Private medical aid sector regulator the Council for Medical Schemes (CMS) has raised the prospect of legal action against medical schemes found to have practised racial profiling against black service providers.
The council’s head of legal affairs John Letsoalo said in a meeting of parliament’s health portfolio committee legal advice would be sought on whether an approach could be made to the Equality Court or whether a class action should be instituted by those negatively affected by racially discriminatory practices by medical schemes.
Some medical practitioners had lost income due to the actions of medical schemes.
There was a need to amend the Medical Schemes Act and its regulations because it had gaps that allowed the schemes and administrators to interpret some sections in a way that suited them, Letsoalo said.
“We find these findings quite distasteful,” he told MPs. “We are taking racial discrimination, especially in private healthcare, seriously.”
Members of the committee demanded consequence management and for penalties to be imposed on medical schemes found to have acted wrongly to create a deterrence. They suggested black medical practitioners be recompensed in some way by the medical schemes.
The question of legal action against medical schemes was also raised.
The CMS and health minister Aaron Motsoaledi briefed the committee on the panel report released last week which found three medical aids — Discovery, Medscheme and the Government Employees Medical Scheme — practised racial profiling to detect and punish fraud. The three represent more than 80% of medical aid membership in the country.
The panel found a statistical analysis of risk ratios between 2012 and 2019 showed black practitioners faced a disproportionately higher likelihood of investigation and sanction for fraud, waste and abuse compared with their white counterparts.
The Board of Healthcare Funders, the Health Funders Association and Discovery have argued the methodology used by the panel was “flawed” and scientifically unsound.
In terms of the Medical Schemes Act, the scheme may deduct amounts from any benefit payable to a member or supplier of a health service if they are not entitled to the amount, or for any loss which has been sustained by the medical scheme through theft, fraud, negligence or misconduct.
Motsoaledi said investigations into such allegations could take years, with medical practitioners slapped with crippling deductions as medical schemes took action to recoup their money.
This forced some of them out of practice. There needed to be an early warning system that alerted the practitioner about wrongdoing.
The minister identified a weakness in the Medical Schemes Act in that it did not specify what steps a medical scheme must take when investigating fraud, wastage or abuse. This was a weakness, as the medical schemes had come up with their own methods.
“We will have to look into this,” the minister said, adding his department would seek legal advice on what could be done and consult about the question of penalties that would need a legislative amendment.
National Health Insurance legislation would also be examined to see if it had to be amended.
CMS chairperson Thandi Mabeba also said legislative changes were necessary to empower the CMS to take action, while its registrar and CEO Musa Gumede outlined the processes planned by the CMS in response to the panel’s findings and recommendations.
He outlined the systems the CMS put in place to address fraud, wastage and abuse since the release of the panel’s interim report in 2021.
The CMS is to hold a special meeting on Monday to discuss the panel’s findings and recommendations.
Among the panel’s recommendations were that the Medical Schemes Act should include clear procedural safeguards. Also, a dedicated mechanism or tribunal should be established to support healthcare providers accused of fraud, ensuring they are not left to defend themselves against the overwhelming power of the schemes.
Schemes should be required to disclose the software and artificial intelligence programs they rely on to detect suspect claims to assess whether they entrench bias.
The panel also recommended schemes should conduct yearly assessments of the racial profile of providers investigated for fraud and publish the data broken down by discipline, so discriminatory patterns don’t go undetected for years.
ActionSA’s Kgosi Letlape on Sunday said he would lay criminal charges against several medical aid providers regarding alleged criminal conduct that warranted investigation.
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