What are medical scheme rates?

Private healthcare providers are currently entitled to set their own rates or tariffs for their services.  

They set their rates in line with what they regard the value of their time is given their training, experience and specialisation, the cost of running their establishment or practice, including the value of any equipment they have, and other costs such as those for indemnity insurance, accounting and bill collection.

Supply and demand also influence what they charge.

In the past, medical schemes through their association used to negotiate with associations representing different provider groups, such as the one for hospitals, one for doctors and one for specialists, on the rate or tariff at which schemes would reimburse.  This resulted in what was known as medical scheme rates, that were published, giving consumers certainty about these rates. When providers charged medical scheme rates, members could be sure that as long as the benefit was covered, their scheme would pay the cost of the service in full.

Setting rates found to be anti-competitive

In 2003, the Competition Commission ruled that these annual negotiations were anti-competitive and the practice stopped.

The Department of Health briefly attempted to publish a list of guideline tariffs – known as the National Health Reference Price List (NHRPL) but doctors used a technicality to successfully challenge the department’s authority to publish these tariffs in 2010 and no guideline tariffs have been published since then.

Providers now determine their own rates and each medical scheme has its own reimbursement rates. This is the amount that the scheme is willing to pay for a particular service, often referred to as the scheme rate. These rates can differ significantly from provider tariffs.

Tariff gap widens leaving members exposed

The gap between what providers charge and the rate at which schemes reimburse has been diverging ever since the Competition Commission ruled that collective negotiation of the tariffs for providers and schemes was anti-competitive.

Providers face a number of increasing costs, including the cost of equipment, technology, new medicines, indemnity insurance and the cost of collecting payments from patients. Providers who are highly specialised, experienced or in short supply are able to set higher prices.

Schemes struggling to manage claims in order to keep membership contributions affordable have been attempting to contain the rates or tariffs at which they reimburse providers. Schemes have set up networks of providers who agree to charge the scheme’s rate in return for having members directed to them or in return for a direct payment from the scheme.

When rates at which schemes reimbursed providers were still linked to the NHRPL, many providers began to charge three times higher than NHRPL rates and some as much as six times higher than these rates and there was no guidance on tariffs from regulators of healthcare professionals.

Schemes chose to reimburse providers at lower rates – often two times on a higher benefit option and at just one times the scheme rates on lower options. These rates were adjusted for inflation each year while providers often increased at higher rates.

As schemes and providers have adjusted their rates by different amounts over the years, the link to the guideline tariffs has weakened. Some providers have also introduced new tariff codes that schemes do not recognise leading to further gaps in cover.

This leaves you as a medical scheme member to navigate the complexities of  what is and is not covered, and vulnerable to out-of-pocket payments unless you are able to find a provider who is willing to charge the same rate at which your scheme reimburses --- or you take out gap cover that insures you, within limits, for the difference between what your scheme pays and the provider charges.

The fragmented approach to setting tariffs for medical services has also increased complexity for both providers and schemes, which ultimately costs us, as healthcare consumers.

Comprehensive cover pays higher rates

How close your scheme’s reimbursement rate is to what the provider charges will determine just how comprehensive the cover your benefit option provides.

More expensive comprehensive options usually reimburse providers at higher rates, sometimes matching or coming close to providers’ tariffs, while more basic options and those focussed mainly on hospital cover may pay a lower rate.

When a provider charges more than what your scheme reimburses, you, as the member, are responsible for the difference — this is known as an out-of-pocket expense. For example, if your doctor charges R5 000 for a procedure but your scheme pays only R3 500, you will need to pay the R1 500 difference or gap in cover yourself. These shortfalls are common, especially with specialists and in-hospital procedures. Providers are allowed to bill you for the balance owed after your medical scheme has paid its portion, but may not split the bill, sending one bill to the scheme for the rate it charges and another to you for an additional amount.

PMBs should be paid in full

Certain conditions, however, must by law be covered by your scheme. In  terms of the Medical Schemes Act, medical schemes are required to pay “in full” for Prescribed Minimum Benefit (PMB) conditions. The term “in full” has never been defined.

Schemes are also entitled to name designated service providers that you need to use for treatment when you have a PMB condition in order to enjoy cover in full unless it is an emergency.

The PMBs include a number of listed conditions, certain common chronic conditions and all emergencies. The diagnosis, treatment and care of the PMBs must covered by your scheme to at least the level of care provided in state facilities.

To avoid financial surprises, always ask your provider for a quote for any health service, and confirm with your scheme how much of that quote it will pay. Understanding provider tariffs and your scheme option’s reimbursement rates, can help you manage your healthcare costs and minimise out-of-pocket expenses.

If the difference in rates is not affordable, shop around for a provider who does charge scheme rates.

It may be difficult to find a provider, such as a specialist, so ask your scheme to recommend the appropriate provider.

Proposals to set healthcare tariffs again

The Competition Commission’s Health Market Inquiry considered the commission 2003 decision on healthcare provider tariffs. In its report delivered in 2019, the inquiry recommended that regulator for healthcare providers (a Supply Side Regulator for Healthcare) be set up. One of its roles would be to set up a negotiating forum which could set a maximum price for PMBs and reference or guideline prices for non-PMBs.

The inquiry further recommended that the regulator be able to specify what negotiated rates would be in the public’s interest and in the interests of public policy, including in the interests of National Health Insurance (NHI).

The recommendation was not acted upon immediately and in 2021 the Board of Healthcare Funders applied to the Competition Commission for an exemption from the Competition Act for five years to allow the BHF and its members to publish a reference price list or Recommended Scale of Benefits for healthcare services and to collectively negotiate with healthcare providers regarding the pricing and quality of PMB services.

The BHF also sought to collaborate on and publish health technology assessments and to provide collective submissions from its members to regulators and government bodies.

After a three-year delay, this application was rejected by the commission in January 2025 on the grounds that there was insufficient evidence that the exemption the BHF applied for would meet the objectives of allowing exemptions under the Act. The Act provides for exemptions to meet socio-economic and political objectives. The BHF has appealed to the Competition Tribunal.  

In February 2025, the Minister of Trade and Industry published draft regulations under the Competition Act, known as the Interim Block Exemption for Tariffs Determination in the Healthcare Sector to establish a negotiating forum in line with the commission’s recommendations.

These regulations propose exempting from the Competition Act for at least three years:

The collective determination of healthcare services tariffs; 

The collective determination of standardised diagnosis, procedure, medical device and treatment codes; and 

The collective determination of quality measurements/metrics, medicines formularies and treatment protocols/guidelines.

Proposed negotiating forum

The regulations create a framework for the establishment of a multilateral negotiating forum to determine tariffs in the healthcare sector with the aim of contributing to affordability of quality healthcare services.

The forum will be overseen by a tariffs governing body and will be responsible for:

Setting maximum tariffs for PMBs and non-PMBs;

Determining the process to be followed when setting tariffs;

Recommending standardised medical codes;

Recommending quality standards and treatment guidelines; and

Providing evidence for health technology assessments (“HTAs”)

Hospital services and medicines will be excluded.

Tariff proposals criticised

The BHF is of the view that the proposed structures and processes the regulations seek to establish are flawed and could take years to roll out and take effect. The BHF argues that:

The legislative framework is incomplete and processes have not been clearly defined;

Hospitals (a larger cost driver) and medicines are excluded;

Medical schemes appear to be prevented from engaging with each other, and

Participation in the negotiating forum is not compulsory.

This article was written by Laura du Preez and reviewed by Dr Rajesh Patel, Head: Health System Strengthening, Board of Healthcare Funders, and Charlton Murove, Head Of Research at Board of Healthcare Funders