Gap cover, a potential inconspicuous need of your client

The one common theme of some recent industry conferences that I attended, is the changing role of the broker, from that of a traditional broker to a risk manager.

Brokers who transition and who consider the needs analysis of a client as a tool to manage the risk for, and on behalf of the client, will find themselves reaping the rewards of being at the leading edge of the industry.

The risk manager’s role to point out the gap

One focus area of such a risk management process is for the risk manager to identify blind-spots for the client – to actually point out the inconspicuous needs of the client. One such inconspicuous need often missed as part of the needs analysis, is the risk exposure of the client when it comes to hospitalisation cover. Why so? Despite the comprehensiveness of a hospital benefit, without Gap cover, your client is likely to be out-of-pocket.

As a basic description, Gap cover pays the difference between what your client’s medical specialist charges for an in-hospital procedure and the tariff the medical scheme pays.

One of the biggest reasons for such tariff shortfalls is because of the basic economic principle of supply and demand because of the shortage of specialist skills in South Africa. In fact, in my view, South Africa’s calibre of medical specialists is one of the reasons why our private health sector is considered among the best in the world. Gap cover plays an important role in this ecosystem.

Is the need for Gap cover real?

In last year’s Council for Medical Schemes (CMS) Annual report, the CMS reported that the largest out of pocket expense categories for members on medical schemes related to anaesthetics, surgical specialists and hospitals.

Think about this at a practical level – when your client goes to hospital, they may have a preference for a specific surgeon, but as the surgeon works with an anaesthetist, your client is not in a position to negotiate anaesthetist tariffs at the time the procedure is about to be performed. Anaesthetists’ claims make up nearly a third of Gap cover claims.

Another aspect raised in the previous CMS Annual report, was the concerning trend that medical scheme members go for a surgical procedure under the impression that because the procedure is part of a PMB (Prescribed Minimum Benefit) condition, it is covered in full, just to find out that it is a non-PMB or they have not used the designated service provider appointed by the medical scheme.

From our data, and looking at the last 18 months, the top three types of Gap cover claims (using the ICD-10 Chapters as the categories), are:

  Top three Gap cover claims (value) over the last 18 months Average value per claim
1 Diseases of the musculoskeletal system and connective tissue such as muscles, joints and bones, autoimmune disorders, etc. R9 271
2 Neoplasms such as tumours R8 068
3 Pregnancy and childbirth R10 101

Claims from these three categories alone, totalled more than R100 million.

With the average Gap cover claim for childbirth of R10 101, there will be a material hole in your client’s pocket in the absence of such cover. On a different note, the sad reality is that the World Health Organisation reported an increase of 108 168 new cancer cases in South Africa in 2020. These are risks that can unfortunately not be ignored and with gap cover having evolved to include cancer and some other conditions, these should form part of the risk management strategy with any client.

A checklist

Guide your client to consider the following:

  • The increased likelihood of specialist providers charging in excess of the scheme tariff;
  • The cost of the bills that form part of the procedure that the client may not be aware of;
  • Instances when the procedure is not actually a PMB and will not be covered in full; and
  • The co-payments for cancer and for some procedures.

Brokers who identify such blind spots for the client will have clients resting assured that even the inconspicuous risks are managed … knowing that their health is covered.

Toska Kouskos
Executive Life & Health
Constantia Insurance Company Limited