As the cost of healthcare rises each year, medical schemes are increasingly looking for ways to contain costs.
One way in which schemes can do this is to contract with providers of healthcare services, such as hospitals or doctors, willing to charge a certain, often discounted tariff or rate, to ensure they get the business.
These cost savings can then be passed on to you as a member provided you use the providers who are referred to as being in the scheme’s network.
In this way, provider networks limit your freedom of choice of provider and restrict you to using providers listed as part of the scheme’s network.
Medical schemes contract with certain healthcare providers and ensure they will provide healthcare services at a particular rate or tariff.
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TIP: CHECK THE PROVIDER Check with your scheme and the relevant provider that it is still one of your scheme’s DSPs or preferred providers before you are treated or Scheme websites are not always up-to-date. |
Your scheme should state in its rules which benefits need to be obtained from network providers in its network and your scheme should inform you where you can find an up-to-date list of those providers, for example, on the scheme website, from the call centre or in marketing material.
In some cases, schemes specify in their rules that members and their dependants must use providers in a particular network in order to access certain benefits. In other instances, the use of the network is optional (see different kinds of networks below).
Networks may include any healthcare provider but they are typically made up of hospitals, pharmacies, general practitioners, optometrists, radiologists, pathologists and sometimes specialists.
A scheme may contract with individual providers or provider group, such as a hospital group or pharmacy chain.
A medical scheme can negotiate a significant discount on the tariff providers charge by channelling members and dependants of a particular option to a provider. As the provider is guaranteed a certain volume of patients, it is willing to reduce its rates.
The scheme’s contract with the provider will typically include an agreement by the scheme to pay the provider directly rather than reimburse, you, the member, leaving you to settle with the provider.
These direct payment arrangements benefit providers as they do not have to wait for members to reimburse them or pursue members for payment.
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TIP: WATCH OUT FOR ANESTHETIST'S COSTS Anesthetists are chosen by the doctor who performs a procedure, leaving you with little control over ensuring that anesthetist is one of your scheme’s DSPs or preferred providers. Be sure to discuss |
The scheme also gets more certainty about the price of the services it is likely to provide to members over the year and this helps the scheme to plan its costs and contributions more accurately.
Schemes, or their managed care entities, may also negotiate with providers on the treatment protocols they will follow when treating its members and their dependants, as long as these protocols are based on cost-efficiency, current best practices and are at least in line with those at public hospitals.
Scheme administrators can profile providers based on the costs and efficiencies of their services and help schemes identify which providers of healthcare services meet a certain standard. For example, a scheme may monitor a hospital to see the length of patient’s admissions for different procedures, how often patients are readmitted for complications or suffer infections while admitted. When a scheme contracts with a healthcare provider that consistently provides good quality services, it ultimately reduces costs.
Your scheme may have set up two different networks or these networks may be one and the same:
All medical schemes are obliged under the Medical Schemes Act to provide certain prescribed minimum benefits (PMBs). The diagnosis, treatment and care for these 
PMBs must be paid for in full and the care must not be less than that in public health facilities. Read more: What is a prescribed minimum benefit? (smartaboutmoney.co.za)
The PMBs cover all medical emergencies.
In order to contain the cost of the PMBs, schemes are entitled in terms of the regulations under the Medical Schemes Act to state in their rules that members must obtain PMB benefits at certain providers that form part of its designated service provider (DSP) network. The rules should also state the co-payment the scheme will impose if you fail to use that DSP for a PMB condition.
The regulations under the Medical Schemes Act provide for some exceptions to these rules when your scheme must pay for PMB even if you did not use a DSP. These exceptions cover situations where:
Schemes may also list their preferred providers with whom they have contracted.
Some benefits may be dependent on you, as a member or dependant of a member using a preferred provider and co-payments may apply if you choose a provider outside of the network even in the case of non-PMB services.
For example, a scheme may provide cover for a non-PMB procedure in hospital subject to the member using a hospital within its hospital network, failing which it can charge a co-payment.
Schemes making use of provider networks typically have lower contribution rates and this is why you pay a co-payment if you do not use a provider in the network.
Some schemes offer what are known as efficiency discount options for members who agree to use provider networks rather than have a choice of providers. These options are offered at a discount to an option with the same benefits but no restriction on the providers you can use. The discounts can be as much as 30%.
Some scheme options are known as network options because the benefits are largely offered only through the scheme’s network providers.
Schemes can set up what are known as closed networks for only those providers they have selected and contracted with.
Alternatively, schemes may have open networks that can include any provider who agrees to charge the scheme rates and abide by its agreed protocols.
You should definitely use a provider in your scheme’s network when you are being admitted to hospital unless you are sure about the co-payment and that you are able to pay it.
Choose a specialist who is in your scheme’s network when you have an expensive procedure or hospital admission as specialists’ charges can be thousands of rands more than your scheme’s rate of reimbursement.
Use your scheme’s provider for ongoing medication for a chronic condition or ongoing treatment. The costs can mount quickly if you have to pay out of pocket because you used the wrong provider.
Using a preferred or designated service provider can ensure your day-to-day benefits and particularly your medical savings account last longer and, if you have above threshold benefits, that your self-payment gap is as narrow as possible.
A network option may still be cost-effective if you choose to continue with a particular doctor with whom you have a long history and who is not on your scheme’s provider list. You will have to pay that provider's bills yourself or at least the co-payment. Consider, however, whether you may need your chosen doctor for surgery or services they only perform at a hospital that is not in your scheme’s network.
admitted to hospital.
this with your doctor or surgeon before you have a planned procedure.