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IRA, Medical Council to enforce pricing structure among HMOs

Speaking at the second Human Resource managers meeting in Kampala on Thursday, the IRA chief executive officer Ibrahim Kaddunabbi Lubega said the huge variances in the pricing of similar procedures and drugs in different hospitals is a big concern that should be addressed urgently.

RoseMaryHerbert

Rosemary Buringuriza, Head HR Irish Embassy (L) receives an award from IAA’s General Manager Herbert Mukoza (R) in honour of the Embassy’s support as a client for 15 years.

The Insurance Regulatory Authority (IRA) and the Medical Council are set to streamline pricing of medical service provision provided by Health Management Organisations (HMOs).

Speaking at the second Human Resource managers meeting in Kampala on Thursday, the IRA chief executive officer Ibrahim Kaddunabbi Lubega said the huge variances in the pricing of similar procedures and drugs in different hospitals is a big concern that should be addressed urgently.

Kaddunabbi said IRA and the Medical Council hired a consultant with support from the World Bank to undertake a study and propose the reasonable pricing range for different procedures and medicines.

He said the first draft report is ready and will soon be discussed with the stakeholders with a view of having the pricing procedure in place by the end of this year.

“You find that a woman who has given birth from hospital A in is charge as much as sh5m yet another one at hospital B is charged as low as sh200,000,” he said, adding that the effort will give guidance to the sector and guide costing of the medical schemes.

There are about 11 HMOs including International Air Ambulance (IAA), Africa Air Rescue (AAR), International Medical Group and Nakasero Hospital among others.

Kaddunabbi also cautioned HMOs against high management expenses, which he said constrain their ability to effectively pay claims.

“Most HMOs have high management expenses; the recommended expenses should be 20%, although even 30% can be acceptable.”

In 2014, HMOs posted a slight decline in revenue to sh46.8b, down from sh56b posted in 2013 due to the high the cost of sales amounting to sh40b and high operating expenses estimated at sh3b.

Additionally, Kaddunabbi warned HMOs against mispricing their schemes packages either for competition reasons or desire to make unreasonable profit.

“We have realised that there are some schemes which would have been sold to clients cheaply but they are overpriced and others which would have been sold expensively are underpriced because of competition. Over pricing tantamount to cheating clients and is unethical while underpricing affects the HMOs’ ability to implement the scheme and provide proper service.”

IAA Health Care General Manager Herbert Mukoza, however, said the company is in the process of hiring an actuary to assess risk and advise on the proper pricing, packaging and limits to ensure that schemes are neither underpriced nor overpriced.

He further noted that HMOs are faced with numerous challenges including the high cost of consultation, drugs, fraud and low uptake of health insurance among others.

“The number of people with health insurance in the country is too low and this makes it hard for us to breakeven at certain point. Though we hope that with innovative products and sensitisation, the uptake will increase,” Mukoza said.

Mukoza urged HR managers to always screen and review their health policies to assess whether they are getting value for their money.

The Insurance Institute of Uganda Chairman Public relations and Advocacy Committee Solomon Rubondo also alluded to the low uptake of medical insurance, which he estimates at 0.2% of the 0.85% total insurance penetration in Uganda, saying there is urgent need to pass the National Health Insurance Scheme law to boost penetration.

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