Big changes for medical aid prices coming for South Africa

Minister of Trade, Industry & Competition Parks Tau has opened the door to potentially lower healthcare costs, with the National Health Insurance (NHI) still years away from full implementation.

Tau gazetted and opened for public comment the concept of an interim block exemption—for both prescribed minimum benefits (PMBs) and nonprescribed minimum benefits (non-PMBs).

This exemption would allow healthcare providers, funders, and other stakeholders to collectively determine tariffs for healthcare services, diagnosis and treatment codes, and quality metrics.

It would ultimately give them greater power when dealing with hospitals and drug companies, achieving better prices and benefitting medical aid members.

The Competition Commission’s Health Market Inquiry (HMI) previously stressed the need for a structured tariff determination process in the healthcare space.

It recommended a shift towards a “multi-stakeholder negotiation process” to improve pricing transparency and competition in the healthcare market.

The healthcare sector in South Africa has experienced significant challenges in determining tariffs for healthcare services, leading to concerns about the affordability and accessibility of quality healthcare.

The proposed interim block exemption aims to address this by enabling a structured, multilateral tariff determination process.

“A multi-stakeholder tariff determination framework for healthcare services is at the centre of the proposed interim block exemption consistent with the recommendations of the HMI,” said the DTIC.

“This will contribute to the long-term goal of reducing costs, promoting universal access to health and enhancing the quality of healthcare.”

The department added that there has been a notable vacuum in tariff regulation since 2003, which has resulted in fragmented negotiations between healthcare providers and funders.

This status quo has limited the ability to create standardized tariffs that ensure consistent pricing among healthcare providers.

The absence of a formal tariff determination process has led to inefficiencies and disparities in the pricing of healthcare services in the sector.

NHI-shaped fears

Although the gazette acknowledged the NHI Act, which was signed into law last year, the department stressed the need for immediate price relief.

“The promulgation of the National Health Insurance (NHI) Act signals a significant long-term restructuring of the healthcare sector, with the aim of universal health coverage.”

“The NHI Act will introduce new regulatory and funding models, but until the NHI framework is fully operational, there remains an immediate need to address the current gaps in tariff determination.”

As per the interim measure, the proposed block exemption provides for a system-wide regulatory
framework to facilitate multilateral tariff determination.

The exemption would also apply to specific categories of agreements related to tariffs and quality standards.

The department said this would allow the sector to transition smoothly to the NHI while addressing present challenges in pricing.

The exemption applies to the following categories of agreements of practices concerning the following PMBs and non-PMBs:

• The collective determination of healthcare services tariffs;
• The collective determination of standardized diagnosis, procedure, medical device and treatment codes; and
• The collective determination of quality measurements/metrics, medicines formularies and treatment protocols/guidelines.

This aims to improve the affordability of quality healthcare services across both PMBs and non-PMBs by reducing costs and preventing the overutilization of healthcare services.

The exemption, if approved, will last three years and be managed by the Department of Health.

In consultation with the Council of Medical Schemes, the Department of Health will establish and oversee a tariffs governing body.

Comments on the gazette must be submitted to the DTIC by 14 March 2025 and emailed to Dr Ivan Galodikwe, [email protected].

There are already concerns about the new law, particularly about the Department of Health’s involvement in the new fund.

As Business Day reported, the Board of Healthcare Funders (BHF) has reservations about the new dispensation.

The BHF is concerned that the Department of Health would manage the block exemption negotiation process, arguing that it is actively keeping private healthcare expensive to justify the NHI.

It also argued that to make private healthcare more affordable, the Competition Commission should grant exemptions to allow medical schemes to negotiate tariffs with healthcare providers.