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Contested doctors tariffs on hold

Infighting and competition concerns have seen healthcare guidelines changing constantly.

The Competition Commission has had frequent appointments with the private healthcare sector over the past decade.

Sometimes it pops in for a routine check-up; sometimes it appears as an awkward patient demanding change; and most recently, with the announcement of the commission’s general inquiry into the sector, it has become a long-term in-patient with a complex set of symptoms that will take at least two years to diagnose.

But, in the meantime, it has found momentary peace with at least one thing in the sector: the question of how to determine the norms to establish when a medical practitioner is overcharging.

It’s a bugbear that has been around for the better part of a decade and reveals the complex interplay between the various nodes of authority in the industry and the interest groups that pull the sector in opposing directions.

The question of price in the private health sector is problematic, said Umunyana Rugege, an attorney specialising in healthcare issues at public interest law centre Section27.

“Healthcare isn’t a normal product or service,” Rugege said.

“Normally, you would make decisions based on quality or price and so forth, but here you don’t have that kind of bargaining power. You rely on a healthcare provider to advise you …

“Doctors decide on supply and demand. Quality is difficult to observe.”


In a survey conducted by the Mail & Guardian last year, 63% of respondents said they had been overcharged by a doctor or dentist.

It appears obvious that the issue calls for attention but the solutions presented by the powers that be have been wide-ranging, inconsistent and fraught with tension.

The guidelines for “how much is too much” have changed at least three times over the past 10 years, largely thanks to the Competition Commission and infighting among interest groups in the industry.

Currently there are none at all. Recent processes indicated an end may be in sight, but they have been halted to allow for “consultation”.

It all began with a response to commission rulings 10 years ago. The Council for Medical Schemes (CMS), the regulator of private medical schemes in the country, sought to create a model for price determination in the industry, while respecting the commission’s prohibition on collective price setting.

The result was the national health reference price list. Janneke Saltner, a health economist for Section27, said: “It was not a recommended price for doctors, nor a recommended reimbursement level for medical schemes.”

Rather, it was a model that aimed to provide a basis for individual price-setting. The price list was intended to be a resource for understanding healthcare costs and to inform policy, and was published until 2006.

Definitive price list

At that point the department of health stepped in to take over the job. But it wished to change the list fundamentally. “It aimed to be a definitive price list, from which variation was not possible,” Saltner said.

According to a document by the Health Professions Council of South Africa (HPCSA), “after publication of this reference price list (RPL) and its regulations, the department quickly experienced problems regarding the conflicting roles it was expected to play by various stakeholders.

“The biggest problem was with regard to the Competition Commission because the process of the RPL was viewed as a permission to collude in the setting of prices,” the council said.

Several interest groups opposed it and took their objections to court. The first was the private Hospital Association of South Africa.

Ultimately, the department’s price lists were set aside by the high court. Among other things, it was found that the processes through which the prices were arrived at were unacceptable and excluded smaller stakeholders, individuals and companies.

But the court action left a noticeable vacuum in the industry. “Once the RPL was overturned [in 2010], there was effectively no form of price list available for use by the private sector,” Saltner said.

Alex van den Heever, the chairperson of social security systems at the University of the Witwatersrand, said that a lack of reference point in the industry disadvantages the consumer and creates an environment ripe for collusion. “In the absence of any benchmark, a decision [about over-charging] is made on a case-to-case basis. There’s likely to be a [price] bias upward,” Van den Heever said.

Enter the HPCSA, a regulatory body appointed by the minister that oversees 12 medical boards, ranging from medical and dental to psychology and emergency care. According to the Health Professions Act, this council, and not the department of health or any other, must provide guideline tariffs for medical practitioners and dentists.

New process

In 2012, the council published “guideline tariffs”. The prices it proposed took the CMS’s 2006 rates and added an inflator of 46.66%. But there were major objections on various fronts. Industry groups complained that they had not been consulted and that the basis on which the prices were decided was arbitrary, flawed and possibly anticompetitive.

So, in October last year, the council reassessed the guidelines. It proposed a completely new process for the determination of fee norms by the medical and dental professional board. And, for the first time, it outlined the involvement of the Competition Commission from the beginning.

The proposed new process has been well received generally and will be based on consultation with a wide range of players. It creates a process in which collusion is not possible, Van den Heever said. “It stops any single party from being able to impose their will [on the outcome].”

And perhaps the magic ingredient has been the involvement of the commission. “The commission did not provide public comment but provided oral input during the design phase of the HPCSA’s proposed process,” the organisation told the Mail & Guardian.

But the implementation of the new process is behind schedule. By March, the norms should have been gazetted and available for comment.

However, according to the council’s chief operations officer, Tshepo Boikanyo, the process has been “halted” to allow for consultation between the council and the Medical and Dental Professions Board. Last year, the South African Dental Association rejected the regulation of fees for the majority of dental procedures. There is some speculation that groups within the council are trying to stall the process, but this has not been confirmed by the council.

Although Health Minister Aaron Motsoaledi has spoken out in favour of a fee norm, he has no jurisdiction over it, and cannot expedite or postpone it. “This is not a decision of the minister but the HPCSA,” the minister’s spokesperson said. And, although the commission made suggestions for the framework of the process, it doesn’t control the process itself. “The commission does not sanction any policy, regulation or process,” a spokesperson said.

In other words, whether the new guidelines will be a salve to the ills of the past, or whether the private healthcare industry will need another check-up in a few year’s time, is a difficult diagnosis to make.