Ailing medical scheme to be liquidated and members moved

Community Medical Scheme (Commed) is to be liquidated and its 11,000 members moved to Bonitas Medical Scheme, the Council for Medical Schemes has announced.

The move is a sharp departure from the assurances the council gave members when Commed was placed under provisional curatorship in June that it was able to pay claims.

Reports subsequently compiled by Commed’s provisional curator and its actuary indicated that the scheme was in fact insolvent, the council’s acting registrar, Sipho Kabane, said on Monday.

Liquidation rarely occurs in the medical schemes industry.

Recent examples include Renaissance, which was liquidated in 2008, and Omnihealth, which was wound up in 2005.

The High Court in Pretoria placed Commed under provisional curatorship on June 2 after the council discovered alleged governance failings.

The apparent failures in fiduciary oversight included allowing a R1.1m bonus to be paid to Commed’s principal officer that was outside the scope of her performance agreement, and permitting illegal advance payments to the scheme’s administrator, Allcare.

Kabane said Bonitas had been selected for Commed members to ensure their benefits were not compromised. They would move across with no break in their cover, he said.

He declined to provide details of the extent of Commed’s financial troubles.

The migration of members is due to begin this week and, once completed, liquidation of the 28-year-old scheme is expected to commence.

The council emphasised that the liquidation was unrelated to the drive to consolidate the industry under National Health Insurance (NHI).

In a separate development, Kabane issued a statement, saying that industry consolidation would not be confined to small schemes with fewer than 6,000 members and that the details would be determined by an NHI advisory committee to be established in terms of the NHI Implementation Structures gazette, published on July 7.

“The view that this process will only affect the 31 schemes that have less than the required number of principal members in terms of Regulation 2(3) of the Medical Schemes Act is not communicating the full extent of the consolidation process.

“The consolidation process will also affect all the healthcare risk pools of civil servants that are located at national and provincial departments, municipalities and state-owned entities, according to [the gazette],” he said.

“The NHI adviser committee appointed to perform the task, and not the CMS [Council for Medical Schemes] on its own, will be responsible for … the consolidation process,” he said.

Kabane said the medical schemes council wished to “categorically state that none of the beneficiaries of medical schemes will be left without medical cover as a result of the NHI consolidation process”.

THE APPARENT FAILURES IN OVERSIGHT INCLUDED ALLOWING A R1.1M BONUS TO BE PAID THE MIGRATION OF MEMBERS IS DUE TO BEGIN THIS WEEK AND LIQUIDATION WILL FOLLOW