What Is A Medical Scheme?
A Medical Scheme is a not-for-profit entity, owned by its members. The medical scheme members pay contributions into the medical scheme, which is used to pay medical claims. This pool of funds is used to co-ordinate the financing of the provisions of health care and essential services. By putting together everyone’s money together, medical schemes allow members to have access to affordable, quality private health care.
Medical schemes work on the idea of cross-subsidisation, meaning that all members share the risk – the money paid by members who are healthy and only have a few claims, is used to pay claims of sicker people who have a lot of claims.
Medical Schemes are managed by Trustees, which are elected by the members of the Medical Scheme.
What is a Medical Scheme Administrator?
Medical Scheme Administrators are “for profit” companies whose function is to protect clients’ funds by:
- Collecting contributions from members
- Processing claims and statements
- Payment of accounts to suppliers (providers of service)
- Comprehensive premium management
- Scheme marketing and communication
- Design and printing of marketing information
- Report writing
- Research and trend analysis
- Governance, secretarial, financial and actuarial analysis
The Medical Scheme Administrators have to be accredited with the Council for Medical Schemes before they are allowed to operate. The Administration company is usually selected by trustees of the Medical Scheme.
The Medical Scheme pays for the above services on a flat “per beneficiary per month rate”. This is currently a cause for concern, as the service fee is seen by some as one of the reasons for the increase in medical spending.
What is the Council for Medical Schemes?
The Council for Medical Scheme (CMS) is a statutory body established by the Medical Schemes Act to provide regulatory supervision of private health financing through Medical Schemes.
All Medical Schemes in South Africa are required to report annually on their financial position and the performance of their schemes over the last year.