Discovery defends admin fees

2012-07-12 09:55

The Discovery Health Medical Scheme (DHMS) has defended its total administration fee of R2.8 billion in the last financial year.

“Our administration fees are in line with the market,” principal officer Milton Streak said in a statement.

The matter was raised by two members at the DHMS annual general meeting (AGM) in Johannesburg last month.

The board of trustees had decided at a November meeting to conduct an independent review, said Streak.

“This is not a once-off exercise, but part of a continuous process that has been highlighted at all AGMs.”

Business Day reported on Tuesday that DHMS members wanted an independent review and a detailed breakdown of administration fees paid to Discovery Health last year.

The scheme’s administration fees were the second highest in South Africa, at R102 per average beneficiary per month, according to the newspaper.

Trustees were also told by members to commission an independent review of the value for money provided by Discovery Health.

Streak said while it was critical to assess the costs paid by the scheme, it should be judged by the total premiums paid related to the scheme’s benefits.

DHMS’s non-healthcare expenditure was below the average level charged by other open medical schemes, he said.

Administration and managed healthcare fees were within industry benchmark levels, comprising 10% and 3% of annual total contributions, respectively.

Streak said fees paid to Discovery Health were increasing at a rate markedly below the consumer price index, the standard measurement for inflation.

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