Government gets tough on private health sector over charges

The Department of Health published long-awaited regulations spelling out the process by which it plans to draw up a National Health Reference Price list, a move it says will put an end to perverse incentives and unethical business practices in the private healthcare industry, says Business Day. Private sector health care providers will be required to submit their fee structures to the health department annually, including details of how they calculated their costs for various services and agreements with third parties. The department will then draft a reference price list, and give industry four weeks to comment, before publishing a final list each September. The first such list is expected only next year, to take effect in 2009.The regulations give the department the power to set a price if information is not forthcoming from the industry. Full Business Day report Regulations

Private hospitals came under fire at the recent conference of the Board of Healthcare Funders, which represents the medical schemes. Rajesh Patel, the head of benefit and risk at the board, lashed out at hospitals for adding R2bn to patient costs by overcharging for medical supplies, according to the Sunday Times. He also accused hospitals of not passing discounts they obtain from suppliers on to patients. He told delegates that off-invoice discounts or rebates were ‘endemic’, as was charging for anaesthetic gases that were not administered to patients – concern about the fraudulent billing of anaesthetic gas has prompted an investigation by the Health Department. Patel accused private hospital groups of either inflating the prices of products bought, or encouraging suppliers to invoice hospitals for higher amounts and then giving them the difference as an unrecorded rebate. Business Day reports that the country’s biggest medical aid provider, Discovery, supported Patel’s view that price inflation on items such as drip sets, gloves, syringes and suture materials was costing medical aids about R2bn year. Discovery itself was incurring costs of about R240m annually. Full Business Day report Full Sunday Times report

Major hospital groups Netcare and Medi-Clinic have denied the accusations. The Mail & Guardian Online reports that according to Netcare, medical schemes ‘are not forced to pay inflated costs – to the contrary, private healthcare delivered in SA has been benchmarked internationally within the top five for value for money and quality’. Medi-Clinic said in a statement that it had removed all rebates and discounts on pharmaceutical and surgical items when it adopted a transparent pricing system in 2002. ’This model provides no incentive whatsoever for Medi-Clinic to inflate invoice prices,’ it said. Full Mail & Guardian Online report

Doctors commonly charge patients more than their medical aids are prepared to pay, but when treating another doctor it is considered ‘collegial’ to stick to medical aid rates, according to an article in the latest issue of the SA Medical Journal, says a News24 report. University of Cape Town surgery professor David Dent and Unisa law professor Sas Strauss said the issue of doctors charging one another was one of ‘etiquette, collegiality and habit’. They added: ‘A collegial guide and compromise may be that neither party should be out of pocket, or as little out of pocket as possible, after any interaction’. Full report on the News24 site

The probe should be extended beyond hospitals to cover all parties, including medical aid funds and drug companies, the Hospital Association of SA says in Business Report. Kurt Worrell-Clare, the CE of the association, which represents most of the country’s private hospitals, said the scrutiny and criticism of hospitals’ prices was welcome. But he said hospitals made up only 30% of the total cost. ‘The supply chain is a lot more complex than just the hospitals. We need to say what we can do to provide affordability. We need a strategy that will include the pharmaceuticals, the medical aid funders, the surgical items suppliers and the doctors.’ Full report in Business Report

In the US, healthcare fraud is costing taxpayers more than $60bn each year. The Washington Post says law enforcement authorities have reinforced their commitment to crack down on medical companies that send phoney bills or provide excessive treatments, pointing to 2 400 investigations in 2006 and warning that a fresh spate of cases is on the way. According to US Government estimates, national healthcare expenditures in 2006 surpassed $2trn and they are likely to grow even larger as aging baby boomers require more medical treatments. That is spurring federal officials to renew their focus on health-care fraud. Full report in The Washington Post