Keep your eye on the till to save on medical expenses

South Africans using their medical aid savings to buy unregulated health-care products often unknowingly pay a steep premium — in some cases up to 40% more than the same items sell for off the pharmacy shelf.

Carers and relatives of residents at a Kuils River care home told interviewers they had been claiming items on medical savings, unaware of the higher cost. A pack of 30 Molicare adult nappies retailing at R446 from an Essential Health Pharmacy outlet cost R636 on the customer’s Discovery Health savings plan. The same product at Clicks cost R510, while via the Discovery Health medical savings computerised price list it was R665, according to pharmacists interviewed.

Essential Health Pharmacy CEO Marelee Brand tells the FM this was “unwitting” on the part of their dispensers.

Pharmacists at Essential Health and Clicks said items not regulated by the single exit price (SEP) framework, designed for prescription medicines, can cost up to 40% more when charged through medical aids, compared with the same items discounted or off the shelf for cash. They said only a few unregulated items are charged at lower prices via savings plans.

Prices for scheduled medicines, whether branded or generic, are regulated and include the manufacturer’s price, a regulated logistics fee and VAT.

The SEP is the maximum at which a manufacturer may sell a medicine to pharmacies, hospitals or dispensing doctors. It does not cover unscheduled products, including schedule 0 medicines, many supplements, vitamins, nutraceuticals, herbal remedies, homeopathic products, medical devices and most over-the-counter wellness products. These fall outside the framework, creating a two-tier system: regulated prices for scheduled medicines and largely unregulated ones for a range of products, including those billed to medical aid savings.

The SEP framework was established to protect consumers, but it excluded certain categories of health-care products. This created a pricing grey zone where savings can be quietly eroded. Savings are effectively the member’s own money, but claims are processed like insured benefits. The prices are usually not scrutinised in real time, and members often do not see the cash price at the point of sale, unless they insist. This allows higher “claimed” prices to pass through with little resistance.

Noluthando Nematswerani, chief clinical officer at Discovery Health, says the scheme does not buy or sell products and cannot earn any margin or financial benefit. “Our role is limited to reimbursing claims submitted by pharmacies, using standard product price lists provided by suppliers. No mark-up is ever added,” she says.

Nothing prohibits the pharmacy from claiming a lower price from the medical aid

—  Noluthando Nematswerani

Nematswerani says that when a pharmacy submits a claim, reimbursement is capped at the “validated list price”. If a pharmacy submits a lower price, which it can do for nonregulated products, the scheme pays it. “The responsibility to submit the appropriate price rests entirely with the pharmacy,” she says.

With nonregulated products, including items such as adult nappies, Nematswerani says pharmacies have “complete freedom” to set their own mark-ups and discount cash purchases selectively with no regulatory requirement for these discounts to be passed on to medical schemes. The cash price can be lower because it reflects the pharmacy’s commercial discretion, not a medical scheme’s preferred price. The pharmacy can also offer deals based on supplier arrangements.

“Nothing prohibits the pharmacy from claiming a lower price from the medical aid. We encourage members to compare prices and choose the most cost-efficient option and still claim back directly from their savings, subject to available funds, submission of a valid claim and applicable scheme rules,” she says.

Brand says pharmacists charging through medical aid savings are usually unaware of “front of house” prices, discounted or not, and rely on their suppliers’ list price on their computer system.

“There’s no intent to charge a different price. We pull from the same price file as regulated medicines, except that for these [unregulated] products we use the electronic list the manufacturer gives. The mark-up goes to whoever negotiated the price [the relevant pharmacy or pharmacy chain].”

Brand says customers who notice price discrepancies should tell dispensers when using their savings. “They can override the system and put it through at that lower price,” she says.

Pharmacies also have discretion on what dispensing fee they charge.

Discovery receives “periodic queries on this topic”, says Nematswerani. “The reason is almost always the same: pharmacy pricing differences, particularly on unregulated products.” She says it can benefit members to procure products directly from legitimate suppliers.

“If they’re on the pharmacy’s list, you can even arrange for your dispenser to give you the lower price that you’ve secured directly from the supplier,” she says.