SHARED VALUE HEALTHCARE VITALITY ACTIVE REWARDS FOR DOCTORS DISCOVERY FOUNDATION DIGITAL HEALTH TECHNOLOGY 2020 ENHANCEMENTS 2020 TARIFFSH

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We are committed to workingwith healthcare professionalsto build a shared valuehealthcare ecosystem. Everyprivate healthcare system inthe world exhibits a naturaltension between payers(funders) and providers(healthcare professionalsand others). Notwithstandingthis, we respectfully believethat we are able to align withhealthcare professionalsto sustainably improvehealth outcomes, in the bestinterests of your patients,our members. Evidence-basedhealth economic studiesdemonstrate a U-shapedrelationship between qualityand cost, demonstrablyshowing that rationalimprovements in quality,ultimately lead to lowertotal cost. This evidencesupports our view that sharedvalue can be found betweenprofessionals and payerswith quality outcomes as thecentral focus.

One of the key elements of this shared value healthcaremodel is value-based care, which is globally recognised asa mechanism to align the interests and incentives of payersand healthcare professionals around health outcomes.Successful implementation of value-based care shouldlead to improved health outcomes and enhanced healtheconomics, driving lower cost of delivery and consequentlyavailing additional funds for enhanced remuneration forprofessionals. This sounds impressive and easy in theory,but is truly difficult to implement, as witnessed in manyhealthcare markets globally. It requires trust betweenhealthcare professionals and payers, and responsible riskmitigation through implementation phases. Implementingvalue-based care strategies slowly and cautiously in theDiscovery Health ecosystem is already proving to be highlyeffective in addressing the challenges

in variable quality of care and cost-effectiveness.Value-based care partnership programmesdeliberately move away from supply-driven careto person-centred care, resulting in the bestpossible clinical outcomes at the lowest possiblecosts. Successful examples of this include theCoronary Artery Disease (CAD) Care Initiative inconsultation with the SA Society of CardiovascularIntervention, Joint Arthroplasty Network workingwith the SA Orthopaedic Association and SA Societyof Anaesthesiologists, the Obstetric GovernanceProgramme with the SA Society of Obstetricians andGynaecologists / Gynaecology Management Groupand the Value-based multiplier for GPs supportedby the Family Practitioner Advisory Board, IPAF andSAMA.

SHARED VALUE, MAXIMISING THE BENEFITS FOR ALL ROLE PLAYERS

Patients

Healthcare Professionals Discovery Health

There are now more than 8 000 healthcare practices involved in Discovery Health’s value-based care programmes,ranging from data-sharing and peer-stewardship agreements, to more complex, care-delivery and alternative paymentinitiatives. Over 54% of specialists and all family practitioners currently have access to one of these programmes.We have paid more than R200 million in additional payments over and above tariff, during 2019, to healthcarepractitioners participating in these programmes.

We will continue to collaborate with the profession to implement value-based care initiatives.

SHARED VALUE HEALTHCARE VITALITY ACTIVE REWARDS FOR DOCTORS DISCOVERY FOUNDATION DIGITAL HEALTH TECHNOLOGY 2020 ENHANCEMENTS 2020 TARIFFVI

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Vitality Active Rewards for Doctors (VARD)_________________

Evidence demonstrates that healthier doctors are more effective in prescribing wellnessand achieving behaviour change in their patients.

Frank et al, as published in theCanadian Medical Association Journalduring 2013, demonstrate that "…wefound a consistent, positive relationbetween physicians' and patients'preventive health practices."

To show our appreciation to all the skilledand dedicated doctors in this country, we aremaking it easier and more rewarding for youto get active. We are delighted to make ourglobally recognised wellness and behaviourchange programme, Vitality Active Rewardsfor Doctors (VARD), available free of charge toall doctors registered with the HPCSA. This isimportant to us as the health of our doctors iscentral to the sustainability of our healthcaresystem, and also is proven to have directimpact on the health of their patients.

Over 4 300 doctors (exceeding one third ofall doctors in the private sector) are currentlyengaging in Vitality Active Rewards for Doctors(VARD), earning rewards and substantiallyimproving their activity levels.

"Doctors exercise, on average, 15% morefrequently after activating Vitality Active Rewards,with a 12% increase in the proportion of highintensity workout sessions." Vitality White Paper,2019

In addition, following significant approachesfrom doctors in the public sector, we have alsobegun rolling this out in the public sector incollaboration with the South African MedicalAssociation (SAMA). In the month after the launchof this programme at the 2019 SAMA NationalConference, over 500 doctors in the public sectorjoined Vitality Active Rewards for Doctors. Thisnumber continues to grow. We are in the processof rolling Vitality Active Rewards for Doctors out inthe academic sector as well.

"Discovery Vitality has really helped motivate me to a healthier self" Dr Brian Behrens, GP, WesternCape

See where you and your peers rank on the Vitality Active Rewards for Doctors leader board.

SHARED VALUE HEALTHCARE VITALITY ACTIVE REWARDS FOR DOCTORS DISCOVERY FOUNDATION DIGITAL HEALTH TECHNOLOGY 2020 ENHANCEMENTS 2020 TARIFFD

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Discovery Foundation_________________

The South African healthcare system is severely challenged due to a critical shortage of medical (particularlyspecialist) skills in identified areas of need. It is also necessary to address the historical racial disparity inspecialist skills. The Discovery Foundation supports government in addressing this shortage and by doing sostrengthens the South African healthcare system:

The Foundation is having a significant, positive impact on the South African healthcare system – public and private -and currently supports some 10% of all sub-specialist posts in the country. Over 75% of our alumni have remained inthe public sector, in academic and research posts and are training and mentoring our country’s future doctors.

SHARED VALUE HEALTHCARE VITALITY ACTIVE REWARDS FOR DOCTORS DISCOVERY FOUNDATION DIGITAL HEALTH TECHNOLOGY 2020 ENHANCEMENTS 2020 TARIFFD

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New technologies are changing many industries, including healthcare. Digitaltechnology is particularly relevant in expanding access to quality care to under-served communities, thus providing medical professionals the tools to achieve thegoal of offering better care to more people.

Digital tools have been shown to:• Enhance administrative efficiency• Connect you and your patients for easily accessible, earlier care• Provide important patient information to inform your clinical decisions• Facilitate better coordination of care• Enable enhanced measurement and visibility of clinical outcomes.

Healthcare is a latecomer to the digital revolution, with many industries already waydown the line in efficiency and quality gains from digitization. Healthcare's time fordigitization is now. We are committed to working with the profession to build a sharedvalue healthcare ecosystem that uses digital tools, in line with global trends and bestpractice. This provides a rich ecosystem in which patients, doctors and the funder jointogether to sustainably improve healthcare outcomes.

HealthID and DrConnect

Digital information sharing significantly enhances care outcomes and so consequently,this is increasingly central to all our value-based initiatives. Discovery’s HealthIDimproves information sharing, care coordination, administrative simplicity andsupports the shared value healthcare ecosystem.

In 2020, Discovery Health aims to enhance access to appropriate telemedicineconsultations between healthcare providers and patients as a new quality, cost-effective and convenient channel to manage certain medical problems.

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Day-to-day Extender Benefitenhanced through telemedicine_________________

In 2020 the Day-to-day Extender Benefit, which provides access to additional GPconsultations when members have exhausted their Medical Savings Account (MSA),will align with the global evolution of telemedicine. This avails funding for virtualconsultations between members and their GPs, or members consulting GPs throughthe pharmacy wellness networks.

Members can access these additional GP consultations by:

1. Arranging follow-up telemedicine consultations (using video or text) usingDrConnect.

2. Visiting a participating pharmacy clinic in our wellness network, where a nurse canfacilitate a real-time, video-linked, doctor-assisted consultation where appropriate.

If a member has a virtual consultation with a GP and the doctor decides that a face-to-face consultation is required, the Scheme pays for this additional consultation fromrisk benefits at GP Network rates, from the Day-to-day Extender Benefit.

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The Premier Plus GP Network_________________

Non-communicable diseases are rapidly becoming the largest global public healthemergency of the 21st century. In South Africa we face the quadruple burden of diseaseof poor maternal and child health, trauma, infectious disease (HIV, AIDS & TB) as well asnon-communicable disease. We are at the forefront of this epidemic of lifestyle diseases,including surging mental health disorders.

Discovery Health Medical Scheme is experiencing a significant year-on-year increase inmembers registering on the Chronic Illness Benefit for diabetes and cardiovascular disease. Toaddress the healthcare needs associated with the increasing prevalence of non-communicablediseases, the Premier Plus network provides additional disease management support topractices that enrol patients in the Diabetes Care and Cardio Care programmes.

SHARED VALUE HEALTHCARE VITALITY ACTIVE REWARDS FOR DOCTORS DISCOVERY FOUNDATION DIGITAL HEALTH TECHNOLOGY 2020 ENHANCEMENTS 2020 TARIFFD

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ENT We are delighted with the positive uptake we are experiencing on both these programmes with

over 25 000 members with diabetes are currently registered on the Diabetes Care programme andover 60 000 members on the Cardio Care programme. The Care Programmes provide for enhancedmanagement and support of your patients with these chronic conditions and we are delighted withthe positive uptake we are experiencing on both the Diabetes Care and Cardio Care programmes.

YEAR-ON-YEAR DIABETES GROWTH DIABETES CARE REGISTRATIONS

Number of members

Year-on-year growth in prevalence of diabetes amongDiscovery Health Medical Scheme members

CARDIO CARE REGISTRATIONS CARDIOVASCULAR CHRONIC REGISTRATIONS

SHARED VALUE HEALTHCARE VITALITY ACTIVE REWARDS FOR DOCTORS DISCOVERY FOUNDATION DIGITAL HEALTH TECHNOLOGY 2020 ENHANCEMENTS 2020 TARIFFD

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Although early in the lifecycle of these programmes, we are already observingenhanced clinical as well as financial outcomes in registered patients resultingfrom a measureable increase in quality of care.

Diabetes Care clinical measures vs non-registered members

HBA1c GP VISITS

LIPOGRAM ADMISSIONS

As the care team leader, Premier Plus GPs can access an extended consultationfee for an annual assessment, as well as receive an ongoing monthly patientmanagement fee, in a value-based context of aligning to keep these patientswell managed. The additional payment is intended to allow for additional timefor the GP to provide patient education, counselling, and advice on changingthe patient’s lifestyle.

Our data shows an increasing prevalence of depression (Figure a), with a 39%increase in the number of people registered for treatment of depressionsince 2016. The Mental Health Care Programme, launched in 2019, providesadditional benefits for members

diagnosed with new onset major depression by a Premier Plus GP. The totalnumber of members who have been registered thus far is 596 (January toOctober 2019).

As we have seen with Diabetes Care and Cardio Care, we anticipate substantialuptake on this programme in 2020.

Figure a: Registration per 1000 lives for depression over time

REGISTRATIONS PER 1 000 LIVES - DEPRESSION

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Health Coaching and Track your Health

Improving health outcomes requires changes in behaviour, which is oftendifficult. Understanding this, Discovery Health has made a number of toolsavailable to members to support the care being delivered by the Premier Plusnetwork.

Members registered on Diabetes Care have access to diabetes health coaching.Specific members who would benefit from coaching are proactively identified.The coach works with the member to ensure adherence to the GPs treatmentplan as well as supporting the member to make lifestyle changes.

Members with diabetes, hypertension and hypercholesterolaemia have accessto Track your Health on the Discovery app. Once activated, members canenjoy regular rewards for achieving personalised health goals designed to helpmembers adhere to treatment and make healthy lifestyle choices. PremierPlus doctors are able to use HealthID to recommend to patients that theyparticipate.

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GP Network andValue-based Multiplier_________________

Value-based care initiatives are becoming more common in South African private healthcare,with a growing number of practices independently adopting strategies that produce the sameor better outcomes than other practices at a lower cost. The value-based multiplier (VBM) forGPs rewards practices that actively drive high-quality care, care-coordination and cost-efficiencybased on common screening and preventative care measures. VBM practices align with globalbest practice on the use of digital support tools to significantly enhance visibility, coordinationand consequently healthcare outcomes.

We successfully launched the VBM in 2018, with qualifying practices receiving anadditional 5% increase over and above the Discovery Health tariffs.

Practices performing well on the following measures qualify for VBM:

Measure Description

Accessibility Low casualty visit rate

  Flu vaccinations for patients older than 65 years

Quality HIV screening for patients older than 12 years

  Mammogram screening for females who are 50 to 75 years old

  Pap smear screening for females who are 25 to 65 years old

Composite efficiency Profile efficiency score*

   

*This profile efficiency score is a sophisticated data tool taking into account case mix at every practice and calculatingthe effectiveness and efficiency of care. It provides a powerful proxy for effective care of patients.

Practices are reviewed for potential participation in the higher VBM payment arrangementwhen we release the GP Practice Quality Report. There has been a 27% increase onprevious qualifiers, demonstrating a positive move to improve quality care. This positivetrend is not only expected to continue into 2020 but also to drive high-quality care well intothe future.

We will alert all qualifying practices of their VBM status.

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KeyCare Plans_________________

Casualty benefit

Casualty/emergency units offer patients rapid access to acutemedical care. However, some patients access emergency roomsfor non-emergency care, including the ongoing management ofchronic conditions that could be more effectively managed in afamily practice setting.

In 2020, Discovery Health Medical Scheme and other schemes withKeyCare options (with the exception of TFG Health) will introducea limit of one casualty visit for each person for non-emergencycasualty visits. The limit does not apply to emergency casualtyvisits or to a visit that results in a hospital admission. Patients whopresent with uncomplicated, non-emergency acute conditions orchronic conditions should be referred to their treating doctor.

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Primary Careproduct range for 2020_________________

Discovery Primary Care was launched in 2015 to address the needfor employers to give their employees access to affordable primaryhealthcare services. Based on affordability and the healthcare needs oftheir employees, employers can choose between Primary Care Activateand Primary Care Advanced.

Discovery Primary Care currently includes cover for network GPconsultations and benefits for a defined list of medical proceduresperformed in a doctor’s rooms, day-to-day prescription medicine, definedchronic benefits, basic pathology and basic radiology.

For 2020, Discovery Health has enhanced Primary Care Advanced to includedefined funding for specialist consultations, a flu vaccine every year and HIVmanagement. Primary Care Activate will include cover for basic optometryand dentistry. The Trauma Benefit cover limits will be increased, employershave the option to choose from either R300 000 and R1 million cover.

Log into the HP Zone for more information on the Discovery Primary Care2020 product updates

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Over the past few years Discovery Health hasinstituted tariff increases in line with ConsumerPrice Index (CPI) inflation.

Healthcare inflation has continued to rise in excessof CPI, in line with global trends, due to increasesin the utilisation of healthcare services delivered. InSouth Africa, these utilisation increases are driven byboth demand-side and supply-side factors. On thedemand-side, the covered medical aid population isgetting older and sicker each year. Adverse selectiondrives sicker and at-risk consumers to seek outmedical insurance, while affordability discourageshealthy members from persisting with cover. On thesupply-side, new technologies and new hospitalscontinue to increase the cost of care, way in excess ofnormal price inflation.

Payment to medical professionals depends on twofactors:

1. The volume of healthcare services they provide(care utilisation)

2. Tariffs charged for these services.In 2020 all practices will receive a price increase of4.8% for consultations and procedures. In the contextof current CPI inflation at 3.7%, this represents asignificant increase above CPI.

Our data demonstrates that utilisation of healthcareprofessional services has increased on averageby 5.4% per annum over the period 2014 - 2019.In this context, and based on historical careutilisation trends, it is expected that in 2020, medicalprofessionals will typically experience an increase of10.2% in payments received for their services. Thisis almost a full percentage point more than the 2020average contribution increase for our members.

Details of the 4.8% tariff increase for eachtariff code will be available on the HP Zone atwww.discovery.co.za from mid-December.

  www.discovery.co.za       @Discovery_SA       discoverysouthafrica____________________________________________________________________________________________________________________________________________________________________________________________________________________

Discovery Health (Pty) Ltd; registration number 1997/013480/07, is an authorised financial services provider and administrator of medical schemes.