Mega gap insurance claims soar to R440k in 2023 amid escalating specialist fees

Source: Supplied. Martin Rimmer is the chief executive officer of Sirago Underwriting Managers.

Secondly, it highlights how specialist fees have rocketed in the absence of any price regulation in healthcare provisioning, meaning providers charge any rate they wish, often many more times that of the medical-scheme rates.

Martin Rimmer, chief executive officer of Sirago Underwriting Managers, explains that average gap claims values continue to rise exponentially, and mega gap claims are increasing in frequency, with massive shortfalls ranging anywhere between R50,000 and R191,000 (the regulated overall annual limit for 2023 per beneficiary per annum that gap insurers cover) for in-hospital treatments not paid by medical schemes.

Gap insurance covers the difference that arises from the rate that healthcare specialists charge for in-hospital procedures versus what a medical scheme pays.

“Of the thousands of claims processed in 2023, Sirago paid over 100 mega claims – internally classified as upwards of R40k per claim – in shortfalls not covered by medical-scheme benefits on these mega claims alone.

"Total gap insurance claims paid between January and November 2023 by Sirago amounted to over R106m that policyholders would otherwise have had to foot from their own pockets had they not had gap insurance in place,” explains Rimmer.

These are the three biggest gap-insurance claims Sirago paid in 2023:

• A 69-year old man presented with cardiovascular issues and symptoms linked to coronary artery disease. His disease was treated with stent implantation. The gap cover paid was R181,376; his medical scheme paid R140,681. The sum-total of the doctor's fee was R322,057.
• A 58-year old female presented with a complex musculoskeletal issue involving the spine, potentially causing pain and limited mobility. Her surgical interventions amounted to R361,386. The gap cover in this case was R175,709 and her medical scheme covered R185,677.
• A 61-year old male presented with acute ischaemic heart disease. His treatment involved unblocking a coronary artery, whicb was obstructing blood flow to the heart muscle. The gap cover paid was R163,640; his medical scheme paid R110,933. The total doctor's fee was R274,573.

“Of the R958k in specialist charges for these three claims alone, medical schemes only paid out 46% of the total specialist bills, while gap cover stepped in to pick up the 54% shortfall.

"The standout for anyone analysing these stats is that being on a comprehensive medical-scheme option is no guarantee that your bills for in-hospital treatment will be paid for in full by your medical scheme – in fact in these three case studies, two members were on the top-end comprehensive medical scheme options, but less than half of the bills from their specialists were paid by the medical scheme.

"We are seeing more frequently that gap cover is paying more than what the medical schemes are paying to doctors for in-hospital treatment. It’s a perverse situation where specialist doctor and hospital fees are now running levels that are many times more than the rate at which medical schemes reimburse.

"The reality is that even if you’re on a medical scheme benefit option that pays at 200% of tariff, it may very well not be enough given that healthcare providers are free to charge whatever they want in the absence of any pricing regulation,” he adds.

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Critical role of gap cover: Rimmer adds that if you consider that when gap cover was first introduced as a financial solution to medical-scheme shortfalls, gap claims averaged between R6,000 to R12,000. However, in the last three years or so, large claims of R50k+ are increasingly almost a daily occurrence.

The bottom line is that gap cover is a critical part of your healthcare-funding strategy and that medical scheme membership, whether on a comprehensive or core benefit, simply isn’t enough.

For total peace of mind, no medical-scheme member should be without gap cover if they want a hand-in-glove solution to protect themselves against the risk of onerous financial shortfalls on in-hospital treatment and procedures.

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“Consider at an average of just over R50,000 per mega claim and measured against an average premium of R498/pm per policy on an individual basis, or R566/pm for a family (*Sirago Ultimate Gap, 2023 rates), it means policyholders have claimed approximately eight years’ worth of premiums paid or still to be collected.

"If you take one of the three massive gap claims paid at an average of R174k – that’s 29 years of premiums – demonstrating the crucial role that gap insurance plays in your healthcare financial planning, protecting you from large and unexpected costs which you would need to self-fund if you do not have gap cover in place. Very few people, if any, have that sort of money available unless they go into serious debt.”