How Medical Aid Rates Differ From Private Cash Rates

Over the years, more doctors and other service providers in South African have opted to contract out of medical aid and charge private rates. It has been an issue of contention among medical aid members who find that they still have to pay cash to health care practitioners despite paying their monthly medical aid contribution. Even more frustrating for medical aid members is that the private cash rates charged by many doctors is significantly higher than medical aid rates. Ultimately this leads to a shortfall between what the patient has to pay and what the medical aid is prepared to reimburse, which means that patients are out of pocket.

What Your Medical Aid Pays

South African medical schemes pay a set rate for each tariff code. These rates are in accordance with the National Health Reference Price List, which has not been updated for several years. Now most schemes charge the last published NHRPL rates in addition to an annual increase which is somewhat in keeping with the official inflation rate in South Africa. There may be some fluctuation in the rates paid by different medical schemes but it is usually minor and most schemes pay pretty much the same rate.

The rate your medical aid opts to pay is not negotiable. While a scheme will pay a lower amount if claimed, higher amounts are subject to a scheme limit or ceiling. Medical aids are not forced to pay what a doctor demands although this ceiling may be bypassed in the event of a prescribed minimum benefit condition. Some higher medical aid plans will pay as much as 300% of the standard rate if a doctor charges higher fees, but this is usually only applicable to treatment within hospital.

What Your Doctor Charges

The South African private healthcare system is largely a free market system, although medical schemes are subject to a host of stringent regulations. However, doctors and other service providers are allowed to charge as much as they wish for their services. Due to the demand for private health services, many doctors charge above medical aid rates – and it is their right to do so. However, these charges may not be affordable for every patient.

These days many doctors are charging private rates that are significantly higher than medical aid rates. Patients are therefore required to pay cash for these services and then claim back from their medical aid. It is a matter of supply and demand, and if a patient is unable to afford the cost of the doctor’s services, he/she has the right to refuse to pay these rates and seek treatment from another practitioner with more affordable rates.

Affording The Shortfall

While there are measures underway to limit the private rates charged by doctors, it is unlikely to force practitioners to keep their rates to medical aid limits. Instead practitioners may be restricted from charging above a certain threshold which is still significantly higher than the maximum medical rate. It means that patients will still be liable for the shortfall between what the medical aid pays and what the doctor charges.

With the rising cost of medical aid cover in South Africa, members are undoubtedly going to be further burdened by this gap in rates. It has already been occurring for many years, especially when it comes to the rates charged by medical specialists. In some cases it may only be a few hundred rands at most but there are instances where the shortfall can run into the thousands and even tens of thousands of rands. Medical aid gap cover has come about to protect medical aid members against the financial impact of this shortfall.

It is a short term insurance policy that pays the difference between what your medical aid pays and what your doctor charges, up to a threshold limit. These limits are based according to a percentage of the medical aid rate. For example, assume that your medical gap cover pays up to 300% of medical aid rate. If your doctor charges R850 but your medical aid pays only R300 then gap cover will pay the other R550. However, if your doctor charges a much higher rate beyond the gap cover threshold, there will still be a shortfall in the payout but it will be much less than not having any gap cover.