Alternate reimbursement models in the private healthcare sector - Medshield
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Alternate reimbursement models in the private healthcare sector

Posted in Medshield Medical Scheme   |   March 4th, 2019

JOHANNESBURG – Medshield Medical Scheme holds the strong view that it is time for new and innovative alternative reimbursement models in the South African private healthcare sector. According to Thoneshan Principal Officer of Medshield, the current fees for service reimbursement models relies heavily on modality and does not entail proper care management or value measurement that truly serves the interest of the patient, or medical scheme member. The view is that the fee-for-service model includes perverse relationships at its core and supports industry ills like supplier-induced demand, and therefore calls for an alternative that will focus on value for money and measurement of quality outcomes.

The proposed alternative reimbursement model is focussed at being more cost-effective while providing better control. The alternative reimbursement model will be an improvement of the fees for service model, that is often subject to abuse and claims fraud due to little control on utilisation and quality outcomes. “Our rationale for the alternative model is providing better value for money to our members while ensuring improved quality of healthcare based on measured outcomes” said Naidoo

At Medshield quality is measured with the DRG tool and allows the tracking of cost versus quality based on reliable data, set against outcomes and pre-determined parameters. The premise of the alternative reimbursement is diagnosis-determined if a proposed procedure will be in prescribed minimum benefits or not as opposed to the current procedure-led basis. The medical scheme is then obliged to pay the PMB rate for such a procedure or the contracted rate above PMB according to the medical scheme choice as taken up by the scheme member.

The most significant challenge of implementing the new model is that there is already some wastage in the system. One will need to apply best practice in negotiation based on evidence and ensuring the best value for money for scheme members. In gathering of such evidence big data is of the utmost importance.

A workable model relies on effective partnership between the medical scheme, healthcare providers and the patient. In making care decisions, patients often have very little information and use whatever is presented to them; often by the healthcare provider. Medshield is committed to improving educative communication to members for them to understand their choices and be able to make more informed decisions.

The Medshield claims mix for 2017 illustrates that greater value for money according to the patient’s need is required in the reimbursement model. Currently more than 40% of the benefit category is allocated to private hospitals and 15.3% to medical specialists, based on a fee for service in a procedure-based modality. Greater value for money can be achieved if care decisions and resultant benefit allocation is based on diagnosis rather than procedure elements only.

The fee for service model holds distinct disadvantages that an alternative model can overcome. In Medshield’s view, some of the disadvantages of the fee for service model include increased premiums, spiralling and unsustainable healthcare cost through over-servicing as well as a prevailing imbalance between supply and demand. Care is fragmented and uncoordinated while the system leaves a lot of room for duplication and claims fraud. Our primary concern is for our members and with the current fee for service model poor health outcomes are experienced, and less than optimal value for money is provided. The current system leads to increased deductibles and co-payments while no or little provision is made for preventative care medicine that can better manage the member’s claims and benefit availability in the long run.

Albeit that fee for service brings greater choice of doctors and no, or short, waiting periods to see Specialists, the view is that the model fragments the care provision. There is a need to go back to care coordination with the Family Practitioner as the key coordinator or custodian of care. An integrated multidisciplinary approach to healthcare is imperative when required and best serves the interest of the patient. Poor outcomes of the current model can be avoided with improved measurement of clinical outcomes a focal point to enhance quality stimulating approaches such as pay for performance and outcomes-based reimbursements. An alternative diagnosis-led model with greater focus on outcomes and measurement will avoid over-servicing without focus on measurable clinical outcomes.

“We recognise that the marketplace, providers and service approach need to reform. Payers and providers face a number of challenges to strike a balance between efficient value-based contracting and agreement based on performance metrics,” says Naidoo. Finding innovative solutions for these and other related challenges should support member health status improvements by linking outcomes and reimbursement. “the key driver should remain the interest of the patient,” reiterates Naidoo. He also stresses that the long-term sustainability of the healthcare system must be a critical consideration going forward.

The suggested alternative models include a combination of the following:

  • Per diems
  • Fixed fees or global fees
  • Capitalisation agreements
  • Pay for performance / value-based reimbursement
  • Episode of care

Medshield regards partnerships on the journey towards a reformed healthcare dispensation as critical and values the networks and relationships it enjoys. “The Medshield Family Practitioner Network was established in 2015 in partnership with IPAF and is a key network in serving the interest of our members. This partnership with IPAF, and other healthcare provider partnerships, stand our members in good stead,” says Naidoo. Provider profiling measures quality and cost metrics which allows Medshield to reimburse enhance payments to Family Practitioners based on such metrics.

The old principle of prevention is better than cure still rings true in the Medshield approach. Medshield has a comprehensive wellness benefit and care baskets for 26 prevalent chronic diseases; paid from risk benefit to enhance primary care and optimise chronic disease treatment.

“The alternative reimbursement model is driven by the key driving force in Medshield – the best interest of our members,” concludes Naidoo.

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