Council for Medical Schemes on its Strategic Plan & Budget 2011; Briefing by BUSA & South African Business Coalition on their HIV and AIDS programmes

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Health

12 April 2011
Chairperson: Mr B Goqwana (ANC)
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Meeting Summary

The Council for Medical Schemes briefed the Committee on its strategic plan and budget for 2011. The organisation’s total budget, including the capital budget was approximately R98.6 million for this year as compared with the budget of R82.9 million for the previous year. This was approximately a 19% increase for the budget, which translated into a levy increase from R18.29 to R22.83 for the whole year. The salary payments increased from R51.8 million to R58 million, which represented a 12% increase. In total, the salary bill accounted for approximately 68.8% of the CMS’ total budget. The entity’s operational expenditure increased from R79.92 million to approximately R95.3 million.

The Council had four strategic goals. These included the following:
•Maximisation of access to good, quality medical schemes
•Medical schemes and other regulatory entities should be properly governed and responsive to environment, and beneficiaries should be informed and protected at all times
•The CMS should be as responsive as possible to the needs of the environment by being an effective and efficient organisation
•The CMS should provide influential and strategic advice and support for the development and implementation of strategic health policies, including supporting the National Health Insurance (NHI) process

Members asked where the Council had received its surplus funds from, if there were any cases of collusion in the healthcare industry and what its view was on the proposed National Health Insurance Plan.
They further examined the categories of complaints that the Council received and how it planned to deal with the increase in complaints going forward. The Committee also asked the Council to elaborate on the decrease in its budget for consumer education and what it was doing to inform people about its existence. A Member noted that there were many Council employees that had resigned in 2006-2009 as compared with 2010 and 2011. She therefore asked what the cause was for so many people resigning and why the amount of resignations had declined after 2009.

Business Unity South Africa (BUSA) and the South African Business Coalition on HIV and AIDS (SABCOHA) briefed the Committee on what they were doing to help the HIV and AIDS programme. BUSA was the national voice of business and represented business at the National Economic Development and Labour Council. Both organisations also had seats on the South African National AIDS Council. BUSA and SABCOHA worked very closely together on the issue of HIV and AIDS. SABCOHA drove the implementation and monitoring of business-led initiatives on HIV and AIDS. SABCOHA’s mission was to coordinate efforts to mitigate the impact of HIV and AIDS on sustained profitability and economic growth. SABCOHA was founded in 2001 and was a not-for-profit, membership based organisation. SABCOHA wanted to ensure that business was part of a nationally coordinated response to HIV and was aligned with national priorities. SABCOHA was in the process of developing strategies that addressed the differentiated business sector. Future areas of focus for SABCOHA included closer alignment with structures within government, especially with the Department of Health and the Department of Social Development. The organisation also wanted to develop a private sector monitoring and evaluation unit, and hoped to strengthen communication within the private sector.

Members enquired if the organisations foresaw any hindrances preventing the government from achieving its Millennium Development Goal (MDG) of combating HIV/AIDS by 2015. They also asked what the outreach and recruitment strategy SABCOHA had for its peer education project, how businesses would contribute to helping society and the government at large and if both organisations would also look into occupational health and safety as it went much deeper than just HIV, TB and Sexually Transmitted Infections.


Meeting report

Opening Statement
The Chairperson informed the Committee that after 15 years in Parliament, Dr A Luthuli (ANC) had chosen to retire. She and her family had made a great contribution to the country. He thanked her on behalf of the country. He asked her to say a few words as this would probably be her last meeting with the Committee.

Dr Luthuli thanked the Chairperson and said that this was a very emotional day for her. It was difficult for her to leave Parliament after fifteen years of service. She would miss every bit of her life in government service. She said that even though she was retiring, she would still have an interest in government business.

Council for Medical Schemes Briefing
Dr Monwabisi Gantsho, Chief Executive Officer of the Council for Medical Schemes (CMS) and the Registrar of Medical Schemes, said that the organisation had taken stock of the past ten years of its existence and was looking at ways to make the entity stronger, as well as more efficient and effective. The private healthcare sector was in good shape and would only get stronger going forward. The environment in which the CMS had operated for the past few years was changing and becoming very complex. The CMS was coping when it came to the regulations, but still it needed the Committee’s support. The CMS required an increase in its capacity and budget in order to become more effective. The number of complaints about medical aid schemes had increased from a few hundreds a year to approximately 6000 a year. It was the CMS’ duty to protect the beneficiaries of the schemes.

The CMS had four strategic goals:
•Maximisation of access to good, quality medical schemes
•Medical schemes and other regulatory entities should be properly governed and responsive to environment, and beneficiaries should be informed and protected at all times
•The CMS should be as responsive as possible to the needs of the environment by being an effective and efficient organisation
•The CMS should provide influential and strategic advice and support for the development and implementation of strategic health policies, including supporting the National Health Insurance (NHI) process

Mr Daniel Lehutjo, Chief Financial Officer: CMS, reported that the budget would be R98.6 million for this year as compared with the budget of R82.9 million for the previous year. This was approximately a 19% increase for the budget, which translated into a levy increase from R18.29 to R22.83 for the whole year. The salary payments increased from R51.8 million to R58 million, which represented a 12% increase. In total, the salary bill accounted for approximately 68.8% of the CMS’ total budget. The entity’s operational expenditure increased from R79.92 million to approximately R95.3 million. In this regard, the total budget, including the capital budget was approximately R98.6 million. This was financed through cash requirements, of which they had surplus funds from the previous financial year. In terms of the Public Finance Management Act (PFMA), the CMS had to apply for usage of the surplus fund.

The total membership for this year, as at 31 December 2010 was approximately 3.6 million; however, this information had not been audited. There were a few units within the CMS:
•The Complaints Adjudication Unit which accounted for 4% of the total budget
•The Internal Finance Unit accounted for 19% of the total budget
•The Information Systems and Knowledge Unit accounted for 9% of the budget
•The Financial Supervision Unit accounted for 8% of the budget
•The COO’s Office as a Strategic Office accounted for 8% of the budget
•The Strategic Project Unit accounted for 7% of the budget
•A new unit called the Stakeholder Relations Unit was being introduced
•The Accreditation Unit was introduced
•The Human Resource Unit accounted for 6% of the budget
•The Compliance Unit accounted for 6% of the budget
•The Research and Evaluation Unit was being introduced  

Dr Boshoff Steenekamp, Strategic Project Specialist: CMS, said that he wanted to put in perspective the cost of regulation. If the Committee looked at the percentage increase of 24.8% it looked like a very large increase for this year. But, the total budget was approximately 0.092% of the contributions that people made to the medical schemes. This meant that only one out of every ten thousand cents that was paid towards a medical scheme, went to the CMS for regulations. The levy notice was published on the CMS website and a number of schemes had commented, saying that there should not be an increase. The CMS accepted the Monetary Policy Committee’s projected Consumer Price Index (CPI) to be around 4.8% in this period. However, it needed to account for other issues as well such as the 5% more beneficiaries that would be protected. This explained the first part of the levy increase. If the Committee looked at the levy increase in real terms, it meant the old prices for inflation was adjusted; it showed that the increase was around 14%.

Over the years, the levy had become increasingly important because the statutory fees, which were the fees the schemes had to pay when they wanted to register or if they wanted to be accredited, had not changed in the past ten years. Because the fee had not been adjusted, it meant that the CMS received lower fees and had to receive more money from its levies. Also, there was a very small surplus available to the CMS from the previous year, which also resulted in the increase in the levies.

The number of complaints received by the CMS about medical aid schemes had increased to approximately 6000 a year. This could be due to the CMS becoming more well-known, or that schemes had been transgressing more. Either way, the public had to be protected and complaints had to be resolved. The CMS had been involved in more court cases. In 2007/08, the CMS was involved in ten court cases. In the previous financial year, there were 25 cases. If this trend continued, the entity would soon be dealing with 40 a year. The court cases and appeals sapped the entity’s resources and energy and they had to find a way to prevent these types of issues. In order to continue executing its legislative mandate, they proposed an above CPI increase for their budget in order to create new positions within CMS to deal with prospective regulatory functions and to protect the public from the schemes by taking legal actions. The new positions and legal fees for court cases used the bulk of the increase.


Discussion
The Chairperson noted that people sometimes abused their authority when they were given positions of “control”, such as in a regulatory entity. He hoped the CMS was not abusing its powers to get people to do what they wished. He also noted that an area of concern was the entity's levies. The Committee needed to engage on this matter. The Committee had always been happy with the CMS' financial controls. The entity's finances had always been handled well. The CMS was an important organisation for the country. It was important to give all people in South Africa healthcare.

Mr Gantsho replied that the CMS was a “creature of statute” and had to abide by the laws passed in Parliament. A regulator such as the CMS was not always liked by the industry that it regulated. So, regardless of what the CMS did, it was bound to receive its fair share of criticism, which they did. The CMS was an organ of state and its duty was to protect the members of medical aid schemes; therefore, they could not afford to transgress the law. But, it was always important for the entity to guard itself against abusing its power.

Ms Ngcobo (ANC) asked three questions. Firstly, she asked where the CMS received its surplus funds from, and if they were from roll-overs. Secondly, she asked if there were any cases of collusion in the healthcare industry. In most medical aid schemes, lately, there were usually requests for ex-gratia payments for cancer patients in respect of genetic drugs, which were very expensive. This consumed quite a lot of money from the budget of the schemes. She asked the CMS to elaborate on the matter. Lastly, she asked what the entity's take was on the NHI.

Mr Lehutjo addressed the matter of the surplus funds. He said that when the CMS was first established, it received grants from the Department of Health (DoH). The CMS only started issuing levies about two years after its establishment. When the CMS was promulgated in 1999 and it had to comply as a schedule three public entity, they then had to comply with the relevant clause in the PFMA that said the CMS was not allowed to keep surplus funds. If they had surplus funds, they had to apply to roll-over the funds so that it could be used in the next financial year. The past financial year ended 31 March 2011 and the CMS has not started collecting levies. If the CMS did not have the surplus funds, they would not be able to run for the first two or three months of the financial year. Therefore, the CMS applied to have the surplus funds so it would be able operate until they received approval from the Minister, in concurrence with the Minister of Finance, to collect levies.

Mr Gantsho replied that collusion was not a serious problem. However, he admitted that there were schemes colluding with private hospitals and service providers, specialists in particular, where they entered into agreements about what had to be provided in the service and how much they would charge for it. This was taking place in spite of the Competitions Act. There would be heavy penalties if collusion was discovered. There had been complaints from the public asking the CMS to investigate whether there was collusion taking place in the industry; however, the CMS was not mandated to do so. The cases were then referred to the Competition Commission.

Dr Steenekamp replied that many of the complaints received by the CMS were about the non-payment of prescribed minimum benefits. The law gave the Minister of Health the power to prescribe a set of minimum benefits that every scheme had to offer. Payments of these benefits had to be in full. In other words, there should be no co-payment to the member. These consist of approximately 270 conditions, which included cancers and 25 chronic conditions such as hypertension and asthma. Most cancers should be paid in full. The money had to come from the schemes. Many people wanted to know if there had to be a co-payment for the “biologicals” in cancers. For example, there were a few new drugs being used for the treatment of cancer that could easily cost someone up to R1 million a year. To deal with this issue, regulations specified that those treatments that had to be paid in full had to be consistent with the prevailing level of practice. The CMS had started a process of defining the benefits better.

Mr Gantsho explained that the CMS was well positioned to assist with various aspects of the NHI to make sure it is implemented efficiently and effectively. This could be done using the expertise and experience the CMS had. The CMS served on three committees that spoke to NHI, including being a member of the Ministerial Advisory Committee (MAC) that looked at the NHI. The CMS was waiting for the final comments on the NHI, which they were told would be published soon. The CMS had already made an input into the NHI. He assured the Committee that the CMS would be “invaluable” in the implementation of the NHI.

Mr M Hoosen (ID) said that it was interesting to see that the number of complaints from the public had increased quite a bit over the last few years. This could be attributed to the CMS becoming more well-known over the years; however, the possibility remained that there could be an increase in transgressions from the medical aid schemes' side. He wanted an understanding of the categories of complaints that the CMS received and how they were planning to deal with the increase in complaints going forward.

Dr Steenekamp replied that he did not have the exact numbers of complaints that the CMS had received; however, this information was included in the entity's annual reports. Most of the complaints were about the non-payment of claims, and non-payment of prescribed minimum benefits. Most complaints were due to the uncertainty of what was covered by the schemes.

Ms E More (DA) noted that the CMS had decreased its budget for consumer education. She asked why the budget had decreased if the number of complaints had increased.

Mr Gantsho explained that it had not been made clear in the document, but they were in the process of decentralising the consumer education budget instead of putting it in one unit, which was the education and training unit. The consumer education budget was divided between a few units that also dealt with education and training. The CMS was aware the educating the public was important for the dissemination of information. The CMS could not afford to be seen decreasing the budget for education and training of the public. They also wanted to share this duty with the schemes themselves, as they were the ones collecting money from the public.

Mr D Kganare (COPE) addressed advertisements by insurance companies. He asked how the schemes were regulating their clientele.

The Chairperson clarified that there was a Financial Services Board (FSB) that addressed this issue.

Mr Gantsho added that FSB was one of the regulatory bodies for financial services in the country such as banks and insurance companies. The FSB dealt with clientele. The CMS had a very good working relationship with the FSB, as it was also a creature of statute and it was important for the two entities to cooperate. The CMS and the FSB ensured that beneficiaries were not discriminated against on the basis of their age and whether they were sickly or not.

Dr Luthuli thought there was a great need to educate the public about matters relating to medical aid schemes. It would make life easier for many people as there were many people that did not understand these schemes. They should educate people in the languages they could understand.

Mr Lehutjo replied that explanatory materials were distributed to the public in various languages. The CMS always tried to be innovative to see how best to reach the public.

Ms T Kenye (ANC) noted that there were many CMS employees that resigned in 2006-2009 as compared with 2010 and 2011. She asked what the cause was for so many people resigning and why the amount of resignations had declined after 2009.

Mr Lehutjo answered that the CMS conducted exit interviews but people were not always ready to talk about why they were leaving. Also, many of the entity's employees were poached by the medical aid industry because of their knowledge of regulatory matters.

Mr Gantsho added that this was a good observation from the Member. From 2006-2009, the number of resignations from the CMS had increased every year. After 2009, the number of resignations started reducing. The first reason for this was because the employees of the CMS, since the entity's inception until two years ago, had all been on contract. The uncertainty caused people to look for other employment. Permanent employment was created two years ago, which explained why the number of resignations decreased in the past two years. The CMS also introduced retention strategies, which looked at benefits and salaries etc. This encouraged employees to stay at the CMS.

Ms M Segale-Diswai (ANC) asked what the CMS was doing to inform people about its existence.

Mr Gantsho replied that the public needed to know about the CMS. People in rural areas were just as entitled to the CMS as those in urban areas were. The education of the public was a never-ending job as the CMS could not afford to stop educating people about medical aid schemes and what their rights were when it came to health insurance.

Mr Lehutjo added that the CMS deployed a number of their staff members to places to explain what the CMS was.

The Chairperson thanked the CMS for their presentation. He liked the passion they showed in trying to help the public. He hoped they would continue to have this attitude.

Business Unity South Africa (BUSA) and the South African Business Coalition on HIV and AIDS (SABCOHA) briefing
The Chairperson stated that the Committee would receive a presentation from Business Unity South Africa (BUSA) and the South African Business Coalition on HIV and AIDS (SABCOHA). The Committee knew how many people were dying of HIV and AIDS. BUSA noticed that many of the people that were dying were those that were economically viable. BUSA and SABCOHA were there to tell the Committee about their HIV and AIDS programme.

Ms Lee Padayachee, Head: BUSA Cape Town Office, stated that BUSA was the largest confederation of businesses in the country with over 60 member organisations. BUSA was the national voice of business and represented business at National Economic Development and Labour Council (Nedlac). They also had seats on the South African National AIDS Council. BUSA and SABCOHA worked very closely together on the issue of HIV and AIDS. SABCOHA drove the implementation and monitoring of business-led initiatives on HIV and AIDS. SABCOHA would be leading the presentation.

Mr Brad Mears, Chief Executive Officer: SABCOHA, informed the Committee that its mission was to coordinate efforts to mitigate the impact of HIV and AIDS on sustained profitability and economic growth. SABCOHA was founded in 2001 and was a not-for-profit, membership based organisation. It was a member of BUSA.

He discussed SABCOHA's strategic areas for delivery. SABCOHA wanted to ensure that business was part of a nationally coordinated response to HIV and was aligned with national priorities. They wanted to mobilise business in the fight against HIV. SABCOHA was in the process of developing strategies that addressed the differentiated business sector. SABCOHA was involved in empowering business. They were involved in projects regarding peer education, trucking wellness, tavern intervention programmes, BizAIDS, and SME capacity development.

SABCOHA wanted to develop and implement a provincially relevant sector-specific strategic plan. This would help to strengthen cooperation and partnerships with other sectors to improve service delivery.

Future areas of focus for SABCOHA included closer alignment with structures within government, especially with the Department of Health and the Department of Social Development. They wanted to develop a private sector monitoring and evaluation unit, and they wanted to strengthen communication within the private sector.

Discussion
Ms Kenye thought it was important for BUSA and SABCOHA worked together to address HIV and AIDS. She asked if they saw any hindrances preventing the government from achieving its Millennium Development Goal (MDG) of combating HIV/AIDS by 2015. She asked what the outreach and recruitment strategy SABCOHA had for its peer education project. She noted that there were 22 Trucking Wellness sites in Cape Town and asked why they did not focus on the other provinces in the country.

Mr Mear answered that the relationship between the public and private sectors had to be in place before anything could actually happen. If the country had all the resources it needed, it would be easy to empower businesses. SABCOHA tried to identify areas that would be of the best value to the business sector. SABCOHA tried to be as receptive as it could to what its members wanted and what they identified as pertinent in terms of resources. Peer educators in the country needed support. In 2006, SABCOHA went around the country and ran a series of peer education forums, which allowed SABCOHA to listen to what they had to say. With the first forum that was held in Kwazulu-Natal, 300 people came from as far as the Northern Cape and they were angry that they did not receive any kind of support or acknowledgment from the companies that they worked for. SABCOHA then helped to set up provincial peer educator forums, which allowed them to share and talk to one another. There was a toll-free line that peer educators could call.

He said there was a study done that showed that if each of the 200 000 peer educators spoke at least one person that was at risk of contracting HIV/AIDS, it would have an exponential impact on the country. However, he thought there were some overarching strategic issues that were going to be an impediment to the response to HIV/AIDS in the country. There was always going to be a response that was not going to meet the private sectors expectations. This was where some of the dialogue had to be focused. 

Mr Mear said that there were 22 sites in total; only two were in the Western Cape.

Dr Luthuli stated that she was sorry she was leaving Parliament now that businesses were finally working with the government. The partnership was overdue. She wanted to know how businesses would contribute to helping society and the government at large. There were many principals of schools complaining that the number of taverns in the communities were increasing and were placed near schools. Business could help this situation. It was a serious problem as it encouraged young students to drink, which helped to spread HIV/AIDS.

Mr Mear commented that, from an idealistic point of view, constraints to the business-government partnership were only limited by the imagination. Public-private partnerships did not happen at a national level; it happened at the grassroots level, in communities. These kinds of initiatives were usually driven by people who were passionate about helping others. Government was a machine that moved constantly, but the private sector was subject to the economic vagaries of the global world. South Africa is now in a position where money is tight. This was a constraint, as the government was unable to what it wanted to do. On the other hand, one could say that the lack of resources and increased constraints should force the country to become more creative. A modicum of entrepreneurialism had to be injected into the minds of people working in the healthcare sector. He supposed that this was government’s weakness; it did not like taking risks. The private sector, on the other hand, liked to take risks. It was time for the public and private sector to support one another and to try some new ideas.

He addressed the matter of taverns. He said that SABCOHA was using South African Breweries Ltd (SAB) “skeletal framework” in order to access all the taverns in the country. SABCOHA provided the taverns with condoms; and they provided the BizAids programme which was an informal sector training programme. SABCOHA was capacitating tavern owners to run a proper business and they trained peer educators. SABCOHA either trained the bar-owner or the ladies that worked in the taverns to be peer educators. Peer educators in the taverns were taught about how alcohol leads to violence, gender-based violence, and the responsible use of alcohol. They had not solved the problem, but it was a small start.

Ms More stated that she was aware that public hospitals had a programme called Integrated Health and Wellness, as well as one called Occupational Health and Safety. She wondered if SABCOHA and BUSA would also look into occupational health and safety as it went much deeper than just HIV, TB and Sexually Transmitted Infections (STIs). She asked if SABCOHA had a knowledge management framework.

Mr Mear replied that the SABCOHA took the approach that HIV was part of the broader wellness approach. It was about physical, mental and social wellness. The government had to look areas of low social capital as well as areas with high levels of HIV and other illnesses. He said that a lot of companies linked their HIV programmes to their occupational health programmes. There were some constructive models that the private sector could use that would augment what the public sector was attempting to achieve.

He said that SABCOHA had been very weak in the area of its knowledge management framework. They had a knowledge management strategy bit it required resources.

Mr Faizel Randera, Board Member: SABCOHA, stated that he was glad to hear the Committee recognise and reinforce the role that business played in society. SABCOHA could not come back to Parliament next year when Members did not even know they existed. They would send more information to the Committee about the key areas in the health sector that BUSA and SABCOHA were involved in. He stated that business played a big role in the socio-economic development of the country, and in business as a whole there were many systems on knowledge management that the government could galvanise and bring to the table. He said that the next time SABCOHA came to the Committee; they had to focus on the MDGs and how business was plating its role.

The Chairperson stated that time was against the Committee and the meeting had to come to an end. He thanked BUSA and SABCOHA for a good presentation. The impact that the public-private partnership would have on communities in the country was going to extend further than HIV/AIDS.

The meeting was adjourned.



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