Johannesburg - A proposal by the Council for Medical Schemes (CMS) to change how health brokers are remunerated was made in "bad faith", the Joint Brokers Forum (JBF) said on Wednesday.
The forum, which was established in October 2008 - a month after the Council proposed the changes - represents the Financial Planning Institute (FPI), the Financial Intermediaries Association of Southern Africa (FIA), the South African Health Intermediary Association (SAHIA) and the Black Brokers Services Network (BBSN).
The JBF said the process followed pertaining to the CMS discussion document would not lead to an optimal solution that guarantees the fair treatment of consumers.
"Members have the right to independent and trusted advice on medical aid schemes," said JBF chairperson Friedman Twala.
The JBF proposed a more inclusive process based on market research, a cost-benefit analysis and impact studies.
The forum said the council's discussion document focuses primarily on potential conflicts of interest concerns and market conduct.
To deal with these problems, the council proposed creating two categories of healthcare intermediaries: a tied marketing agent who would be employed by one medical scheme and an independent advisor who would serve the interest of the consumer by engaging with only the consumer.
The JBF is concerned that the proposals contained in the discussion document may create an unfair environment wherein different categories of intermediaries would be created and one in which they would be required to compete in an unbalanced environment.
Independent advisors would need to be directly remunerated by their clients and consumer research indicates that employers and employees would not be prepared to pay additional fees to an independent healthcare advisor.
The current healthcare remuneration model in operation (the community-rated model) sees every person paying exactly the same amount of commission to the intermediary. This system ensures that for a set fee, consumers may access comprehensive, professional advice. The JBF said this model should be retained.
"If we abolish this system, who will be the man assisting the poor?" said Twala. "It is the poor who, in a fee-based environment, are left without any protection."
The role of intermediaries in the process is another point of contention. Even though the council agrees that brokers are important in the healthcare environment, it has stated that brokers are not attracting additional members to medical aid schemes and are therefore "not doing their job".
In response, Twala said the demographics of the current broker market are not representative of the wider population. "There are 7 741 brokers in total and only 24% are non-white," he said, "We can only get the job done in attracting additional members if more black brokers are trained." The JBF argued that these brokers would be able to overcome language and geographical barriers in educating the poor population about medical aid schemes.
"Overall, 97% of a sample of members are comfortable and happy with their broker. Only 80% are comfortable with their medical aid. That means brokers are doing a good job," said Twala.
The JBF recognises that there are problems in the current system, but is disappointed that the CMS did not engage with the forum on possible solutions to these problems. "We respect the Council for Medical Schemes and agree with the spirit of their discussion document. However, this process could have been avoided if the council had engaged with us on the solutions to the problems they see," said Twala.
The JBF suggested some solutions to the shortcomings identified by the CMS:
- It urges the development of model contracts, which would ensure that every contract between a medical scheme and intermediary is similar.
- An undesirable business practices hotline funded by the industry would "name and shame" those who act unlawfully. The JBF would like to see a publication of all disputes, not just the CMS' complaints.
- Improved enforcement of the Financial Advisory and Intermediary Services (FAIS) Act. At present, a broker only needs a matric certificate and FAIS credits. However, the JBF argued that a healthcare qualification should be enforced, since healthcare is specialised.
- Inflation-linked increases.
- The JBF supports statutory apprenticeships, which would be similar to the auditing and legal professions followed by a qualifying board exam.
"We do not support any major structural changes, but instead encourage an increase in regulatory tools such as undesirable business practices, fines and the retraction of accreditation," said the forum.
Twala urged the entire healthcare industry to sit down and talk about the problem until it comes up with a solution that everyone is happy with. "The current framework may not be perfect, but it is also not broken at all," he said.
Twala warned that if a satisfying solution is not found, there may be an "exodus" of brokers. "We have to find a synergy, otherwise there will be mutually assured destruction," he said.
The members of the panel were Friedman Twala of Absa Healthcare Consultants, Linza van Aswegen of the Financial Intermediaries Association of Southern Africa, Andrew Jacobs of Aon Healthcare Gauteng and Dan Nefolovhodwe of Tshidudu Healthcare Solutions.
- Fin24.com