The Medical Scheme Act of 1998 Provides a Definition of Services
In addition to providing a comprehensive definition of the responsibilities of medical aid schemes in South Africa, the relevant Act, No. 131, which was implemented during 1998, also prescribed their structure and the various terms with which their modus operandi is required to comply. In addition, the act also established a statutory body charged with providing regulatory oversight of private health financing and the companies responsible for providing it.
In essence, these responsibilities involve the acceptance of certain liabilities in exchange for the premium contributions made by the scheme’s members. These may be summarised as facilitating access to any relevant healthcare service by providing the financial assistance needed to defray the cost of such services to its members. The definition continues by stating that, where this may be applicable, a medical aid scheme is at liberty either to provide such services through its own facilities or to appoint a relevant third-party service provider or group of providers to undertake them on its behalf.
In order to operate, schemes in South Africa must first be registered and, in accordance with the terms of the Act, this means that they must be financially sound, have an adequate number of members and be seen to practice no form of discrimination against its members. Their operation is overseen by a board of trustees, of which the definition states 50% must be members of the medical scheme in question. While the remaining trustees may be drawn from within the industry, they may not be either directors or employees of the scheme that they are appointed to serve.
The trustees have a number of duties that include the appointment of a principal officer tasked with ensuring that suitable systems, controls and accurate operational records are maintained. In addition, the trustees have a responsibility to ensure that members are kept fully informed with regards to their rights and benefits under the scheme, as well as regarding the contributions and the obligations that form the terms and conditions of their membership.
Although many are unaware of the fact, South African medical schemes are required to operate as non-profit organisations. By definition, this means that they can have no shareholders and that all income over and above their annual operational costs and the retainers or salaries paid to directors must be carried forward and used to meet their costs for the following year.
There is little doubt, however, that among the most significant changes resulting from the 1998 Act was the introduction of Prescribed Minimum Benefits (PMB). These identify no less than 270 conditions, including 25 chronic illnesses, for which all costs involved in their diagnosis, treatment and care must be covered by any product offered by all private healthcare funds operating in South Africa. Incidentally, providing PMB cover is not mandatory for the hospital cash plans sold by insurance companies, although some do now include these benefits. Before choosing such a product, one needs to be aware that the daily sums paid fall well short of the actual healthcare costs, unlike the hospital plans available from the country’s medical schemes.
At KeyHealth, we have developed a range of affordable products with some exceptional features, including a hospital plan that exceeds the standard definition to provide some valuable, out-of-hospital, core benefits.