Independent Community Pharmacy Association Challenges Closed DSP Networks and Co-payments

The Independent Community Pharmacy Association (ICPA) recently won an appeal at the Council for Medical Schemes which will force the Council to declare the practice of closed Designated Service Provider (DSP) networks and the application of penalty co-payment as unfair business practices.

A Designated Service Provider is a provider that is appointed by a medical scheme as the preferred provider to the scheme and its members. If a patient obtains treatment or services from a DSP, then the scheme will usually cover the costs of the treatment or services in full, whereas if the treatment or services are obtained from a non-DSP then a co-payment is often levied for which the patient must pay from his or her own pocket.

The ICPA has argued what SAPAESA has also been saying for many years: there is no need for a DSP network to be closed, and forcing a patient to seek out treatment or services from only a limited number of providers is inconvenient, confusing, and in some cases dangerous when there is no DSP available within a reasonable distance from the patient.

There are a number of providers in all sectors of the private healthcare market that are prepared to contract with medical schemes on a DSP basis on the understanding that they will charge preferential rates to the scheme and its members, which will ultimately have financial benefits to the scheme.

These providers include independent pharmacies, as in the case of the ICPA challenge at the CMS, and independent ambulance services that are unable to contact with schemes on a DSP basis, even though they are completely willing to do so on terms that are highly favourable to the schemes.

One must question whether a few large medical aid administrators that control the bulk of the medical scheme work, only contracting with a small number of very large corporate healthcare providers, is anti-competitive? Why are large corporate healthcare providers being supported in creating monopolies or duopolies in the private medical sector, and why are schemes and their administrators encouraging this behaviour?

The outcome of the ICPA challenge at the Council for Medical Schemes will be a very interesting one that will have far reaching outcomes for a number of private healthcare sectors, and we continue to watch the development of this case very carefully.

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