Business Day - 29 July 2010

Blow for state as court scraps tariff guide for doctors’ fees

The North Gauteng High Court has scrapped the Department of Health’s controversial tariff guide for doctors’ fees.

The North Gauteng High Court has scrapped the Department of Health’s controversial tariff guide for doctors’ fees, dealing a blow to Health Minister Aaron Motsoaledi’s attempts to control prices in the private healthcare sector.

The ruling, handed down yesterday, means the department has to go back to the drawing board to devise a new system for determining rates for the private health sector. Resolving the issue is vital for the government’s plans to introduce national health insurance (NHI). Under the proposed NHI scheme, the state would contract directly with doctors so that patients do not have to make payments in advance.

The National Health Reference Price List was introduced via regulations to the National Health Act in 2007, and was punted by the department as no more than guidelines for private healthcare as it would have been at odds with the Competition Act if it had prescribed the fees.

But in practice the guide has been used by medical schemes to set limits on the rates they would pay service providers such as doctors and specialists.

The Hospital Association of SA, emergency services ER24 and Netcare911, and the South African Private Practitioners Forum joined 22 specialist groups to challenge the validity of the reference price list, a case that was heard in February. At issue was the way the department had determined the fees spelt out in the list, which the applicants argued bore no relation to the cost of running a business. They also challenged the way the department interacted with the parties affected by the tariff guide.

Yesterday, Acting Judge Piet Ebersohn ruled that former health director-general Thami Mseleku, now ambassador to Malaysia, had failed to comply with the constitution and had acted in a manner that was procedurally unfair.

He described Mr Mseleku’s action as “one of disdain and disregard” for the rights of the Hospital Association, which had tried in vain to get the department to consider its proposals for establishing a methodology for determining hospital fees.

No suitable methodology was established for private hospitals or private emergency services, yet fees were published for these parties, a process the judge described as “irrational and unreasonable”.

Judge Ebersohn ruled the regulations to the National Health Act that established the reference price list to be invalid and set them aside. He made a sweeping costs order requiring the department to pay not only the applicants’ legal costs but also for the research that formed the basis of their submissions to the department, including two surveys commissioned by the Hospital Association from PricewaterhouseCoopers and Deloitte.

Practitioners forum head Dr Chris Archer was “relieved” by the judge’s findings, but he declined to comment further until he had studied the ruling.

“We are very pleased. We feel vindicated,” Hospital Association CEO Kurt Worrall-Clare said.

“We do not see ourselves in opposition with the health department on this or any issue, and we hope that our relations from this point can be constructive and engaging.”

The department’s spokesman, Fidel Hadebe, declined to comment, saying officials had yet to study the judgment.

“The underlying principle of tariffs is not in question, and to us that’s encouraging,” said Heidi Kruger, spokeswoman for the Board of Healthcare Funders, which represents medical schemes and administrators.