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2. REGULATORY BACKGROUND
During July 2007 the Department of Health (DoH) published regulations to determine procedures to be followed
in the determination of a Reference Price List (RPL). These regulations set the scope for Practice Cost Studies to
be done.
In December 2007, the ANC announced the introduction of a National Health Insurance Plan (NHI) as one of the
top priorities for Government. Since then the environment for private practice has changed significantly.
The National Health Amendment Act was published in 2008, mandating the Reference Price List (RPL) as the
legal maximum tariff for medical services and establishing an elaborate process for price regulation. In the latter
part of 2008 the Health Professions Council of South Africa (HPCSA) announced that it intended to withdraw the
Ethical Tariff and establish the RPL as the maximum tariff for medical services, indicating that this was necessary
for the introduction of the NHI.
These events indicated that Government is serious about Price Regulation for medical services. The
amendments to the National Health Act and HPCSA ethical rules were challenged by SAPPF and temporarily
withdrawn. The Council of Medical Schemes has recently issued a new discussion document on pricing of
healthcare services.
3. RPL & PRACTICE COST STUDIES
In order to assess actual costs to run a private practice as a specialist, approximately 890 specialists submitted
practice cost studies during 2008 and 2009. A number of specialist disciplines were rejected as the number of
responses was considered too low by DoH. Of the approximately 340 physicians in private practice, we only had
a 12% response! Despite a much higher response in other groups the DoH still did not accept the cost studies
nor has the DoH completed the verification process. This was the whole basis for the legal challenge embarked
on since November 2008 as the DoH did not comply with the Regulations to the National Health Act. There was
no support from SAMA in the legal challenge.
If, as Government and the HPCSA have indicated, the RPL becomes the maximum fee for medical services in the
public and private sector, and we are not at a cost based structure, few medical practices will survive
economically. We thus had no other option but to take the Department of Health to court to force them to
complete their review of the submissions, follow the law that regulates the RPL process and publish a cost based
RPL.
The total fee for the legal challenge and court case was R6,000,000. The hearing was set for the 22 nd -24 th
February 2010. Judge Ebersohn passed judgment on the court case at the end of July 2010 and declared the RPL
processes to have been illegal and accordingly null and void. This judgment renders all RPL’s published since
2007 to be illegal.
The result of the RPL being declared invalid is that it has left a void and SAPPF would have to focus on trying to
negotiate a result for 2011. It should be noted that the interactions of the competition commission hamstrings
the processes as it is impossible to jointly negotiate with schemes on tariffs for 2011. It is however intended to
apply for a Competitions Commission exemption in the near future. The first meeting with the Competitions
Commission was held on 3 February 2011.