Medical aid schemes regulator under fire
Council for Medical Schemes accused of maladministration and abuse of power
Medical aid schemes regulator the Council for Medical Schemes (CMS) has come under fire from one of the main industry bodies for alleged maladministration and abuse of power.
The allegations, contained in an eightpage legal letter from the Board of Healthcare Funders (BHF) to the council’s board, speaks to a breakdown in the relationship between the regulator and key stakeholders in the sector at a time when there is huge uncertainty over National Health Insurance (NHI) — the government’s plan to achieve universal health coverage.
The BHF, which issued the letter through law firm Bowmans, represents about 40 registered medical aid schemes, who together service about 4.5-million members. In its letter, the BHF accuses CMS registrar Dr Sipho Kabane of acting contrary to the Medical
Schemes Act.
“It has become evident, based on BHF members’ common experiences, that the registrar readily reverts to the threat of the appointment of a curator to intimidate boards of trustees of medical aid schemes when there is an issue that cannot be resolved. His office demonstrates a marked hostility towards medical aid schemes, even when the schemes indicate a willingness to work with the registrar and the council on the challenges the medical schemes face,” the letter says.
It cites several instances where the CMS either lost litigation related to ill-advised applications to place schemes under curatorship, or withdrew these applications with no reason, leading to unnecessary expenditure on the part of schemes and itself.
These include a case in 2020 in which the CMS withdrew its ex parte application to place the SAPS Medical Scheme under curatorship after the scheme pre-emptively went to court to prevent the application.
In another case in the same year, Hosmed went to court to urgently appeal against a decision by CMS to confirm an exposition of the proposed amalgamation of Hosmed with Sizwe Medical Scheme.
In retaliation, the registrar launched an application to place Sizwe under curatorship. This failed, but not without a scathing rebuke from the judge, who exposed ulterior motives for the application.
Due to management inefficiencies, the CMS council has had 24 meetings in the last two years at a cost of R6.7-million to the organisation.
This week Kabane referred queries on the allegations to the council, saying the matters fell within “the jurisdiction of council [board] to take any appropriate steps as they deem fit”.
The council said it had instructed its legal team to advise on the merits of the allegations contained in the letter.
“It will be premature to make any pronouncements at present while the council is still engaged in the process of looking at this matter,” it added.
A senior CMS insider, who is not permitted to speak to the media, confirmed the organisation was in a state of disarray and that key interventions in the sector remained outstanding.
“More than five years ago the industry recommended
His office demonstrates a marked hostility towards medical aid schemes, even when the schemes indicate a willingness to work [together] on challenges
The Board of Healthcare Funders in a letter to the Council for Medical Schemes
that CMS develop a risk-based solvency [framework]. That process was abandoned midway and I don’t know what for — maybe it was more exciting to terrorise and threaten schemes,” the insider said.
“Also, the law prescribed minimum benefits review [every two years], which have not been undertaken in more than 10 years. And the result of that is that schemes are bleeding. People with integrity, and everyone who cares about their professional reputation, are looking for alternative employment,” the source added.
In the letter, the BHF accuses Kabane of letting NHI — which has not been made law as yet — inform regulation and regulatory action for the past five years.
“The registrar’s ministerial brief of September 2021, furnished to us by our client, seems to suggest this as it extensively deals with the NHI’s strategic projects and refers back to the NHI when dealing with other regulatory initiatives,” the letter said.
“Has the NHI Bill been regarded as unofficial national health policy? If so, on what basis? If not, under what empowerment in the act was it afforded such status?”
An example, one industry insider said, was the CMS’s delay in finalising guidelines for low-cost benefit options (LCBO) — an initiative that would broaden the stagnant industry by allowing schemes to market products to low-income earners who cannot afford medical aid.
“LCBOs could save smaller schemes, but the regulator has been slow on this. Instead there is this crazy push to target smaller schemes and force them to rationalise in anticipation of NHI,” said the insider, who asked not to be named out of fear of their scheme being targeted. “This undermines the industry instead of promoting it.”
In its letter, the BHF said development of the guidelines had taken nearly a decade without finalisation.
The department of health said the allegations of intimidation and maladministration contained in the letter were “serious”, adding that “the letter is receiving attention of the minister and all issues/allegations raised are taken into serious consideration. He will respond in due course.”