend private healthcare
       benefits to as many people as possible;
      Promote international liaison and understanding of global developments in the field of
       healthcare funding;
      Conduct all its activities on a non-profit basis and on the basis that no member shall
       profit from it.
      Consider matters of policy and questions of mutual interest and to do all such other
       things as are incidental and/or conducive to all or any of the above objectives.

The relationship of the South African Medical Association to healthcare benefits administrators
is outlined and an explanation is give as to how decisions are made that affect the two
organisations.
The SA Medical Association differs from the Health Professions Council in that its membership
is voluntary and it has no statutory or disciplinary powers. At present some 70% of doctors in
both the public and private sectors are members of the association, which is registered as an
independent, non-profit section 21 company.
The Association acts as doctors' and patients' champion, and strives for a health care
dispensation that will best serve their needs.
The Association's activities focus on both professional and business aspects.
SAMA believes doctors can positively influence medical practice by:
      Anticipating and influencing health policy changes
      Promoting cost containment
      A lifelong commitment to continuing professional development.




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Examples of the areas in which the Unit is involved include the following:
HIV/AIDS:
Activity in this area aims to
        mobilise doctors to support community AIDS Care projects,
        facilitate professional debate on medical/legal and ethical issues relating to HIV,
      help in the formulation of policy on HIV/Aids together with other Non-Governmental
       Organisations and the Dept of Health.
Women's Health:
This aims to raise awareness in issues relating to women's health and to lobby for action on the
instruments for the observation of human rights pertaining to the health of women.
Violence and Health:
The focus of this project is on Doctors as the first responders to support victims of violence and
crime.
Other areas of involvement include: Tobacco resource Center, Health Care Technology Policy
and the Science and Education committee.
The Government Gazette is used to access information applicable to medical schemes.
The Government Gazette is the official publication of the State that, on the date of publication,
officially notifies each and every person or any other legal entity whom it may ever concern of:
a)       New Act/s (Law/s)
b)       Amendments to existing Act/s (Law/s).
c)       Rules and Regulations and amendments thereto, for example amended tariffs.
d)       Anything else to be taken notice of.


The Government Printer situated in Tswane (Pretoria) (012) 334-4500, publish the Government
Gazette on a weekly basis in large volumes covering every conceivable topic and matter
arising.

The role of the Council of Medical Schemes and the Appeal Board in regulating healthcare
benefit administration is described in terms of monitory accreditations and appeals.
Purpose:
        Its primary purpose is to protect the interests of medical schemes and their members.
        It monitors the solvency and financial soundness of medical schemes.
        It controls and co-ordinates the functioning of medical schemes in a manner that is
         complementary with the national health policy.
        It investigates complaints and settle disputes in relation to the affairs of medical
         schemes.
        It collects and disseminates information about private health care in South Africa.
        The Council makes rules (that are in line with the Medical Schemes Act) with regard to
         its own functions and powers; and
        It makes recommendations to the Minister of Health on criteria for the measurement of
         quality and outcomes of the relevant health services provided for by medical schemes.




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Registration and Accreditation Unit:
This Unit is responsible for the registration of medical schemes and for the accreditation of
brokers and administrators. The unit assesses the rules of medical schemes to ensure that
they comply with the Act.

Research and monitoring:
The research and monitoring unit is responsible for monitoring the impact of the Act on key
outcomes such as access to care, costs, and efficiency of resource use in the private sector.
The unit advises the Registrar on the implementation of the Act and on areas within the
regulatory framework that might require change. The research and monitoring trends and
events in the private healthcare sector is also the task of this unit.

Appeal Board
The functions of the Appeal Board:
Receive written complaints and replies thereto from the Registrar (Registrar of Medical
Schemes). This is in the event of the Registrar being unable to resolve the complaint or if there
is an appeal against the Registrars decision.
      The company, which is the subject of complaint, will be suspended until a final resolution
       is received. This company has three months to reply to the complaint.
      The company will be advised of the hearing date, place and time 14 days before the
       hearing.
      Final decisions will be in writing to all parties concerned.
      The Minister of Health will appoint the members of the Appeal Board for a period of three
       years.
      The Appeal Board has the same powers as the High Court.




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                                                                                         Page 30



                                        Case Study
John works as a consultant for a recruitment agency. His monthly income is based on a basic
of R8000, 00 plus commission per month. His work involves travelling to contract new
companies to use the recruitment agency services, office administration and interviews of
prospective employees for the client companies.
John is married with two children at primary school. His wife Anne works from home as a florist.
Her income is irregular and can be as low as R1000, 00 per month or more profitable.
His eldest daughter suffers regular Asthma attacks, which is a great concern and worry to the
parents.
You are the accredited Healthcare Consultant whom he contacts for advice and a quote for
medical care, as his employers do not provide medical aid as a benefit.
Describe the product or package that you will recommend and justify or explain why you
recommend the particular product.




What are some of the questions you will ask him in order to establish his particular needs




Do you think he will benefit from a Threshold benefit? Explain your answer.




Explain the difference of open and closed schemes to John as he heard BMW members are
very happy with their scheme and the way it is administered, and mentioned he would prefer
that scheme.




Explain to John how the family would benefit from the Chronic illness benefit.




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                                                                                 Page 31



                     LEARNER WORKBOOK
Learner Name ________________________________ Number _________________



    Activity No.1 (6 Hours for completion)
    Research and compare two medical insurance products. Use the table provided as a
    guideline. Name particular products.
    How to research the information in the table:
    Example: Does Product A and B have Life Cover Answer: Yes / No. Record the
    answer in the table.



                                                      Product A               Product B

    Life cover                                  Yes                     Yes

    Provider / Insurance Company

    Members

    Dependant

    Minimum Benefits

    Surrender

    Cession

    Change of Employment

    Membership Card

    Failure to pay

    Benefits

    Payment of Accounts

    Reinstatement

Facilitator Comment / Feedback:__________________________________________
    _________________________________________________________________
    _________________________________________________________________

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                                                                                      Page 32


     Activity No. 2 (6 Hours for completion)
     Research and compare two products marketed as medical scheme cover. Use the table
     format provided as a guideline. Prepare for and make a 2-minute presentation using your
     completed table as your source document. You can hand out copies to all Learners and
     your facilitator / trainer so that they can follow and see what you mean.
     In your presentation advise what is meant by a Hospital Benefit, and Chronic Medication
     Benefit.
     While completing the table, give an example of each section of the product.
     Example: Asthma is a Chronic Disease.



  Sections of Product                    Product A                          Product B
Major Medical Benefit
Hospital Benefit
Insured Procedures Benefit
Medical Access Facility /
Medical Savings Account
Threshold Benefit
Chronic Medication Benefit




Formative Assessment & Feedback.




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                                                                               Page 33


Activity No. 3     Not for formative assessment purposes.
You saw examples of questions that can be asked about a product. Speak to a broker or
intermediary and find out what other types of questions are commonly asked. Record four
more typical questions.




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                                                                                 Page 34




Activity No. 4 (One Hour)
     Write a short paragraph on:
A personal decision is made as to whether medical insurance or medical scheme cover best
provides for your own needs.




     Facilitator / Trainer Comment.
     _________________________________________________________________
     _________________________________________________________________




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                                                                                     Page 35


Activity No. 5 (Three Hours)
    Write a short article on how healthcare benefits administrators are regulated.
    Refer to The Department of Health, The Medical Schemes Act, The Board of Healthcare
    Funders and The South African Medical Council.




    Facilitator / Trainer feedback and comments.
    _______________________________________________________________________
    _______________________________________________________________________
    _______________________________________________________________________




                                                                                     07/04/12

				
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