Medical aid funds in tight spot between regulator and service providers
The Namibia Financial Services Supervisory Authority (NAMFISA) is tasking medical aid funds to come up with solutions to arrest the dramatic rise in membership costs following Covid-19.
Namfisa Chief Executive, Kenny Matomola commented “Amidst the backdrop of rising healthcare costs, we invite medical aid funds to explore innovative solutions for alleviating financial burdens on individuals and families, urging collaboration with medical service providers and administrators to establish a new pricing equilibrium that prioritizes affordability and sustainability. This initiative aligns with NAMFISA’s mission to regulate and supervise financial institutions in the public interest.”
NAMFISA has implemented a temporary cap on some funds’ annual contribution increases limiting it to a maximum of 9.99%.
The industry has been given until 20 March 2024, to submit additional contribution increase applications along with realistic medium-term strategies to address the sustainability of the funds.
The authority is also concerned about statutory solvency ratios, noting that funds usually pass these deficits on to members. The authority does not list a temporary reduction of solvency ratios as an interim means to relieve the pressure on funds.
NAMFISA said in a statement that concerns were raised regarding the lack of realistic and measurable medium-term strategic plans during the 2024 Rule Amendment Approval process, questioning the credibility of certain medical aid funds’ solvency forecasts.
“Recognizing the urgency to curb escalating contribution rates, NAMFISA calls on medical aid funds to engage in renegotiations with both medical and non-medical service providers.”
Additionally, the Authority acknowledges the potential of technology to enhance efficiencies in the industry, urging funds and administrators to embrace automation, modernization, and data analysis technologies. These advancements can streamline processes, improve fraud management, and reduce administration costs, ultimately enhancing the experience for members and service providers.
NAMFISA said it emphasizes the need for transparency and accountability, encouraging the adoption of the International Classification of Diseases, Tenth Revision (ICD-10) coding structure by 2025 which is expected to improve transparency, accuracy in pricing, and to enable granular trend analysis, enhance fraud detection, and support initiatives to reduce over-servicing.
“As the medical aid fund industry approaches 2024, NAMFISA underscores the importance of bold actions, innovative thinking, and collaborative efforts. The Authority calls upon medical aid funds, service providers, administrators, and stakeholders to embrace these measures and collaboratively work to create a new pricing mechanism that prioritizes sustainability, affordability, and transparency.”
NAMFISA is the financial regulator of the medical aid insurance industry with total assets of N$1.9 billion. The eight represented funds cover more than 214,000 principal members, just over 114,000 dependents and another 13524 pensioners. The industry is also regulated by the Namibian Association of Medical Aid Funds (NAMAF), a juristic body established by an act of Parliament, the Medical Aid Funds Act (23 of 1995), which has often lead to funds finding themselves in a bind when NAMFISA and NAMAF regulatory action diverges.
