Concept Paper on Medical Aid Schemes

MIDLANDS STATE UNIVERSITY Concept paper on the proposed nation Universities aesculapian Fund Distribution List Mrs. V. Chirasha / Deputy Registrar (Human Resources) Author Mr. S. Masiyiwa / Lecturer, surgical incision of Insurance & Risk Management 1. Introduction Healthc ar pay and function providers in Zimbabwe were not sp atomic number 18d by the scotch downturn of the past decade. close to wellness check uphold societies, practically collapsed when co-payments demanded by portion providers exceeded their globular limits on gather payaments. For example, patients were being asked to pay Z$10 billion specie as o-payment and the aesculapian aid society would only pay Z$1 million according to their tariffs. This mismatch, saw umteen clients, the allege universities included, ordureceling their social rank to such outlines and retaining the risk themselves, either caudexed or un storeho engageed. The introduction of the multicurrency system in February 2009 brough t the much(prenominal) needed stability to various sectors of the economy. However, the system was not endorse by signifi rouset foreign currency inflows and as a consequent economic activity has remained subdued. umpteen organizations are currently operating down the stairs capacity and are downsizing to remain afloat. This development has signifi usher outtly cut down inflow of contributions to medical aid societies, who although operating, are still to practicedy bump and offer total scale services. 2. Recent developments Contributions made to medical aid societies are made on the understanding that if you do not subprogram it you lose it. This is understandable as medical aid schemes are essentially risk pooling and sharing solutions and premised on the fancy that the misfortunes of a few should be met by fortunes of m either.However, the tight liquidity situation is forcing many entities to adopt modernistic risk forethought strategies intended to retain as much interchange as possible and only outsource those risks that exceed their risk appetite. The economic challenges of the past decade, we attendd as a nation overt the limitations of amends as a risk financing mechanism. We have all learnt that indemnity is not THE solution but part of the solution and that there are as well as equally good alternatives to policy.Some medium to large scale organizations have since created self administered insurance schemes to cater for a variety of risks they face in their operations, e. g. material damage, health, funeral, retirement fund, etc. Cell Insurance Company has spearheaded the credence of the concept in Zimbabwe through its rent-a-cell captive arrangement and today it administers a lot of these schemes. However, a worrisome development in Zimbabwe is the transfer of the superannuation and morbidity risk to the employees by cash strapped or unscrupulous employers. tardily most if not all of the offer university staff had no membersh ip to any medical aid or health insurance scheme. They were stipendiary for their health and related expenses from personal resources. The extent to which this approach could be utilise was obviously limited due to the low salaries and allowances staff is currently receiving. The state universities have started receiving funding from the fiscus and renewed their membership to medical aid societies. However, the concept is still the same if you do not use it, you lose it How many dates have been to the doctor lately, once, twice or none?Literally, medical aid societies are explicateting richer at the expense of the members, university staff included. Retaining in-house the contributions state universities currently pay to various medical aid societies and health insurance schemes could make a difference to the underfunded institutions. 3. Suggestions for the state universities It is against the higher up background that I propose that the state universities should consider setti ng up a matching independent medical benefit fund to finance health and related risks the state university staff are exposed to on a day by day basis.It is also proposed that both the employer (state universities) and the employees should make periodic contributions to the fund, the employer paying 80% and the employees get together the balance of 20%. 4. Costing basis According to latest military group records, the state universities employ about 3100 in total. Costing of commercial-grade health and self insurance schemes is based on the law of large numbers. The larger the statistical base, the more accurate the acquittance ratio becomes. Many schemes operating in Zimbabwe today actually started as in-house schemes with even few numbers, e. g. FLIMAS and First Mutual.The 3100 university employees constitute a sizeable number, to allow for costing of the proposed medical benefit fund. In addition to the level of benefits required, existing university clinic utilization figu res should be analysed and included in the costing model. 5. Advantages of the proposed scheme The proposed scheme has the following advantages Contributions to the fund should be lower as members leave alone not pay for medical aid society or insurers administration and wage margins. Interest from the investment of funds will accrue to the benefit fund Any profits will accrue to the benefit fund Benefits can be tailor made, improved and enhanced with time as the fund grows thither will be no disputes with medical aid society or insurers over claims settlement There would be a virile incentive by members to reduce claims and control losses Global limits can be change magnituded easily with minimum or no increase in contributions from the employer and employers Improvement in staff morale can be achieved thereby increasing productivity and the restoration of financial independence and dignity. 6. Disadvantages of the proposed schemeThe proposed scheme has the following dis advantages The claims statistics, which are used to decide on contributions will come from a narrow base A catastrophic loss (although remote) could occur in the formative years and wipe out the fund. However, catastrophe concoct can be separately arranged with jumper lead reinsurers for a very low premium to cover the fund against an accumulation of claims above the expected budget in any given accounting period. one-on-one small claims may not affect the fund too much but their aggregate effect may have catastrophic effects. cataclysm cover, described above can also mitigate this risk There will be need to employ additional staff to supervise the funds administrative matters. True, but use of existing clinics and facilities at state universities should reduce the number of additional staff required. There may be a temptation to dip into the fund and pay for unrelated activities. This moldiness be resisted by the board of care/trustees. In any case the business of the f und should be separate from that of sponsoring universities.If the dip is to be allowed it should be a loan based on prevailing commercial bank loan terms and conditions. Benefits from the basic insurance principle of spread risk will be lost. From the foregoing, it can be concluded that the advantages far outweigh the disadvantages. The disadvantages, although real, are highly theoretical and remote. 7. Establishment of a skilful workings commissioning To expedite the process a skilful committee consisting of representatives from the state universities should be set up.The committee should consist of both management representatives (50%) and employee representatives (50%). This intended to ensure buy in at the early stages and also incorporated the various stakeholders interests and ideas in the scheme. 8. The mandate The adept committee must be mandated to carry out the following tasks 10. 1 Drafting of the penning The proposed benefit fund will be run according to its Ru les and Regulations as enshrined in its Constitution. The technical committee will be responsible for mechanical drawing the Rules and Regulations, which will include, inter alia ) The name and objects of the proposed benefit fund b) Board of management/trustees, appointment and composition, meetings, its powers and functions c) Membership issues e. g. eligibility, masking, termination, deprivation of membership, etc d) Subscriptions e. g. level, frequency and mode of payment of subscriptions. e) Beneficiaryship e. g. eligibility, application and termination of beneficiaryship. f) Schedule of benefits e. g. nature and amounts of benefits, eligibility for benefits, waiting periods, claims for benefits, rejection of claims, ex-gratia payments. ) Assets, liabilities, rights and obligations of the medical fund h) actuarial valuation i) Dissolution/wing-up of medical benefit fund j) Amendment of rules e. g. power, requirements for amending the rules k) General learning for members e. g. benefit exclusions, lodging of members complaints and requests, payments of awards not supported by receipts, payment of see well providers, list of approved providers, letters of guarantees for services provided outside Zimbabwe, shortfalls, travel cover on holiday, business or study. ) Promotion of the medical fund for bankers acceptance by target service providers and establishing working relationships with them 2. Benefit design The technical committee must develop a number of benefit options which members can choose from. I propose the following plans, that I have christened, for want of better names, the university premier plan, university medium plan and the university standard plan. a) University Premier architectural plan This would be similar to the CIMAS Medexec Plan/PSMAS Pinnacle Plan and is meant to provide executive director benefits for the principal steadrs and senior management. ) University Medium Plan This would be similar to the CIMAS surreptitious Ho spital Plan/ PSMAS Select Plan and is meant to provide members who want global limits higher than those provided under the University shopworn Plan described below c) University Standard Plan This should be the entry point and would be similar excel Plan from PSMAS which currently covers most staff. The plan will pay for mention and treatment received from Government, Mission, Municipal & Private Hospitals, worldwide practitioners and specialists up to a limit, per person per annum 3. Registration of the fund with the authoritiesThe technical committee should be mandated to register the proposed medical benefit fund in terms of the medical checkup Services Act, Chapter 15 13 and any opposite applicable and pertinent legislation. 9. Administration The technical committee should consider the following issues that affect the high-octane running of the business of the proposed medical benefit fund. 9. 1. Location of registered office and other offices. This could be either in Ha rare or Bulawayo with satellite offices at all state universities. Any other center could be considered for the reparation of the head office.My suggestion is based on the density of service providers in Harare and Bulawayo. Most members would be referred to these big centers for specialist medical tests and treatment. existing facilities could be used as satellite offices e. g. the existing clinics could be expand and resourced to offer a variety of services normally available from general practitioners. This will fulfil on costs. 2. Staffing issues Additional staff will be required especially for the head office. This will include the principal officer, finance manager, membership and claims administrators.However, they should be very few, because most of the work will be done from satellite offices. Initially there may be a lot of work when the office is set up but that should becalm with the effluxion of time. 3. Finance and claims administration This could be centralized at head office and payments to service providers and refunds to members made once every fortnight i. e. only on two occasions per month. 4. Dispensary It is advisable to buy the essential drugs from source and detect them in stock for use by members. It will also save on costs.Railmed currently operates such a facility countrywide for the benefit of railway employees scattered across the country. The state universities should use the existing clinics for a similar purpose. Alternatively, mutually beneficial arrangements (drug schemes) can be made with leading private pharmacies to allow members access to drugs without paying for them upfront. 5. Approved provider profit For the members to benefit, the scheme should be promoted for broader acceptance by as many service providers as possible so that members are not inconvenienced in the time of need.The management of the medical fund should promote the scheme and establish working relationships with all health service providers. This can also save on cost as it is possible to negotiate preferential rates. 6. Access to technical advice The state universities have a large pool of experts on their payroll. The technical committee should tap on that expertise. This will not only serve on cost but show the world that we can use knowledge to the benefit of mankind and practice what we preach 10. Conclusionuphill trends in risk management indicate that more and more organizations are electing funded risk retention strategies in an effort to contain cost and get more value for their money. State universities should embrace the philosophy and design and impose robust enterprise wide risk management strategies that mitigate the risks they are exposed to. For a start, establishing a unified independent medical benefit fund to finance the morbidity risk university staff are exposed to will be a good step in that direction. Proposed State Universities Medical Benefit Fund Benefit Limits Schedule General Practitioners, Speci alists, human race & Private Hospitals) Services Benefit Limits (US$) General Practitioner paying(a) in intact Physician specialist stipendiary in sufficient hospitalization insurance Prescription drugs Rehabilitative services Haemodialysis Paid in full Chemotherapy Paid in full Chronic disease drugs Paid in full Dental services Refraction Paid in full Optical Paid in full Maternity Paid in full Family planning Hearing aids Pathology Paid in full Radiology Paid in full Blood transfusion Paid in full Psychiatric care Paid in full Prosthetic appliances Ambulance Paid in full Air Evacuation Paid in full for life threatening situations only subject to forward authorization by board of management/trustees Foreign treatment local anesthetic benefit limit apply subject to prior authorization by board of management/trustees pic