ICPA challenging Fedhealth Medical Aid and Council of Medical Schemes to do away with closed DSP’s

Fedhealth Medical Aid has recently announced that they are implementing a closed pharmacy network in 2017 on all but two of their benefit options. This essentially means that Fedhealth members must obtain their chronic medication from only MediRite and Dis-Chem Pharmacies or Pharmacy Direct, a postal pharmacy, or face a 40% penalty co-payment. 

Fedhealth is another medical scheme to add to the growing list of medical schemes, including Bonitas Medical Fund and Polmed Medical Aid Scheme, which dictate to its members who they may consult with.

In light of this announcement the Independent Community Pharmacy Association (ICPA), a body which represents the interests of independent community pharmacies across South Africa, is taking its fight against closed DSP’s and penalty co-payments to the next level.

On June 6, the ICPA was awarded a ruling by the Appeal Board established in terms of the Medical Schemes Act (Act 131 of 1998) against the Council for Medical Schemes (‘CMS’) mandating it to investigate the closed DSP and penalty co-payment mechanism with a view to declare it an undesirable practice. The ruling ordered CMS to commence the process within 30 days.  Despite confirmation by CMS that they have indeed commenced the process no further action on their part is forthcoming.  

Mogologolo Phasha, Chairman of the ICPA explains that as yet the CMS has not demonstrated that they have taken any action to investigate the matter and the proposed changes to the legislation that the CMS indicated would be made, has not materialised despite the Appeal Board ordering CMS to commence the process.
“The ICPA, which has been supported by the Department of Health throughout this process, is now appealing to the new registrar of CMS to act decisively and sort this matter out; failing which we will have to compel the CMS through a High Court order to remedy the situation.”
“Our first challenge to the CMS was dismissed,” says Phasha.  “We subsequently lodged an appeal with the Appeal Board, chaired by Judge BM Ngoepe, against the CMS and were successful – thus we expected the Registrar of the CMS to review the begrudged practices of closed DSP’s and penalty co-payments and declare them an undesirable business practice.”

The ICPA has been involved in an ongoing fight for over five years against unfair business practices on the part of medical schemes.  ICPA challenged the CMS to do away with closed DSP’s and penalty co-payments, as the current structure does not have the interests of the patient at heart, denying them freedom of choice and hurting their pockets. 

“We believe that DSPs should be open to all pharmacies and healthcare providers to join on a willing provider arrangement.  This will reduce out-of-pocket patient costs, improve adherence to medicines and improve patient care and outcomes,” says Phasha.  “We feel that it is unacceptable that only big corporate pharmacies are being supported in these closed DSP arrangements.  Fedhealth’s newly announced closed DSP means that members who live in areas without a MediRite or Dis-Chem pharmacy are forced into either using a courier pharmacy or paying a 40% penalty co-payment – when access could have been provided by a “non-network pharmacy” down the road; an objectionable removal of choice.”

The ICPA notes that according to the results of the recent South African Customer Satisfaction Index (SAcsi) and Prof Adrè Schreuder, founder of SAcsi, the overall perceived value in medical aids is low amongst South African consumers and Prof Schreuder says that as private healthcare in South Africa is becoming more and more of a grudge purchase, medical schemes should be looking to actively improve the perceived value scores.  

“Doing away with the practises of closed DSP’s and penalty co-payments would go a long way towards improving the service offering and the public perception towards medical schemes,” concludes Phasha.  “something that is in the best interest of both the public and the medical schemes themselves.”

Closed DSP’s
A Designated Service Provider (DSP) is an appointed healthcare provider (doctor, pharmacist, hospital etc.) by your medical scheme to diagnose, treat or care for Prescribed Minimum Benefit (PMB) conditions of their members.

However, according to the ICPA, medical schemes are able to decide who their preferred provider is and usually do not enter into any consultation with their members or the industry at large, and importantly, they often exclude independent community pharmacies from these DSP arrangements.

This effectively deprives medical scheme members of choice when it comes to where they can get their medicines from.  It also means that independent pharmacies are deprived of a source of revenue from medical scheme members who are forced to use a DSP.  The ICPA believes that DSPs should at all times be open for other pharmacies and healthcare providers to join if they wish to, in other words a willing provider arrangement.

Certain medical aids, have chosen not to contract provider networks giving their members the freedom to choose their own community pharmacy. 

Penalty co-payments
Coupled with the issue of closed DSPs limiting a consumer’s choice, is the fact that if people choose to get their chronic medicines from a provider outside their medical scheme DSP pharmacy network they will be charged a penalty co-payment.

Currently, if a person chooses not to use the DSP selected by their scheme, without consulting them, they will have to pay a portion of the bill as a penalty co-payment. 

This means that a consumer can end up paying in some cases 30% to 60% of the cost of their chronic medicines out of their own pocket.

In the end the consumer is inconvenienced because they may use their local pharmacy for their acute medicine, but have to use another supplier for their chronic medicines or otherwise they face high financial penalty co-payments. 

Consumers also need to be made aware that it is not their local independent pharmacy that is charging this penalty co-payment but rather it is the medical scheme that they belong to that implements these draconian rules.

Consumers also need to think about the pharmacy they support.   Think of what your local pharmacy does for your local community, what they plough back into it.  Think who carries the debt of the customers when they lose their jobs, or a terrifying illness occurs, they need medicine but can not pay immediately.  Think who really cares, who has the human edge. 
Think about where the income of the pharmacy goes to – to the shareholders of a big corporation who earn unthinkable performance bonusses, or help to pay for a little girl’s dancing lessons, or put a child through college.  Think what type of people your local independent pharmacy employ and the opportunities they provide staff to train and equip them.  Your local independent pharmacy is the perfect small to medium business that provide employment for people with less skills and entrepreneural opportunity in line with the government's visions.  Although your pharmacist is a highly skilled professional who is sorely underappreciated and whose full potential is not realised by the lawmakers, the medical aids or other medical professionals.  

Fedhealth’s CEO, Jeremy Yatt, told ICPA: “Pharmacists are glorified pill pushers!”  Their slogan, “Family takes care of family,” is ironic!

Fedhealth is now excluding the family who engage with the patients, who know their family, to whom patient outcomes and value for money matters.  When it comes to paying the creditors, your independent pharmacy is man alone, whilst the corporate has the national backing of the company.  Independants can not buy front shop stock at big quantities and compete with the prices.  

Know your prices, don’t always be fooled to think corporates are always cheaper in the front shop!  Think of how your local pharmacist and support personnel know you, your family.  Are they not best equipped to advise you on the safest acute medication if they can see your chronic medication profile and help you manage your chronic disease as well?  When making use of different pharmacy service providers, you can not receive optimal care.   Think.  Make informed decisions when choosing who you remain loyal to.  

Consumers/patients have the right to excerice their own choice and not be forced where they may shop by a few “at the top” to whom only money matters.  Think where you matter as a human being, a person in your own right.

About the ICPA 
ICPA (Independent Community Pharmacy Association) is an organisation which provides independent community pharmacies with a collective strength and a coherent voice that is heard by government, medical schemes, pharmaceutical suppliers and importantly, the consumer.
ICPA represents the largest pool of professionals in the healthcare sector with over 1 100 pharmacies, about 2 500 pharmacists and 20 000 supportive healthcare personnel spread across metropolitan, urban and rural South Africa.
The objective of ICPA is to assist and support its members in securing a sustainable and successful future as independent, owner-managed pharmacies.  In addition to this, the ICPA strives to foster an understanding of the role that independent pharmacies can (and do) play in delivering important healthcare services to the communities that they serve.
All ICPA members are committed to high quality pharmacist care and to the restoration and maintenance of the health and well-being of the consumer – the lifeblood of all pharmacies.  

Submitted by: Catherine Pate / Catalyst Communications
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