Centre for Actuarial Research The Costing of the Chronic Disease List January 2003.

Centre for Actuarial Research

The Costing of the Chronic Disease

List

January 2003

Centre forActuarial Research

CDL Study Data

Data from Medscheme Data Warehouse Data covers 2001 calendar year, extracted in August 2002 Data fully run-off, no adjustment for IBNR 46 options 27 schemes 16.103 million beneficiary months of data Average exposure of 1,341,892 beneficiaries


Cluster Analysis and Applicability


Cluster Analysis Distinct clusters:

High contains options with older, 'whiter' members with high utilisation;

Medium-older contains options with medium utilisation and older members;

Medium-younger contains options with medium utilisation and younger members; and

Low contains options with younger, 'blacker' members with low utilisation.

Additional not present in PMB study. Single large scheme where the ethnicity is predominantly so-called “Coloured”


Cluster Analysis Different clusters experience different benefit utilisation,

costs and disease profiles. Provider behaviour differs by cluster, even within the same hospital facility.

Study contains more Low cluster beneficiaries than the industry.

For industry comparisons, use Weighted industry price. This uses 50% of the costs of the Low cluster and

100% of the other clusters. Low cluster is more relevant to the emerging low-cost

option environment.


Beneficiaries by Cluster

5.6%7.0%

5.0%

9.5%

72.9%

High

Medium-older

Medium-younger

Additional

Low



Age Profile by Cluster

0%

2%

4%

6%

8%

10%

12%

14%

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pro

po

rtio

n o

f b

enef

icia

ries

Total High Additional

Low Medium-older Medium-younger



Proportion of Options Covering

the CDL


Industry Benefit Study 2001

4.7%

18.3%

6.5%

60.9%

9.5%

No Chronic MedicineBenefits

Primary Care ClinicFormulary

Two-tiered BenefitDesign

Monetary Limits

"Unlimited" ChronicBenefits

Source : CARE Monograph


Proportion of Beneficiaries

Covered for CDL


Chronic Registrations by Cluster

29.7%

16.9%

9.3%11.4%

13.2%

0%

5%

10%

15%

20%

25%

30%

High Medium-older

Medium-younger

Low Total

Cluster

Pro

po

rtio

n o

f B

en

efi

cia

rie

s

High

Medium-older

Medium-younger

Low

Total

Q1 2002 data


Chronic Registrations High Cluster

15.8%43.2%

28.2%31.1%

18.5%40.2%

28.3%33.6%

20.7%29.5%

36.2%

61.2%25.4%

41.7%30.0%

41.4%51.9%

65.1%

0% 10% 20% 30% 40% 50% 60% 70%

A1A2A3B1C1D1D2E1E2F1G1G2G3G4H1H2I1J1J2

Op

tio

n i

den

tifi

er


Cluster Average 29.7%

Q1 2002 data


Chronic Registrations Medium-older Cluster

35.2%

13.8%0.2%0.4%1.0%

17.5%10.3%

19.2%18.7%

28.4%

16.9%

22.8%21.7%

23.8%19.2%

41.9%

0% 10% 20% 30% 40% 50% 60% 70%

A4E3E4G5G6G7H3H4H5H6H7J3J4J5K1L1M1N1O1P1Q1R1

Op

tio

n Id

en

tifi

er




Q1 2002 data


Chronic Registrations Medium-Younger Cluster

17.4%16.5%

20.9%0.1%

12.9%

2.8%2.5%

18.7%16.1%

19.1%12.8%

19.7%17.6%

15.8%

0% 10% 20% 30% 40% 50% 60% 70%

A5AA

AB1D3E5E6E7H8H9L2S1T1U1V1W1W2X1Y1Z1

Op

tio

n I

den

tifi

er



Q1 2002 data


Chronic Registrations Low Cluster

9.0%6.2%6.4%

11.1%0.0%

15.0%19.2%

16.7%1.8%

3.6%5.8%

2.1%5.0%

12.5%0.4%

0% 10% 20% 30% 40% 50% 60% 70%

A6AC1AD1AE1AF1AF2AF3AG1AH1

D4D5D6E8E9G7

H10H11

H9Y3

Op

tio

n I

den

tifi

er




Q1 2002 data


Chronic Registrations Scheme H

25.4%

41.7%

17.5%

10.3%

19.2%18.7%

28.4%

2.8%2.5%5.0%

12.5%

0.4%0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

H1 H2 H3 H4 H5 H6 H7 H8 H9 H11 H12 H10Options in Scheme H

Pro

po

rtio

n o

f B

en

efi

cia

rie

s

Q1 2002 data


Prevalence of CDL Conditions from Registrations


Registration of Beneficiaries for Chronic Medicine

Other Chronic Conditions

22.9%

CDL Conditions

77.1%


Diabetes Mellitus Type 1 & 210.6%

Epilepsy2.6%

Asthma12.2%

Osteoarthritis3.4%

Other 18 conditions7.6%

Anti-Coagulating Therapy

4.9%

Hypothyroidism5.1%

Hyperlipidaemia12.5%

Hypertension37.3%

Coronary Artery Disease

3.8%

Prevalence of CDL Registrations



Co-morbidity in Registrations

As Co-morbidity

59.4%

Single Disease

40.6%




0% 5% 10% 15% 20% 25% 30% 35% 40%

Addison's DiseaseAnti-Coagulating

AsthmaBipolar Mood Disorder

BronchiectasisCardiac Failure

CardiomyopathyChronic Obs. Pulmon.

Chronic Renal DiseaseCoronary ArteryCrohn's Disease

Cushing's DiseaseDiabetes Insipidus

Diabetes Mellitus T1&2Dysrhythmias

EpilepsyGlaucoma

HyperlipidaemiaHypertension

HypothyroidismMultiple Sclerosis

OsteoarthritisParkinson's DiseaseRheumatoid Arthritis

SchizophreniaSystemic LupusUlcerative colitis

Proportion of CDL registrationsSingle Disease As Co-morbidity




0% 20% 40% 60% 80% 100%








EpilepsyGlaucoma





ProportionSingle Disease As Co-morbidity



Beneficiaries Registered for CDL Conditions

1 disease62.5%

2 diseases25.0%

3 diseases9.2%

4 or more diseases

3.3%


Single Disease Analysis


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%








EpilepsyGlaucoma





Total excl. Hemophilia

Proportion of Registrations

Any Drugs Claimed

no cases

Registered Beneficiaries Claiming

Centre forActuarial ResearchSingle diseases only


Proportion of Total Drug Claims

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%








EpilepsyGlaucoma






Proportion of Claiming Beneficiaries

Primary Drugs Secondary Chronic Drugs Other Acute

no cases



Proportion of Total Drug Cost

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%








EpilepsyGlaucoma






Proportion of Total Cost


no cases



Average Cost per Case


0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000








EpilepsyGlaucoma






Average Cost per case


no cases

Single diseases only





0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000








EpilepsyGlaucoma








no cases

R21 013

Single diseases only



Multiple Disease Analysis


Registered Beneficiaries

Single Diseases

62.5%

Top 9 Multiple Diseases

19.2%

Other 1,998 Multiple

Diseases18.3%


85.0%

69.1%

87.5%

65.4%

79.4%

71.5%

67.7%

77.2%

74.6%

76.5%

71.9%

79.1%

77.2%

0% 20% 40% 60% 80% 100%

Diabetes, Hypertension

Hyperlipid., Hypertension

Hypertension, Osteoarthritis

Hypertension, Hypothyroid.

Asthma; Hypertension

Anti-Coag, Hypertension

Anti-Coag., Hyperlipid., Hyperten.

Diabetes, Hyperlipid., Hyperten.

Coronary Artery, Hyperlipid.


Other Multiple Diseases

All Single Diseases

All CDL Diseases

Proportion of Registrations

Any Drugs Claimed

Multiple diseases

Registered Beneficiaries Claiming



Proportion of Total Drug Claims


0% 20% 40% 60% 80% 100%












All Single Diseases

All CDL Diseases

Proportion of Claiming Beneficiaries


Multiple diseases


Proportion of Total Drug Cost

Multiple diseases


0% 20% 40% 60% 80% 100%












All Single Diseases

All CDL Diseases

Proportion of Total Cost




Centre forActuarial ResearchMultiple diseases

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000












All Single Diseases

All CDL Diseases




Average Cost per Case vs. Sum of Single Diseases

Centre forActuarial ResearchMultiple diseases

7.4%

3.4%

6.5%

12.8%

7.5%

4.0%

1.9%

-0.5%

-6.8%

-10.4%

-15% -10% -5% 0% 5% 10% 15%











Average Cost Increase Over Sum of Single Diseases

Primary Drugs


0.3116.94

0.32

0.260.100.49

0.600.07

4.980.43

2.570.44

3.81

2.46

1.630.11

0.860.150.090.19

6.574.43

2.191.491.84

1.281.071.160.83

0.02

0.01

0.03

0.00

0.02

29.88

0 5 10 15 20 25 30

Addison's DiseaseAnti-Coagulating Therapy



CardiomyopathyChronic Obs. Pulmon. Disease

Chronic Renal DiseaseCoronary Artery Disease

Crohn's DiseaseDiabetes Insipidus


EpilepsyGlaucoma




SchizophreniaSystemic Lupus Erythromatosis

Ulcerative colitisDiabetes, Hypertension

Hyperlipid., HypertensionHypertension, OsteoarthritisHypertension, Hypothyroid.

Asthma; HypertensionAnti-Coag, Hypertension

Anti-Coag., Hyperlipid., Hyperten.Diabetes, Hyperlipid., Hyperten.


Incidence per 1000 beneficiaries

Prevalence All

Diseases


CDL Package by Age


Age of Exposed Beneficiaries

0%

2%

4%

6%

8%

10%

12%

14%

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pro

po

rtio

n o

f b

en

efi

cia

rie

s



Age of Claiming Beneficiaries

0%

2%

4%

6%

8%

10%

12%

14%

0-1

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pro

po

rtio

n o

f C

laim

ing

Ben

efic

iari

es

All Single Diseases Top 9 Multiple Diseases Other Multiple Diseases


Age of Claiming Beneficiaries

0%

2%

4%

6%

8%

10%

12%

14%

0-1

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pro

po

rtio

n o

f C

laim

ing

Ben

efic

iari

es


Age of Claiming Beneficiariesfor Selected Diseases

0%

2%

4%

6%

8%

10%

12%

14%

0-1

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pro

po

rtio

n o

f C

laim

ing

Ben

efic

iari

es

Asthma Hypertension Diabetes Mellitus T1&2

Diabetes, Hypertension Other CDL diseases



Age of Claiming Beneficiariesfor Selected Diseases

0%

20%

40%

60%

80%

100%

0-1

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pro

po

rtio

n o

f C

laim

ing

Ben

efic

iari

es

Asthma Hypertension Diabetes Mellitus T1&2

Diabetes, Hypertension Other CDL diseases



CDL Prevalence by Age

0

50

100

150

200

250

0-1

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pre

vale

nce

per

100

0 b

enef

icia

ries




0

100

200

300

400

500

600

0-1

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

All

ages

Pre

vale

nce

per

100

0 b

enef

icia

ries




0

100

200

300

400

500

6000-

1

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

All

age

s

Pre

vale

nce

pe

r 10

00

ben

efic

iari

es


Average Cost by Age

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Ave

rag

e C

ost

per

cas

e p

a

All CDL Conditions All Single Diseases

Top 9 Multiple Diseases Other Multiple Diseases


Average Cost of CDL by Age

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,0000

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

All

Age

s

Ave

rag

e C

os

t p

er c

ase

pa


Raw Price of CDL by Age

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

0

1-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

+

All

Ag

es

Pri

ce p

er b

enef

icia

ry p

a




Raw Price of CDL by Age

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

All

Age

s

Pri

ce

pe

r b

en

efi

cia

ry p

a


Proportion of Price by Age

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

All A

ges

Pro

po

rtio

n o

f p

ric

e




Raw Price of CDL by Wider Age Bands


333.40

537.68

334.39

53.98

1784.08

0

200

400

600

800

1000

1200

1400

1600

1800

Under 20 20-54 Over 55 Adult All Ages

Pri

ce p

er b

enef

icia

ry p

a



CDL Package by Cluster



0%

2%

4%

6%

8%

10%

12%

14%

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pro

po

rtio

n o

f b

enef

icia

ries

High and Medium High Medium-older Medium-younger




0%

2%

4%

6%

8%

10%

12%

14%

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pro

po

rtio

n o

f b

enef

icia

ries

Total High and Medium Additional Low



Prevalence All CDL Diseases

0

20

40

60

80

100

120

140

160

180

200

High Medium-older

Medium-younger

High andMedium

Additional Low Total

Inci

den

ce p

er 1

000

ben

efic

iari

es



Prevalence by Cluster

0

100

200

300

400

500

600

700

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pre

va

len

ce

pe

r 1

00

0 b

en

efi

cia

rie

s

High and Medium High Medium-older Medium-younger


Prevalence by Cluster


0

100

200

300

400

500

600

700

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pre

va

len

ce

pe

r 1

00

0 b

en

efi

cia

rie

s

Total High and Medium Additional Low


Average Cost by Cluster


0

1,000

2,000

3,000

4,000

5,000

6,000

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Av

era

ge

Co

st

pe

r c

as

e p

a

Total High Medium-older

Medium-younger Additional Low


Raw Price by Cluster

0

100

200

300

400

500

600

700

800

900

1000

High Medium-older

Medium-younger

High andMedium

Additional Low Total

Pri

ce p

er b

enef

icia

ry p

a



Raw Price by Age and Cluster

0

500

1,000

1,500

2,000

2,500

3,000

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pri

ce

pe

r b

en

efi

cia

ry p

a

Total High Medium-older

Medium-younger Additional Low


Raw Price High vs. Low Cluster


0

500

1,000

1,500

2,000

2,500

3,000

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pri

ce

pe

r b

en

efi

cia

ry p

a

Total High Low


High Price Relative to Low Price by Age

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

0

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

Pri

ce

pe

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en

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Average Cost of HypertensionHigh vs. Low Cluster

0

500

1,000

1,500

2,000

2,500

3,000

3,500

30

- 3

4

35

- 3

9

40

- 4

4

45

- 4

9

50

- 5

4

55

- 5

9

60

- 6

4

65

- 6

9

70

- 7

4

75

- 7

9

80

- 8

4

85

- 8

9

Av

era

ge

co

st

pe

r c

as

e p

a

Low

High


Differences Between Clusters

Age profile differences explain roughly two-thirds of difference in raw cluster prices.

Other differences are probably due to a combination of “the four P’s”: variation in Prevalence rates of important conditions; Presentation or manifestation of conditions; Provider choice (GP vs. specialist and the

management or prescribing habits of each); and benefits available within the health care Plan.


Adjustments to the Raw Price of the

CDL Package


Adjustments to Raw Price

Haemophilia Removal of three diseases from final Regulations Cost of diagnosis and medical management Adjustment for compliance Adjustment for limits Adjustment for co-payments Costs of chronic medicine management programme Costs of administration Reduction for cost of delivery in the public sector


Haemophilia

Patients do not register for chronic medicine. Covered by ‘Blood and related products’ benefit, not Medicines.

Haemophilia Society estimates 2000 patients in SA, which suggests prevalence of 1/20 000.

220 people claiming ‘Blood and related products’ benefit; estimate 67 are haemophiliacs.

Average case cost of R2 500 per month (R30 000 p.a.) for ‘Blood and related products’ benefit.

But majority are renal failure patients, erythropoietin for treatment of chronic anaemia.

Recommendation: use estimate of R0.50 pbpa


Removal of Diseases from Final Regulations

Anti-coagulating Therapy: 0.7% of total cost Cushing’s Disease: 0.0% of total cost Osteoarthritis: 3.1% of total cost

In total, 1.8% of people excluded from any CDL benefit 12.7% now excluded from partial CDL benefits

Recommendation: reduce raw CDL price by 3.7%.


Cost of Diagnosis and Medical Management

Prescribed Minimum Benefit: “diagnosis, medical management and medication, to

the extent that this is provided for by way of a therapeutic algorithm for the specified condition, published by the Minister by notice in the Gazette”.

Need to determine and finalise therapeutic algorithms. Process requires full study of cost implications.

Recommendation: use initial rough estimate of R130.00 per beneficiary per annum.


Cost of Diagnosis and Medical Management

Chronic Disease (CDL Category) GP visitsSpecialist

visitsOther visits

Devices Tests ER visitsEstimated

Annual Cost Per Case

Addison's Disease R 800 R 400 R 1,200

Anti-Coagulating Therapy R 400 R 800 R 200 R 1,400

Asthma R 400 R 800 R 300 R 200 R 400 R 2,100

Bipolar Mood Disorder R 800 R 75 R 875

Bronchiectasis R 800 R 400 R 250 R 1,450

Cardiac Failure R 400 R 800 R 200 R 1,400

Cardiomyopathy R 400 R 800 R 200 R 1,400

Chronic Obstructive Pulmonary Disease R 800 R 400 R 250 R 1,450

Chronic Renal Disease R 800 R 250 R 1,050

Coronary Artery Disease R 400 R 800 R 200 R 1,400

Crohn's disease R 800 R 100 R 900

Cushing's Disease R 800 R 300 R 1,100

Diabetes Insipidus R 800 R 250 R 1,050

Diabetes Mellitus Type 1 & 2 R 400 R 800 R 400 R 500 R 200 R 200 R 2,500


Adjustment for Compliance

Longitudinal study of new applications with follow-up for one year. 27% of beneficiaries classified as non-compliant used only 28% of the value of the medicines authorised.

Scheme only experienced 71% of the potential cost of the medicines authorised.

Recommend stress-testing price through adjusting margin for compliance.

Recommendation: add margin of 20% of raw price of CDL package for possible increase in compliance in a mandatory environment.


Adjustments for Limits Design of project to attempt to obtain full cost of the CDL

conditions without constraints: Relatively generous chronic medicine limits in schemes. All members can select option with chronic medicine. Extracted both chronic and acute usage. Full tariff amount of item prescribed, not amount paid.

But need small margin where beneficiaries stop claiming during the year because limits have been reached.

Recommendation: add margin of 5% to raw price of CDL package for effect of removing all limits in a mandatory environment.


Adjustments for Co-payments

Design of project: Full tariff amount of item prescribed, not amount paid.

Could be small increase in usage of Primary CDL-NAPPIs relative to Secondary CDL-NAPPIs in mandatory environment, with member co-paying difference in price.

Potentially an increase in usage because full benefit will be paid without constraints from pooled benefits.

Recommendation: add margin of 5% to raw price of CDL package for effect of removing co-payments in a mandatory environment.


Medicine Management Costs

Price per benficiary per

month


annum


month


annum

High R 5.67 R 68.00 R 4.37 R 52.43

Medium-older R 4.34 R 52.11 R 3.35 R 40.18

Medium-younger R 3.42 R 41.03 R 2.64 R 31.64

High and Medium R 4.50 R 54.02 R 3.47 R 41.65

Additional R 5.05 R 60.59 R 3.89 R 46.72

Low R 2.46 R 29.53 R 1.90 R 22.77

Total R 3.07 R 36.80 R 2.36 R 28.38

Cluster

Total Chronic Medicine Management

CDL Medicine Management


CDL Administration Costs


month


annum


month


annum

High R 3.06 R 36.72 R 2.36 R 28.31

Medium-older R 2.34 R 28.14 R 1.81 R 21.69

Medium-younger R 1.85 R 22.15 R 1.42 R 17.08

High and Medium R 2.43 R 29.17 R 1.87 R 22.49

Additional R 2.73 R 32.72 R 2.10 R 25.22

Low R 1.33 R 15.95 R 1.02 R 12.29

Total R 1.66 R 19.87 R 1.28 R 15.32

Cluster

Total Chronic Medicine Claims Administration

CDL Medicine Claims Administration


EDL State Tender Price Compared to Private Sector Price

Anti-inflammatories 5

Antibiotics 6

Cardiovascular 6

Central Nervous System 7

Respiratory 6

Number of Products Compared

CategoryLowest-priced

ProductHighest-priced

Product

16.9% 9.8%

24.4% 4.6%

20.0% 5.0%

15.4% 14.5%

21.3% 16.9%

State Tender Price as a Percentage of Private Sector Price

Source: Rothberg and Walters (SAMJ 1996)


Savings for Switch to EDL Medicines

at State Tender Prices

Source: Rothberg and Walters (SAMJ 1996)

Items PrescribedProportion of all

prescriptionsProportion of

total value

Potential savings of total GP medicine expenditure (%)

EDL items 22.4 19.1 18.3

Other forms of EDL items 19.6 21.5 15.7

Out-of-formulary items 10.0 15.0 -

Residual 48.0 44.4 38.0

Total 100.0 100.0 72.0


CDL Cost in the Public Sector

1995 Committee of Inquiry’s estimate of a 50% reduction in private sector costs is achievable for primary health care medicines.

Access to Essential Drugs List medicine at State tender prices is a potential policy option.

Recommendation: use estimate of 50% saving in cost of CDL package when delivered in public sector. As policy unfolds, so this estimate can be further refined.


Full Price of the CDL Package


Full Price of CDL Package

Four components: Medicine component, based on full data in study (high

degree of certainty) Portion of price for which uncertainty exists until

package is fully defined and allowance for impact of package being mandatory

Amount added for medical management costs Non-healthcare costs.

Note: Prices should not be used blindly in pricing work. Contact a professional for assistance.


Full Price CDL Package

R 0

R 250

R 500

R 750

R 1,000

R 1,250

R 1,500

High Medium-older

Medium-Younger

High andMedium

Low Additional TotalStudy

WeightedTotal

Pe

r B

en

efi

cia

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An

nu

m

Non-healthcare costs

Medical management est.

Uncertainty in CDL

CDL Medicine Package


Full Price PMB Package

Price per beneficiary per annum (in 2001 Rand terms)

HighMedium-

olderMedium-Younger

High and Medium

LowTotal Study

Weighted Total

Total CDL package R 1,365.09 R 911.83 R 711.75 R 999.48 R 451.39 R 595.28 R 677.74

PMB Package excl. CDL R 2,432.41 R 2,010.90 R 1,489.49 R 1,956.01 R 1,100.08 R 1,343.43 R 1,479.04

Total PMB package Private Sector

R 3,797.50 R 2,922.73 R 2,201.25 R 2,955.48 R 1,551.47 R 1,938.71 R 2,156.78

Total PMB package Public Sector

R 2,425.48 R 1,895.39 R 1,425.10 R 1,901.87 R 1,015.61 R 1,261.73 R 1,400.07


Non-Healthcare Expenditure

Non-healthcare Expenditure as a Proportion of …

HighMedium-

olderMedium-Younger

High and Medium

LowTotal Study

Weighted Total

CDL Package 5.9% 6.8% 6.8% 6.4% 7.8% 7.3% 7.2%

Total PMB package (excluding CDL)

3.7% 3.8% 4.6% 4.0% 5.0% 4.6% 4.4%

Total PMB package including CDL)

4.5% 4.7% 5.4% 4.8% 5.8% 5.4% 5.3%

Well below Registrar’s benchmark of 10% of total expenditure


CDL Package Relative to Medicine Expenditure

381

499

1,222

1,067

1,349

R 0

R 200

R 400

R 600

R 800

R 1,000

R 1,200

R 1,400

R 1,600

R 1,800

Total Medicine

Pe

r B

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CDL Package

CDL Package if mandatory

Schemes in PMB StudyOpen non-study schemes

Restricted non-study schemes



PMB Package Relative to Benefits and Contributions

2,043 2,157

4,285

5,0134,668

5,7605,613

4,772

R 0

R 1,000

R 2,000

R 3,000

R 4,000

R 5,000

R 6,000

Total Benefits Contributions

Pe

r B

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efi

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PMB package (including CDL)Schemes in PMB StudyOpen non-study schemesRestricted non-study schemes


Conclusions


Preliminary Conclusions on Affordability

CDL package, both in basic form and with added margins for change in claiming behaviour when mandatory, appears to be affordable compared to medicine benefits.

PMB package (including CDL) appears to be well covered when compared to total benefits and contributions in the industry.


Price in Mandatory Environment

Expect change in member and provider behaviour from existing environment.

Uncertainty exists in price until package is fully defined. Have included an effective 30% margin on medicine

component of CDL package. Consortium opinion that collective margin of 30% on

medicine component is sufficiently conservative to cover this uncertainty in the pricing.


Need for Mandatory Package

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,5000

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

All

Age

s

Pri

ce

pe

r b

en

efi

cia

ry p

a

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,5000

1-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

All

Age

s

Pri

ce

pe

r b

en

efi

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ry p

a

Community rated price


Need for Mandatory Package

Real danger that open schemes will pursue more aggressive self-seeking behaviour and limit chronic medicine benefits to discourage older members and improve their community rate relative to their competitors.

Substantial broker activity and churning of members worsens this incentive.

A mandatory minimum package of chronic medicine and management benefits is essential for reducing opportunistic behaviour by some schemes.


Further Policy Issues

Membership of medical schemes needs to be compulsory, rather than voluntary, for medium to higher income groups to stabilise the system.

A risk equalisation system between medical schemes, based on the Prescribed Minimum Benefit package will reduce the opportunistic profiting from risk selection still further.


Composition of the CDL List

Brief did not extend to consider diseases outside of the draft list and whether any should have been included.

Need for a process of chronic disease prioritisation in medical schemes in order to inform the rationing process in future.


Definition of CDL Package

Draft of Treatment Guidelines for Chronic Disease List Conditions

Based on Standard Treatment Guidelines and Essential Drugs List published by DoH in 1998.

Appoint task team for documenting and maintaining treatment algorithms for CDL conditions.

Actuarial and pricing expertise to estimate the price of the algorithms. Iterative process of refining algorithms.

Project manager to ensure process completed in time for pricing in August 2003 if implementation is 1 January 2004.


Complementary and Traditional Medicine

Serious concerns about the implications of legislating the algorithms for CDL conditions.

Only one approach to treatment will receive funding from medical schemes: entrenchment of an allopathic approach to treatment, largely based on drug interventions.

Hard won legal freedoms to operate must not be negated by preventing funding of complementary medicine and African traditional medicine for CDL conditions.

Allied Health Professions Council with 11 modalities. Consumers will increasingly question health plans. Inclusion unlikely to be simple and debate will be vigorous.


Chronic Medicine Management Programmes

Medicines management is essentially divided into rules-based formulary management and clinically-based member management.

Experience with a large membership base shows that there is no question that a combination of the two yields the best results.


Further Research

Combine with PMB study to obtain total expenditure on CDL conditions. Aid in setting industry priorities.

Range of costs for each condition, rather than average costs.

Understand price difference between High and Low clusters.

Current prices of EDL medicines at State tender prices compared to medicines used by beneficiaries in this study.

Costs of treating CDL conditions in the public sector.


A Research Unit of the University of Cape Town

(CARE)

Centre for Actuarial Research

A Research Report Prepared Under Contract for the Council for Medical Schemes

Centre for Actuarial Research The Costing of the Chronic Disease List January 2003.

Documents

ageraw price of cdl

cdl chronic registrations

ageaverage cost of cdl

low cluster beneficiaries

cdl diseasesprevalence

cdl study datadata

cdl industry benefit

clusterraw price high