The Council for Medical Schemes (CMS) has invited the Board of Healthcare Funders (BHF) to sign a memorandum of understanding (MOU) to “genuinely” address the concerns of its members instead of engaging in forum shopping through a “media circus”.
The invitation forms part of the Office of the Registrar’s recent response to “a deliberately leaked” lawyer’s letter addressed to the chairperson of the CMS, Dr Thandi Mabeba, and the Minister of Health, Dr Joseph Phaahla. The letter, dated 16 February 2024, was sent by Bowman Gilfillan, acting for the BHF.
Read: Board of healthcare funders takes Council for Medical Schemes to task in lawyer’s letter
In the letter, the BHF criticised Dr Sipho Kabane, the Registrar of Medical Schemes, and the CMS for allegedly displaying hostility towards medical schemes and delaying the introduction of low-cost benefit options (LCBOs), among other concerns.
Read: CMS denies it is sabotaging medical schemes to boost NHI
The BHF, a non-profit organisation, represents about 40 schemes and medical scheme administrators, serving roughly 4.5 million beneficiaries.
In its scathing 31-page response, the CMS states that between 2017 and the onset of the Covid-19 pandemic, the registrar proposed signing an MOU with the BHF on more than three occasions. The CMS claims that despite providing draft MOUs for scheduled engagements to address member concerns, all attempts failed because of a lack of interest from the BHF’s leadership.
According to the CMS, the BHF’s Memorandum of Incorporation states that one of its main goals is to lobby and advocate for policy positions on behalf of its members.
The CMS describes the approach by the BHF of canvassing these key policy issues in the public domain via the “deliberately leaked” lawyer’s letter as a “clear indication of an organisation that has run out of creative ideas and is now resorting to forum shopping to remain relevant and gain support”.
The CMS describes the BHF’s stance on key health policies such as National Health Insurance, LCBOs, and the Prescribed Minimum Benefits (PMBs) as being politically and ideologically linked to “conservative elements in the health space”.
The CMS alleges that recent meetings between the registrar and the BHF leadership failed to tackle key issues outlined in the letter, which it finds “extremely disappointing” and indicative of a lack of integrity, courage, accountability, and honesty. The regulator believes that if these concerns had been addressed in earlier meetings or discussions regarding the MOU, they could have been resolved, “and the need to ventilate them in the public platform would not have arisen”.
“The publishing in the media of key important issues that are of a policy or regulatory nature without the engagement with the regulator results in the misrepresentation of facts and the interests of the beneficiaries,” the CMS states.
Communication of benefit changes
The BHF’s letter addressed long-running areas of conflict between schemes and the CMS, such as LCBOs, and comparatively recent ones, such as schemes’ publication of their 2024 contribution increases and benefit changes before these changes had been approved by the regulator.
According to the Medical Schemes Act (MSA), a scheme can adjust its rules, but changes need the registrar’s approval (section 31). Last August, CMS advised schemes against announcing changes without approval (Circular 27 of 2023). Yet, Discovery Health, Bonitas, Momentum, Bestmed, and Medihelp did so in September. In an unprecedented move, the CMS ordered them to withdraw the announcements until it had approved the changes.
Read: UPDATED: Withdraw 2024 contribution increase announcements, regulator instructs medical schemes
The BHF questioned the motives behind this move, particularly because schemes freely communicated such changes in previous years. It argued that schemes are within their rights to inform members of impending changes, pending formal approval. It said the CMS’s action, targeting only the largest schemes, appeared to be contrary to beneficiaries’ interests.
The CMS found that five out of 71 schemes announced their 2024 benefit and contribution changes without the registrar’s approval, violating sections 31(2) and 57(6)(b) of the MSA. It states that not informing members of this requirement also breached section 57(4)(d).
After receiving “a high number of complaints”, the CMS engaged with these schemes.
“Medical schemes immediately withdrew the announcements of the proposed benefit and contribution changes. One medical scheme provided evidence that its announcement was consistent with Circular 27 of 2023. The affected medical scheme was considered to have fully complied. The matter was considered closed.”
Review of the PMBs
The spotlight is also on the PMB review process.
According to the BHF’s letter, there is a statutory requirement for the PMBs to be reviewed at least every two years.
The BHF asked why the PMBs have not been reviewed for the past 24 years and whether the CMS has held the registrar to account for not doing so.
The letter also referred to the Health Market Inquiry (HMI) into the private healthcare market. The Competition Commission released the final HMI report in 2019.
According to the HMI report, the PMBs were being reviewed at the time. Despite this, the letter said, the BHF and its members “have no evidence of any progress or an intention by the council to implement the recommendations set out in the HMI regarding the review of [the] PMBs”.
According to the CMS, the PMBs are the only guaranteed rights, entitlements, and benefits that members enjoy under the medical scheme dispensation.
“If this dispensation is removed, as proposed by some stakeholders in the guise for cost-effectiveness and affordability, then medical schemes will decide through a discretionary process of whether to honour claims or not.”
The CMS states that it reviews the PMB through the PMB Benefit Definitions Project and the CMS Scripts, which are regularly published in the public domain. The CMS said it publishes 10 PMB definitions and CMS Scripts a year.
Commenting on the progress of the HMI, the CMS says the costing of the primary healthcare package has been completed.
“CMS is currently finalising the affordability framework. Once concluded, it will be deliberated at relevant committees, including the PMB Priority Setting Committee and the PMB Advisory Committees, following industry consultations.”
The CMS confirms that the National Department of Health (NDOH) is expected to review the PMBs at least every two years, adding that the review “involves” the CMS, stakeholders, provincial health departments, and consumer representatives.
The CMS contends it cannot be held solely responsible for the PMB review, citing “contention among stakeholders”.
“CMS is trying to foster an inclusive and collaborative approach continuous and consultative process. The progress on the review is continuously slowed down by the vested interests of parties involved, and BHF has been involved in the PMB Advisory Committee as a stakeholder and is equally to blame for the slow output – like all other parties.”
Final report on discriminatory practices
Another key issue raised in the letter related to the establishment of the section 59 investigation panel.
In 2019, the CMS launched an investigation into claims by members of the National Health Care Professionals Association that black medical professionals were treated unfairly and schemes withheld their claims because of racial profiling. The investigation became known as the Section 59 Inquiry.
The panel’s interim report was released in January 2021.
“Our client [BHF] still awaits a final report, although it has been more than four years since the process started, with no end in sight. The way the investigation is being handled, in particular, the ill-informed further information requests, is perceived as an attempt to victimise medical schemes at the expense of their members and for ulterior purposes outside of the council’s scope,” the letter said.
The CMS states that although there have been delays in the release of the final report of the Section 59 Inquiry, these were beyond its control, “and evidence will support this assertion”.
It deems the inquiry a matter of public interest.
“The CMS vehemently rejects the notion that the section 59 investigation was a waste of public funds, and we are extremely disturbed that the BHF is using the media to trivialise allegations of bullying, coercion, and blacklisting of black health professionals,” the report reads.
Solvency framework
The BHF opposed the CMS’s decision against implementing a risk-based capital solvency framework (RBC), citing global best practices. It sought clarity on when engagement with scheme members and health sector auditors will occur regarding relevant audit frameworks, particularly given recent changes to financial standards.
According to the CMS, the MSA does not include provisions for the RBC, “making it neither mandatory nor legislated”.
However, the CMS says it has engaged the services of an expert to assess the impact of its implementation and provide recommendations in this regard. One of the primary considerations is whether to adopt the framework as a monitoring tool rather than enforcing it at the industry level.
“The study undertaken shows that the model is likely to advantage larger medical schemes and disenfranchise small medical schemes. We will continuously review this important tool and will only implement it when we are certain that it will not cause industry instability,” the CMS says.
The regulator adds there is no expectation that the framework will be implemented at the industry level until the CMS is satisfied it can be implemented without destabilising the industry.
“It is up to the CMS to decide whether to implement the final outcome of this process, taking into account its overall impact on the medical schemes’ environment,” the report reads.
Legality of regulatory actions questioned
The BHF also queried whether any of the CMS’s regulatory actions undertaken since 2017 have been lawful.
“The council has concurrent jurisdiction with the FSCA and Prudential Authority (PA) until 31 March 2024. Please provide us with evidence of the council seeking or obtaining concurrence from the FSCA and PA in respect of any conduct matters – for example, curatorship, litigation, banning of publishing notices on benefit options and contribution increases, preparing submission of LCBO report, etc. In the absence of such documentary evidence, our client will assume that all regulatory actions under the Act have been illegal since the inception of the Financial Sector Regulation Act [FRSA] in 2017,” the letter says.
(Comment: Most of the provisions of the FSRA came into effect on 1 April 2018.)
The CMS states it has been operating with the transitional extensions since 2019 to exclude concurrence for the past few years in line with the FSRA.
“No concurrence amongst the three regulator is required due to the suspension effect of the gazette ending March 2024 and the further gazette that has been published which further suspend the need for concurrence by another three years (March 2027).”
According to the CMS, the allegation of lack of concurrence with FSCA and PA constitute a curious interpretation of FSRA.
“There are transitional arrangements (Annexure D of the CMS report), and BHF is out of touch with the ongoing discussions between CMS, NDOH, FSCA, PA, and National Treasury. We see this as a fishing expedition of information they are not entitled to,” the CMS states.
Click here to download the full CMS response.
