The value proposition of efficiency discount options: The government employees medical scheme emerald value option case study

BACKGROUND: The Government Employees Medical Scheme (GEMS) introduced an EDO named the Emerald Value Option (EVO) in January 2017. The option was introduced to contain the cost of care whilst simultaneously improving the quality of care by championing care coordination. AIM: This study aimed to assess the impact of introducing an EDO such as EVO as a cost-containment strategy using contracted provider networks and coordinated care. SETTING: The study was conducted using aggregated data from GEMS. Government Employees Medical Scheme is a restricted medical scheme available to government employees in South Africa. METHODS: This is a descriptive pairwise comparison study between the Emerald benefit option (the parent option), which does not have embedded care coordination, and its derivative, EVO. RESULTS: Membership and claims data for 2018 were analysed. Expenditure per life per month in 2018 on the EVO amounts to R1357.01. After adjusting for the risk profile of beneficiaries on the EVO, expenditure per life per month would be expected to be R1621.73 (based on the conventional Emerald option). This translates to a savings of 16.3%. Similarly, health outcomes for EVO were more favourable than expected, actual admission rates were lower at 23.2% versus 26.2% expected. CONCLUSIONS: The EVO benefit design has succeeded in lowering the cost of care through network provider contracting and care coordination. The EVO has saved approximately R490 million in healthcare costs in 2018. If applied across the medical schemes industry, it is estimated that EVO contracting, and care coordination principles could save R20 billion per annum.