Council for Medical Schemes hit by probes, lack of funding, staff shortages

An industry-wide probe into allegations of fraud and corruption, as well as a constrained budget, are just two of the challenges the Council for Medical Schemes is facing.

Officials from the council on Thursday briefed Parliament's portfolio committee on health on its annual performance plan and budget.

The Council for Medical Schemes (CMS) regulates private health financing though medical aid schemes. The CMS has oversight of 78 medical schemes, affecting 8.9 million scheme beneficiaries.

Registrar Dr Sipho Kabane told the committee that the CMS had invited the Special Investigating Unit (SIU) to conduct an industry-wide probe into allegations of fraud and corruption, which have stemmed from a previous investigation into the council's General Manager of Compliance, Stephen Mmatli.

In February this year Mmatli was suspended after the CMS received allegations via its fraud and corruption hotline, that the general manager had engaged in "corrupt relationships" with industry stakeholders.

Mmatli was suspended with full pay and an external investigator conducted a probe which has since been completed. Mmatli also faced a disciplinary hearing which was held on Tuesday, August 27, 2019, Kabane confirmed.

In the meantime, the SIU had received a proclamation from President Cyril Ramaphosa and has started its investigation, Kabane said. The CMS is working along with the SIU on the investigation to rid the industry of "fraud and corruption," he said.

The CMS has also appointed an investigation panel led by Advocate Tembeka Ngcukaitobi to look into allegations of racial profiling by medical schemes.

The investigation follows allegations by members of the National Healthcare Professionals Association that they were being unfairly treated and their claims were withheld by medical aid schemes based on their race and ethnicity.

Ngcukaitobi will determine the veracity of the allegations of blocked payments, black-listing, bullying, coercion and the use of hidden cameras. Public hearings are being held and will be concluded in September. A final report will be provided by the investigating panel by November 2019.

Budget constraints

The CMS is also challenged by a lack of resources. The CMS has a personnel of 120 individuals in comparison to the 8.9 million medical scheme beneficiaries whose interests the council aims to protect.

Kabane also said in light of the investigations, the CMS's mandate is expanding – specifically to tackle fraud and corruption, which has warranted a need for restructuring of the organisation so that it can be fit for its purpose.

The CMS's budget is R164.9m, which is small relative to the size of the industry it is regulating, Chief Financial Officer, Daniel Lehutjo said.

Kabane echoed these views and said that medical schemes in totality have contributions totaling R192bn. "We are like this baby fighting Goliath… It just makes us pale into insignificance. We are regulating a resource-rich industry," he said.

The ability of the CMS to regulate the industry depends on the resources available to it, Kabane said. "We tend to be reactive rather than proactive," he said.

The principle source of income for the council is levies charged to medical schemes. The CMS has requested an increase of 9.6% on levies, but the health and finance ministers have agreed to an increase of 7.03%.

"The biggest source of our budget is being strangled," Kabane commented.

He said the SIU investigation would cost R4.6m and the investigation, led by Ngcukaitobi, will cost R10m, which the CMS is at pains to fund.

In its presentation, the CMS warned that the lack of funding would affect its ability to support urgent NHI projects.

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