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PROFESSIONAL DEVELOPMENT
First for the professional personal financial adviser
29 February 2024
The erosion of medical scheme benefits and out-of-control specialist fees BY MARTIN RIMMER CEO of Sirago Underwriting Managers
A
n analysis of three massive gap insurance claims amounting to R440k paid by Sirago Underwriting Managers during 2023 highlights an alarming reality of just how financially devastating the shortfalls are for in-hospital treatment that medical schemes are not paying for, and secondly, how specialist fees have rocketed in the absence of any price regulation in healthcare provisioning, meaning providers charge any rate they wish, often many more times the medical scheme rates. Martin Rimmer, CEO of Sirago Underwriting Managers, explains that average gap claims values continue to rise exponentially, and mega gap claims are increasing in frequency, with massive shortfalls ranging anywhere between R50 000 and R191 000 (the regulated overall annual limit for 2023 per beneficiary per annum that gap insurers cover) for in-hospital treatments not paid by medical schemes. Gap insurance covers the difference that arises from the rate that healthcare
specialists charge for in-hospital procedures versus what a medical scheme pays. “Of the thousands of claims processed in 2023, Sirago paid over 100 mega claims – internally classified as upwards of R40k per claim – in shortfalls not covered by medical scheme benefits on these mega claims alone. Total gap insurance claims paid between January and November 2023 by Sirago amounted to over R106m that policyholders would have to foot from their own pockets had they not had gap insurance in place,” explains Rimmer.
by your medical scheme – in fact, in these three case studies, two members were on the top-end comprehensive medical scheme options, but less than half of the bills from their specialists were paid by the medical scheme.
The three biggest gap insurance claims Sirago paid in 2023 Below is a breakdown of the three biggest gap insurance claims paid by Sirago during 2023. “Of the R958k in specialist charges for these three claims alone, medical schemes only paid out 46% of the total specialist bills, while gap cover stepped in to pick up the 54% shortfall. The standout for anyone analysing these stats is that being on a comprehensive medical scheme option is no guarantee that your bills for in-hospital treatment will be paid for in full
Condition
Patient
Muscolo-skeletal/connective tissue, spinal stenosis (irreversible degeneration of the spinal discs) Circulatory System - Unstable Angina, coronary artery disease treated with stent implantation Acute Ischaemic Heart Disease - blood flow to the heart muscle obstructed by blockage of a coronary artery
58-year-old female, on a comprehensive medical scheme option 69-year-old male, on a core hospital plan option 61-year-old male, on a comprehensive medical scheme option
Martin Rimmer
Doctor’s fees R361 386
Medical Scheme paid R185 677
% of bill paid by medical scheme 51%
Sirago Gap Cover paid R175 709
R322 057
R140 681
43%
R181 376
R274 573
R110 933
40%
R163 640
Continued on next page
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