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Costing of Prescribed Minimum Benefits

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					                   Centre for
                   Actuarial
                   Research


   The Pricing of
Prescribed Minimum
      Benefits
       June 2003
     Söderlund & Peprah (1998)
   Minimum package defined in terms of diagnosis-treatment
    pairs. ICD-9 codes for diagnosis element and CPT-4
    codes for treatment element.
   The “core inpatient package” would cost R 502 pbpa in
    1998 prices.
   Data on outpatient services could not be broken down into
    diagnosis-treatment pairs. Assumption that experience of
    mine hospital users would apply. Expected outpatient
    costs of R 183 pbpa.
   Estimated that total inpatient and outpatient package
    would cost R 685 pbpa, for those currently without medical
    scheme cover.
                                                         Centre for
                                                         Actuarial
                                                         Research
    PMBs in 1999 Regulations
   CODE: 902E
      Diagnosis: disorders of arteries: visceral

      Treatment: bypass graft; surgical management



   CODE: 910G
      Diagnosis: gallstone with cholecystitis and/or jaundice

      Treatment: medical management; Cholecystectomy; Other open or
       closed surgery

   CODE: 950H
      Diagnosis: cancer of bones - treatable

      Treatment: medical and surgical management, which includes
       chemotherapy and radiation therapy
                                                             Centre for
                                                             Actuarial
                                                             Research
Söderlund Definition of PMBs

   DIAGNOSIS: FRACTURE OF JOINT, CLOSED (EXCEPT
    HIP)
      ICD-9 CODE:
       810.0,811.0,812.0,812.4,813.0,813.4,814.0,815.0,816.0,
       817.0,819.0,821.
      TREATMENT: REDUCTION

      CPT-4 CODE: 20690,20692-20694,20900,23500-
       23515,23570-23630,24530-24587,24650-2468




                                                                Centre for
                                                                Actuarial
                                                                Research
     Comprehensive Crosswalk
   Provides a powerful tool for rapid application of PMB
    status to hospital admissions based on ICD-10 coding:
      Included (IN) as a benefit in the PMB package

       Excluded (OUT) as a benefit in the PMB package
       NC (not classifiable) with respect to the PMB package.
   Strongly recommend that this should be made freely
    available in order to improve understanding and
    management of PMBs.
   Recommend utilising this tool, or one developed from this
    work, to define and manage the PMB package in future.
                                                          Centre for
                                                          Actuarial
                                                          Research
Pricing of PMBs
    Specific client price - requires further actuarial
    involvement
    Weighted Industry price - demographic correction
    Study price (Full Price)
    Margins and adjustments




    Raw Price - from cleaned data




                                                    Centre for
                                                    Actuarial
                                                    Research
                PMB Study Data
   Data from Medscheme Data Warehouse
   Covers 2001 calendar year, extracted in July 2002. Fully
    run-off, no adjustment for IBNR.
   90 options, 31 schemes.
   18.071 million beneficiary months of data. Average
    exposure of 1,505,917 beneficiaries.
   Full cost of event paid by scheme: hospital + related cost
   Related costs are for all services and service providers
    relating to hospitalisation: doctors, radiology, pathology,
    pharmaceutical supplies (on discharge), prostheses, blood
    transfusions and physiotherapy. Was 28.1% of total cost.
                                                          Centre for
                                                          Actuarial
                                                          Research
                 Cluster Analysis
   Different clusters experience different benefit utilisation,
    costs and disease profiles. Provider behaviour differs by
    cluster, even within the same hospital facility.
   Distinct clusters:
      High contains options with older, 'whiter' members with
       high utilisation;
      Medium-older contains options with medium utilisation
       and older members;
      Medium-younger contains options with medium
       utilisation and younger members; and
      Low contains options with younger, 'blacker' members
       with low utilisation.                                  Centre for
                                                                Actuarial
                                                                Research
Beneficiaries in PMB Study




                         Centre for
                         Actuarial
                         Research
Data Sets
                                            Pricing




                Complete data              No discharge diagnosis or
                                            no authorisation match




                                Chapter
                                Analysis



86.8% of admissions                        13.2% of admissions

                                                          Centre for
                                                          Actuarial
                                                          Research
               CDL Study Data
   Data from Medscheme Data Warehouse
   Data covers 2001 calendar year, extracted in August 2002
   Data fully run-off, no adjustment for IBNR
   46 options
   27 schemes
   16.103 million beneficiary months of data
   Average exposure of 1,341,892 beneficiaries.
   Adjustment to beneficiary numbers for those claiming,
    based on the exposure of each beneficiary to each option
    in the year.
                                                       Centre for
                                                       Actuarial
                                                       Research
Beneficiaries in CDL Study




                         Centre for
                         Actuarial
                         Research
     CDL-NAPPI Categorisation
   Three sets of data extracted, based on the NAPPI codes:
   Primary: using only selected NAPPIs that are clinically
    appropriate for the CDL conditions. [2 000 CDL-NAPPIs]
   Secondary: using all NAPPIs ever claimed under chronic
    benefits by any of the people in the study. [13 000 CDL-
    NAPPIs].
   Total Tariff Amount: using all NAPPIs ever claimed,
    whether under chronic medicine benefits or acute
    medicine benefits. This covers all medicines claimed by
    the beneficiaries in the study.
   Drugs in the Secondary category are considered to be
    supportive, rather than therapeutic in treating the CDL
    condition.
                                                        Centre for
                                                        Actuarial
                                                        Research
        CDL Study Methodology
   Claims extracted that were lodged under both chronic and
    acute benefit limits.
   If no medicine management programme, identify those
    claiming medicines prescribed for CDL conditions.
   Relatively generous medicine benefits in comparison to
    industry. Probably due to longer experience with chronic
    medicine benefit management, subsequent relaxation of
    financial limits in favour of active clinical management.
   Rather than work with „benefit‟ or „paid‟ amounts, which may
    be heavily influenced by limits and co-payments, the items
    claimed were linked to the full tariff amount or „Blue Book‟
    amount.                                                  Centre for
                                                               Actuarial
                                                               Research
Raw Price of PMBs


                Centre for
                Actuarial
                Research
Incidence of PMB Admissions
           by Age
             450

             400

             350

             300
                                                                                                                                                                              Incidence
 Incidence




             250                                                                                                                                                               All Ages

             200

             150

             100                                                                                                                                                               97.6850
             50

              0




                                                                                                                                                             75+
                   0- 1




                                        10- 14



                                                          20- 24




                                                                                                       45- 49

                                                                                                                50- 54

                                                                                                                         55- 59
                                                                   25- 29

                                                                            30- 34

                                                                                     35- 39

                                                                                              40- 44




                                                                                                                                  60- 64

                                                                                                                                           65- 69

                                                                                                                                                    70- 74



                                                                                                                                                                   All ages
                          1- 4

                                 5- 9



                                                 15- 19




                                                                                                                                                                              Centre for
                                                                                                                                                                              Actuarial
                                                                                                                                                                              Research
Average Cost of PMBs by Age
                18,000

                16,000

                14,000

                12,000
 Average Cost




                10,000
                                                                                                                                                                     R9 127
                 8,000

                 6,000

                 4,000
                                                                                                                                                                     Average
                 2,000                                                                                                                                              Cost for All
                                                                                                                                                                      Ages
                    0




                                                                                                                                                         All ages
                                                                   25-29

                                                                           30-34

                                                                                   35-39

                                                                                           40-44




                                                                                                                                           70-74
                                           10-14

                                                   15-19

                                                           20-24




                                                                                                   45-49

                                                                                                           50-54

                                                                                                                   55-59

                                                                                                                           60-64

                                                                                                                                   65-69



                                                                                                                                                   75+
                         0-1

                               1-4

                                     5-9




                                                                                                                                                                    Centre for
                                                                                                                                                                    Actuarial
                                                                                                                                                                    Research
Raw PMB Price by Age (pbpa)
R 5,000

R 4,500

R 4,000

R 3,500
                                                                                                                                                      Average
R 3,000                                                                                                                                              Price for All
                                                                                                                                                        Ages
R 2,500

R 2,000

R 1,500

R 1,000                                                                                                                                               R 891.56
 R 500                                                                                                                                                  pbpa
   R0




                                                                                                                                    75+
                                                            30-34




                                                                                    45-49




                                                                                                            60-64
                            10-14




                                                    25-29




                                                                            40-44
                                                                    35-39




                                                                                                    55-59



                                                                                                                    65-69
                                    15-19

                                            20-24




                                                                                            50-54




                                                                                                                            70-74



                                                                                                                                          All ages
          0-1

                1-4

                      5-9




                                                                                                                                                     Centre for
                                                                                                                                                     Actuarial
                                                                                                                                                     Research
                           Proportion of beneficiaries




                                               10%
                                                     12%
                                                           14%




                     0%
                          2%
                               4%
                                    6%
                                          8%
                0
               1-4
               5-9
             10-14
             15-19
             20-24
             25-29
             30-34
             35-39
             40-44
             45-49
             50-54
             55-59
             60-64
             65-69
             70-74
             75-79
             80-84
              85+
                                                                 Age of Exposed Beneficiaries




Research
Actuarial
Centre for
                         Proportion of Claiming Beneficiaries




                           2%
                                 4%
                                       6%




                    0%
                                            8%
                                                  10%
                                                        12%
                                                                14%

              0-1
              1-4
              5-9
             10-14
             15-19
             20-24
             25-29
             30-34
             35-39
             40-44
             45-49
             50-54
             55-59
             60-64
             65-69
             70-74
             75-79
             80-84
              85+
Research
Actuarial
                                                                      Age of CDL Claiming Beneficiaries




Centre for
                           Prevalence per 1000 beneficiaries




                              100
                                    200
                                          300
                                                400
                                                       500
                                                               600




                       0
                 0-1
                 1-4
                 5-9
               10-14
               15-19
               20-24
               25-29
               30-34
               35-39
               40-44
               45-49
               50-54
               55-59
               60-64
               65-69
               70-74
               75-79
               80-84
                 85+
                                                                     CDL Prevalence by Age




             All ages
Research
Actuarial
Centre for
                                  Average Cost per case pa




                                                                  3,000




                                  1,000
                                          1,500
                                                  2,000
                                                          2,500
                                                                          3,500
                                                                                  4,000
                                                                                          4,500
                                                                                                  5,000




                            500
                        0
                   0
                 1-4
                 5-9
               10-14
               15-19
               20-24
               25-29
               30-34
               35-39
               40-44
               45-49
               50-54
               55-59
               60-64
               65-69
               70-74
               75-79
               80-84
                 85+


             All Ages
                                                                                                          Average Cost of CDL by Age




Research
Actuarial
Centre for
                                  Price per beneficiary pa




                            250
                                  500
                                        750
                                                              1,500


                                              1,000
                                                      1,250
                                                                      1,750
                                                                              2,000
                                                                                      2,250
                                                                                              2,500




                        0
                   0
                 1-4
                 5-9
               10-14
               15-19
               20-24
               25-29
               30-34
               35-39
               40-44
               45-49
               50-54
               55-59
               60-64
               65-69
               70-74
               75-79
               80-84
                 85+
                                                                                                      Raw Price of CDL by Age




             All Ages
Research
Actuarial
Centre for
Margins and
Adjustments

              Centre for
              Actuarial
              Research
Pricing Spreadsheet




                      Centre for
                      Actuarial
                      Research
Adjustments for
 Definition and
  Uncertainty

                  Centre for
                  Actuarial
                  Research
    Chemotherapy and Dialysis
   Treatable malignancies and chronic renal failure most
    frequently managed in outpatient setting.
   Clarity in Regulation November 2002 that these are
    included in PMBs.
   Figures described as “very preliminary”. Need further
    work.

   Recommendation: use R12 pbpa for chronic renal failure
    and R36 pbpa for chemotherapy.


                                                            Centre for
                                                            Actuarial
                                                            Research
      Costs related to HIV/AIDS
   Only 9 admissions coded 168S (Diagnosis: # HIV-
    Associated Disease).
   Confidential data from Aid-for-AIDS programme will not be
    obvious.
   Costs of related conditions and complications are
    identified in categories such as pneumonia, encephalitis,
    TB etc. Available for further analysis.
   Study almost certainly incorporates the cost and pricing of
    hospitalisation of symptomatic AIDS, as at 2001.
   Recommendation: Allow for impact of increased
    hospitalisation for HIV/AIDS in later stages of epidemic.
    Obtain advice from Actuarial Society of South Africa‟s
    AIDS Subcommittee.
                                                          Centre for
                                                          Actuarial
                                                          Research
         Recoding of Out Group
   Coding originally done by Söderlund was open to debate
    among healthcare professionals.
   No clear definitions in Act so ICD-10 codes placed into IN,
    OUT or NC on a subjective basis.
   Reviewed all 1 614 ICD-10 codes classified as OUT.
   New coding moved 19.8% of admissions of OUT group to
    IN group.
   Claim value was 27.0% of the original OUT category.
   Raw price for PMBs for all clusters increases from R 786.80
    pbpa to R 910.14 pbpa, an increase of 13.5%.

   Recommendation: allow for 27.0% of the OUT category
    by value to be included in the final price.     Centre for
                                                         Actuarial
                                                         Research
         Recoding of NC Group
   NC group is more complicated to recode, as many
    conditions need to be linked to CPT-4 codes.
   Recommendation: stress-test final price using various
    estimates of proportion of NC that might be included in a
    better-defined PMB package.
   Recommended estimate is to include 20% of the NC
    group by value in the final price.




                                                          Centre for
                                                          Actuarial
                                                          Research
                   Haemophilia
   Patients do not register for chronic medicine. Covered by
    „Blood and related products‟ benefit, not Medicines.
   Haemophilia Society estimates 2000 patients in SA, which
    suggests prevalence of 1/20 000.
   220 people claiming „Blood and related products‟ benefit;
    estimate 67 are haemophiliacs.
   Average case cost of R2 500 per month (R30 000 p.a.) for
    „Blood and related products‟ benefit.
   But majority are renal failure patients, erythropoietin for
    treatment of chronic anaemia.
   Recommendation: use estimate of R0.50 pbpa
                                                          Centre for
                                                          Actuarial
                                                          Research
      Removal of CDL Diseases
       from Final Regulations
   Anti-coagulating Therapy: 0.7% of total cost
   Cushing’s Disease: 0.0% of total cost
   Osteoarthritis: 3.1% of total cost

   In total, 1.8% of people excluded from any CDL benefit
   12.7% now excluded from partial CDL benefits

   Recommendation: reduce raw CDL price by 3.7%.


                                                         Centre for
                                                         Actuarial
                                                         Research
    Adjustment for Compliance
   Longitudinal study of new applications with follow-up for
    one year. 27% of beneficiaries classified as non-compliant
    used only 28% of the value of the medicines authorised.
   Scheme only experienced 71% of the potential cost of the
    medicines authorised.
   Recommend stress-testing price through adjusting margin
    for compliance.
   Recommendation: add margin of 20% of raw price of
    CDL package for possible increase in compliance in a
    mandatory environment.

                                                          Centre for
                                                          Actuarial
                                                          Research
Price in Mandatory Environment
   Expect change in member and provider behaviour from
    existing environment.
   Uncertainty exists in price until package is fully defined.
   Have included an effective 30% margin on medicine
    component of CDL package.
      Compliance margin of 20%

      Limits margin of 5%

      Co-payments margin of 5%.

   Consortium opinion that collective margin of 30% on
    medicine component is sufficiently conservative to cover
    this uncertainty in the pricing.
                                                            Centre for
                                                            Actuarial
                                                            Research
Ambulatory Care


                  Centre for
                  Actuarial
                  Research
    Regulations November 2002
   Note: (2A) In respect of treatments denoted as “medical
    management”, note (2) above describes the standard of
    treatment required, namely “prevailing hospital-based
    medical or surgical diagnostic and treatment practice for
    the specified condition”. Note (2) does not restrict the
    setting in which the relevant care should be provided, and
    should not be construed as preventing the delivery of any
    prescribed minimum benefit on an outpatient basis or in a
    setting other than a hospital, where this is clinically most
    appropriate.


                                                            Centre for
                                                            Actuarial
                                                            Research
Estimate of Additional Cost of
      Ambulatory Care




                            Centre for
                            Actuarial
                            Research
        Ratio of Ambulatory to
        Inpatient Expenditure
                                             Söderlund (1998) used 36.5%




                                                                       Centre for
                                                                       Actuarial
                                                                       Research
Source: Van den Heever using OECD database
    Estimate of Ambulatory Care
   Amount paid to hospital groups, less admissions, was
    R314 million. Includes out-patient visits, on-going tests
    performed in a hospital setting, dispensing from the
    hospital pharmacy, emergency room visits for conditions
    such as asthma and diabetes, and costs for certain
    dialysis centres.
   Chemotherapy and dialysis separately estimated. Caution
    overlap with CDL package.
   Recommendation: use 15% as estimate for ratio of other
    ambulatory expenditure to in-patient expenditure for the
    PMB package, excluding the CDL package.
                                                        Centre for
                                                        Actuarial
                                                        Research
Cost of Diagnosis and Medical
         Management
   Prescribed Minimum Benefit:
      “diagnosis, medical management and medication, to
       the extent that this is provided for by way of a
       therapeutic algorithm for the specified condition,
       published by the Minister by notice in the Gazette”.
   Need to determine and finalise therapeutic algorithms.
   Process requires full study of cost implications.

   Recommendation: use initial rough estimate of R130.00
    per beneficiary per annum.
                                                         Centre for
                                                         Actuarial
                                                         Research
Cost of Diagnosis and Medical
         Management




                          Centre for
                          Actuarial
                          Research
Draft
Therapeutic
Algorithms




        Centre for
        Actuarial
        Research
Non-Healthcare
    Costs

                 Centre for
                 Actuarial
                 Research
Hospital Management Costs




                        Centre for
                        Actuarial
                        Research
Hospital and Related Claims
      Administration




                         Centre for
                         Actuarial
                         Research
     Ambulatory Administration
   Scanty information. Level of pre-authorisation and
    management will be much lower and will apply only to
    certain tests. Administration of claims will require much
    less intensive activity.

   Recommendation: If the other ambulatory expenditure
    estimate is held at the recommended level of 15%, then
    use 10% of the non-health care costs of the in-patient
    PMB package, as the estimate for the costs of ambulatory
    administration.


                                                            Centre for
                                                            Actuarial
                                                            Research
Medicine Management Costs




                       Centre for
                       Actuarial
                       Research
CDL Administration Costs




                           Centre for
                           Actuarial
                           Research
Non-Healthcare Expenditure
     on PMB Package




    Well below Registrar‟s benchmark of
          10% of total expenditure

                                          Centre for
                                          Actuarial
                                          Research
          Administration Costs
   The administration component covers the following
    services:
      claims assessment

      claims payment

      a portion of contribution collection

      a portion of scheme finance (accounting, reporting and
       pricing)
      a portion of membership management and customer
       services costs.


                                                         Centre for
                                                         Actuarial
                                                         Research
    Costs in Other Environments
   In an open scheme environment there will be an additional
    component for member acquisition and maintenance,
    including marketing costs and brokerage fees. The full
    cost of member enquiry help-lines has also not been
    included. In a scheme with a complex benefit structure, or
    experiencing administration delays, this aspect of
    administration cost can escalate substantially from what
    has been included.




                                                         Centre for
                                                         Actuarial
                                                         Research
Full Price of PMBs


                 Centre for
                 Actuarial
                 Research
Full Price of PMBs (excl CDL)
      R2 432.41



                  R2 010.90
                                          R1 956.01


                              R1 489.49                                       R1 479.04

                                                                  R1 343.43

                                                      R1 100.08




                                                                                      Centre for
                                                                                      Actuarial
                                                                                      Research
Full Price CDL Package




                         Centre for
                         Actuarial
                         Research
Private Sector PMB Package
    per beneficiary per annum




                                Centre for
                                Actuarial
                                Research
Price of PMB Package by Age
             12,000
                            Total CDL package
                            Total Outpatient package
             10,000         Total Inpatient package
                            Complete PMB package
              8,000         Public sector
Price pbpa




              6,000


              4,000


              2,000


                 0




                                                                                                                                                                    Missing
                      0




                                                                                                                                                              85+
                          1-4
                                5-9
                                      10-14
                                              15-19
                                                      20-24
                                                              25-29
                                                                      30-34




                                                                                                                                                      80-84
                                                                              35-39
                                                                                      40-44
                                                                                              45-49
                                                                                                      50-54
                                                                                                              55-59
                                                                                                                      60-64
                                                                                                                              65-69
                                                                                                                                      70-74
                                                                                                                                              75-79




                                                                                                                                                                              All ages
                                                                                                                                                                                         Centre for
                                                                                                                                                                                         Actuarial
                                                                                                                                                                                         Research
Delivery of PMBs in
 the Public Sector

                 Centre for
                 Actuarial
                 Research
Protocols and Reimbursement
   These prices are for the delivery of the PMB package in a
    private sector fee-for-service setting.
   This implies the protocols (whether explicit or implicit) in
    use in the private sector in 2001.
   To the extent that contracts with providers are entered into
    on a risk-sharing basis, protocols for treatment may alter.
   The greater the degree of risk-sharing, the more careful
    providers are expected to be in ensuring that an
    appropriate standard of care is delivered and that wastage
    in the system is reduced.
   It is not possible to put an estimate on that effect, but the
    impact would be to reduce the price in the private sector
    from the levels quoted.
                                                            Centre for
                                                            Actuarial
                                                            Research
PMB Cost in the Public Sector
   Studies available use theoretical cases.
   Attempts to compare actual costs of public and private
    sector admissions uncovered unexpected finding that not
    all provinces were billing using UPFS system in 2001.
   Need to definitively determine the relationship between
    UPFS costs in the public sector and costs in the private
    sector. DoH study now underway.
   Recommendation: use 70% of PMB price for delivery of
    PMB Inpatient package and PMB Outpatient package in
    public sector. Adjust in negotiations with provincial
    authorities.
                                                        Centre for
                                                        Actuarial
                                                        Research
Savings for Switch to EDL Medicines
       at State Tender Prices




   Source: Rothberg and Walters (SAMJ 1996)


                                              Centre for
                                              Actuarial
                                              Research
CDL Cost in the Public Sector
   1995 Committee of Inquiry‟s estimate of a 50% reduction
    in private sector costs is achievable for primary health
    care medicines.
   Access to Essential Drugs List medicine at State tender
    prices is a potential policy option.

   Recommendation: use estimate of 50% saving in cost of
    CDL package when delivered in public sector. As policy
    unfolds, so this estimate can be further refined.



                                                         Centre for
                                                         Actuarial
                                                         Research
Public Sector PMB Package
   per beneficiary per annum




                               Centre for
                               Actuarial
                               Research
Weighted Industry
 Price of PMBs

                Centre for
                Actuarial
                Research
Detailed Age Profile of the
   Industry and Study




                              Centre for
                              Actuarial
                              Research
Simplified Age Profiles of the
    Study and Industry




                            Centre for
                            Actuarial
                            Research
Ethnicity Summary




                    Centre for
                    Actuarial
                    Research
        Weighted Industry Total
   Study contains more Low cluster beneficiaries than the
    industry.
   Re-weighted total to give closer demographic fit to industry
    data:
        100% High cluster
        100% Medium-older cluster

        100% Medium-younger cluster

        50% Low cluster

   Weighted industry total gives exact matching of
    beneficiaries over age 55; closer to ethnicity
   Low cluster is more relevant to the emerging low-cost
    option environment.
                                                           Centre for
                                                           Actuarial
                                                           Research
Age Profile of Study




                       Centre for
                       Actuarial
                       Research
Age Profile Beneficiaries
  Admitted for PMBs




                            Centre for
                            Actuarial
                            Research
Incidence of PMB Admissions
           by Age




                         Centre for
                         Actuarial
                         Research
Average Cost of PMBs by Age




                         Centre for
                         Actuarial
                         Research
Raw PMB Price by Age and
     Cluster (pbpa)




                       Centre for
                       Actuarial
                       Research
CDL Prevalence by Cluster




                        Centre for
                        Actuarial
                        Research
Raw CDL Price by Cluster




                           Centre for
                           Actuarial
                           Research
Specific Client
Price of PMBs

                  Centre for
                  Actuarial
                  Research
Study of PMB Costs for Client
   Tools for study:
      Comprehensive Crosswalk

      ICD-10 codes for CDL diseases

      Primary NAPPIs.



   If study not possible, assess demographic profile and re-
    weight raw PMB price before margins and adjustments.
   Adjustment for age profile is essential.



                                                          Centre for
                                                          Actuarial
                                                          Research
Recommended Age Definition
   Age as at 1 January each year.
   Age bands:
      Under 1 year of age

      1 to 4 years

      5 year age bands from 5 years of age up to 84 years of
       age
      85 years and older.



   Collected by Office of the Registrar in Quarterly and
    Annual Returns.
                                                            Centre for
                                                            Actuarial
                                                            Research
                 Health Warning
   These prices should not be used blindly in pricing work or
    for contracting.
   They cover only the actual claims in the study period, for
    the demographic group in this study, as adjusted by the
    margins and factors in the reports.
   An actuary, or other skilled pricing professional, should be
    consulted on adapting these prices for the actual pricing of
    other medical schemes or for pricing provider capitation
    contracts for future years.



                                                           Centre for
                                                           Actuarial
                                                           Research
    Further Adjustments Needed
   These include:
   Standardisation to expected demographic profile of scheme.
   Inflation adjustment to period when price is to apply.
   Allowance for progression of HIV/AIDS epidemic.
   Incorporation of contracted administration and managed
    care costs.
   Allowance for solvency margins, depending on the current
    solvency position of the scheme.
   Allowance for uncertainty of pricing in an open scheme.
   Impact of risk-sharing arrangements and intensity of
    managed care on price.
                                                        Centre for
                                                        Actuarial
                                                        Research
                     Centre for
                     Actuarial
                     Research



The Impact of PMBs
  on Affordability

      January 2003
Complete PMB Package
 for family of four per month




                                Centre for
                                Actuarial
                                Research
                Total Benefits




                                    Centre for
                                    Actuarial
                                    Research
Source : Registrar‟s Returns 2001
Options Available to Benchmark Family




                                 Centre for
                                 Actuarial
                                 Research
    Source : CARE Monograph
Primary Care Network Options
    Fedsure Larona PrimeCure                                                                          843
              Ingwe PrimeCure                                                     638
             Ingwe CareCross                                                              728
             Medihelp Nucleus                                                                                     966
           Medimed PrimeCure                                                              730
        Medimed ECIPA, UDIPA                                                                      824
      Metropolitan Primary Plus                                                    657
         MSP/Sizwe PrimeCure                                                576
         MSP/Sizwe Ecipamed                                                                     780
        MSP/Sizwe MediCross                                                                                 904
                NMP PrimeCure                                                             732
       Protector Health Primary                     280
  Protector Health Primary Plus                                      480
              Provia SilverCure                                                                       841
  Spectramed Spectra Alliance                                                                    810
     Topmed Bophelo Network                                                         672
            Vulamed Standard                                                      635
Low cluster PMB Public Sector                            321
Low cluster PMB Private Sector                                        489

                                  0   100   200    300         400   500    600     700     800         900       1,000
                                                  Contribution per family per month
                                                                                                                          Centre for
                                                                                                                          Actuarial
                                                                                                                          Research
          Source : CARE Monograph
Possible SHI Income Earners


                                 Part of a medical scheme
                                 Potential SHI
                                 Public Sector




                                             Centre for
                                             Actuarial
  Source : Preliminary results               Research
  from OHS 1999 studies
    Centre for Actuarial Research
    (CARE)
    A Research Unit of the University of Cape Town



A Research Report Prepared
Under Contract for the
Council for Medical Schemes
                                                     Centre for
                                                     Actuarial
                                                     Research

				
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