Health funders welcome block exemption for private healthcare

The Health Funders Association has welcomed the publication of the Interim Block Exemption for Tariffs Determination in the Healthcare Sector as a significant step towards improving pricing transparency and affordability for medical scheme members in private healthcare.

However, the Health Funders Association (HFA) cautions that a one-size-fits-all approach could undermine healthcare quality and innovation, saying that a holistic and coordinated approach is required to ensure that medical inflation is brought under control.

Thoneshan Naidoo, CEO of the HFA, says the draft regulations aim to establish maximum pricing by healthcare practitioners for Prescribed Minimum Benefits (PMBs) and non-PMBs, standardise procedure coding, determine quality metrics, set medicine formularies, and define treatment protocols—all issues that have long plagued medical schemes and healthcare providers.

PMBs are a defined set of benefits that medical schemes must provide full, unlimited cover for, with no co-payments or deductibles for diagnosis, treatment and care costs. Naidoo says capping tariffs will provide medical schemes with greater budget certainty when designing and planning member benefits and can ultimately reduce the cost of coverage.

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Price regulation alone will not effectively manage cost of private healthcare

Most medical schemes have entered into Designated Service Provider (DSP) agreements to financially protect their members from PMB-related costs. Naidoo says these agreements often include quality-related aspects to improve healthcare outcomes, aligning with the goal of delivering better value to patients.

“However, price regulation alone will not effectively manage the cost of medical scheme cover, as the volume of services remains a key cost driver.”

He emphasises that a regulatory framework that supports innovative contracting approaches to encourage the efficient use of healthcare resources and promoting quality outcomes is therefore critical. This aligns with the Health Market Inquiry’s (HMI) recommendations, which underpin the department of trade and industry’s (DTI) draft regulations.

Naidoo says by mandating the envisaged Tariff Governing Body to also play a role in developing and coordinating Alternate Reimbursement Mechanisms (ARMs), healthcare providers and funders’ incentives could be better aligned to ensure high-quality care at the best price, while eliminating incentives for under- or over-servicing.

“We suggest that the body be renamed the Reimbursement Governing Body, reflecting its broader role in transitioning from the current fee-for-service model to value-based care models.”

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Minimum standards needed for alternative reimbursement

Naidoo says this body should establish minimum standards for alternate reimbursement mechanisms and ensure transparency by defining and sharing treatment data when alternate remuneration methods are applied.

“The focus should not be solely on lowering prices but on creating remuneration structures that support high-quality healthcare outcomes for members.”

He says the HFA supports efforts to improve price transparency but cautions against reinforcing the outdated fee-for-service model, which prioritises quantity over quality. “We urge government to fully implement the HMI recommendations, enabling value-based payment models where providers are fairly rewarded for patient outcomes rather than service volume.”

Healthcare professionals must be central to developing these frameworks, with co-development processes balancing affordable cover, clinical autonomy and patient needs, Naidoo says, emphasising that the HFA remains committed to constructive collaboration.

“Building on recent amendments to the HPCSA rules that enable multidisciplinary practices and innovative contracting, HFA views the interim tariff regulations as a meaningful step towards private sector reform. However, broader reforms are essential for long-term sustainability, as outlined by the HMI.”

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Key priorities for broader HMI reforms for private healthcare

Naidoo says key priorities should include:

• A review of PMBs to ensure continued relevance and cost-effectiveness.
• The introduction of a Risk Adjustment Mechanism to enhance fairness and stability in medical schemes.
• Quality and outcome measurement interventions that drive better health outcomes, efficiency and affordability.
• Implementation of low-cost benefit options (LCBOs) to expand access to quality private healthcare and alleviate public sector pressures.

He says the composition of the Tariff Governing Body and Multi-Lateral Negotiating Forum committee must guarantee fair representation from all key stakeholders, particularly health funders representing medical scheme members and healthcare providers.

“These groups will be directly affected by tariff decisions. Without their meaningful input, there is a risk of tariffs misaligned with financial sustainability, service delivery realities and patient care access.”

According to Naidoo, the HFA will thoroughly review the draft regulations and submit a comprehensive response. “As always, careful consideration of practical implementation and long-term impact is crucial. These reforms must strike the right balance between cost control, sustainability and continued access to quality healthcare for all South Africans.”

The HFA is a non-profit organisation representing key stakeholders in the private healthcare funding sector in South Africa and was formed by a collective of industry professionals. It proactively advocates for a sustainable and vibrant health funding industry within an equitable healthcare system and represents 21 medical schemes and three administrators, covering 46% of the private healthcare market.