Home Health & Fitness Medical aid crisis: saving health sector from greed and abuse

Medical aid crisis: saving health sector from greed and abuse

by Lex Vambe

Zimbabwe’s health industry has been locked in a crisis for some years now, mainly due to a standoff between health funders and providers of medical services over tariffs, among other contested matters. With the Zimbabwe Medical Association, which represents doctors, warning that it would stop accepting medical aid cards from July 1, in protest over what doctors say is an estimated $220 million in unpaid fees by health funders, the crisis could soon come to a head. The Source takes a closer look at the dispute, which threatens to break the health sector while short-changing an estimated 1,6 million Zimbabweans contributing to medical aid or health insurance schemes. We talk to Victor Mangava, the managing director of Budget Health Medical Aid Society, a health insurer and member of the Association of Health Funders of Zimbabwe (AHFoZ).


Zimbabwe’s billion-dollar health industry is in turmoil. As players in the industry jostle over money, the country’s health standards are falling.

The industry is facing a plethora of problems, chief among them the high cost of medical services, which has excluded the majority of the people. The industry has elevated the more expensive secondary care and neglected primary care, which is key to a healthy nation.

Zimbabwe’s health costs are more than twice that of regional rivals South Africa and Zambia and Asian giant India, according to available data.

In 2015, the Association of Health Funders of Zimbabwe (AHFoZ) — which has a membership of 27 medical insurance companies — said membership for medical aid firms fell 31 percent to 400,000 in the previous year. AHFoZ still collected $400 million in subscriptions, which was all swallowed up by the high costs of service. With the deteriorating economic situation, these numbers declined further last year.


Over the years, too much interference in the health ecosystem has led to problems such as shortfalls, low membership uptake, lack of confidence in the system, absence of guarantee of payment and poor debt control.

The financial repercussions are huge, but the biggest losers are the public who have seen their universal right to quality healthcare usurped by a system that has supplanted them for corporate greed.


A working system

Up until 1998, medical aid societies (MAS) were self-regulating. The National Association of Medical Aid Societies (NAMAS), the forerunner of AHFoZ, had peer review mechanisms which included suspending errant members.

This association included in its membership, medical service providers (MSPs). This association developed tariffs which were applicable to both members and MSPs who were registered with them. This was in order to protect members from abuse by unregistered practitioners.

MSPs also had their own association, but they used the NAMAS tariff in which they had a role in setting through the National Tariff Liaison Committee. The committee was actually headed by an MSP.

The government also provided medical services and had tariffs applicable to different institutions, which were heavily subsidised by the state. This was very convenient for everyone.

MAS, MSPs and the state were in harmony and a law was enacted to make sure that everyone understood their roles.


A regrettable regime change

A young medical practitioner, Paul Chimedza, changed all that when he was elected president of the Zimbabwe Medical Association (ZiMA), the sole representative association for all medical doctors in the country.

Chimedza claimed his right to charge a tariff he felt appropriate for the services rendered, and his association agreed with him. This led to a ZiMA tariff which was much higher than the NAMAS tariff.

The tariff was based on model from the developed world.

Medical aid societies, whose subscriptions were based on a much lower NAMAS tariff, were faced with many challenges.

The new tariff strained relations with service providers who wanted payment based on the much higher ZiMA schedule.

Employers, who at the time were providing medical aid subscriptions as a condition of employment, started pulling out due to the high costs. This reduced the membership in medical aid companies. The higher cost of medical services pushed the premiums up at a faster rate, making them unaffordable. More members dropped out.

That period also saw the entrance into the health sector by insurance companies who started offering savings funds that also covered medical aid. The new entrants, who included Fidelity, First Mutual and TN Medical Fund, were incorporated into NAMAS, which changed its name to AHFoZ.

The development meant that MAS were now facing competition from the new entrants for what was becoming a shrinking customer base.

The largest medical aid society, Premier Service Medical Aid Society (PSMAS), decided to invest in its own facilities under its Premier Service Medical Investments (PSMI) vehicle, which charged much lower rates than the ZiMA tariff.

The move by PSMAS actually saved the industry from collapse as smaller MAS referred their members for treatment to its cheaper facilities.

In time, some smaller MAS also set up their own facilities.

The relationship between MAS and medical services providers deteriorated as both fought for the same dwindling cake.

On the other hand, Zimbabwe’s economy was fast shrinking as the country descended into a hyperinflation whirlwind that eventually stopped with dollarisation in 2009. Employers left workers to fend for their own medical requirements. Government stood by and watched.

Former ZiMA president Chimedza was appointed the deputy minister of health in 2013, superintending over the medical aid societies (he was later to be among the seven ministers dismissed in December 2014 for “below-standard conduct and performance”). Under his watch, government gazetted new tariffs that were higher than the schedules provided by both AHFoZ and ZiMA.

It must be noted that Chimedza (and his replacement, Aldrin Musiiwa), the Health Minister David Parirenyatwa and Secretary Brigadier General Gerald Gwinji, are all practising professionals, running private surgeries. This compromises their ability to manage the confusion in the health sector.

The gazetted tariffs instructed health insurers to pay whatever health providers charges that land on their desks. This had the effect of neutralising the schemes designed by the insurers to cater for different classes of subscribers. The tariff regime also ordered the health insurers to pay within 30 days or risk losing licences, which were being issued annually.

Health insurers felt this move contributed to the rise in fraudulent claims. For example, in May last year, Cimas Medical Aid Society suspended its online drugs claim facility after it lost $1,2 million in fraudulent claims.

In the same year, First Mutual Life Holdings’ health insurance arm received over $1,5 million in fraudulent claims in the first four months.

But government went on to enforce the new law and started issuing six-month licences in lieu of payments. The health insurers had to provide evidence of payments or an aged analysis before the licence could be renewed. This is despite the ministry getting audited accounts for all health insurers.

The move has left health insurers unable to cope as they now had to deal with lower membership, lower premiums, coupled with high default rate against higher tariffs and bulging claims.

This explains the spat between Corporate 24, a health insurer with its own facilities, PSMAS and CIMAS.


The ZIMRA confusion

Doctors are not charged tax on the service they provide, but are required to submit Pay As You Earn on salaries they get from their practice and for their employees. The surgeries, as registered private business enterprises, are also required to pay presumptive tax or corporate tax.  Most doctors have not been doing this and, naturally, Zimra has come knocking on their doors. The doctors have to make tax submissions on their personal earnings.


The solution

At the moment, the cost of medical aid is much higher than in the region and some tariffs are much more than individual salaries.

International best practice shows that medical insurance costs cannot go beyond 10 percent of one’s earnings. In Zimbabwe, the average salary is $300, so it stands to reason that there is need for a realignment of the current tariffs and the reality on the ground.

The current system is flawed and needs an urgent revisit. At the moment no one wants to admit the total collapse of the system.

Zimbabwe needs an independent board that balances the needs of health insurers, providers, government and the public.

Over Regulation and poor government interventions have put the system in intensive care. Officials and the industry have tended to be self-serving, ignoring their most important resource, the people.-THE SOURCE

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