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National Health Act, 2003 (Act No. 61 of 2003)


National Health Insurance Policy towards Universal Health Coverage

Chapter 9 : Phased Implementation


310. The process of policy development started in 2012 and included piloting of health system strengthening initiatives. Activities in the initial phase were funded through a combination of sources which included National Health Conditional Grant such as the direct and indirect NHI Conditional Grants as well as the Health Infrastructure Grants. Workstreams were established to further refine the policy and incorporate comments as well as make recommendations for the phased implementation of NHI. As the NHI pilots phase has come to an end, some useful lessons have been learnt in the implementation of integrated school health services, maternal and child health initiatives, district clinical specialist teams and the PHC outreach teams will be taken forward during this phase. These lessons will be scaled up in the next phases of implementation.


311. The next phase extends from 2017 to 2022, which will focus on the development of the NHI legislation and amendments to other legislation. Initiatives will be undertaken that are aimed at establishing institutions that will be the foundation for a fully functional NHI Fund. This phase will also entail purchasing of personal healthcare services for vulnerable groups such as children, women, people with disability and the elderly. Health systems strengthening initiatives will continue to be implemented.


312. The following institutions will be established during the second phase of implementation:


(a) Establishment of National Tertiary Health Services Committee


313. The National Tertiary Health Services Committee will be a technical implementation committee established by the Minister of Health in terms of section 91(1) of the National Health Act, 2003. It will be responsible for developing the framework governing the Tertiary services platform in South Africa. It will also be responsible for overseeing the establishment of Central Hospitals as semi-autonomous entities.


(b) Establishment of National Governing Body on Training and Development


314. This Committee will be established by the Minister of Health in terms of section 91(1) of the National Health Act, 2003. The Committee will, amongst others, be responsible for advising on the vision for health workforce matters and for recommending policy related to health sciences student education and training to the Minister of Health, including a human resources for health development plan. It will also oversee and monitor implementation of the policy and evaluate its impact. The committee will coordinate and align strategy, policy and financing of health sciences education.


(c) Establishment of Contracting Unit for Primary Healthcare Services


315. The Contracting Unit for PHC (CUP) will be established at the District level. The CUP will be structured in a cooperative management arrangement with the district hospital linked to a number of PHC facilities.


(d) Establishment of the NHI Fund


316. The NHI Fund will be established through legislation and will require the development of systems and processes to ensure its effective functioning and administration in anticipation of a fully functional Fund. The systems that must be developed concurrently with the legislative process include the development of a provider payment system (such as Capitation and the DRG systems), health patient registration system, health provider registration system and fraud and risk mitigation system.


317. An NHI implementation team will be established as a government component reporting to the Minister of Health. The team will act as transitional structure responsible for implementation of the service benefits, pricing and reimbursement framework, purchasing of healthcare services for vulnerable groups in the population.


(e) Establishment of other Interim Structures in Preparation for the NHI Fund


318. Several interim structures will be established prior to the finalisation of the NHI Legislation. These structures will be precursors to the functional units of the NHI Fund and the NHI Board. The following are the interim structures that will be established during this phase:
(i) Ministerial Advisory Committee on Health Care Benefits for National Health Insurance


319. Ministerial Advisory Committee on Health Care benefits will be established as a precursor to the NHI Benefits Advisory Committee. This Committee will advise the Minister on a process of priority setting to inform the decision-making processes of the NHI to determine the benefits to be covered. This committee will consist of a panel of medical and other experts to recommend healthcare services covered under NHI and to advise the Minister of Health on the clinical, social, financial and health impact of benefits to be covered under NHI.
(ii) National Health Service Pricing Advisory Committee


320. The NHI Fund in consultation with the Minister will determine its own pricing and reimbursement mechanisms. This Committee will also advise the Minister on strategies to address the escalating costs of delivering healthcare services that will ensure sustainability of the NHI Fund.
(iii) National Advisory Committee on Consolidation of Financing Arrangements


321. This Committee will advise the Minister on the strategies to be followed in consolidating current fragmented funding pools in the medical schemes environment. Furthermore, this Committee will advise during the transition phase, on the alignment of the benefits covered through the social security funds, COIDA, ODMWA, and the RAF. During the transition, the tax credits and subsidies paid to various medical schemes will be consolidated these into a single pool NHI funding arrangement.


322. Amendments to the Medical Schemes Act will be initiated as part of the broad phased implementation. Medical schemes will evolve and consolidate during this phase to provide complementary cover. In the initial stages, all benefit options in the various schemes will be consolidated from the current 323 benefit options in 83 schemes to one option per scheme. Schemes covering state employees will be consolidated into one scheme, the Government Employee Medical Scheme (GEMS). The other activities to be undertaken will involve the creation of a uniform information system and standardisation of healthcare services across the medical schemes to be aligned to comprehensive healthcare services for NHI.
(iv) Ministerial Advisory Committee on Health Technology Assessment for National Health Insurance


323. This Committee will be established to advise the Minister on Health Technology Assessment (HTA). It will be a precursor to the HTA agency that will regularly review the range of health interventions and technology using the best available evidence on cost-effectiveness, allocative, productive and technical efficiency and HTA. It will consist of a panel of multi-disciplinary experts to recommend prioritisation, selection, distribution, management and introduction of interventions for health promotion, disease prevention, diagnosis, treatment and rehabilitation.


324. Activities to be undertaken by the Implementation Team include:


(f) Health Patient Registration Process (HPRS)


325. Health Patient Registration is an activity that will take place throughout the life-cycle of the population and NHI. Vulnerable groups, such as women, children, older persons and people with disabilities, orphans, adolescents and rural populations will be prioritised. The identification of the population with the greatest need will be based on criteria consistent with the principles of the Constitution. The population will be registered using the unique identifier that is linked to the Department of Home Affairs’ identification system. The registration information will be from cradle to grave and will be encrypted. The information will be utilised to access services at different levels of the health system.


(g) Accreditation of Health Care Providers


326. In preparation for a fully functional NHI Fund that can contract with providers, accrediting NHI ready Clinics, private PHC providers and public hospitals will be initiated. This would require that health establishments are inspected and certified by the Office of Health Standards Compliance (OHSC), health professionals are licensed by respective statutory bodies and health care providers comply with criteria for accreditation in readiness for contracting with the NHI Fund.


(h) Development of Provider Payment Mechanisms


327. Alternative reimbursement mechanisms will be developed for NHI during this phase of implementation. At a PHC level, a Risk Adjusted Capitation will be the main mechanism that will be used to pay contracted providers will be a risk-adjusted capitation system with an element of performance-based payment. This system will be developed during this phase


328. At a hospital level, a case-mix system for the reimbursement for hospitals’ and medical specialists’ services will be developed. The payment will be related to services delivered and would be determined through a system of case-mix activity adjusted payments (such as Diagnosis-Related Groups or DRGs).
(i) Defined as the whole set of activities and interventions of the hospital and medical specialist resulting from the first consultation and diagnosis of the medical specialist in the hospital
(ii) These tariffs apply to all hospitals and include two separate components: a reimbursement of hospital costs and an honorarium for medical specialists.


(i) Phased Implementation of Purchasing of NHI Service Benefits


329. During the early stages of this phase the NHI Fund will purchase personal health services such as PHC services, maternity and child healthcare services including school health services, healthcare services for the aged, people with disabilities and rural communities from contracted public and private providers including general practitioners, audiologists, oral health practitioners, optometrists, speech therapists and other designated providers at a PHC level focusing on disease prevention, health promotion, provision of PHC services and addressing certain critical backlogs. The implementation of prioritised NHI service benefits will be phased in over the next two years starting with the following services:
(i) Common set of maternal health services: All pregnant women will access antenatal care provided within the public and private sector. Benefits will include up to eight antenatal visits and delivery. The costs of delivery in-facility will be covered with progressive inclusion of private facilities over time. Family planning services including oral contraceptives, injectables and sub-dermal implants will be available for females from age 15 to 40.
(ii) Expansion of the integrated school health programme: Previously screened children with identified problems will receive follow up-care from relevant professionals in both the public and private sectors, including any assistive devices (e.g. hearing aids, spectacles, and other corrective devices). In addition, all children entering Grade 1 in 2017 will be screened and referred for follow up-care from relevant professionals in both the public and private sectors, including any assistive devices (e.g. hearing aids, spectacles, and other corrective devices). The school health service programme will be expanded to all primary schools in South Africa. In the medium to long term, all children in Grade 1-12 will be screened and referred for follow up-care from relevant professionals in both the public and private sectors including any assistive devices.
(iii) The elderly will be prioritized and targeted for interventions to remove surgical backlogs, starting such cataracts and hip and knee replacements.
(iv) Mental Health Services will be prioritized for screening, referral and care.


330. The initial funding will be required to establish the Fund as a separate public entity and to enable the establishment of institutional arrangements as well as for purchasing initial priority healthcare services. In line with the 2017 Budget Speech, additional revenue of approximately R2-3 billion will be raised to establish the NHI Fund. Over the MTEF further restructuring of the tax rebate and medical schemes tax credit will allow for the increased revenue into the Fund. This revenue will be used to purchase services on behalf of the vulnerable groups in the population as identified above.


(j) Legislative Reforms


331. The NHI legislation will be developed to establish the NHI Fund as a single fund that will pool financial resources and to strategically purchase comprehensive services on behalf of the entire population.


332. To enable the introduction of NHI, a number of existing legislation will need to be changed.

These include:

(i) The National Health Act
(ii) The Mental Health Care Act
(iii) The Occupational Diseases in Mines and Works Act
(iv) The Health Professions Act
(v) The Traditional Health Practitioners Act
(vi) The Allied Health Professions Act
(vii) The Dental Technicians Act
(viii) The Medical Schemes Act
(ix) Medicines and Related Substances Act
(x) The Provincial Health Acts
(xi) The Nursing Act


333. There are many other pieces of legislation across all spheres of government that may be impacted upon by the introduction of NHI. These will be identified as the NHI Act is promulgated. The NHI Bill, amendments to the National Health Act and the Medical Schemes Act will be prioritized during this second phase of implementation.


(k) Establishment of Governance Structures


334. The NHI Fund will be governed by the NHI Fund Board as an oversight mechanism. Relevant expertise in the fields of health care financing, health economics, public health, health policy and planning, monitoring and evaluation, epidemiology, statistics, health law, labour, actuarial sciences, taxation, social security, information technology and communication will be identified. The Board will also include civil society representatives. Once the NHI Legislation has been finalised, the NHI Board will be appointed.


(l) Establishment of a fully functional NHI Fund


335. In the later stages of the second phase, a fully functional NHI Fund will be established once the NHI Act has been enacted and proclaimed. The NHI Fund will have the capabilities of purchasing personal health services from accredited and contracted public and private providers at PHC level and public hospitals.


(m) Purchasing of Hospital Services to be Funded by NHI


336. During the latter stages of this phase, the NHI Fund will expand the personal health services purchased to higher levels of care from public hospitals (central, tertiary, regional and district hospitals) and Emergency Medical Services (EMS). Pathology services provided by NHLS Services will also be purchased in the latter stages of this phase.


337. The last phase will extend from 2022 - 2026. Health systems strengthening activities are an ongoing process and will be undertaken throughout the lifecycle of the health system in perpetuity. Other activities that will be undertaken during the last phase will be to initiate the mobilisation of additional resources as approved by Cabinet. Selective contracting of healthcare services from private providers will be undertaken during this phase. The following activities will be undertaken:


(n) Introduction of Mandatory Prepayment for the NHI


338. The fully established NHI Fund will require supplementary funding mobilised through mandatory prepayment as NHI-specific taxes that are approved by Cabinet taking into account prevailing tax policies. The process of consolidating funding paid by the State towards medical scheme contribution subsidies and tax credits paid to various medical schemes to consolidate these into the single pool NHI funding arrangement would have been finalised in phase two.. The alignment and consolidation of funding sources personal healthcare services previously covered through the COIDA, ODMWA and the RAF would have been consolidated and will form part of additional revenue sources for the NHI Fund.


(o) Contracting for Accredited Private Hospital and Specialist Services


339. The fully implemented NHI Fund will purchase services from accredited private specialists and private hospitals that comply with performance criteria as determined by the Fund and based on the needs in the population through selective contracting.