96% of medical aids at risk

A total of 96% of medical aids in the country are either in urgent need of attention during the current financial or over the next year or two.

This was contained in a presentation made by the Namibian Association of Medical Aid Funds (Namaf) to the Namibia Medical Care board of trustees.

The presentation made on 7 September and obtained by The Namibian indicates that 77,19% of medical aid companies require urgent attention within the current 2023/4 financial year, while 19,3% of the companies also need assistance within two years.

The presentation said only about 3% of medical aid companies in Namibia are financially sound.

“The industry is bleeding,” Namaf chief executive officer (CEO) Stephen Tjiuoro said during the presentation.

He later clarified on Desert Radio that the issue is not that 96% of the medical aids in the country face collapse, but the view of the role-players in the industry is that there is potential for a difficult economic future “and we need to find a better way of making sure that the whole industry operates in a sustainable way”.

Namibia’s nine medical aid funds around the country submit monthly data to Namaf for balance and checks. These funds include Namibia Health Plan, Namibia Medical Care, Nammed Medical Aid Fund, Napotel Medical Aid Fund, Renaissance Health Namibia, Gem Health, Heritage Health Namibia and Bankmed Namibia.

Most of these funds are in danger of closing down. Bankmed Namibia is now in the final stages of liquidation. Bankmed’s solvency level over the years has been falling from 53% to 16% last year and to 10% by the end of March 2023.

A Government Gazette published on 13 October gave notice that Jacques Oosthuizen was appointed as liquidator of Bankmed Namibia. It said Bankmed Namibia was wound up by a special resolution approved by the registrar of medical aid funds in terms of the Medical Aid Funds Act.

“Sorry, Bankmed no longer exists. You are now at Methealth,” a receptionist said this week. Methealth Namibia Administrators is a fund that was administrating Bankmed.

The root cause reportedly making the medical aid industry bleed is utilisation. Another cause is the introduction of many doctors’ practices and pharmacies.

“Doctors would bill for procedures or medical expenses that are not necessary. In simple terms, if you go to a hospital complaining about a small issue, doctors would check for your temperature, blood level and other unnecessary diagnostic tests, treatments, or surgeries,” an industry source says. “This is putting much pressure on medical aid fund because they have to pay out more than what they should.

Doctors would book in a patient when he/she doesn’t need to be booked in. Some doctors would make unnecessary referrals or prescriptions and get kickbacks,” said a source.

Another industry source said doctors and pharmacists work together to create a chain of medical expenses for profit.

“Doctors would prescribe unnecessary medicines and send the patient to their friends who own pharmacies. Pharmacists would add certain medicines on the patient’s medical aid bill, but never give out such medicine.”

The Namibian sent questions to medical aid companies this week, but instead, it was Namaf CEO Tjiuoro who replied and cc’d all principal officers of these companies to dispute the information in the presentation.

“Thus the pie chart is not pronouncing a public statement by Namaf describing the financial situation of the funds,” he said. 

Tjiuoro, however, confirms that there are concerns regarding the solvency rate and reserve level.

The Namibian Financial Institutions Supervisory Authority (Namfisa) requires that medical aid funds have a solvency rate and reserve level of at least 25%.

“Namaf is on record saying that the aggregate reserve levels of all the medical aid funds are 23,8% which is below the prudential investment reserve levels of 25%.  A worrisome position, which is why Namaf has not applied inflationary adjustments to the benchmark tariffs yet,” he said.

Tjiuoro said the pie chart from which The Namibian derived that statement depicted three clusters of respondents responding to the questions in a funding industry survey in preparation of a Cost Containment Intervention Workshop in June 2023.

This intervention workshop with medical aid funds held in June identified 15 interventions toward ensuring the future sustainability of the industry. This includes stricter claims adjudication with the rejection of claims that do not comply with clinical best practices, and stricter claims adjudication with the rejection of claims that do not comply with the Namaf billing rules and guidelines.

Another intervention is the formal and legally binding industry arrangements between medical aid funds (as a collective) and healthcare service providers (with associated incentives and disincentives), including discount arrangements in return for a shorter payment cycle.

“There is a lack of [a] formal benchmark for product and price file that has led to issues between the medical aid funds and pharmacies if there is extra money to be paid,” said Tjiuoro.

NACC CONSIDERS COURT APPEAL OVER PHARMACY PRICES

Namibian Competition Commission (NaCC) spokesperson Dina


//Gowases told The Namibian the commission is considering an appeal after they lost a High Court battle last week against the Pharmaceutical Society of Namibia (PSN) regarding the alleged anti-competitiveness of a mandatory 50% mark-up on medicine imposed by PSN.

Court documents indicate that the NaCC initiated an investigation in September 2018, notifying the PSN about the inquiry into the pricing practice.

According to findings by the NaCC, the pharmacies use a mandatory rule to charge a mark-up tariff of 50% on the actual price of medicine they dispense to patients.

The NaCC said this model is applied “without reasonable justification” on patients both with and without medical aid.

The commission concluded its investigation in September 2019, accusing PSN of contravening competition laws.  On 4 March 2020, the commission proposed its decision, listing seven grounds, including allegations that PSN enforced the 50% mark-up and resisted reforms.

The PSN and its 203 members responded by highlighting the absence of a Pricing Committee in Namibia, unlike in South Africa.

“The submission emphasised that Namibia lacked regulatory oversight, and pricing decisions were made by entities like the Namibian Association of Medical Aid Funds, which determined ‘benchmark tariffs’,” read the court documents.

PSN also denied enforcing the 50% mark-up, attributing it to Namaf.

Tjiuoro yesterday denied this.

The PSN also claimed not to sanction pharmacies for deviating from the mark-up formula, allowing individual discretion.

In a  judgement delivered last week, the court set aside the NaCC’s decision and ruled in favour of the PSN. 

The court expressed concern over the secrecy surrounding the determination that the PSN contravened the Competition Act. The court also said there was a lack of evidence disclosed to the parties, hindering their ability to mount an adequate defence. The NaCC was also ordered to pay legal costs of the PSN.

In response to the court ruling, Gowases said the NaCC is considering an appeal.

“The commission is considering its options with its legal counsel and will determine an appropriate course of action in due time.

Unfortunately, the commission cannot delve into its reasons for looking at further options, including the possibility of an appeal,” said Gowases.

The PSN couldn’t be reached for comment.

*This article has been updated to reflect clarifications by Namaf CEO Stephen Tjiuoro, including that stakeholders in the industry believe that 96% medical aids are at risk and that this was in fact not Namaf’s view, but the statistics came from an industry survey.