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Circular 60 of 2021: Retrospective evaluation of cost increase assumptions by medical schemes for the 2021 financial year

In 2010, the Council for Medical Schemes (CMS) initiated a rigorous annual review of medical scheme contribution and cost increases to limit the transfer of inappropriate cost increases to beneficiaries. This was to ensure member protection against high contribution increases and increased transparency in the benefit design and pricing process.

This Circular evaluates the industry assumptions submitted by medical schemes for the 2021 financial year as provided in the benefit review submissions. The purpose of providing this information is to increase the transparency of the schemes’ pricing decisions and increase the quality of provider negotiations.

Legislative requirements

The Medical Schemes Act outlines legislative requirements informing how the CMS conducts its work with regards to benefit content configuration as well as pricing of options:

  • Regulation 8 (1) of the Medical Schemes Act regulations requires that “any benefit option that is offered by a medical scheme must pay in full, without co-payments or use of deductibles, the diagnosis, treatment and care costs of the prescribed minimum benefit conditions.”
  • Section 24 (2) (e) state that “… medical scheme does not or will not unfairly discriminate directly or indirectly against any person on one or more arbitrary grounds including race, age, gender, marital status, ethnic or social origin, sexual orientation, pregnancy, disability and the state of health.”
  • Section 29 (l) makes it mandatory for the scheme to communicate with their members on any change in contributions, membership fees, or subscription, benefits or any other condition affecting their membership.
  • Section 29 (2) and Section 35 of the Act which seeks to encourage financial soundness of Medical Schemes.
  • Section 31 seeks to ensure that the scheme rules registration promotes equity in rule amendments, discourage prejudice towards the member through unlawful exclusion/limitation of benefits also promote public accountability and transparency.
  • Section 33 (2) outlines that “approval of benefit options will be subject to provision of prescribed benefits, self-supporting in-terms of membership and financial performance, financially sound, the option should not jeopardise the financial soundness of any existing options within the medical scheme”

Download the Circular here.